<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 3, 1998
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
FORM S-1
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
------------------
CLEVELAND INDIANS BASEBALL COMPANY, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
OHIO 7941 34-1861303
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER IDENTIFICATION
INCORPORATION) CLASSIFICATION CODE NUMBER) NO.)
</TABLE>
2401 ONTARIO STREET
CLEVELAND, OHIO 44115
(216) 420-4200
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
RICHARD E. JACOBS
CHAIRMAN OF THE BOARD, PRESIDENT AND CHIEF EXECUTIVE OFFICER
CLEVELAND INDIANS BASEBALL COMPANY, INC.
2401 ONTARIO STREET
CLEVELAND, OHIO 44115
(216) 420-4200
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPIES OF ALL CORRESPONDENCE TO:
<TABLE>
<S> <C>
EDWARD G. PTASZEK, JR. THOMAS F. MCKEE
Baker & Hostetler LLP Calfee, Halter & Griswold LLP
3200 National City Center 1400 McDonald Investment Center
1900 East Ninth Street 800 Superior Avenue
Cleveland, Ohio 44114-3485 Cleveland, Ohio 44114-2688
(216) 621-0200 (216) 622-8200
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
------------------
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If 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. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
================================================================================================================================
TITLE OF EACH PROPOSED MAXIMUM PROPOSED MAXIMUM
CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
TO BE REGISTERED REGISTERED(1) PER SHARE(2) OFFERING PRICE(2) REGISTRATION FEE
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A Common Shares, without
par value..................... 4,600,000 Shares $16.00 $73,600,000 $21,712
================================================================================================================================
</TABLE>
(1) Includes 600,000 Class A Common Shares that the Underwriters may purchase to
cover over-allotments, if any.
(2) Estimated pursuant to Rule 457(a) under the Securities Act of 1933 solely
for the purpose of calculating the registration fee.
------------------
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> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED APRIL 3, 1998
PROSPECTUS
4,000,000 SHARES
CLEVELAND INDIANS BASEBALL COMPANY, INC.
LOGO
CLASS A COMMON SHARES
------------------
All of the 4,000,000 Class A Common Shares (the "Class A Common Shares")
offered hereby are being offered by Cleveland Indians Baseball Company, Inc.
(the "Company"). Although the Company will receive all of the proceeds of the
Offering, substantially all of the proceeds will be used to acquire partnership
interests in Cleveland Indians Baseball Company Limited Partnership from
entities controlled by Richard E. Jacobs, Chairman of the Board, President and
Chief Executive Officer of the Company, in connection with the transactions
described under the heading "Formation Transactions."
Prior to the Offering, there has been no public market for the Class A
Common Shares. It is currently anticipated that the initial public offering
price per Class A Common Share will be between $14.00 and $16.00. See
"Underwriting" for a discussion of the factors considered in determining the
initial public offering price. The Company intends to apply for inclusion of the
Class A Common Shares in the Nasdaq National Market under the proposed symbol
"CLEV."
------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 8 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE CLASS A COMMON
SHARES.
------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
=====================================================================================================================
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT(1) THE COMPANY(2)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share.................................... $ $ $
- ---------------------------------------------------------------------------------------------------------------------
Total(3)..................................... $ $ $
=====================================================================================================================
</TABLE>
(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including certain liabilities under the Securities Act of 1933.
See "Underwriting."
(2) Before deducting expenses payable by the Company, estimated at $2,000,000.
(3) The Company has granted the Underwriters a 30-day option to purchase up to
600,000 additional Class A Common Shares solely to cover over-allotments, if
any. If such option is exercised in full, the total Price to Public,
Underwriting Discount and Proceeds to the Company will be $ ,
$ and $ , respectively. See "Underwriting."
------------------
The Class A Common Shares are offered by the Underwriters subject to
receipt and acceptance of the shares by them. The Underwriters reserve the right
to reject any order in whole or in part. It is expected that delivery of the
Class A Common Shares will be made against payment therefor at the offices of
McDonald & Company Securities, Inc. or through the facilities of the Depository
Trust Company on or about , 1998.
MCDONALD & COMPANY
SECURITIES, INC.
The date of this Prospectus is , 1998
<PAGE> 3
Photograph depicting a variety of Cleveland Indians players
and a "1997 American League Champions" logo superimposed
on a background photograph of fans at Jacobs Field
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS THAT
STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE CLASS A COMMON SHARES,
INCLUDING BY ENTERING STABILIZING BIDS, EFFECTING SYNDICATE COVERING
TRANSACTIONS OR IMPOSING PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES,
SEE "UNDERWRITING."
<PAGE> 4
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and financial statements
appearing elsewhere in this Prospectus. Unless otherwise indicated, the
information in this Prospectus assumes (i) no exercise of the Underwriters'
over-allotment option and (ii) completion of the transactions described under
the heading "Formation Transactions." Unless the context otherwise requires,
prior to completion of the Formation Transactions, references to the "Company"
throughout this Prospectus, including the financial information contained
herein, refer to the operations of Cleveland Indians Baseball Company Limited
Partnership (the "Partnership") and Ballpark Management Company ("Ballpark
Management"). After completion of the Formation Transactions, references to the
"Company" refer to the operations of Cleveland Indians Baseball Company, Inc.
and the Partnership.
The American League, and its member clubs, and the National League, and its
member clubs, are collectively referred to in this Prospectus as "MLB" or "Major
League Baseball." None of the Office of the Commissioner of Baseball, the
National League or any of its member clubs, or the American League or any of its
member clubs, or any of their respective owners, officers, directors, employees
or representatives make any representation or warranty, express or implied, as
to the accuracy or completeness of the information contained in, or assume any
liability for any inaccuracies in or omissions from, this Prospectus.
THE COMPANY
The Company has been organized to serve as the sole general partner of the
Partnership, which owns the 1997 American League Champion Cleveland Indians (the
"Indians" or the "Club") and manages Jacobs Field, the Indians' home ballpark.
Baseball has a long tradition in the City of Cleveland. The first
professional baseball game in Cleveland was played on June 2, 1869, when the
Cleveland Forest Citys played the Cincinnati Red Stockings. In 1901, the Club
became one of the charter members of the American League of Professional
Baseball Clubs (the "American League"). During the ensuing 20 years, the Indians
enjoyed great success, including a victory against the Brooklyn Dodgers in the
1920 World Series. During the 1940s and 1950s, the Indians were one of
baseball's consistently strong teams. The Indians won the American League
pennant twice (1948 and 1954), captured the World Series from the Boston Braves
in 1948, and finished second in the American League six times (1951-1953, 1955,
1956 and 1959). Unfortunately, the next 25 years of the Indians' history were
marked by financial instability, inattention to the Club's minor league system,
criticized player personnel decisions, poor on-field performance and some of the
worst attendance figures in Major League Baseball.
In 1986, Richard E. Jacobs and his brother David acquired control of the
Indians and began to execute a long-term strategy that has returned winning
baseball to Cleveland and has made the Cleveland Indians one of the premier
franchises in Major League Baseball. The Company's strategy is to maintain the
Indians' competitive position and to increase the long-term value of the
franchise. The elements of this strategy include dedication to a strong player
development system, effective player personnel management, attention to quality
and customer service and an integrated approach to marketing and licensing
arrangements. In the past three seasons, the Indians have won three American
League Central Division Championships and two American League Championships.
Under Mr. Jacobs' direction, the Indians were also instrumental in the planning
and development of the downtown sports complex that includes Jacobs Field.
The Company believes that the Club's recent on-field and financial
successes are largely attributable to the collaboration of a management team
that includes experienced and talented baseball and business executives. This
team is led by John Hart, Executive Vice President and General Manager, and
Dennis Lehman, Executive Vice President, Business, and includes a coaching staff
led by Mike Hargrove, Manager. Mr. Hart was named Major League Baseball
Executive of the Year in 1994 and 1995 by The Sporting News, a leading sports
publication, and Mr. Hargrove was named Manager of the Year by The Sporting News
in 1995.
Player development is a critical element of management's efforts to build
and maintain a strong franchise. The Company has established a strong minor
league organization through a consistent, system-wide approach to evaluating and
developing young players. The team's minor league organization was ranked the
best in
3
<PAGE> 5
Major League Baseball in a 1996 poll by The Sporting News. Among its other
player development efforts, the Company sponsors baseball programs in The
Dominican Republic and Venezuela in which coaches affiliated with the Club work
to develop the skills of promising young players in those countries. The Club's
successful minor league organization has provided the Indians with a pool of
talented young players to supplement its major league roster and to permit it to
make opportune trades.
Effective player personnel management is the most visible element of the
Company's baseball strategy. The goal of the Company's player personnel
management efforts is to maintain a competitive team while limiting the
unpredictability in player salaries resulting from salary arbitration and free
agency. Management's confidence in its ability to identify promising young
players has permitted the Club to selectively enter into multi-year contracts
with players early in their careers. The Company also attempts to sign a nucleus
of experienced players to multi-year contracts. Finally, the Club has been
successful in trading for, or signing as free agents, talented players who can
fill roles on the roster made vacant by trades, retirements, injuries and losses
to the free agent market.
By building value for team sponsors and fans, the Company's business
executives leverage the Club's on-field product to enhance revenues. The
Company's control over various facets of its business, including advertising
signage and concessions at Jacobs Field, permits it to capitalize on the
Indians' popularity with sponsors and fans. Sponsors are offered a number of
advertising vehicles to maximize their exposure at Jacobs Field and their
association with the Club. Fans at Jacobs Field are offered a customer-focused
experience in an attractive, comfortable environment featuring a variety of
amenities, concessions and merchandise options and a courteous, well-trained
staff.
The successful execution of the Indians' long-term strategy has resulted in
strong revenues in recent years. The Club has sold out all tickets available for
public sale for each of the 1996, 1997 and 1998 regular seasons prior to Opening
Day. The Indians hold the Major League Baseball record for consecutive regular
season sell-outs, which stands at 211 through the end of the 1997 season. These
strong attendance figures provide the Club with a predictable ticket sale and
premium seating revenue base for the regular season and permit the Company to
realize high levels of merchandise and concession sales at Jacobs Field. The fan
interest evidenced by these attendance figures has also permitted the Club to
enhance revenues from other sources, such as local broadcast and cable
television, radio and advertising. Although the Company's revenues from each of
these sources depend heavily on the Indians' on-field performance, the
predictability of the Club's ticket and premium seating sales in recent years
has allowed it to create a competitive, profitable team within the framework of
a Major League Baseball system that is confronted with escalating player
salaries and limited means for clubs to increase revenue.
Richard E. Jacobs is Chairman of the Board, President and Chief Executive
Officer of the Company. Upon completion of the Offering, the Company will own at
least a 51% general partnership interest in the Partnership, and Mr. Jacobs, as
the sole trustee of two family trusts (the "Jacobs family trusts"), will
beneficially own a 49% limited partnership interest in the Partnership, through
the trusts' ownership of Cleveland Baseball Corporation ("CBC"), the
pre-Offering general partner of the Partnership. In addition, Mr. Jacobs,
through the Jacobs family trusts, will beneficially own 2,281,667 Class B Common
Shares and 133,200 Class A Common Shares following the Offering, as a result of
which he will be able to control all decisions regarding the Company, including
the election of the entire Board of Directors. Following the Offering, each of
the 6,043,334 limited partnership Units in the Partnership held by CBC will be
exchangeable for Class A Common Shares on a one-for-one basis, subject to the
right of the Company to pay cash upon receiving notice of a proposed exchange.
See "Formation Transactions" and "The Partnership--Limited Partner Rights."
The Company is an Ohio corporation incorporated on March 17, 1998. The
Company's principal executive offices are located at 2401 Ontario Street,
Cleveland, Ohio 44115, and its telephone number is (216) 420-4200.
4
<PAGE> 6
THE OFFERING
<TABLE>
<S> <C>
Class A Common Shares offered.............................. 4,000,000 shares
Class A Common Shares to be outstanding after the
Offering(1).............................................. 4,139,376 shares
Class B Common Shares to be outstanding after the
Offering................................................. 2,283,957 shares
Aggregate Class A and Class B Common Shares to be
outstanding after the Offering(1)........................ 6,423,333 shares
Proposed Nasdaq National Market symbol..................... CLEV
Use of proceeds............................................ To acquire the general partnership
interest in the Partnership. See
"Formation Transactions."
</TABLE>
- ---------------
(1) Excludes 6,043,334 Class A Common Shares reserved for issuance upon exchange
of limited partnership Units in the Partnership. See "The
Partnership -- Limited Partner Rights." Also excludes 640,000 Class A Common
Shares reserved for issuance under the Company's Stock Option Plan. See
"Management -- Stock Option Plan."
5
<PAGE> 7
SUMMARY FINANCIAL DATA
The following table sets forth certain historical and pro forma data for
the Partnership and Ballpark Management on a combined basis and should be read
in conjunction with the Combined Financial Statements of the Partnership and
Ballpark Management and the Notes thereto included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED
----------------------------------------------------------------
OCTOBER 31,(1)(2) DECEMBER 31, DECEMBER 31, 1997
----------------- ------------------ -----------------------
1993 1994(3) 1995(3) 1996 ACTUAL PRO FORMA(4)
------- ------- ------- -------- -------- ------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
REVENUES:
Net ticket sales................................... $19,410 $23,182 $32,267 $ 45,658 $ 49,279 $ 49,279
Local radio and television......................... 6,316 5,568 9,667 13,631 17,014 17,014
Concession and catering............................ 2,367 6,969 11,872 14,726 14,095 14,095
Private suite and club seat rental................. -- 3,768 5,635 7,035 8,704 8,704
Advertising and promotion.......................... 1,597 3,998 5,742 6,891 8,754 8,754
Merchandise........................................ 2,548 8,513 15,024 14,683 17,449 17,449
Major Leagues Central Fund......................... 17,585 3,943 6,633 12,369 15,505 15,505
Other.............................................. 3,602 3,579 2,979 3,002 3,365 3,365
Post-season........................................ -- -- 9,888 1,933 13,051 13,051
Benefit (provision) for revenue sharing............ 658 (239) (2,056) (5,731) (7,186) (7,186)
------- ------- ------- -------- -------- --------
Total revenues............................... 54,083 59,281 97,651 114,197 140,030 140,030
------- ------- ------- -------- -------- --------
OPERATING EXPENSES:
Major league team.................................. 21,898 26,389 38,904 53,420 66,125 66,125
Player development................................. 7,931 7,198 8,298 8,735 11,146 11,146
Ballpark operations................................ 5,148 6,259 9,071 10,389 10,965 10,965
Cost of merchandise sold........................... 1,422 5,001 9,224 11,692 12,982 12,982
Administrative and general......................... 5,983 8,702 9,769 9,275 10,292 11,342
Major Leagues Central Fund......................... 3,747 3,559 1,498 4,146 4,938 4,938
Advertising and promotion.......................... 3,205 3,929 3,805 2,960 3,854 3,854
Post-season........................................ -- -- 5,457 1,309 6,252 6,252
Amortization of signing bonuses and player
contracts........................................ 1,833 2,005 3,242 3,212 3,630 3,630
Depreciation and amortization...................... 1,338 1,275 1,361 1,326 1,629 1,629
------- ------- ------- -------- -------- --------
Total operating expenses..................... 52,505 64,317 90,629 106,464 131,813 132,863
------- ------- ------- -------- -------- --------
OPERATING INCOME (LOSS).............................. 1,578 (5,036) 7,022 7,733 8,217 7,167
OTHER INCOME (EXPENSE):
Interest income.................................... 1,260 1,375 1,658 3,855 4,672 2,649
Interest expense................................... (2,027) (1,310) (2,005) (2,045) (2,301) (2,301)
Gain on player transactions........................ 47 85 71 616 2,696 2,696
League expansion proceeds.......................... 3,000 -- -- -- 9,286 9,286
Minority interest.................................. -- -- -- -- -- (9,554)
------- ------- ------- -------- -------- --------
Income (loss) before provision for income taxes...... 3,858 (4,886) 6,746 10,159 22,570 9,943
Provision for income taxes........................... -- -- -- -- -- 3,060
------- ------- ------- -------- -------- --------
Net income (loss).................................... $ 3,858 $(4,886) $6,746 $ 10,159 $ 22,570 $ 6,883
======= ======= ======= ======== ======== ========
Pro forma net income per share....................... $ 1.07
========
BALANCE SHEET DATA (AT PERIOD END):
Total current assets................................. $28,316 $21,719 $60,952 $ 60,228 $ 85,195 $ 71,495
Total current liabilities............................ 32,465 35,792 68,346 62,124 76,891 76,891
Total assets......................................... 47,441 43,032 79,991 87,272 118,152 109,152
Long-term obligations................................ 26,538 25,671 26,182 33,458 43,811 43,811
Total shareholders' equity (deficit)................. (11,562) (18,431) (14,537) (8,310) (2,550) (11,550)
</TABLE>
- ---------------
(1) Includes (a) the assets, liabilities and results of operations of the
Partnership as of October 31, 1993 and 1994 and for the years then ended and
(b) the assets, liabilities and results of operations of Ballpark Management
as of December 31, 1993 and 1994 and for the years then ended. The results
of operations of the Partnership for the two-
6
<PAGE> 8
month period ended December 31, 1994, which are not reflected in the above
combined financial data, were as follows (in thousands):
<TABLE>
<S> <C>
Revenues.................................. $ 578
Expenses.................................. 2,783
-------
Operating loss............................ (2,205)
Interest expense.......................... 271
-------
Net loss.................................. $(2,476)
=======
</TABLE>
(2) The Club did not commence play at Jacobs Field until the 1994 regular
season. As a result, the operations of Ballpark Management for the year
ended December 31, 1993 were insignificant.
(3) A players' strike during 1994 and 1995 resulted in the cancellation of 27
home games and 18 away games of the 1994 regular season, the entire 1994
post-season and nine home games and nine away games of the 1995 regular
season. The Major League Baseball regular season consists of 162 games, of
which 81 are scheduled to be played at home and 81 are scheduled to be
played on the road.
(4) Pro forma income statement data give effect to a March 1998 distribution by
the Partnership and the repayment of related party indebtedness (the
"Distribution"), the transactions described under the caption "Formation
Transactions" and the sale of 4,000,000 Class A Common Shares by the Company
pursuant to the Offering and the application of the estimated net proceeds
therefrom at an assumed initial public offering price of $15.00 per share,
as if such transactions had occurred on January 1, 1997. Pro forma balance
sheet data give effect to such transactions as if they had occurred on
December 31, 1997. See "Formation Transactions," "Use of Proceeds" and "Pro
Forma Financial Data."
7
<PAGE> 9
RISK FACTORS
Prospective investors should consider carefully the following risk factors,
together with the other information contained in this Prospectus, in evaluating
an investment in the Class A Common Shares offered hereby. The following factors
and other information set forth in this Prospectus contain certain forward-
looking statements involving risks and uncertainties. The Company's actual
results may differ materially from the results anticipated in these
forward-looking statements as a result of certain factors set forth in this
section and elsewhere in this Prospectus.
CONTROL BY RICHARD E. JACOBS; VOTING RIGHTS
The Company has two classes of common shares comprised of Class A Common
Shares and Class B Common Shares (collectively, the "Common Shares"). Following
completion of the Formation Transactions and the Offering, Richard E. Jacobs
will control substantially all of the outstanding Class B Common Shares as sole
trustee of the Jacobs family trusts which own such shares of record. Although
Class A Common Shares and Class B Common Shares vote together on all matters
submitted to the shareholders for approval, the Class A Common Shares are
entitled to one vote per share, and the Class B Common Shares are entitled to
10,000 votes per share. Consequently, Mr. Jacobs, as the beneficial holder of
2,281,667 Class B Common Shares, will be able to control the management and
policies of the Company, including its management of the Indians as general
partner of the Partnership, the election of the entire Board of Directors, any
determination with respect to a sale of all or substantially all of the assets
of the Company or the Partnership and the outcome of all other matters submitted
to the shareholders for approval. See "Management," "Certain Transactions" and
"Principal Shareholders."
USE OF PROCEEDS
The Company intends to use the proceeds of the Offering to purchase its
general partnership interest in the Partnership and to engage in the other
transactions described under the caption "Formation Transactions." Substantially
all of the net proceeds from the Offering will be paid to CBC, which is owned by
the Jacobs family trusts. The terms of the Formation Transactions were not
negotiated on an arms'-length basis and no independent appraisals or other
valuations of the assets being transferred in connection with the Formation
Transactions have been obtained.
LIMITED POTENTIAL FOR FURTHER REVENUE AND EARNINGS GROWTH
During the past five years, the Company has realized significant growth in
revenues, operating income and net income. Most of the Company's revenues are
derived from local sources. Gross revenues from national television and radio
contracts and Major League Baseball Properties royalties represented only
approximately 11.5% of the Company's revenues during 1997. Much of the Company's
growth has resulted from increased ticket sales, premium seating rents, food and
beverage concession sales, merchandise sales and local broadcasting revenues
(radio, broadcast television and cable television). Increases in the Company's
revenues have resulted primarily from the Indians' on-field performance and the
increased popularity of the Club among baseball fans in the region. Management
believes that much of the Indians' local revenue potential has already been
realized and that future increases in revenues, operating income and net income,
if any, are likely to be substantially less than those realized over the past
five years.
DISTRIBUTION AND REPAYMENT OF RELATED PARTY INDEBTEDNESS
The Partnership has borrowed an aggregate of $35.5 million under the Major
League Credit Facility. Substantially all of those funds have been loaned by the
Partnership to CBC, the pre-Offering general partner of the Partnership and an
affiliate of Mr. Jacobs. In March 1998, the Partnership distributed $49.2
million to its partners, and CBC repaid its $35.5 million debt to the
Partnership. These transactions have had the effect of allowing CBC to use cash
generated by the Partnership to repay its debt to the Partnership. The Company
will receive no benefit from the repayment of such indebtedness since the
Partnership will remain obligated, subject to the terms and conditions of the
Major League Credit Facility, to repay amounts borrowed
8
<PAGE> 10
thereunder. See "Certain Transactions" and "Management's Discussion and Analysis
of Results of Operations and Financial Condition--Liquidity and Capital
Resources."
DEPENDENCE ON COMPETITIVE SUCCESS OF THE INDIANS
The financial results of the Company and the franchise value of the Indians
are expected to depend in large part on the Indians continuing to achieve
on-field success. The team's recent successes have generated fan enthusiasm,
resulting in sustained ticket, premium seating, concession and merchandise sales
during the regular season and greater shares of local television and radio
audiences. Furthermore, success in the regular season has permitted
participation in post-season playoffs, which has provided the Company with
additional revenue and income. Poor on-field performance by the Indians is
likely to adversely affect revenue and income. There can be no assurance that
the Indians will perform well or qualify for post-season play in 1998 or
thereafter.
DEPENDENCE ON TALENTED PLAYERS
The success of the Indians will depend, in large part, upon their ability
to develop, obtain and retain talented players. The Indians compete with other
MLB baseball teams and teams in other countries for available players. There can
be no assurance that the Indians will be able to retain players upon expiration
of their contracts or identify and obtain new players of adequate talent to
replace players who retire or are injured, traded, released or lost to free
agency. Even if the Indians are able to retain or obtain players who have had
successful amateur or professional careers, there can be no assurance of the
quality of their performance for the Indians.
RISK OF INJURIES; ABSENCE OF INSURANCE
To the extent that financial results of the Company and its franchise value
are dependent on the Indians' competitive success, the likelihood of achieving
such success is substantially reduced by serious or untimely injuries to key
players. After the start of the season a player is entitled to receive his
salary even if the player dies or is unable to play as a result of injury
sustained during the term of his employment. In addition, players signed to
multi-year contracts are guaranteed the payment of their salaries whether or not
they are able to perform. These salaries represent significant financial
commitments for the Indians. The Company is generally insured against having to
pay salaries in the event of a player's death. The Company has obtained
disability insurance policies for substantially all of its players under
multi-year contracts. In the event of injuries sustained resulting in lost
services as defined in the policies, the policies provide for payment to the
Company of a portion of the player's salary for the remaining term of the
contract or until the player can resume playing. The Company's expenditures on
such insurance have risen substantially. The Company may choose not to obtain
(or may not be able to obtain) insurance in the future. In addition, player
disability insurance policies usually exclude from coverage pre-existing
conditions. If an injured player is not insured, the Company will be obligated
to pay all of the injured player's salary. Replacement of an injured player may
result in an increase in salary expense for the Company.
EFFECT OF POST-SEASON PLAY ON REVENUES AND INCOME
The Company's revenue, operating income and cash flows in recent years have
benefited materially from the Indians' appearance and performance in post-season
play. In 1995 and 1997, the Indians' won the American League Championship and
appeared in the World Series, and the operating income generated from
post-season revenues accounted for the majority of the Company's operating
income in those years. The revenues and profitability derived from post-season
play are substantially dependent on the number of post-season games in which the
Indians participate and the number of those games played at Jacobs Field. In the
1995 post-season, the Indians appeared in 15 out of 19 potential post-season
games, and in 1997, the Indians played in 18 out of 19 potential post-season
games. Before giving effect to revenue sharing payments, post-season revenues
contributed approximately $4.4 million and $6.8 million to the Company's
operating income in 1995 and 1997, respectively. In 1996, the Indians were
eliminated from post-season play in the Division Series, and appeared in only
four out of 19 potential post-season games. Post-season revenues contributed
only
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$0.6 million to operating income during 1996. There can be no assurance that the
Indians will appear in post-season play in the future or that post-season
revenues, operating income and cash flows will be significant.
HISTORY OF LOSSES AND UNCERTAINTY OF FUTURE RESULTS
Although the Company has generated net income in the recent past, the
Company has also had periods of significant losses. During the recent periods of
earnings, the Indians have sold out all regular season games prior to the start
of the season and the team has had strong on-field performance. There can be no
assurance that the Company can sustain strong ticket sales and attendance or
that its recent profitability can be sustained on an ongoing basis. See
"Management's Discussion and Analysis of Results of Operations and Financial
Condition" and "Business--Business Operations."
EFFECT OF BASEBALL DECISIONS ON FINANCIAL PERFORMANCE
Management's primary business objective is to increase the long-term value
of the Company. Management believes that maintaining the Indians' on-field
success is essential to the achievement of this objective. Accordingly, efforts
to improve the Company's revenues and income from period to period may be
secondary to actions that management believes will enhance long-term value. In
particular, maintaining the Indians' competitive position may require the
Company to take actions that could significantly increase expenses for a
particular period. These actions may include, among other things, trading for
highly compensated players, signing free agents or current players to new
contracts or engaging in salary arbitration with existing players. Any of these
actions could have a material adverse effect on the Company's financial
performance and could significantly affect the market price of the Class A
Common Shares. Furthermore, there can be no assurance that any actions taken by
management to increase the Company's long-term value will be successful.
The Commissioner and the President of the American League have the power
and authority to take actions that they deem to be in the best interests of
Major League Baseball, which may not necessarily be consistent with maximizing
value for the holders of Class A Common Shares. Certain of these decisions could
have a material adverse effect on the business, results of operations and
financial condition of the Company and on the market price of Class A Common
Shares.
UNCERTAINTIES OF INCREASES IN PLAYERS' SALARIES
Players' salaries in Major League Baseball have increased significantly
over the past several seasons. The Club's aggregate players' salaries have
increased from approximately $17.7 million during the 1993 season to
approximately $58.2 million during the 1997 season. The Company's baseball
executives expect players' salaries to continue to increase. Significant
increases in players' salaries could have a material adverse effect on the
Company's financial condition, results of operations, cash flows and franchise
value if the increases are not offset by adequate increases in revenue.
Moreover, to the extent that higher salaries must be paid in order to retain
talented players, the Company may be subject to the luxury tax imposed by the
Collective Bargaining Agreement. See "--Dependence on Talented Players" and
"Major League Baseball--Collective Bargaining Agreement--Luxury Tax."
LEGAL AND LEGISLATIVE CHALLENGES TO THE MLB ANTI-TRUST EXEMPTION
In 1922, a United States Supreme Court decision effectively exempted
professional baseball from the federal antitrust laws. Although the antitrust
exemption has been affirmed on several occasions by lower courts, such decisions
are based in part on reasoning suggesting that any reversal of professional
baseball's antitrust exemption should be a legislative matter. In addition, one
state court and one federal district court have applied the exemption narrowly.
Pursuant to the Collective Bargaining Agreement, MLB clubs and the Players
Association have agreed to jointly request and cooperate in lobbying the
Congress to pass legislation that will clarify that MLB players are covered
under the antitrust laws (so that they have the same rights under the antitrust
laws as other professional athletes), together with a provision that makes it
clear that the passage of that legislation does not change the application of
the antitrust laws in any other context. The MLB clubs and the Major League
Baseball Players Association (the "Players Association") are working on a
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<PAGE> 12
joint proposal to propose to the Congress. The Company does not believe that
legislation enacted pursuant to the Collective Bargaining Agreement to limit the
antitrust exemption as it applies to labor matters will have a material effect
on the Company. However, any actions by the courts or legislators to limit
further the antitrust exemption could result in significant litigation expense
that would reduce net revenue produced at the league level and, consequently,
reduce payments to the Company and, if successful, could have a material adverse
effect on the Company and Major League Baseball.
UNCERTAINTIES RELATING TO LABOR RELATIONS IN MAJOR LEAGUE BASEBALL
Relations between MLB clubs and their players have been contentious. During
the 1994 season, a players' strike resulted in the cancellation of a substantial
portion of the 1994 season, including the 1994 World Series, and the first few
weeks of the 1995 season and adversely affected the Company's results of
operations. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations." In addition to the players' strike during 1994 and 1995,
professional baseball has suffered five work stoppages ranging from two to 50
days since 1972. MLB clubs and the Players Association entered into a new
collective bargaining agreement (the "Collective Bargaining Agreement") that
became effective as of January 1, 1997 and, with respect to certain provisions,
was retroactive to the 1996 season. The agreement expires on the later of
October 31, 2000 or the day following the last game of the 2000 World Series,
except that the Players Association has the unilateral option to extend the
Collective Bargaining Agreement to October 31, 2001 or the day after the last
game of the 2001 World Series, whichever is later. MLB has also had disputes
with the labor union representing the major league umpires, which have resulted
in strikes and the need to use replacement umpires. There can be no assurance
that Major League Baseball will not experience labor relations difficulties in
the future which could have a material adverse effect on the Indians' franchise
value and the Company's financial condition or results of operations. See "Major
League Baseball--Collective Bargaining Agreement."
MLB RESTRICTIONS ON THE COMPANY AND ITS SHAREHOLDERS
By virtue of the Indians' membership in the American League, the Company
and its personnel are bound by a number of rules, regulations, guidelines,
bulletins, directives, policies and agreements of the Commissioner, the American
League President, the MLB clubs collectively, the American League, MLB
committees, Major League Baseball Enterprises, Inc., Major League Baseball
Properties, Inc., Baseball Television, Inc. and any other entity owned by the
MLB clubs collectively, including, without limitation, the American League
Constitution, the Major League Agreement, the Major League Rules, the Collective
Bargaining Agreement, and national telecast and radio broadcast agreements
(each, as the same may now exist or be amended or adopted in the future, a
"Governing Document"). Any change to the Governing Documents will be binding
upon the Indians and their personnel, regardless of whether the Company agrees
or disagrees with such changes, and it is possible that any such change could
adversely affect the Company and the shareholders.
The Office of the Commissioner of Baseball (the "Commissioner") and the
President of the American League each have the exclusive power to interpret the
Governing Documents of MLB and the American League, respectively. In addition,
the Governing Documents provide that, as a party to the Major League Agreement
and as a member of the American League, the Company is precluded from resorting
to the courts to enforce or maintain rights or claims against any other club,
all disputes must be submitted to either the Commissioner or the President of
the American League for determination and such determination, when rendered, is
final and binding. See "Major League Baseball--MLB Governance."
The Governing Documents also contain provisions which may in certain
circumstances limit, restrict or require the actions of the Company or the
holders of the Class A Common Shares which may adversely affect the value of the
Class A Common Shares. Failure by the Company or a holder of Class A Common
Shares to comply with these restrictions may ultimately result in the
termination of the Company's membership in MLB, a forced sale of a shareholder's
interest in the Company or the repurchase of such interests by the Company. The
Governing Documents require that the Company submit to the Commissioner for his
approval, which may be withheld in his sole discretion, any agreement that might
affect control of the team prior to
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<PAGE> 13
execution of that agreement. Furthermore, the Governing Documents were designed
to give MLB some control over the areas of non-baseball business conducted by
corporate club owners. To that end, the Governing Documents intend that the
Company be a single-purpose entity. If management determines that it is
beneficial to the Company to expand into other businesses, the Governing
Documents require that the expansion plan be reviewed and approved by the
Commissioner before being put into effect. There can be no assurance that MLB or
the American League will not adopt in the future different or additional
restrictions which could adversely affect the shareholders, the market price of
the Class A Common Shares and the franchise value of the Club. See "Major League
Baseball--Restrictions on Operations."
Because the American League is a nonprofit association, the Indians and
other members of the American League are generally jointly and severally liable
for the debts and obligations of the association. Also, the Company is a party
to various agreements entered into by all MLB clubs and will have obligations
under certain of these agreements in the event another club defaults. Any
failure of other clubs to pay their pro rata share of any such debt or
obligation could adversely affect the Company. The success of the American and
National Leagues and their members depends in part on the competitiveness of the
teams and their ability to maintain fiscally sound franchises. Certain
franchises are encountering financial difficulties, and there can be no
assurance that the leagues and their respective franchises will be able to
operate on a fiscally stable and effective basis.
Any of (i) the amendment of an existing, or the adoption of a new,
Governing Document, (ii) any modification to or extension of MLB's revenue
sharing or luxury tax arrangements by the MLB or (iii) future actions of the
Commissioner or the American League President could have a material adverse
effect on the franchise value of the Club or the market price of the Class A
Common Shares.
POSSIBILITY OF INCREASED COMPETITION AS A RESULT OF MLB EXPANSION
MLB has two new expansion teams that commence play in the 1998 season.
Although there are no current plans to do so, MLB may also expand in the future.
Expansion affords MLB the opportunity to enter new markets, but it also
increases the competition for talented players among MLB teams. Generally,
expansion teams are permitted to select in an expansion draft certain
unprotected players from the rosters of the various MLB teams. There can be no
assurance that the Indians will be able to retain all of their key players
during future expansion drafts or that the rules regarding expansion drafts will
not change to the detriment of the Company. In addition, to the extent MLB teams
share equally in the revenue generated from national broadcast contracts, the
sale of MLB licensed merchandise and national corporate sponsorships, the
Company may receive less revenue from these sources as the result of expansion.
UNCERTAINTIES REGARDING RENEWAL OF MEDIA CONTRACTS
The Company has agreements with Fox Sports Ohio and WUAB for local
television broadcasts of the Indians preseason and regular season games which
expire in 1998 and 2001, respectively. The Company has agreements with Jacor
Broadcasting Corporation and other affiliates for the local radio broadcast of
all Indians games. The Jacor contract expires December 31, 1999, and the Company
has the option to renew the contract for an additional four years. There can be
no assurance that the Company will be able to renew the Fox Sports Ohio, WUAB,
Jacor and local affiliate agreements following their expiration on terms as
favorable as those in the current agreements.
The Company receives a pro rata share of the income MLB generates from
national broadcast and cable television contracts which expire between 2000 and
2002. There can be no assurance that MLB will be able to renew these contracts
following their expiration on terms as favorable as those in the current
agreements.
BUSINESS CONCENTRATION
Upon completion of the Offering, the only business of the Company will be
to own and operate the Indians, manage Jacobs Field and conduct related
activities. The Company's failure to (i) maintain a competitive baseball
franchise, (ii) continue to receive adequate revenue from its baseball
operations or
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<PAGE> 14
(iii) operate the ballpark efficiently, could have a material adverse effect on
the Company's financial condition or results of operations which may not be
offset by operations from other businesses.
NEED FOR ADDITIONAL CAPITAL
The Company's operations may require capital infusions on an ongoing basis.
The Company intends to finance its future operations with cash flow from
operations and, if necessary, borrowings. The Company cannot predict whether it
can sustain cash flow levels sufficient to support its operations. Unless such
cash flow levels are sustained, the Company will require additional borrowings
or the sale of debt or equity securities, or some combination thereof, to
provide funding for its operations. The Company's ability to incur additional
indebtedness is limited by applicable provisions of the Governing Documents,
which limit the amount of debt that may be secured by the assets of, or
ownership interest in, a MLB club and require that the parties to any secured
loan that is approved execute an agreement limiting the rights of the lenders
and the club under certain circumstances, including, upon an event of default or
foreclosure. The issuance and sale of additional equity and debt securities
requires MLB's prior written consent. As a condition to MLB's consent to the
sale of such securities, MLB may impose certain conditions or limitations on the
investor or lender, which may increase the cost of such financing to the
Company. If the Company does not generate sufficient cash flow from its
operations, or is unable to borrow or otherwise obtain additional funds to
finance its operations, the Company's financial condition and results of
operations could be adversely affected. See "Management's Discussion and
Analysis of Results of Operations and Financial Condition--Liquidity and Capital
Resources."
SELF INSURANCE
The Company is self-insured for the first $500,000 of each workers'
compensation claim and, accordingly, establishes reserves for future claims and
payments. Effective January 1, 1998, the Company also implemented a medical
insurance program covering substantially all of its full-time employees. The
program provides employees with maximum lifetime benefits of $2.5 million, for
which the Company is self-insured and, accordingly, establishes reserves for
future claims and payments. The Company has only recently established this
program, and has less experience on which to base its judgments concerning
reserve levels than it does with respect to its workers' compensation program.
There can be no assurance that the Company's actual workers' compensation or
medical insurance claims will not exceed the amount of the Company's reserves.
COMPETITION
The Indians compete for entertainment and advertising dollars with other
sports and with other entertainment and recreational activities. During parts of
the baseball season, the Indians experience competition from professional
basketball (the Cleveland Cavaliers and the Cleveland Rockers) and professional
hockey (the Cleveland Lumberjacks). Moreover, the City of Cleveland is currently
in the process of building a new football-only stadium. If certain conditions
are met, the National Football League (the "NFL") is obligated to provide to the
City an NFL franchise by the fall of 1999. This team is expected to use the
established and popular name and heritage of the former Cleveland NFL franchise,
the Cleveland Browns, and will likely have loyal fan support from its inception.
The Indians also compete for attendance, broadcast audiences and advertising
revenue with a wide range of other entertainment and recreational activities
available in Northeast Ohio.
RISKS RELATING TO EXPANSION OF BUSINESS AND ACQUISITIONS
Although the Company is not presently engaged in negotiations to acquire
other businesses, it may consider making future acquisitions of sports-related
or non-sports-related businesses as well as commercial properties, including
properties which may be owned by Mr. Jacobs or his affiliates. The Company may
make such acquisitions with cash or with securities or a combination thereof. If
the Company makes any such acquisitions, various risks may be encountered,
including potential dilution to the Class A Common Shares then outstanding due
to the issuance of additional Common Shares (which may include Class B Common
Shares) in connection with the acquisitions, possible goodwill amortization,
diversion of management's
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<PAGE> 15
attention, possible environmental and other regulatory costs and unanticipated
problems or liabilities, some or all of which could have a material adverse
effect on the Company's financial condition and results of operations. In
addition, transactions, including acquisitions, which would result in the
issuance of additional Common Shares (which may include Class B Common Shares)
may require the consent of MLB. There is no assurance that the Company will be
able to obtain such consent. See "--MLB Restrictions on the Company and its
Shareholders."
DEPENDENCE ON MANAGEMENT
For the foreseeable future, the Company will be materially dependent upon
the services of Mr. Jacobs, Chairman of the Board, President and Chief Executive
Officer; John Hart, Executive Vice President and General Manager; Dennis Lehman,
Executive Vice President, Business; Dan O'Dowd, Vice President, Baseball
Operations and Assistant General Manager; Jeff Overton, Vice President,
Marketing and Communications and Ken Stefanov, Vice President, Finance. The loss
of the services of any of these individuals could have a material adverse effect
on the Company. See "Management--Directors and Executive Officers." The Company
does not carry key man life insurance on any of its officers.
TRAVEL RELATED RISKS
The Club is scheduled to play 81 regular season road games each year.
Indians players and members of the coaching staff generally travel to away games
using charter air carriers. The Club's extensive travel schedule exposes it to
the risk of travel-related accidents. The Company maintains life insurance
coverage on its players in amounts sufficient to cover its contractual
obligations in the event of a player's death. The Company also maintains
additional life insurance in the amount of $2.0 million on each member of the
Club's 25-man roster which provides coverage in the event of a catastrophic
accident involving the team. Despite the existence of this insurance, a
catastrophic accident involving the Club would have a material adverse effect on
the Company's result of operations and financial condition.
NO PRIOR PUBLIC MARKET AND POSSIBLE VOLATILITY OF SHARE PRICE
Prior to the Offering, there has been no public market for the Class A
Common Shares. Although the Company intends to apply for inclusion of the Class
A Common Shares in the Nasdaq National Market, there can be no assurance that an
active trading market will develop or be sustained following the Offering. There
can be no assurance that the price at which the Class A Common Shares will trade
in the public market subsequent to the Offering will not be lower than the
initial public offering price. The initial public offering price for the Class A
Common Shares will be determined by negotiations between the Company and
McDonald & Company Securities, Inc., as the Representative of the Underwriters,
based on factors described in this Prospectus. See "Underwriting" for a
discussion of the factors considered in determining the initial public offering
price. Because there are no other public companies the principal business of
which is Major League Baseball, the Company and the Representative were not able
to use the market prices of other companies in the same industry as a basis for
setting the initial public offering price. The trading price of the Company's
Class A Common Shares could be subject to significant fluctuations in response
to variations in quarterly results, team performance and other factors. In
addition, in recent years the stock markets, in general have from time to time
experienced significant price and volume fluctuations, and the market for the
shares of companies with a small capitalization, in particular, have experienced
extreme price fluctuations which have often been unrelated to their operating
performance.
ABSENCE OF DIVIDENDS
The Company does not intend to pay any cash dividends with respect to the
Class A Common Shares or the Class B Common Shares in the foreseeable future.
See "Dividend Policy."
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DILUTION
Purchasers of the Class A Common Shares offered hereby will suffer
immediate and substantial dilution of $18.52 per share, assuming an initial
public offering price of $15.00 per share. See "Dilution."
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of the Offering, of the 27,000,000 authorized Class A
Common Shares, 4,139,376 Class A Common Shares will be issued and outstanding.
Of these 4,139,376 Class A Common Shares, the 4,000,000 Class A Common Shares
purchased in this Offering by persons who are not "affiliates" of the Company
will be freely tradeable without restriction under the Securities Act of 1933,
as amended (the "Securities Act"). The Company believes that 139,376 Class A
Common Shares and the 2,283,957 Class B Common Shares that are convertible into
Class A Common Shares are considered "restricted securities" under the
Securities Act and holders may not utilize Rule 144 until such shares have been
held for at least one year or have been registered under the Securities Act. For
a description of Rule 144, see "Shares Eligible for Future Sale." Each of the
6,043,334 limited partnership Units of the Partnership held by CBC is
exchangeable, beginning one year after the date hereof, into one Class A Common
Share. The Class A Common Shares issuable upon such exchange will be restricted
securities within the meaning of the Securities Act. However, the Company has
granted to CBC certain "piggy-back" registration rights with respect to the
Class A Common Shares issued in exchange for Partnership Units.
Class A Common Shares issued upon the exercise of stock options will become
eligible for resale under Rule 144 one year subsequent to the date or dates that
the holders of such options exercise the same. Subsequent to the Offering, the
Company intends to file a registration statement on Form S-8 with respect to the
640,000 Class A Common Shares reserved for issuance pursuant to the Company's
Stock Option Plan. See "Management--Stock Option Plan." Upon registration, such
shares upon issuance would be freely tradeable by persons who are not
"affiliates" of the Company. In addition, "affiliates" of the Company could sell
such shares pursuant to Rule 144 under the Securities Act in compliance with the
manner of sale and volume limitations of Rule 144.
No prediction can be made as to the effect, if any, that future sales of
shares, or the availability of shares for future sale, will have on the market
price of the Class A Common Shares prevailing from time to time. Sales of
substantial amounts of Class A Common Shares, or the perception that such sales
could occur, could adversely affect the prevailing market price for the Class A
Common Shares. See "Shares Eligible for Future Sale."
EFFECT OF CERTAIN CHARTER PROVISIONS
The Company's Amended and Restated Articles of Incorporation authorize the
issuance of Preferred Shares without shareholder approval and upon such terms as
the Board of Directors may determine. The rights of the holders of the Class A
Common Shares will be subject to, and may be affected adversely by, the rights
of holders of Preferred Shares that may be issued in the future. The Company has
no present plans to issue any Preferred Shares.
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<PAGE> 17
FORMATION TRANSACTIONS
Prior to the Offering, the Indians' operations have been conducted by the
Partnership, and Jacobs Field has been managed by Ballpark Management. The
Company has entered into a Reorganization Agreement with CBC, the Partnership's
current general partner, MJC Baseball, Inc. ("MJC"), the Partnership's current
limited partner, Ballpark Management, the Partnership, the Jacobs family trusts
and Martin J. Cleary. Under the terms of the Reorganization Agreement, a number
of transactions will take place prior to or concurrently with the Offering.
These transactions will result in the Company becoming the sole general partner
and the owner of at least a 51% partnership interest in the Partnership, and the
combination of the operations currently conducted by the Partnership and
Ballpark Management. This result will be accomplished through the following
transactions (assuming an initial public offering price of $15.00 per share and
no exercise of the Underwriters' over-allotment option):
- Merger of Ballpark Management and Partnership
Contribution. Ballpark Management will be merged into the Company (the
"Ballpark Management Merger"), and the Jacobs family trusts, as the sole
shareholders of Ballpark Management, will receive 2,281,667 Class B Common
Shares in exchange for their ownership interest in Ballpark Management.
After the Ballpark Management Merger, the Company will contribute Ballpark
Management's assets and liabilities to the Partnership for an approximate
19% general partnership interest in the Partnership.
- Merger of MJC. MJC will be merged into the Company (the "MJC
Merger"), and Mr. Cleary, as the sole shareholder of MJC, will receive
2,290 Class B Common Shares, 6,043 Class A Common Shares and $55,800 in
cash. As a result of the MJC Merger, the Company will succeed to MJC's
interest in the Partnership.
- Transfer of Partnership Interests and Amendment of Partnership
Agreement. CBC will transfer to the Company 3,996,000 of its Partnership
Units for $55,744,200 in cash. The Partnership Agreement will be amended
and restated to provide, among other things, that the Company will be the
Partnership's sole general partner and CBC will be its sole limited
partner.
- Purchase of Common Shares by Jacobs family trusts and Mr.
Cleary. The Jacobs family trusts and Mr. Cleary will acquire an aggregate
of 133,233 Class A Common Shares at $15.00 per share (in addition to the
100 Common Shares purchased by the Jacobs family trusts in connection with
the organization of the Company).
If the Underwriters' over-allotment is exercised in whole or in part, the
Company will purchase from CBC in the Formation Transactions a number of Units
in the Partnership equal to the number of Class A Common Shares sold pursuant to
the over-allotment option for a price per Unit equal to the initial public
offering per share, less the underwriting discount. The Reorganization
Agreement, which is filed as an exhibit to the Registration Statement of which
this Prospectus is a part, provides that the transactions described above are
conditioned upon and will close prior to or concurrently with the completion of
the Offering.
CBC and Ballpark Management are controlled by Richard E. Jacobs, who as
trustee of the Jacobs family trusts beneficially owns all of the outstanding
capital stock of the Company prior to the Offering. MJC is owned by Martin J.
Cleary, a director of the Company. Accordingly, the terms of the transactions
contemplated by the Reorganization Agreement, including the amount of cash to be
issued in exchange for the partnership interests to be transferred to the
Company, the number of Common Shares to be issued in the Ballpark Management
Merger and the amount of cash and number of Common Shares to be issued in the
MJC Merger, were not negotiated on an arms'-length basis. In effect, the value
of the business and assets to be transferred will be based upon the overall
value of the Company implied by the initial public offering price per share. In
considering the value of the assets and business to be transferred, the parties
considered, among other things, the results of operations, financial condition
and cash flows of the Partnership and Ballpark Management, an assessment of the
management of the Partnership and Ballpark Management and the present state of
the Partnership and Ballpark Management's development, recent sales prices of
other Major League Baseball franchises and the current state of the economy in
the United States and the Cleveland, Ohio, metropolitan area. In determining the
number of Class B Common Shares issuable to the Jacobs family trusts
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and Mr. Cleary, the Company also considered the provisions of MLB's Ownership
Guidelines, which require that Mr. Jacobs (or a group of no more than 20
individuals) maintain at least a 10% economic interest in the Company and at
least 90% voting control of the Company at all times. Although the Company
believes that the terms of the transactions contemplated by the Reorganization
are fair to and in the best interests of the Company, no independent appraisals
or other valuations of such partnership interests, assets or businesses have
been or will be obtained.
USE OF PROCEEDS
The net proceeds to the Company from the sale of the 4,000,000 Class A
Common Shares offered hereby are expected to be approximately $53.8 million
($62.2 million if the Underwriters' over-allotment option is exercised in full),
based on an assumed initial public offering price of $15.00 per share. In
addition, the Company will receive proceeds of $2.0 million from the sale of
Class A Common Shares to the Jacobs family trusts and Martin J. Cleary at $15
per share. Assuming no exercise of the Underwriters' over-allotment option, the
Company will acquire partnership interests in the Partnership from CBC and MJC
for $55.8 million in cash and will complete the rest of the Formation
Transactions as a result of which the Company will have an aggregate 51% general
partnership interest in the Partnership. If the Underwriters' over-allotment
option is exercised in full, the Company will use the net proceeds to purchase
additional partnership interests from CBC resulting in the Company having a 56%
general partnership interest in the Partnership.
DIVIDEND POLICY
The Company does not anticipate paying any cash dividends on its Common
Shares in the foreseeable future, but intends instead to retain any future
earnings for reinvestment in its business. Any future determination to pay cash
dividends will be at the sole discretion of the Company's Board of Directors and
will be dependent upon, among other things, future earnings, capital
requirements, contractual restrictions, the general financial condition of the
Company, general business conditions and such other factors as the Company's
Board of Directors deems relevant.
DILUTION
The net tangible book value (deficit) of the Company at December 31, 1997
was $(13.6) million or $(2.12) per share. After giving effect to the
Distribution, the Formation Transactions and the Offering and after deduction of
estimated offering expenses and the underwriting discount, the pro forma net
tangible book value (deficit) as of December 31, 1997 would have been
approximately $(22.6) million or $(3.52) per share. This represents an immediate
dilution of net tangible book value to new investors purchasing shares in the
Offering of $18.52 per share. The following table illustrates the per share
dilution:
<TABLE>
<S> <C> <C>
Assumed initial public offering price....................... $15.00
Net tangible book value (deficit) per share before the
Offering(1)............................................ $(2.12)
Decrease in net tangible book value per share attributable
to the Distribution.................................... (1.40)
------
Pro forma net tangible book value (deficit) per share after
the Offering.............................................. (3.52)
======
Dilution per share to new public investors.................. $18.52
</TABLE>
- ---------------
(1) Net tangible book value per share before the Offering is determined by
dividing net tangible book value (deficit) of the Company (tangible assets
of $107 million less liabilities) by the number of Class A and Class B
Common Shares outstanding after the Formation Transactions and the Offering.
17
<PAGE> 19
CAPITALIZATION
The following table sets forth the actual combined capitalization of the
Partnership and Ballpark Management at December 31, 1997 and on a pro forma
basis to give effect to the Distribution, the Formation Transactions and the
Offering, as if such transactions had occurred at December 31, 1997. This table
should be read in conjunction with the historical combined and pro forma
financial information of the Partnership and Ballpark Management included
elsewhere in this Prospectus.
<TABLE>
<CAPTION>
DECEMBER 31, 1997
-----------------------
HISTORICAL PRO FORMA
---------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Current portion of long-term debt........................... $ 4,750 $ 4,750
======= ========
Long-term debt, excluding current maturities................ $30,750 $ 30,750
Shareholders' equity:
Preferred Shares, without par value; 1,000,000 shares
authorized; no shares issued and outstanding.......... -- --
Class A Common Shares, without par value, 27,000,000
shares authorized;
no shares issued and outstanding, actual; and
4,139,376 shares issued
and outstanding, pro forma(1)........................ -- 55,800(2)
Class B Common Shares, without par value, 3,000,000
shares authorized;
no shares issued or outstanding, actual; and
2,283,957 shares issued and
outstanding, pro forma............................... -- 4,398(3)
Additional paid-in capital.................................. -- 4,700(4)
Shareholders' deficit....................................... -- (76,448)(5)
Accumulated deficit......................................... (2,550) --
------- --------
Total accumulated deficit/shareholders' deficit............. (2,550) (11,550)
------- --------
Total capitalization........................................ $28,200 $ 19,200
======= ========
</TABLE>
- ---------------
(1) Excludes 6,043,334 Class A Common Shares reserved for issuance upon the
exchange of limited partnership Units in the Partnership. See "The
Partnership -- Limited Partner Rights." Also excludes 640,000 Class A Common
Shares reserved for issuance under the Company's Stock Option Plan. See
"Management -- Stock Option Plan."
(2) Represents the issuance of (i) 4,000,000 Class A Common Shares in the
Offering at an assumed initial public offering price of $15 per share for
total consideration of $60,000 less underwriting discounts and expenses of
$6,200, and (ii) 133,333 shares to the Jacobs family trusts and Mr. Cleary
at $15.00 per share. See "Formation Transactions."
(3) Represents the Ballpark Management Merger. See "Formation Transactions."
(4) Represents deferred tax assets established in conjunction with, and as a
result of, the Formation Transactions and the Offering.
(5) Represents the reclassification of accumulated deficit after giving effect
to the Distribution and the application of the net proceeds from the
Offering. See "Use of Proceeds." Includes the entire deficit without
allocation to minority interest.
18
<PAGE> 20
SELECTED FINANCIAL DATA
The following table sets forth historical and pro forma financial data for
the Company as of and for each of the years ended October 31, 1993 and 1994 and
December 31, 1995, 1996 and 1997 which should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," the Combined Financial Statements of the Partnership and Ballpark
Management and related Notes thereto, and other financial information included
elsewhere herein. The financial data as of December 31, 1996 and 1997 and for
the years ended December 31, 1995, 1996 and 1997 are derived from the audited
combined financial statements of the Partnership and Ballpark Management. The
data as of and for the years ended October 31, 1993 and 1994 are derived from
unaudited combined financial statements of the Partnership and Ballpark
Management, which in the opinion of management include all adjustments
(consisting only of normal recurring accruals) necessary to present fairly the
information set forth therein. Pro forma income statement data and pro forma
balance sheet data are presented as if the Distribution, the Formation
Transactions and the Offering had occurred as of January 1 and December 31,
1997, respectively. The pro forma information is not necessarily indicative of
the Company's financial position or results of operations that would actually
have been reported if these transactions had, in fact, occurred on such date or
at the beginning of the periods indicated, or to project the Company's financial
position or results of operations at any future date or for any future period.
<TABLE>
<CAPTION>
YEAR ENDED
--------------------------------------------------------------------------
OCTOBER 31, (1)(2) DECEMBER 31, DECEMBER 31, 1997
--------------------- --------------------- --------------------------
1993 1994(3) 1995(3) 1996 ACTUAL PRO FORMA(4)
--------- --------- --------- --------- --------- --------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
REVENUES:
Net ticket sales.............................. $19,410 $23,182 $32,267 $ 45,658 $ 49,279 $ 49,279
Local radio and television.................... 6,316 5,568 9,667 13,631 17,014 17,014
Concession and catering....................... 2,367 6,969 11,872 14,726 14,095 14,095
Private suite and club seat rental............ -- 3,768 5,635 7,035 8,704 8,704
Advertising and promotion..................... 1,597 3,998 5,742 6,891 8,754 8,754
Merchandise................................... 2,548 8,513 15,024 14,683 17,449 17,449
Major Leagues Central Fund.................... 17,585 3,943 6,633 12,369 15,505 15,505
Other......................................... 3,602 3,579 2,979 3,002 3,365 3,365
Post-season................................... -- -- 9,888 1,933 13,051 13,051
Benefit (provision) for revenue sharing....... 658 (239) (2,056) (5,731) (7,186) (7,186)
------- ------- ------- -------- -------- --------
Total revenues.............................. 54,083 59,281 97,651 114,197 140,030 140,030
------- ------- ------- -------- -------- --------
OPERATING EXPENSES:
Major league team............................. 21,898 26,389 38,904 53,420 66,125 66,125
Player development............................ 7,931 7,198 8,298 8,735 11,146 11,146
Ballpark operations........................... 5,148 6,259 9,071 10,389 10,965 10,965
Cost of merchandise sold...................... 1,422 5,001 9,224 11,692 12,982 12,982
Administrative and general.................... 5,983 8,702 9,769 9,275 10,292 11,342
Major Leagues Central Fund.................... 3,747 3,559 1,498 4,146 4,938 4,938
Advertising and promotion..................... 3,205 3,929 3,805 2,960 3,854 3,854
Post-season................................... -- -- 5,457 1,309 6,252 6,252
Amortization of signing bonuses and player
contracts................................... 1,833 2,005 3,242 3,212 3,630 3,630
Depreciation and amortization................. 1,338 1,275 1,361 1,326 1,629 1,629
------- ------- ------- -------- -------- --------
Total operating expenses.................... 52,505 64,317 90,629 106,464 131,813 132,863
------- ------- ------- -------- -------- --------
OPERATING INCOME (LOSS)......................... 1,578 (5,036) 7,022 7,733 8,217 7,167
OTHER INCOME (EXPENSE):
Interest income............................... 1,260 1,375 1,658 3,855 4,672 2,649
Interest expense.............................. (2,027) (1,310) (2,005) (2,045) (2,301) (2,301)
Gain on player transactions................... 47 85 71 616 2,696 2,696
League expansion proceeds..................... 3,000 -- -- -- 9,286 9,286
Minority interest............................. -- -- -- -- -- (9,554)
------- ------- ------- -------- -------- --------
Income (loss) before provision for income
taxes....................................... 3,858 (4,886) 6,746 10,159 22,570 9,943
Provision for income taxes.................... --...... -- -- -- -- 3,060
------- ------- ------- -------- -------- --------
Net income (loss)............................... $ 3,858 $(4,886) $ 6,746 $ 10,159 $ 22,570 $ 6,883
======= ======= ======= ======== ======== ========
Pro forma net income per share.................. $ 1.07
========
</TABLE>
19
<PAGE> 21
<TABLE>
<CAPTION>
OCTOBER 31, (1)(2) DECEMBER 31, DECEMBER 31, 1997
--------------------- --------------------- --------------------------
1993 1994(3) 1995(3) 1996 ACTUAL PRO FORMA(4)
--------- --------- --------- --------- --------- --------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA (AT PERIOD END):
Total current assets............................ $28,316 $21,719 $60,952 $ 60,228 $ 85,195 $ 71,495
Total current liabilities....................... 32,465 35,792 68,346 62,124 76,891 76,891
Total assets.................................... 47,441 43,032 79,991 87,272 118,152 109,152
Long-term obligations........................... 26,538 25,671 26,182 33,458 43,811 43,811
Total shareholders' equity (deficit)............ (11,562) (18,431) (14,537) (8,310) (2,550) (11,550)
</TABLE>
- ---------------
(1) Includes (a) the assets, liabilities and results of operations of the
Partnership as of October 31, 1993 and 1994 and for the years then ended and
(b) the assets, liabilities and results of operations of Ballpark Management
as of December 31, 1993 and 1994 and for the years then ended. The results
of operations of the Partnership for the two month period ended December 31,
1994 which are not reflected in the above combined financial data were as
follows (in thousands):
<TABLE>
<S> <C>
Revenues....................... $ 578
Expenses....................... 2,783
-------
Operating loss................. (2,205)
Interest expense............... 271
-------
Net loss....................... $(2,476)
=======
</TABLE>
(2) The Club did not commence play at Jacobs Field until the 1994 regular
season. As a result, the operations of Ballpark Management for the year
ended December 31, 1993 were insignificant.
(3) A players' strike during 1994 and 1995 resulted in the cancellation of 27
home games and 18 away games of the 1994 regular season, the entire 1994
post-season and nine home games and nine away games of the 1995 regular
season. A full Major League Baseball regular season consists of 162 games,
of which 81 are scheduled to be played at home and 81 are scheduled to be
played on the road.
(4) See "Pro Forma Financial Data."
20
<PAGE> 22
PRO FORMA FINANCIAL DATA
The following sets forth the Company's Unaudited Pro Forma Condensed
Consolidated Balance Sheet and Unaudited Pro Forma Condensed Consolidated
Statement of Income as of and for the year ended December 31, 1997. The
Unaudited Pro Forma Condensed Consolidated Balance Sheet gives effect to the
Distribution, the Formation Transactions, including the consolidation by the
Company, at cost, of its general partnership interest in the Partnership, and
the Offering as if such transactions had occurred as of December 31, 1997. The
Unaudited Pro Forma Condensed Consolidated Statement of Income gives effect to
such transactions as if they had occurred on January 1, 1997. In Management's
opinion, all adjustments necessary to reflect the effects of the transactions
described above have been made. The Unaudited Pro Forma Condensed Consolidated
Balance Sheet and Unaudited Pro Forma Condensed Consolidated Statement of Income
are not necessarily indicative of what the Company's actual financial position
and results of operations as of and for the year ended December 31, 1997 would
have been, nor do they purport to represent the results of operations for any
future periods or the future financial position of the Company. The pro forma
financial information set forth below should be read in conjunction with the
Combined Financial Statements of the Partnership and Ballpark Management and the
Notes thereto and the Balance Sheet of the Company and the Note thereto included
elsewhere herein.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
THE PARTNERSHIP
AND BALLPARK
THE MANAGEMENT
COMPANY(a) COMBINED ADJUSTMENTS PRO FORMA
----------- --------------- ----------- ---------
(IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
ASSETS
CASH AND INVESTMENTS.............................. $ 61,641 $(13,700)(b) $ 47,941
OTHER CURRENT ASSETS.............................. 23,554 23,554
FIXED ASSETS, NET................................. 4,928 4,928
PREPAID SIGNING BONUSES AND PLAYER CONTRACTS...... 10,743 10,743
INTANGIBLE ASSETS................................. 11,048 11,048
OTHER ASSETS...................................... 6,238 4,700(c) 10,938
-------- --------- -------- --------
TOTAL......................................... $ 118,152 $ (9,000) $109,152
======== ========= ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
DEFERRED REVENUE.................................. 41,375 41,375
CURRENT LIABILITIES............................... 35,516 35,516
LONG-TERM LIABILITIES............................. 43,811 43,811
SHAREHOLDERS' EQUITY (DEFICIT)
Class A Common Shares........................... $ 2 55,798(d) 55,800
Class B Common Shares........................... 4,398(e) 4,398
Additional paid-in capital...................... 4,700(c) 4,700
Shareholders' deficit........................... (76,448)(f) (76,448)
Accumulated equity (deficit).................... 32,950 (32,950)(g)
Loan to Cleveland Baseball Corporation.......... (35,500) 35,500(h)
Subscriptions receivable........................ (2) 2(i)
-------- --------- -------- --------
Total shareholders' equity (deficit).......... -- (2,550) (9,000) (11,550)
-------- --------- -------- --------
TOTAL......................................... $ -- $ 118,152 $ (9,000) $109,152
======== ========= ======== ========
</TABLE>
21
<PAGE> 23
- ---------------
(a) The Company was incorporated on March 17, 1998 and the balance sheet data
set forth above is as of March 31, 1998.
(b) Reflects the distribution of $49,200 by the Partnership to CBC and MJC and
the repayment of $35,500 of CBC's outstanding indebtedness to the
Partnership on March 31, 1998.
(c) Reflects $22,400 of deferred tax assets resulting from the Formation
Transactions and the Offering offset by a $17,700 valuation allowance.
(d) Reflects the issuance of (i) 4,000,000 Class A Common Shares at an assumed
initial public offering price per share of $15.00 for a total consideration
of $60,000 less underwriting discounts and expenses of $6,200 and (ii) the
issuance of 133,233 Class A Common Shares to the Jacobs family trusts and
Mr. Cleary at $15,00 per share.
(e) Reflects issuance of 2,281,667 Class B Common Shares in the Ballpark
Management Merger.
(f) Reflects (i) the distribution of $49,200 by the Partnership to CBC and MJC
on March 31, 1998 and (ii) the application of the estimated net proceeds of
the Offering of $55,800 to purchase partnership interests from CBC and MJC.
Such amounts are offset by a reclassification of the balance of accumulated
equity (deficit) of the Partnership and Ballpark Management to shareholders'
deficit and Class B Common Shares, respectively. As a result of the
Formation Transactions, CBC's ownership interest in the Partnership will
consist solely of limited partnership interests. As a limited partner, CBC
will not be obligated to fund any Partnership deficits. Accordingly, no
provision has been made for the establishment of a minority interest on the
pro forma balance sheet.
(g) Reflects the reclassification of accumulated equity (deficit) upon
completion of the Offering.
(h) Reflects the repayment of CBC's outstanding indebtedness to the Partnership.
(i) Payment of subscription receivable.
22
<PAGE> 24
UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
THE PARTNERSHIP
AND BALLPARK
MANAGEMENT
COMBINED ADJUSTMENTS PRO FORMA
--------------- ----------- ---------
(IN THOUSANDS EXCEPT SHARE AND
PER SHARE AMOUNTS)
<S> <C> <C> <C>
REVENUES:
Net ticket sales.................................... $ 49,279 $ 49,279
Local radio and television.......................... 17,014 17,014
Concession and catering............................. 14,095 14,095
Private suite and club seat rental.................. 8,704 8,704
Advertising and promotion........................... 8,754 8,754
Merchandise......................................... 17,449 17,449
Major Leagues Central Fund.......................... 15,505 15,505
Other............................................... 3,365 3,365
Post-season......................................... 13,051 13,051
Provision for revenue sharing....................... (7,186) (7,186)
-------- -------- --------
Total revenues................................... 140,030 140,030
-------- -------- --------
OPERATING EXPENSES:
Major league team................................... 66,125 66,125
Player development.................................. 11,146 11,146
Ballpark operations................................. 10,965 10,965
Cost of merchandise sold............................ 12,982 12,982
Administrative and general.......................... 10,292 $ 1,050(a) 11,342
Major Leagues Central Fund.......................... 4,938 4,938
Advertising and promotion........................... 3,854 3,854
Post-season......................................... 6,252 6,252
Amortization of signing bonuses and player
contracts........................................ 3,630 3,630
Depreciation and amortization....................... 1,629 1,629
-------- -------- --------
Total operating expenses......................... 131,813 1,050 132,863
-------- -------- --------
OPERATING INCOME...................................... 8,217 (1,050) 7,167
OTHER INCOME (EXPENSE):
Interest income..................................... 4,672 (2,023)(b) 2,649
Interest expense.................................... (2,301) (2,301)
Gain on player transactions......................... 2,696 2,696
League expansion proceeds........................... 9,286 9,286
Minority interest................................... (9,554)(c) (9,554)
-------- -------- --------
INCOME BEFORE PROVISION
FOR INCOME TAXES.................................... 22,570 (12,627) 9,943
-------- -------- --------
PROVISION FOR INCOME TAXES............................ 3,060(d) 3,060
-------- -------- --------
NET INCOME............................................ $ 22,570 $(15,687) $ 6,883
======== ======== ========
PRO FORMA NET INCOME PER SHARE........................ $ 1.07(e)
========
</TABLE>
- ---------------
(a) Represents estimated additional costs associated with operating as a public
company.
(b) Represents a reduction in interest income as a result of CBC's repayment of
its $35,500 debt to the Partnership which occurred on March 31, 1998.
(c) Represents the 49% minority interest attributable to CBC's limited
partnership interest in the Partnership.
(d) Reflects income tax effects, at the Company's 31% effective tax rate, of the
Partnership's 1997 income after pro forma adjustments described in notes
(a), (b) and (c) above.
(e) Pro forma net income per share determined assuming 6,423,333 shares
outstanding.
23
<PAGE> 25
MANAGEMENT DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
The Company derives substantially all of its revenue from (i) the sale of
tickets to home games, (ii) contracts with local broadcast organizations, (iii)
food and beverage concession sales, (iv) premium seating rents, (v) advertising
and promotional sales, (vi) merchandise sales and royalties, (vii) its
participation in the Major Leagues Central Fund and (viii) parking and ancillary
baseball related revenues. If the Indians qualify for post-season play,
incremental revenues will be earned from similar sources.
The Company's operations are seasonal, commencing with the Major League
Baseball spring training camp that opens in mid-February and ending in late
September or early October. If the Indians qualify for post-season playoffs, the
team can play until the end of October, the duration of participation contingent
on continued winning at each level of post-season play (the Division, League
Championship and World Series.)
The Company receives a substantial portion of its receipts from the advance
sale of regular season tickets during the months of December and January, prior
to the commencement of the regular Major League Baseball season in late March or
early April. Season tickets and public single game tickets are sold during this
time period. Jacobs Field paid attendance during the regular season approximates
3.4 million fans, of which 2.1 million are represented by season tickets.
The Major League Baseball regular season schedule consists of 162 games, of
which 81 are scheduled to be played at home and 81 are scheduled to be played on
the road. On August 12, 1994 the Players Association began a strike that did not
end until April 1, 1995. The strike resulted in the cancellation of 27 home
games and 18 away games during the 1994 regular season and the entire 1994
post-season. The 1995 baseball season was also shortened by nine home games and
nine away games as a result of the strike. The results of operations for 1994
and 1995 reflect the reduced number of games played.
During the 1995, 1996 and 1997 baseball seasons, the Indians participated
in the post-season playoffs. In 1995 and 1997, the Indians played a total of 15
games and 18 games, respectively, in the post-season playoffs, advancing to the
World Series in both years. In 1996, the Indians played four post-season games,
losing in the first round (out of a possible three rounds.) The Indians derive
additional revenues and expenses from participation in post-season play that
have been presented separately in the 1995, 1996 and 1997 financial results.
RESULTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996
Revenue
Revenue from net ticket sales increased 8%, or $3.6 million. Net ticket
sales revenue is comprised of gross ticket revenues from regular season games,
less City of Cleveland admissions tax and an American League assessment, plus
net revenues derived from spring training and exhibition games. Gross ticket
revenues from regular season ticket sales increased 10%, or $4.8 million. This
increase was primarily due to a 7% increase in the average ticket price coupled
with a 3% increase in paid attendance. Paid attendance in 1997 increased by
86,584 fans due to one less rainout in 1997 and additional seating capacity
added to Jacobs Field prior to the 1997 regular season. The gross ticket revenue
increase was offset in part by increased City of Cleveland admission taxes of
$1.0 million due to a rate increase which affected ticket sales after January 1,
1996.
Local radio and television revenue increased 25%, or $3.4 million. Radio
advertising sales increased $1.2 million as a result of increases in advertising
rates coupled with a significant increase in volume. Additionally, a three-year
contract with the flagship radio station entered into in 1997 includes an annual
base rights fee of $0.8 million that was not included in the prior contract.
Local broadcast and cable television revenue increased $1.8 million due to
higher incentive and advertising revenue resulting from increased television
ratings. Offsetting these increases was a $0.4 million decrease in video
royalties in 1997.
24
<PAGE> 26
Concession and catering income decreased 4%, or $0.6 million. This decrease
was primarily attributable to decreased consumer spending as a result of early
season cold weather and increased no-shows throughout the season.
Private suite and club seat rentals increased 24%, or $1.7 million. This
increase was primarily attributable to increases in rental revenues associated
with the renewal of 37 suites and 1,303 club seats between the 1996 and the 1997
seasons at an average price increase of 24% and 15%, respectively, and rental
income attributable to additional suite rentals leased on a per-game basis.
Advertising and promotion revenue rose 27%, or $1.9 million. The increase
was primarily due to a $1.2 million increase in print advertising and
promotional revenue and a $0.6 million increase in ballpark advertising signage.
Volume and rate increases contributed to the increase in both categories of
advertising and promotion revenue. Internet advertising sales, new for 1997,
were $0.1 million.
Merchandise sales increased 19%, or $2.8 million. The increase was
primarily attributable to the Club's success in the 1997 post-season.
Major Leagues Central Fund revenues increased 25%, or $3.1 million,
primarily as a result of negotiated contractual increases in national
broadcasting rights fees. Major Leagues Central Fund revenues are comprised
primarily of the Company's share of national television and radio broadcasting
fees.
Post-season revenues increased $11.1 million primarily due to the Indians'
appearance in 18 post-season games in 1997 compared to four in 1996. The
increase in post-season revenues was comprised of a $6.2 million increase in
ticket revenues, a $2.2 million increase in merchandise revenues, a $1.7 million
increase in concession revenues and a $1.0 million increase in other revenues.
Provision for revenue sharing increased 25%, or $1.5 million, primarily due
to the increase in net local revenue, as defined in the Collective Bargaining
Agreement. The increase resulted from the Company's significantly higher
post-season revenues, as well as increases in other revenue categories.
Expenses
Major league team operating costs, which consist primarily of players'
salaries, increased 24%, or $12.7 million. Player salaries were $9.7 million
higher primarily due to the signing of one player for $7.0 million as well as
existing player contractual increases and normal player roster changes. Team
operating costs in 1997 included for the first time a "payroll luxury tax" of
$2.1 million levied on the team under the terms of the Collective Bargaining
Agreement. Travel costs related to the 1997 regular season increased 19%, or
$0.3 million, due to general hotel and airfare increases, and three additional
road trips in 1997. Other team expenses, relating to spring training, equipment
and medical expenses, increased $0.6 million.
Player development costs increased 28%, or $2.4 million, primarily due to a
$1.1 million increase in worker's compensation costs, specifically related to
increased medical costs and claim volume. Scouting costs increased $0.5 million
due to increased payroll and travel costs associated with the hiring of
additional scouts. Player development costs associated with the Company's
various minor league affiliates, such as payroll, travel, equipment and
specialized development programs, increased $0.8 million.
Ballpark operating expenses increased 6%, or $0.6 million, primarily due to
a $0.4 million increase in credit card fees on ticket sales and increased
ballpark rent of $0.2 million.
Cost of merchandise sales increased 11%, or $1.3 million, in part due to
increased sales volume and fixed expenses. Although sales increased 19%, other
fixed expenses associated with the merchandising operation, such as labor, rent
and supplies increased by 14%, or $0.5 million, to meet the demand experienced
with the team's success in the 1997 post-season.
Administrative and general expenses increased 11%, or $1.0 million,
primarily due to front office salary increases and executive bonuses
attributable to performance of $0.8 million. Payroll taxes increased $0.2
million due to higher payroll levels in 1997.
25
<PAGE> 27
Major Leagues Central Fund expenses allocated to the Company increased 19%,
or $0.8 million, primarily due to increased expenses associated with the
administration of the Office of the Commissioner and revenue sharing expenses
provided for in the Collective Bargaining Agreement.
Advertising and promotion expense increased 30%, or $0.9 million, resulting
from costs associated with a significant advertising campaign focused on
increasing merchandise sales.
Post-season expenses increased $4.9 million, primarily due to 14 more
post-season games played in 1997 than in 1996. This increase was comprised of
$1.4 million in ballpark operating costs, $1.3 million in general and
administrative costs, $1.2 million in merchandising costs, $0.8 million in team
costs and $0.2 million in advertising and promotion costs.
Amortization of signing bonuses and player contracts increased 13%, or $0.4
million, primarily due to the amortization of the cost associated with the
acquisition of one player in December 1996.
Depreciation and amortization increased 23%, or $0.3 million, primarily due
to a full year of depreciation incurred on capital expenditures associated with
retail expansion placed into service during 1996.
Interest income increased 21%, or $0.8 million, due to increases in the
loan to CBC of $12.2 million, funds from advance ticket sales and expansion
proceeds. The Company's loan to CBC generated interest income of $2.0 million in
1997. Repayment of CBC's indebtedness to the Company will result in the
elimination of this interest income in future periods.
Interest expense increased 13%, or $0.3 million, primarily attributable to
increases in the outstanding balance of the Major League Credit Facility.
Gain on player transactions increased $2.1 million, primarily due to a
December 1997 trade of one player, which included a provision for the Company to
receive $3.0 million in cash on or before September 1, 1998.
League expansion proceeds recognized in 1997 of $9.3 million represent the
Company's share of fees paid by two expansion groups to obtain expansion
franchises in Major League Baseball that begin play in 1998. The Company had
three of its players selected by the expansion franchises in an expansion draft
conducted in November 1997. The unamortized cost of the players drafted was
insignificant.
YEAR ENDED DECEMBER 31, 1996 COMPARED TO THE YEAR ENDED DECEMBER 31, 1995.
Revenue
Net ticket sales revenue increased 42%, or $13.4 million. Gross ticket
revenues increased $13.9 million, or 40%, primarily due to a 20% increase in the
average ticket price coupled with a 17% increase in paid attendance. Paid
attendance in 1996 increased by 475,421 fans due to eight fewer home games
played in 1995 as a result of the players' strike. The gross ticket revenue
increase was offset in part by increased City of Cleveland admissions taxes of
$1.0 million and increased American League assessment of $0.5 million. Net
revenues from spring training operations increased $1.0 million primarily due to
the affect of the players' strike on 1995 spring training.
Local radio and television revenue increased 41%, or $4.0 million,
primarily due to increased radio advertising sales during the regular season of
$1.7 million, local television contractual rights and incentive fees of $1.7
million due to a new three-year contract entered into in 1996 with the local
television rightsholder and $0.6 million of television advertising revenue.
These increases were the result of the success of the team in 1995, including
its first World Series appearance in 41 years. The 1995 radio and television
advertising sales were adversely affected by the players' strike and the
cancellation of the 1994 post-season.
Concession and catering income increased 24%, or $2.9 million, primarily
due to attendance increases of 17%, directly related to eight more home games
played in 1996 and an increase in average spending per attendee.
Private suite and club seat rentals increased 25%, or $1.4 million,
primarily due to rent credits of $0.8 million issued to private suite and club
seat holders in 1995 for the cancellation of nine home games
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<PAGE> 28
because of the players' strike. Rental revenue attributable to private party
suites increased $0.4 million and revenue associated with private restaurant
memberships at the Terrace Club increased $0.2 million, primarily due to a rate
increase in the annual membership fee in 1996.
Advertising and promotion revenue increased 20%, or $1.1 million, primarily
due to a ballpark advertising signage revenue increase of $0.8 million and a
print and promotion revenue increase of $0.3 million. These increases were
influenced by the team's success in 1995, offset by the negative impact on the
1995 selling season of the 1994 players' strike and the cancellation of the 1994
post-season.
Merchandise sales decreased by 2%, or $0.3 million, primarily due to
decreased consumer spending over an expanded retail store base following the
successful 1995 season.
Major Leagues Central Fund revenue increased 86%, or $5.7 million, due to
new national television contracts entered into in 1996 which extend through the
year 2000 and 2002. In 1995, MLB did not have a national television contract
that included a standard broadcast rights fee. Instead, MLB sold television time
directly to advertisers.
Post-season revenues decreased by $8.0 million due to the reduction in
post-season games played in 1996. The Indians appeared in 15 post-season games
in 1995 and only four in 1996, resulting in a $3.6 million decline in net ticket
sales; a $2.7 million decline in merchandise sales; a $1.0 million decline in
concession and catering revenue; a $0.3 million decrease in local radio and
television sponsorships; and a $0.3 million reduction in league championship
series participation distribution.
The Company's provision for revenue sharing increased 179% or $3.7 million.
The MLB revenue sharing arrangement, under which all net local revenue became
subject to a revenue sharing tax, was first implemented in 1996. Prior to 1996
in the American League, local revenue sharing was generally limited to ticket
receipts and local cable revenues. During 1995, the Company's provision for
revenue sharing was $2.1 million.
Expenses
Major league team expenses increased 37%, or $14.5 million, primarily due
to increases in major league roster salaries of $13.9 million. Players were paid
for a full season in 1996 as compared to only 89% of the season in 1995 as a
result of the players' strike, which accounted for $4.6 million of the increase.
The remainder of the increase was due to player contractual salary increases, as
well as certain player acquisitions. Player disability and life insurance
premiums also increased $0.6 million, which corresponded to the increases in
player salaries.
Player development expenses increased 5.3% or $0.4 million, primarily due
to the addition of four full-time scouting positions primarily focused on
operations in The Dominican Republic and Venezuela.
Ballpark operations expense increased 15%, or $1.3 million, primarily due
to increased rent expense of $0.7 million due to increased attendance in 1996.
Labor and ballpark supply costs associated with operating eight more home games
increased in 1996 due to increased staffing levels to meet higher per game
attendance.
Cost of merchandise sold increased 27%, or $2.5 million, despite a 2%, or
$0.3 million, decline in merchandise sales. The increase in cost of merchandise
sold resulted from an increase in unit sales and an increase of $1.2 million in
personnel, rent and administrative costs associated with a significant expansion
of retail operations. Gross margin for 1996 was 20% compared to 39% in 1995 due
to liquidation of excess inventory resulting from actual sales lagging
expectations.
Administrative and general expenses decreased 5%, or $0.5 million,
primarily due to decreases in certain expenses, such as legal fees and customer
service programs, that were incurred in 1995 because of the players' strike.
Major Leagues Central Fund expenses increased 177%, or $2.6 million,
primarily due to lower 1995 contributions to the Major League Baseball Players'
multiemployer benefit plan as a result of the players' strike and the effect of
revenue sharing expenses incurred in 1996 that did not apply in 1995.
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<PAGE> 29
Advertising and promotion expenses decreased by 22%, or $0.8 million,
primarily due to decreased telemarketing and selling expenses of $0.4 million in
1996. In addition, advertising expenses incurred in the fourth quarter of 1995
did not recur in 1996.
Post-season expenses decreased by $4.1 million due to the reduction in
number of games in 1996 as noted above. The primary contributors to the decline
were a $1.4 million decrease in cost of merchandise sold; a $1.3 million
reduction in administrative and general expenses; a $0.9 million decrease in
ballpark operating expenses; and a $0.5 million decrease in major league team
expenses.
Interest income increased 132%, or $2.2 million, due to increases in loans
to CBC of $15.8 million, funds from advance ticket sales and expansion proceeds.
Gain on player transactions increased $0.5 million due primarily to the
sale of one player to a Japanese league in 1996.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal source of cash historically has been cash provided
from operating activities. Operating activities generated cash of $31.1 million
in 1997. Increases in net income, deferred revenue, higher depreciation and
amortization, increases in deferred compensation, accounts payable and accrued
liabilities during 1997 accounted for the increase in cash provided by operating
activities. Financing activities generated net cash of $13.5 million in 1996,
primarily as a result of contributions from CBC and proceeds from the Major
League Credit Facility. During 1997, financing activities generated net cash of
$7.4 million, as increases in the proceeds from the Major League Credit Facility
were offset in part by increased distributions to CBC.
Principal uses of funds, in addition to working capital requirements,
include the acquisition of short-term investments, loans to CBC, expenditures
for the purchase of player contracts and signing bonuses, and capital
expenditures. During 1996 and 1997, the Company made purchases of short-term
investments aggregating $23.0 million and $16.9 million, respectively, and the
Company's loans to CBC increased by $15.8 million and $12.2 million,
respectively. During 1996 and 1997, the Company made expenditures for the
purchase of player contracts and signing bonuses of $3.0 million and $5.0
million, respectively.
An MLB trust is a party to a Reducing Revolving Credit Agreement with a
syndicate of banks (the "Major League Credit Facility"), under the terms of
which certain MLB clubs, including the Indians, have the ability to obtain
financing on a revolving credit basis. The obligations under the Major League
Credit Facility are non-recourse to the Company, and the obligation to repay
advances for the benefit of the Company are secured by the rights of the Company
to receive revenues that are shared by various MLB clubs, including revenues
from the Major Leagues Central Fund and royalties from MLB Properties. In
connection with the Major League Credit Facility the Club has assigned its
rights to receive its share of revenues and royalties to the Indians Club Trust,
a bankruptcy remote entity. The credit facility expires on December 31, 2000.
The interest rate on amounts borrowed under the credit facility is based upon
the base rate of the facility's administrative agent bank or LIBOR plus a margin
determined by various factors. The loan agreement requires repayment of the loan
as follows: $4.7 million in 1998, $6.3 million in 1999 and the remaining unpaid
balance due in 2000. The facility requires a contingency reserve equal to nine
months' interest expense to be set aside. The Company has historically borrowed
the full amount available to it under the Major League Credit Facility and has
in turn loaned the proceeds of such borrowings to CBC. At December 31, 1997, the
outstanding principal amount of CBC's indebtedness to the Company was $35.5
million. Major League Baseball is currently negotiating an increase in the Major
League Credit Facility to $45.0 million and the extension of repayment terms
beyond 2000. In March 1998, the Partnership distributed $49.2 million to its
partners, and CBC repaid its $35.5 million debt to the Partnership. These
transactions have had the effect of allowing CBC to use cash generated by the
Partnership to repay its debt to the Partnership. The Company will remain
obligated to repay the amounts borrowed under the credit facility.
The Company also maintains a line of credit with KeyBank N.A. providing
aggregate availability of up to $9.0 million. Availability under the line of
credit is reduced to $2.0 million during the period from December 1 to February
28 of each year, and the line must be repaid in full for a period of 30
consecutive days during the
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<PAGE> 30
term of the arrangement. Availability under this line of credit is reduced by an
outstanding $0.4 million standing letter of credit associated with the Company's
workers' compensation self-insurance arrangement. Amounts outstanding under the
line of credit bear interest at either the bank's base rate or LIBOR plus 1.75%,
and are guaranteed by Richard E. Jacobs, individually and as trustee of the
David H. Jacobs Marital Trust. The line of credit matures on November 1, 1998,
at which time the outstanding loan balance may be converted to a four year term
note, subject to certain conditions. At March 31, 1998, the Company had no
borrowings under the line of credit.
The Company's ability to incur additional indebtedness is limited by
applicable provisions of the Governing Documents, which limit the amount of debt
that may be secured by the assets of, or ownership interests in, an MLB club and
require that the parties to any secured loan that is approved execute an
agreement limiting the rights of the lenders and the club under certain
circumstances, including upon an event of default or foreclosure. The consent of
MLB is also required prior to the issuance of any additional debt or equity
securities by the Company. In addition, MLB clubs may not incur indebtedness in
an amount in excess of two-thirds of the value of their assets calculated in
accordance with MLB rules.
The Company has significant contingent liabilities under its contracts with
the players and other personnel, aggregating $185.3 million, including $116.8
million scheduled for payment in 1998 and 1999. See Note 13 to the Combined
Financial Statements of the Partnership and Ballpark Management.
The Company's capital expenditure budget for 1998 is approximately $1.9
million. Capital expenditures for the current year are anticipated to relate to
facility and equipment improvements.
The Company believes that it will generate sufficient cash flows from
operations, as supplemented by available borrowings, to meet debt service
requirements and to meet its short-term and long-term requirements for capital
and acquisition of player contracts, although no assurance can be given that it
will be able to do so or that it will be able to refinance the line of credit
agreement at maturity or that an extension of the Major League Credit Facility
will be negotiated.
YEAR 2000 COMPLIANCE
The inability of computers, software and other equipment utilizing
microprocessors to recognize and properly process data fields containing a
two-digit year is commonly referred to as the Year 2000 Compliance issue. As the
year 2000 approaches, such systems may be unable to accurately process certain
date-based information.
The Company is in the process of identifying and modifying all significant
hardware and software applications that will require modification to ensure Year
2000 Compliance. Internal and external resources are being used to make the
required modifications and test Year 2000 Compliance. The Company plans to
complete the testing and modification of all significant hardware and software
applications by June 30, 1999. The estimated cost to address Year 2000 issues is
not expected to have a material impact on the Company's business, operations or
financial condition.
In addition, the Company is communicating with external service providers
to ensure that the providers are taking the appropriate action to address Year
2000 issues. However, there can be no assurance that the systems of third
parties on which the Company's systems rely will convert, or that a conversion
that is incompatible with the Company's systems, would not have an adverse
effect on the Company's systems.
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<PAGE> 31
BUSINESS
GENERAL
The Company has been organized to serve as the sole general partner of the
Partnership, which owns the 1997 American League Champion Cleveland Indians and
manages Jacobs Field, the Indians' home ballpark.
Baseball has a long tradition in the City of Cleveland. The first
professional baseball game in Cleveland was played on June 2, 1869, when the
Cleveland Forest Citys played the Cincinnati Red Stockings. In 1901, the Club
became one of the charter members of the American League. During the ensuing 20
years, the Indians enjoyed great success, including a victory against the
Brooklyn Dodgers in the 1920 World Series. During the 1940s and 1950s, the
Indians were one of baseball's consistently strong teams. The Indians won the
American League pennant twice (1948 and 1954), captured the World Series from
the Boston Braves in 1948, and finished second in the American League six times
(1951-1953, 1955, 1956 and 1959). Unfortunately, the next 25 years of the
Indians' history were marked by financial instability, inattention to the Club's
minor league system, criticized player personnel decisions, poor on-field
performance and some of the worst attendance figures in Major League Baseball.
In 1986, Richard E. Jacobs and his brother David acquired control of the
Indians and began to execute a long-term strategy that has returned winning
baseball to Cleveland and has made the Cleveland Indians one of the premier
franchises in Major League Baseball. The Company's strategy is to maintain the
Indians' competitive position and to increase the long-term value of the
franchise. The elements of this strategy include dedication to a strong player
development system, effective player personnel management, attention to quality
and customer service and an integrated approach to marketing and licensing
arrangements. In the past three seasons, the Indians have won three American
League Central Division Championships and two American League Championships.
Under Mr. Jacobs' direction, the Indians were also instrumental in the planning
and development of the downtown sports complex that includes Jacobs Field.
The Company believes that the Club's recent on-field and financial
successes are largely attributable to the collaboration of a management team
that includes experienced and talented baseball and business executives. This
team is led by John Hart, Executive Vice President and General Manager, and
Dennis Lehman, Executive Vice President, Business, and includes a coaching staff
led by Mike Hargrove, Manager. Mr. Hart was named Major League Baseball
Executive of the Year in 1994 and 1995 by The Sporting News and Mr. Hargrove was
named Manager of the Year by The Sporting News in 1995.
Player development is a critical element of management's efforts to build
and maintain a strong franchise. The Company has established a strong minor
league organization through a consistent, system-wide approach to evaluating and
developing young players. The team's minor league organization was ranked the
best in Major League Baseball in a 1996 poll by The Sporting News. Among its
other player development efforts, the Company sponsors baseball programs in The
Dominican Republic and Venezuela in which coaches affiliated with the Club work
to develop the skills of promising young players in those countries. The Club's
successful minor league organization has provided the Indians with a pool of
talented young players to supplement its major league roster and to permit it to
make opportune trades.
Effective player personnel management is the most visible element of the
Company's baseball strategy. The goal of the Company's player personnel
management efforts is to maintain a competitive team while limiting the
unpredictability in player salaries resulting from salary arbitration and free
agency. Management's confidence in its ability to identify promising young
players has permitted the Club to selectively enter into multi-year contracts
with players early in their careers. The Company also attempts to sign a nucleus
of experienced players to multi-year contracts. Finally, the Club has been
successful in trading for, or signing as free agents, talented players who can
fill roles on the roster made vacant by trades, retirements, injuries and losses
to the free agent market.
By building value for team sponsors and fans, the Company's business
executives leverage the Club's on-field product to enhance revenues. The
Company's control over various facets of its business, including advertising
signage and concessions at Jacobs Field, permits it to capitalize on the
Indians' popularity with sponsors and fans. Sponsors are offered a number of
advertising vehicles to maximize their exposure at Jacobs
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Field and their association with the Club. Fans at Jacobs Field are offered a
customer-focused experience in an attractive, comfortable environment featuring
a variety of amenities, concessions and merchandise options and a courteous,
well-trained staff.
The successful execution of the Indians' long-term strategy has resulted in
strong revenues in recent years. The Club has sold out all tickets available for
public sale for each of the 1996, 1997 and 1998 regular seasons prior to Opening
Day. The Indians hold the Major League Baseball record for consecutive regular
season sell-outs, which stands at 211 through the end of the 1997 season. These
strong attendance figures provide the Club with a predictable ticket sale and
premium seating revenue base for the regular season and permit the Company to
realize high levels of merchandise and concession sales at Jacobs Field. The fan
interest evidenced by these attendance figures has also permitted the Club to
enhance revenues from other sources, such as local broadcast and cable
television, radio and advertising. Although the Company's revenues from each of
these sources depend heavily on the Indians' on-field performance, the
predictability of the Club's ticket and premium seating sales in recent years
has allowed it to create a competitive, profitable team within the framework of
a Major League Baseball system that is confronted with escalating player
salaries and limited means for clubs to increase revenue.
RECENT TEAM PERFORMANCE
Through the end of the 1997 season, the Indians have the best record in the
American League since 1994. The following table shows the regular season
performance of the Indians in each of the last five seasons:
<TABLE>
<CAPTION>
WINNNING
WINS LOSSES PERCENTAGE
---- ------ ----------
<S> <C> <C> <C>
1997(1).............................. 86 75 .534
1996(1).............................. 99 62 .615
1995(2).............................. 100 44 .694
1994(2).............................. 66 47 .584
1993................................. 76 86 .469
--- --- ----
TOTAL................................ 427 314 .576
</TABLE>
- ---------------
(1) Total games fewer than 162 because of rain-outs that were not re-scheduled.
(2) Season shortened due to players' strike.
The Indians have competed in post-season play in each of the last three
seasons as American League Central Division champions. In 1996, the Indians lost
to the Baltimore Orioles three games to one in the best-of-five Division Series.
After winning the Division Series in each of 1995 and 1997, the Indians played
in the American League Championship Series and won the best-of-seven series in
six games against the Seattle Mariners in 1995 and in six games against the
Baltimore Orioles in 1997. The Indians lost to the Atlanta Braves in six games
in the 1995 World Series and lost to the Florida Marlins in seven games in the
1997 World Series.
BUSINESS OPERATIONS
OWNERSHIP AND MANAGEMENT
Richard E. Jacobs is entering his twelfth year as controlling owner of the
Club. Although Mr. Jacobs is actively involved in the Club's overall management
and strategy for success, he has assembled and relies on a talented team of
baseball and business executives to oversee both the on-field performance of the
team and the business of the franchise.
John Hart was named General Manager of the Indians in September 1991 and is
under contract through 2003 and for four additional years at the option of the
Indians. Mr. Hart joined the Club as a Special Assignment Scout during the 1989
season. He was the Director of Baseball Operations for the 1990 and 1991
seasons. Mr. Hart was named Major League Baseball Executive of the Year by The
Sporting News in 1994 and 1995.
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Mike Hargrove is beginning his seventh season as Field Manager of the
Indians and is under contract through 1999 and for one additional year at the
option of the Indians. Mr. Hargrove joined the Indians in 1989 as the first base
coach and, prior to that, spent three seasons managing in the Indians' minor
league system. Mr. Hargrove was named Manager of the Year by The Sporting News
in 1995. Through the end of the 1997 season, his career record as the Indians'
Manager is 535 wins and 453 losses, a winning percentage of .541.
Dan O'Dowd is entering his eleventh season with the Indians. From 1992
through April 1998, he was the Club's Director, Baseball Operations and
Assistant General Manager. In April 1998, he was appointed Vice President,
Baseball Operations and Assistant General Manager. Mr. O'Dowd is under contract
through 2002 and for four additional years at the option of the Indians. Under
his leadership, the Indians' minor league organization has been rebuilt into one
of the best in professional baseball, posting the second best record in the
1990s among minor league systems while developing major league All-Stars such as
Jim Thome, Charlie Nagy and Manny Ramirez.
Mark Shapiro was named Director of Minor League Operations in 1993 and is
entering his seventh season with the Indians. Mr. Shapiro is under contract
through the 1999 season and for two additional years at the option of the
Indians. All aspects of the Indians player development and Latin American
operations report to Mr. Shapiro. During his tenure, the Club has implemented
its Winter Development Program, which aids in the transition of Indians
prospects to the major league environment. He has also implemented a system of
individual plans for every Indians minor league player.
Dennis Lehman is entering his eleventh season with the Club and sixth year
as its Executive Vice President, Business. Mr. Lehman brings 28 years of
baseball management experience to the team and is under contract through the
2002 season and for four additional years at the option of the Indians. Mr.
Lehman is responsible for all aspects of the Company's business, finance and
administrative operations. Mr. Lehman has been instrumental in implementing many
of the Company's innovative customer service training programs.
Jeff Overton is in his tenth season as Vice President, Marketing and
Communications for the Indians. Mr. Overton is under contract through the 1999
season. Mr. Overton has been successful in building a large season ticket base
and in marketing private suites and club seats at Jacobs Field. Mr. Overton is
responsible for managing the Company's advertising signage and media revenues.
He is also responsible for the public relations, community relations and
advertising departments of the organization.
Ken Stefanov is entering his eighth season with the Indians and fourth as
Vice President, Finance. Mr. Stefanov is under contract through the 1999 season
and for two additional years at the option of the Indians. As Chief Financial
Officer, Mr. Stefanov is responsible for all financial reporting, planning and
analysis. In addition, Mr. Stefanov oversees the Company's management
information systems. Under his leadership, the Indians have developed several
proprietary software programs designed to streamline operating expenses and
capture customer demographic information.
OPERATIONS
Ticket Sales. Jacobs Field has an annual paid capacity of approximately
3.4 million fans. During each of the past two seasons, season ticket sales have
accounted for approximately 2.1 million of that capacity. All available tickets
for home games for the 1996, 1997 and 1998 regular seasons were sold out prior
to Opening Day. The Indians hold the Major League Baseball record for
consecutive regular season sell-outs, which stands at 211 through the end of the
1997 season.
Ticket prices for regular season home games during the 1998 season range
from $6 to $26 per game and the average ticket price is $17.57. Revenue from
ticket sales is reduced by an 8% admissions tax imposed by the City of Cleveland
and by the American League assessment, which ranges from 2.5% to 3.5%. The
Company has a contract with TicketMaster, a national ticket outlet, pursuant to
which all single-game tickets,
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<PAGE> 34
other than those sold at Jacobs Field, are sold. The following table shows
certain information relating to the regular season revenue generated by ticket
sales for the past five seasons:
<TABLE>
<CAPTION>
AVERAGE GROSS PAID
SEASON TICKET AVERAGE PAID AVERAGE GROSS TICKET REVENUE ATTENDANCE
SEASON EVENTS(1) HOLDER BASE ATTENDANCE PAID TICKET PRICE PER EVENT TOTAL
- --------------------- --------- ------------- ------------ ----------------- -------------- ----------
<S> <C> <C> <C> <C> <C> <C>
1997................. 80 2,137,865 42,559 $15.73 $669,518 3,404,750
1996................. 79 2,125,239 42,002 14.67 616,145 3,318,166
1995(2).............. 71 1,539,449 40,039 12.25 490,669 2,842,745
1994(2).............. 51 1,032,710 39,121 11.98 468,785 1,995,174
1993................. 80 852,251 27,224 9.40 255,879 2,177,908
</TABLE>
- ---------------
(1) May differ from number of games played because traditional doubleheaders
count toward two games but only one paid event.
(2) Event figures for 1994 and 1995 reflect games missed due to players' strike.
Concessions, Catering and Merchandise Sales. Jacobs Field provides fans
with a wide array of food, beverage and merchandise items throughout the
ballpark. Traditional ballpark offerings, such as hot dogs, hamburgers, nachos,
popcorn, branded beer and soft drinks, are supplemented by less traditional
baseball fare, such as barbecued chicken and ribs, deli sandwiches, "Ballpark
Draft," a beer brewed by a Cleveland-based microbrewer exclusively for sale at
Jacobs Field, and a selection of premium beers from around the world. In
"KidsLand," a facility located behind Jacobs Field's right field foul line, fans
can purchase food items appealing to younger children, such as peanut butter and
jelly sandwiches. KidsLand also provides children with access to a variety of
toys and playground equipment, and Slider, the Indians' mascot, visits KidsLand
during each game. KidsLand is adjacent to a retail outlet devoted to selling
Indians-logo apparel and other merchandise for children. For large groups, the
Indians' offer pre-game parties in a picnic facility with food and beverage
service located behind the center field fence. Food, beverage and merchandise
vendors also offer a variety of products to fans at their seats. Fans with club
seat or private suite tickets may also purchase food, beverages and merchandise
in the Club Seat Lounge.
The Company has the exclusive right to operate all Jacobs Field
concessions, including private suite and club seat catering, and to receive all
concession revenues. The Company has a license agreement with an affiliate of
Sportservice Corporation ("Sportservice"), a national manager of event
concessions, to operate the food and beverage concession stands and roving
vendors in the ballpark during games. Sportservice has the right to make all
food and beverage concession sales at Jacobs Field, excluding catering, club
seat and Club Seat Lounge sales, private suite sales, restaurant sales or
merchandise sales. The Company has the exclusive right to determine pricing,
profit margins, brands, portions and quality of the products sold by
Sportservice, as well as the right to prohibit the sale of any product. The
Company has a similar agreement with an affiliate of Levy Restaurants, a
national restaurateur based in Chicago ("Levy"), to provide catering for private
functions and to provide concessions sales for club seats, the Club Seat Lounge,
private suites and the Terrace Club.
The Company strives to foster strong brand loyalty in Indians fans by
offering high-quality clothing items (caps, sweatshirts, jackets, jerseys and
shirts) and a wide variety of novelties at Jacobs Field and at six Indians Team
Shops located in Northeastern Ohio shopping malls. At Jacobs Field, the Company
operates a full-service Team Shop that is open during games and also has an
outside entrance which permits it to operate during normal retail hours
throughout the year. Jacobs Field also has merchandise and novelty stands
located throughout Jacobs Field, including KidsLand, that increases Jacobs
Field's attractiveness to families. The six Indians Team Shops also permit the
Club to extend its reach to communities in Northeastern Ohio outside of downtown
Cleveland.
Local Television and Radio. All Cleveland Indians games are broadcast on
local radio and through the Cleveland Indians Radio Network, a network of 37
stations in Ohio, Western New York, Western Pennsylvania and West Virginia that
purchase rights to the games from the Company. In 1998, 145 games are scheduled
to be televised locally or through local cable television stations. Radio
play-by-play and color commentary is provided by Tom Hamilton, who will be
joined for the first time in 1998 by former Indians
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<PAGE> 35
coach Dave Nelson and Mike Hegan. Messrs. Nelson and Hegan replace long-time
Indians broadcaster Herb Score, who retired after the 1997 season. Television
play-by-play and color commentary are provided by Mike Hegan and Jack Corrigan
(when the games are broadcast on local television) and by former Indian Rick
Manning and John Sanders (when the games are broadcast on cable television). All
radio broadcast personalities are chosen by, and enter into contracts with, the
Indians. All television broadcast personalities are employed by the broadcast
stations, subject to approval by the Club.
In 1995, the Company renegotiated its contract with WUAB for the local
television broadcast of 70 of the Indians regular season games and up to six
pre-season games each year. The current contract with WUAB expires on October
31, 2001. The Company also has a contract with Fox Sports Ohio for the local
cable television broadcast of up to 80 Indians games during the regular season
and two pre-season games. The current contract with Fox Sports Ohio expires on
December 31, 1998. The Company and Fox Sports Ohio are currently negotiating a
new contract, and the Company is also in negotiations with another broadcaster.
The Company has a contract with Jacor Broadcasting Corporation pursuant to
which the Company is given radio air-time and sells, on its own behalf,
advertising in connection with the local radio broadcast of all regular and
post-season games. The contract with Jacor expires on December 31, 1999, and the
Company has the option to renew the contract for four additional years.
Advertising and Corporate Sponsorship. The Company's control over various
facets of its business, including advertising signage and concessions at Jacobs
Field, permits it to capitalize on the Indians' advertising value by offering
sponsors a variety of advertising vehicles. As a result of Jacobs Field's appeal
and the Indians success in recent years, most major advertisers are interested
in maximizing their advertising exposure at Jacobs Field and their association
with the Club. To capitalize on advertisers' demand, the Company typically
coordinates the sale of radio advertising with the sale of advertising at
locations in Jacobs Field, including space on the main scoreboard, ancillary
scoreboards, outfield walls and concourse signage. Advertising is also sold in
game programs and on the Club's internet website. The Company also licenses the
Club's name and logo in connection with corporate sponsorships and promotions
throughout Northeastern Ohio. The Company's marketing department works closely
with its sponsors and advertisers to customize integrated advertising and
corporate sponsorship packages that incorporate many or all of the Company's
available advertising outlets.
The Company also offers a number of promotional activities at Jacobs Field
in conjunction with Indians home games. Due to the high level of ticket sales in
recent years, these promotions are designed primarily to enhance fan enjoyment,
rather than to foster increased attendance. The Club has scheduled 18
promotional events for the 1998 season. These promotional events range from the
distribution to fans of premiums (such as calendars, baseball caps commemorating
the Indians' 1997 American League Championship, baseball cards and replica
uniform T-shirts) to theme oriented events, such as a two-day commemoration of
the Indians' 1948 World Series Championship. In keeping with the Club's
objective of attracting families to Jacobs Field, several promotional activities
focus on younger fans, with certain premiums distributed exclusively to fans age
14 and under.
Player Contracts and Salaries. Player salaries constitute the single
largest item of expense for the Club's operation. The Collective Bargaining
Agreement requires each team to enter into a uniform player contract with each
of its players and also establishes a minimum season salary of $170,000 for
major league service in 1998, generally payable in semi-monthly installments
during the season. Players who sustain injuries, or are terminated by the team
during the regular season, are generally entitled to all of their salaries.
Player contracts may be for single-year or multi-year terms. Generally, salaries
payable pursuant to multi-year contracts are guaranteed.
The Indians' aggregate 40-man roster payroll, including bonuses, for the
1997 season was $58.5 million. In 1997, aggregate team salaries in MLB ranged
from $12.2 million to $65.0 million. In addition to the salaries paid to its
players, the Company is obligated to pay its minor league players (who play for
the Indians' minor league affiliates) salaries pursuant to the terms of the
players' respective contracts, which are also governed by the Collective
Bargaining Agreement. Some players are signed to option agreements or "split"
contracts, giving the Club the right to move the player from the Indians major
league roster to that of a minor league
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<PAGE> 36
affiliate team roster and back, the rate of pay being based on the number of
days the player plays in each league.
TEAM
PLAYER PERSONNEL
The Indians player management strategy is to build a competitive team,
while managing their roster to reduce the uncertainties associated with salary
arbitration and free agency. Generally, a MLB player with more than three years
of major league service is eligible for binding salary arbitration, and a player
with more than six years of major league service is eligible for free agency.
The Club has not been to arbitration over a player's salary since 1991. Prior to
eligibility for arbitration, a player's salary may be established by the club,
subject to the MLB minimum. See "Major League Baseball -- Collective Bargaining
Agreement -- Salary Arbitration and MLB Free Agency."
The Indians' success in recent years is attributable to the Company's
player development efforts and effective player personnel management. In the
last three years, 14 Indians have been selected to the American League All-Star
team, six have received Gold Glove Awards and six have received Silver Slugger
Awards. The Indians have maintained a nucleus of talented players despite a
significant level of player turnover. Only nine members of the Indians' 1997
American League Championship team were members of the 1995 American League
Championship team.
MLB permits each team to have 40 players under contract but limits the
active roster to 25 players from Opening Day through August 31. From September 1
through the end of the season, each team is permitted an active roster of 40
players. The Indians currently have 40 players under contract for the 1998
season. Certain information with respect to each of those players as of Opening
Day of the 1998 season is set forth below:
<TABLE>
<CAPTION>
YEARS/DAYS LAST SEASON CLUB
OF MLB SERVICE(1) OF CONTRACT OPTION
----------------- ----------- ------
<S> <C> <C> <C>
PITCHERS
- --------
Paul Assenmacher........................................ 11/158 1999
Rich Batchelor.......................................... 0/140 1998
Dave Burba.............................................. 6/59 1999
Bartolo Colon........................................... 0/112 1998
Dwight Gooden........................................... 13/0 1999 2000
Mike Jackson............................................ 11/59 1998 1999
Steve Karsay(2)......................................... 3/48 1998
Rich Krivda............................................. 1/82 1998
Tom Martin.............................................. 1/0 1998
Michael Matthews........................................ 0/0 1998
Jose Mesa(3)............................................ 7/28 1998
Alvin Morman(2)......................................... 1/147 1998
Charles Nagy(3)......................................... 7/48 1998
Chad Ogea............................................... 3/38 1999 2000
Eric Plunk.............................................. 11/74 1999 2000
Jason Rakers............................................ 0/0 1998
Paul Shuey.............................................. 2/94 2000 2001
John Smiley............................................. 11/35 1999
Ron Villone(2).......................................... 2/85 1998
Jaret Wright............................................ 0/97 1998
</TABLE>
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<PAGE> 37
<TABLE>
<CAPTION>
YEARS/DAYS LAST SEASON CLUB
OF MLB SERVICE(1) OF CONTRACT OPTION
----------------- ----------- ------
<S> <C> <C> <C>
CATCHERS
- ---------
Sandy Alomar Jr......................................... 8/47 1999 2000
Pat Borders(3).......................................... 10/0 1998
INFIELDERS
- ---------
Jeff Branson(3)......................................... 5/141 1998
Russell Branyan......................................... 0/0 1998
Shawon Dunston(3)....................................... 12/93 1998
Travis Fryman........................................... 7/89 2002 2003
Jeff Manto.............................................. 3/69 1998
Edwin Perez............................................. 0/0 1998
Richie Sexson........................................... 0/17 1998
Jim Thome............................................... 5/42 2001 2002
Omar Vizquel............................................ 8/130 2001 2002
Enrique Wilson.......................................... 0/17 1998
OUTFIELDERS
- -----------
Bruce Aven.............................................. 0/24 1998
Geronimo Berroa(3)...................................... 5/152 1998
Brian Giles............................................. 1/96 1998
David Justice........................................... 8/00 2002 2003
Kenny Lofton............................................ 6/23 2000 2001
Scott Morgan............................................ 0/0 1998
Alexander Ramirez....................................... 0/29 1998
Manny Ramirez........................................... 4/33 1999 2000
</TABLE>
- ---------------
(1) A player is credited with a day of major league service for each day of the
baseball season that he is on a club's active roster. A total of 172 days of
major league service constitutes a year of major league service. See "Major
League Baseball -- Collective Bargaining Agreement -- Salary Arbitration and
MLB Free Agency."
(2) Eligible for salary arbitration upon completion of the 1998 season (assuming
the player remains on the Club's active roster for the entire season).
(3) Eligible for free agency upon completion of the 1998 season (assuming the
player remains on the Club's active roster for the entire season).
PLAYER DEVELOPMENT
In the past decade, the Company has built a strong player development and
scouting system based on a consistently applied approach to player evaluation,
instruction and coaching. Since 1991, under the direction of General Manager
John Hart, the Indians' minor league organization has greatly improved and in
1996 was ranked the best in professional baseball in a poll conducted by The
Sporting News. Of the 40 players currently on the major league roster, 19 have
played in the Indians' minor league organization. In addition to providing a
source of talent for the Indians' major league roster, the Club's player
development efforts also enhance its ability to obtain proven major league
players in trades with other teams. The Indians employ 28 full-time scouts and
several part-time scouts in their player development program. The scouts are
evaluated in part by the success of the prospects they find. The Club also uses
independent scouts who are paid a finders' fee for prospects.
The Club's player development efforts are based on a business-like approach
to the evaluation and development of player talent. The Club's staff of seasoned
scouts are trained to assess and evaluate player
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<PAGE> 38
talent consistently throughout the organization. In addition, the managerial and
coaching staffs at all of the Club's minor league affiliates use instructional
principles that are applied consistently at all levels of the Club's system. The
Company believes that this standardized approach to player development improves
the chances of the most talented minor league players succeeding at the major
league level. The Club's minor league system involves the establishment of an
individual plan for every player in the system. The plan is intended to cover
all aspects of player development, including mental and physical development and
baseball fundamentals. The Company's player development program also includes
the Winter Development Program, which brings minor league prospects to Cleveland
in the off-season to better prepare young players for the transition to the
major league level. Participants in the Winter Development Program receive
intensive instruction in various baseball skills and conditioning methods. In
addition, participants receive instruction in a number of off-field areas which
the Company believes are essential to their success in Major League Baseball.
These include seminars focusing on media and fan relations and financial
planning.
Players from Puerto Rico and Latin American countries are an important
source of talent for the Indians and other MLB clubs. Players from countries
other than the United States and Canada are not part of the MLB Rule 4 draft,
and the Club can enter into contracts with these players subject to MLB rules.
See "Major League Baseball -- Major League Rules -- Signing Players." The
Indians sponsor baseball programs in The Dominican Republic and Venezuela in
which coaches affiliated with the Club work to develop the skills of promising
young players in those countries. The Indians have a full-time member of the
front office who is fluent in Spanish and who works closely with Latin American
prospects, the Club's minor league coaching staffs and other Indians personnel
in order to promote the development of these players. The Club provides these
prospects with instruction in the English language and assistance in adjusting
to cultural differences between the United States and their native countries.
The Indians also work with Club personnel in order to promote an understanding
of cultural differences and to prevent these differences from adversely
affecting player development.
The Indians are affiliated with seven minor league teams of which they own
two (the Burlington Indians and the Dominican Summer League Indians). No
revenues are derived from the club-owned affiliates. A large portion of the
expenses associated with all of the minor league teams, including player
salaries, are paid by the Club. MLB clubs are not permitted to be affiliated
with more than one Class AA and one Class AAA team. In the 1990s, the overall
record for the Club's minor league organization through the end of the 1997
season is 2,978 wins and 2,552 losses, a winning percentage of .539, placing it
second among the minor league organizations of all MLB clubs. The Indians' minor
league affiliates are as follows:
<TABLE>
<CAPTION>
TEAM CLASS LEAGUE LOCATION
---- ----- ------ --------
<S> <C> <C> <C>
Buffalo Bisons............... AAA International League Buffalo, New York
Akron Aeros.................. AA Eastern League Akron, Ohio
Columbus Redstixx............ A South Atlantic League Columbus, Georgia
Kinston Indians.............. A Carolina League Kinston, North Carolina
Watertown Indians............ A New York-Penn League Watertown, New York
Burlington Indians........... Rookie Appalachian League Burlington, North Carolina
Dominican Summer League
Indians.................... Rookie Dominican Summer League Santiago, Dominican Republic
</TABLE>
FACILITIES
DOWNTOWN SPORTS COMPLEX
The current home of the Indians is Jacobs Field, which is part of the
Gateway Sports and Entertainment Complex (the "Complex") in downtown Cleveland.
The Complex is the product of cooperation and planning among the Gateway
Economic Development Corporation of Greater Cleveland, an Ohio nonprofit
corporation ("Gateway"), the City of Cleveland (the "City"), Cuyahoga County,
Ohio (the "County"), the Cleveland Cavaliers (the "Cavs"), a National Basketball
Association franchise, and the Company. The Complex contains Jacobs Field, which
is leased to the Company, and Gund Arena, which is home of the Cavs, the
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<PAGE> 39
Cleveland Lumberjacks, a professional minor league hockey team, and the
Cleveland Rockers, a women's professional basketball team.
JACOBS FIELD
General. Jacobs Field, completed in 1994, was designed as a premier,
baseball-only facility offering a fan-friendly, intimate environment. Jacobs
Field combines modern stadium design and amenities with many features evoking
historic Major League Baseball ballparks. For example, Jacobs Field's outfield
dimensions are irregular, like many older ballparks, and it features a 19 foot
left field wall reminiscent of Fenway Park's "Green Monster." Jacobs Field also
has some of its own signature features, such as the "home run porch," an open
area located behind the left field foul pole available to fans who purchase
standing room only tickets. Jacobs Field also features a high-tech, electronic
left field scoreboard incorporating a large screen television that airs
highlights and promotional features during breaks in the on-field action. Fans
visiting concession and merchandise stands during the game can keep track of the
game by viewing one of the approximately 700 television monitors located
throughout Jacobs Field.
Private Suites and Party Suites. Jacobs Field has 132 private suites which
include a living area, wet bar and private bathroom, and covered seating with a
premium view of the game. Of the total suites, 98 are leased by the Company to
guests for four- and five-year terms, 24 are leased on a ten-year, prepaid basis
and ten suites are reserved for Club use. Depending on the size of the suite,
each leaseholder must purchase at least eight to 12 tickets, with the option to
purchase up to four additional tickets for each home game. Suite guests may
purchase a wide range of catered, buffet-style meals during each game. The lease
entitles suite guests access to the Club Seat Lounge, a full-scale bar and
lounge located inside the ballpark directly behind the club seats which contains
a full-service bar, food court and televisions providing a close-circuit
broadcast of the game. Jacobs Field also contains three party suites, each with
a seating capacity of 40, which are rented for single games.
Club Seats. Club seats offer larger seats, service of an extended menu of
concessions and access to the Club Seat Lounge. Like the private suites, club
seats are leased for various terms. A club seat lease gives the holder the right
to the club seat amenities, which include access to the Club Seat Lounge,
in-seat food and beverage service during the game and the right to buy a club
seat ticket for each home game.
The Terrace Club. Jacobs Field houses the Terrace Club, a full-service
restaurant with a windowed, terraced view of the playing field. Club members pay
an annual membership fee which entitles them to the right to book reservations
for meals before or during each game. The Terrace Club is open to the public for
lunch (except on days when the Indians have an afternoon home game). The Terrace
Club, as well as a catering service, is available for private parties.
Executive Offices. Jacobs Field also houses the Company's executive
offices.
CHAIN OF LAKES PARK
The Indians' spring training facility is located in Winter Haven, Florida,
and spring training home games are played at Chain of Lakes Park. The Indians
relocated spring training to Winter Haven in 1993, after more than 40 years in
Tucson, Arizona. In addition to providing the Indians with modern,
well-maintained training facilities, Winter Haven is located in proximity to the
spring training facilities of many other Major League clubs. This allows the
Indians' players to sharpen their skills against a wide variety of Major League
opponents, and enhances the Club's ability to assess the skills of the Indians'
players and minor league prospects. Winter Haven is located less than an hour's
drive from the cities of Tampa and Orlando, which facilitates visits to the
Indians' spring training facilities by Northeastern Ohio fans. Pitchers and
catchers report to spring training the third week of February and exhibition
games begin in late February and continue through the end of March. The Company
employs a full-time manager to oversee the operations of Chain of Lakes Park.
The facility is owned by the city of Winter Haven and is available to the
Company through October 31, 2003. The Company has four options to renew the use
agreement for five-year terms. Revenues
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<PAGE> 40
derived from sources similar to those derived at Jacobs Field, including ticket
sales, concessions, advertising and media rights, are allocated between the
Company and Winter Haven.
OPERATING AGREEMENTS AND LEASES
Gateway Agreements. The Company and Gateway are parties to various
agreements relating to Jacobs Field. Gateway leases to the Company the ballpark
land and improvements pursuant to a Lease Agreement which excludes the baseball
playing field and improvements thereon. The playing field portion of Jacobs
Field is leased to the Company pursuant to a Ground Lease Agreement for which
the Company pays nominal rent. Management of the ballpark facility is governed
by a Management Agreement, while the rights and obligations of the parties
regarding the common areas of the Complex are governed by a Common Area
Maintenance Agreement. (The Lease Agreement, Ground Lease, Management Agreement
and Common Area Maintenance Agreement are collectively referred to as the
"Gateway Agreements.")
Under the Gateway Agreements, the Company has the exclusive right to use
the baseball facility to host Major League Baseball games and to conduct related
activities. The Company also has the right to sponsor special events at Jacobs
Field. The Company is obligated to play all of its home games, including playoff
games, at Jacobs Field and is prohibited from transferring the Indians franchise
to any location other than Jacobs Field or making any application to MLB for
approval of such a transfer.
Gateway is responsible for all routine maintenance and capital repairs of
the baseball facility under the Ground Lease. However, pursuant to the
Management Agreement, Gateway has assigned to the Company the responsibility to
perform routine maintenance and pay for all costs and expenses related thereto.
Gateway has retained responsibility for performance of and payment for all
capital repairs. Capital repairs include work required to repair, restore or
replace facility components, such as heating and air conditioning units,
carpeting, scoreboards, field lighting bulbs and worn-out seats.
The Management Agreement grants the Company the exclusive right to manage
and operate Jacobs Field for an annual fee. Under the Management Agreement, the
Company is entitled to the exclusive right to operate all ballpark concessions,
including operation of the Terrace Club and catering for the private suites and
club seats, and is entitled to all revenues therefrom. The Company also has the
exclusive right to sell and lease space for, and enter into agreements
regarding, advertising in and around Jacobs Field. Gateway has the right to
conduct special events at Jacobs Field if certain conditions are met, including
establishing to the satisfaction of the Company that the event would not render
the playing field unsuitable for the playing of baseball.
The Gateway Agreements (excluding the Ground Lease) terminate upon the
sooner of (i) the end of the year in which the 20th full season is played or
(ii) the retirement or discharge of all the stadium revenue bonds. The term of
the Ground Lease is for 40 years following the initial season. Following
termination of the Agreements, the Company must surrender the ballpark facility
to Gateway. The Ground Lease and the Lease Agreement do not provide for an
option by the Company to renew the agreement upon their expiration.
Nevertheless, the Company believes it will be able to enter into a new lease
agreement for the facility in 2014 under commercially reasonable and competitive
terms. Pursuant to the Ground Lease, the Company has a leasehold interest in the
playing field and the improvements thereon until the year 2034 and has received
assurances from the City and County that they will commence discussions with the
Company regarding a new lease agreement for Jacobs Field two years before the
current lease has expired.
Naming Rights Agreement. Gateway, the City, the County, the Company and
Mr. Jacobs entered into a Naming Rights Agreement regarding the naming of the
ballpark which expires in 2013. In March 1998, Mr. Jacobs assigned all of his
interests in the Naming Rights Agreement to the Company.
COMPETITION
The Indians compete with other sports, entertainment and recreational
activities for entertainment and advertising dollars. During portions of its
season, the Indians experience competition from professional basketball (the
Cavs and the Rockers) and professional minor league hockey (the Cleveland
Lumberjacks).
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<PAGE> 41
Moreover, the City of Cleveland is currently building a new football-only
stadium. If certain conditions are met, the NFL will be obligated to provide to
the City an NFL franchise by the fall of 1999. This team is expected to use the
established and popular name and heritage of the former Cleveland NFL franchise,
the Cleveland Browns, and will likely have loyal fan support from its inception.
The Indians also compete for attendance and advertising revenue with a wide
range of other entertainment available in Northeastern Ohio. The Indians compete
with other MLB teams to obtain the services of available players.
EMPLOYEES
The Company currently employs 321 baseball personnel (including 228
players) and 126 non-baseball personnel on a full-time basis. The Company also
employs approximately 2,000 part-time personnel, including ushers, novelty sales
people, vendors and statisticians. At March 31, 1998, approximately 750 of the
Company's part-time employees, in addition to players on the major league
roster, were members of labor unions. The Company considers relations with its
employees to be good.
LITIGATION
The Company, along with all MLB clubs other than the New York Yankees, is a
defendant in The New York Yankees Partnership et al. v. Major League Baseball
Enterprises, Inc. The plaintiffs in this action allege that the agency agreement
underlying MLB Properties licensing arrangements represents monopolization and
an unlawful restraint of trade in violation of applicable provisions of federal
and state antitrust laws. The plaintiffs also raise various common law and state
statutory claims against the defendants. The plaintiffs seek compensatory,
punitive and treble damages, as well as injunctive relief. The action was
originally filed in the United States District Court for the Middle District of
Florida. That court recently issued an order granting the defendants' motion to
transfer venue to the United States District Court for the Southern District of
New York. The case is currently in the discovery stage and no trial date has
been set. The defendants intend to vigorously contest the allegations in the
plaintiffs' complaint. The Company does not believe that this litigation will
have a material adverse effect on its financial condition, results of operations
or cash flows.
The Company and MLB are involved in various lawsuits arising in the
ordinary course of business. Management does not believe that the outcome of
these matters will have a material adverse effect on the Company's financial
condition, results of operations and cash flows.
40
<PAGE> 42
MAJOR LEAGUE BASEBALL
TEAMS
Major League Baseball is comprised of 30 baseball clubs. The Arizona
Diamondbacks and the Tampa Bay Devil Rays are expansion clubs that will compete
for the first time in the 1998 season. MLB clubs belong to either the American
League or the National League. Each league currently has three divisions: the
East, West and Central. Beginning with the 1998 season, the clubs are aligned as
follows:
<TABLE>
<CAPTION>
AMERICAN LEAGUE
- ------------------------------------------------------------------------------------
AMERICAN LEAGUE EAST AMERICAN LEAGUE CENTRAL AMERICAN LEAGUE WEST
- --------------------- ----------------------- --------------------
<S> <C> <C>
Baltimore Orioles Chicago White Sox Anaheim Angels
Boston Red Sox Cleveland Indians Oakland Athletics
New York Yankees Detroit Tigers Seattle Mariners
Tampa Bay Devil Rays Kansas City Royals Texas Rangers
Toronto Blue Jays Minnesota Twins
</TABLE>
<TABLE>
<CAPTION>
NATIONAL LEAGUE
- ------------------------------------------------------------------------------------
NATIONAL LEAGUE EAST NATIONAL LEAGUE CENTRAL NATIONAL LEAGUE WEST
- --------------------- ----------------------- --------------------
<S> <C> <C>
Atlanta Braves Chicago Cubs Arizona Diamondbacks
Florida Marlins Cincinnati Reds Colorado Rockies
Montreal Expos Houston Astros Los Angeles Dodgers
New York Mets Milwaukee Brewers San Diego Padres
Philadelphia Phillies Pittsburgh Pirates San Francisco Giants
St. Louis Cardinals
</TABLE>
REGULAR SEASON AND POST-SEASON PLAY
During the regular season, which typically begins in early April and
extends to late September, each MLB team is scheduled to play a total of 162
games. Half of the games are played at home and half are played away. For the
most part, a club competes against other clubs in the same league during the
regular season. However, interleague play was introduced during the 1997 season
and each club played 15 games against teams from the corresponding division in
the other league (16 games for the Western Division in each league). Interleague
games for the 1998 season have been scheduled in a similar manner. Interleague
play is scheduled to expire after the 1998 season, unless further extended by
agreement of the clubs and the Players Association.
At the end of the regular season, four clubs from each league compete in
the Division Series. The clubs with the best season record in each division and
the club in each league with the best season record of the remaining clubs in
the respective league play a best-of-five series. The two winners of the
Division Series in each league then compete against each other in the League
Championship Series. Each League Championship Series is a best-of-seven series.
The resulting American League Champion and National League Champion play in the
World Series, which is a best-of-seven series.
MLB GOVERNANCE
The Major League Baseball clubs are organized into two leagues, the
American League, which has 14 members, and the National League of Professional
Baseball Clubs (the "National League"), which has 16 members. Each league is
governed by its own Constitution. The leagues and their members are parties to a
Major League Agreement, which establishes the Office of the Commissioner (the
"Commissioner") and governs matters concerning MLB clubs (including voting
rules, dispute resolution and administration). The members of each league elect
the Commissioner, whose functions include serving as the chief executive officer
of MLB, investigating complaints regarding MLB and regulating the conduct of
teams, owners, coaches and players. The Commissioner has the power to impose
sanctions, including fines and suspensions, for violations of MLB rules. The
Major League Agreement also establishes an Executive Council, consisting of the
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<PAGE> 43
Commissioner, the presidents of each league and four team representatives from
each league, which has jurisdiction over various other matters, including the
promotion of baseball and investigations into possible changes in how the game
is played. Mr. Jacobs currently serves on the Executive Council.
The position of Commissioner has been vacant since September 1992. During
periods of vacancy, the Major League Agreement provides that the Executive
Council is responsible for discharging the duties of the Commissioner. During
this period, Allan H. "Bud" Selig, owner of the Milwaukee Brewers and Chairman
of the Executive Council, has performed the day-to-day duties otherwise
conducted by a sitting Commissioner.
Under the terms of the Major League Agreement, various levels of member
approval are required under certain circumstances, including in connection with
the sale or relocation of a member. The Major League Agreement provides that
members are prohibited from resorting to the courts to enforce or maintain
rights or claims against other members, and all disputes must be submitted to
the Commissioner for his determination, and such determination, when rendered,
is final and binding. However, courts have not always dismissed lawsuits filed
by members naming the leagues or their members as defendants. Accordingly, there
can be no assurance that the Company will not be named as a defendant in
lawsuits involving other MLB teams.
The Indians play in the American League and are subject to its
Constitution. The Constitution establishes a board of directors that generally
supervises and manages the affairs and business of the league. The board
consists of six league members and rotates membership, with two board members
retiring and two board members coming on each year. Each member serves on the
board for a three-year term and is off of the board for a four- or five-year
period before returning. The President of the American League has governance and
executive duties over the American League. The President is sole arbitrator over
disputes among American League members and has final and binding determination
regarding such matters. The current President of the American League is Gene A.
Budig.
RESTRICTIONS ON OPERATIONS
MLB requires that the Company submit to the Commissioner for approval,
which may be withheld in the Commissioner's sole discretion, any agreement that
might affect control of the team prior to execution of that agreement. Such
agreements specifically include loan agreements, ballpark leases, television and
radio rights agreements, concession agreements and any other agreement on any
subject with a potential duration of five years or more. These agreements cannot
be signed prior to the Commissioner's approval even if they, by their terms, are
subject to such approval. Furthermore, should the Company decide or be required
to relocate the Indians to another city, at least a 75% vote of the American
League members, and a majority vote of the members of the National League, must
be obtained. If the relocation is to a city located within the same geographic
area as an existing National League franchise, the minimum requisite affirmative
vote of the National League members increases to 75%. The Governing Documents
require that the Company be a single-purpose entity. Should management determine
that it is beneficial to the Company to expand into other business areas, the
expansion plan must be reviewed and approved by the Commissioner prior to being
put into effect. The Governing Documents limit the amount of debt that may be
secured by the assets of, or ownership interests in, an MLB club and require
that the parties to any secured loan that is approved execute an agreement
limiting the rights of the lenders and the club (or shareholder) under certain
circumstances, including upon an event of default or foreclosure. MLB or the
American League could in the future adopt different or additional restrictions
which could adversely affect the shareholders.
CONTROL REQUIREMENT AND OWNERSHIP RESTRICTIONS
The Ownership Guidelines require that Mr. Jacobs (or a group of no more
than 20 individuals) maintain at least a 10% economic interest in the Company
and at least 90% voting control of the Company at all times. Upon completion of
the Formation Transactions and the Offering, Mr. Jacobs' beneficial ownership of
Class B Common Shares will satisfy both the economic interest and voting control
requirements of MLB. See "Risk Factors--Control by Richard E. Jacobs; Voting
Rights" and "Formation Transactions."
Any transfer of control interest in a club must be submitted for review to
an MLB ownership committee and requires approval by 75% of the members of the
American League and a majority of the members of the
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<PAGE> 44
\National League. In addition, each MLB club must designate an individual who is
accountable to the Office of the Commissioner for the Club's operation and its
compliance with MLB rules and who is responsible for and empowered to make all
club decisions. This requirement must be satisfied regardless of whether a club
is owned in corporate or partnership form, and a change in the designated person
constitutes a control interest transfer under the Governing Documents and,
therefore, requires league approval. Mr. Jacobs serves in this capacity for the
Indians.
No holder of 5% or more of the Class A Common Shares, nor any holder of
Class B Common Shares, nor any officer, director or employee (including manager
or player) of the Company, may own stock or any other proprietary or financial
interest in any other MLB club. The Governing Documents require that each holder
of 5% or more of the Class A Common Shares, each holder of Class B Common Shares
and each officer, director and employee of the Company submit annually a
statement that such person has no ownership or other financial interest in
another club. In addition, any person acquiring more than 5% of the Class A
Common Shares outstanding must obtain approval of the Commissioner before making
such acquisition, and, such approval will be specifically withheld if that
person owns any interest in another MLB club or the ownership by such person
would otherwise violate any other provision of the Governing Documents. No
president, secretary, treasurer, umpire or employee of either league is eligible
to own stock or any other proprietary or financial interest in any MLB team,
including Class A Common Shares of the Company.
Failure by a holder of Class A Common Shares to comply with these
restrictions may result in a forced sale of such holder's interest or the
repurchase of such interest by the Company. The Company's Amended and Restated
Articles of Incorporation provide that the Company may redeem, at the lower of
fair market value or cost, shares held by any person or entity who becomes the
owner of 5% or more of the Company's shares without the approval of MLB. These
restrictions will be contained in a legend on each certificate issued evidencing
Class A Common Shares.
AMERICAN LEAGUE ASSESSMENTS
Each club in the American League is required to pay an annual assessment to
the American League based on gate receipts net of local ticket taxes, if any.
The assessment ranges from 2.5% to 3.5%. In 1997, the assessment was 3.25%, and
the Company paid $1.6 million to the American League.
POST-SEASON GATE RECEIPTS ALLOCATIONS
The Governing Documents and the Collective Bargaining Agreement govern the
allocation of gate receipts attributable to post-season play. The terms of the
allocation depend on whether the Players Association decides to exercise its
option to extend the Collective Bargaining Agreement for the 2001 season. If the
agreement is extended, 60% of the total gate receipts of the first three games
of the Division Series will be allocated to a players' pool. The remaining
receipts from those games, and 100% of the gate receipts from the fourth and
fifth games, if played, are split between the two competing teams net of the
applicable league assessment. If the Players Association's option is not
exercised, 80% (instead of 60%) of such receipts will be allocated to the
players' pool for the 1997 through 2000 seasons. Until it is known whether or
not the option is exercised, the amount representing the difference between 60%
and 80% of such receipts is distributed by MLB to each team annually on a pro
rata basis. Each team is obligated to maintain a fictional account for such
amount plus interest, and if the option is not exercised, each team will be
required to distribute the amount in that account to the Players Association
following the 2000 season. The Company has $96,922 allocated under the fictional
account as of the end of the 1997 season.
In the League Championship Series, 60% of the gate receipts of the first
four games are allocated to the players' pool and 40% of such receipts are
allocated to the competing teams. The gate receipts from the remaining games, if
any, are allocated according to each league. The American League allocates such
receipts equally between the competing teams, net of the American League
assessment. For the World Series, 60% of the gate receipts from the first four
games is paid to the players' pool, 15% is allocated to the Office of the
Commissioner and the remainder is split between the competing teams and their
respective leagues. Fifteen
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percent of gate receipts from the remaining games, if any, are allocated to the
Office of the Commissioner and the remainder is divided in four equal shares
among the competing teams and their respective leagues.
COLLECTIVE BARGAINING AGREEMENT
In the Fall of 1996, Major League Baseball Clubs and the Players
Association reached agreement with respect to a Collective Bargaining Agreement.
The Agreement became effective on January 1, 1997 and, with respect to certain
provisions, was retroactive to the 1996 season. The Agreement expires on the
later of October 31, 2000 or the day following the last game of the 2000 World
Series, except that the Players Association has the unilateral option to extend
the Agreement to October 31, 2001 or the day after the last game of the 2001
World Series, whichever is later. In addition, if antitrust legislation jointly
proposed by the MLB clubs and the Players Association is not enacted by December
31, 1998, the Agreement is extended until December 31, 2000 with the Players
Association retaining the one-year option to extend through October 31, 2001.
The Collective Bargaining Agreement introduced a new revenue sharing system and
implemented, for the first time, interleague play and a luxury tax on club
payrolls.
Revenue Sharing. The MLB clubs participate in a revenue sharing system,
which was significantly overhauled as part of the Collective Bargaining
Agreement. The revenue sharing system, which was retroactively effective for the
1996 season, is being phased in over a five-year period and will be fully
implemented in the 2000 season. The revenue sharing rates, which apply to a
club's net local revenue, will be 16% in 1998, 17% in 1999 and 20% in 2000. Net
local revenue is defined in the Collective Bargaining Agreement as all revenue
received by a team or a related party excluding any centrally-generated revenues
of the club that are administered by MLB, such as revenues from the Major
Leagues Central Fund and MLB Properties. In determining net local revenue, a
club may deduct any expenses directly attributable to stadium operations and
certain other specified expenses. For 1998 and beyond, each club contributes the
applicable percentage of its net local revenue to a pool. Once the pool is
accumulated, 75% of it is re-distributed to the clubs equally on a pro rata
basis. The remaining 25% is distributed to teams whose total revenue was below
the average revenue for all clubs based on the extent to which that team's
revenue was below the average. The Florida Marlins and the Colorado Rockies, as
expansion teams, were exempt from the revenue sharing system for the 1996 and
1997 seasons, but both teams will participate in revenue sharing for the 1998
season. The Tampa Bay Devil Rays and the Arizona Diamondbacks are currently
exempt from revenue sharing and will not participate until the 2000 season. The
Company was a payor under the revenue sharing system for the 1997 season and
estimates that its final contribution will be $7.2 million.
Luxury Tax. The luxury tax first introduced in the Collective Bargaining
Agreement became effective at the beginning of the 1997 season. A club that has
an actual club payroll for a season above a specified threshold minimum for that
season may be subject to the luxury tax, but the threshold minimum is adjusted
so that no more than five teams are required to pay the luxury tax in any
season. The adjusted threshold minimum was $55.6 million for 1997, and, unless
further adjusted, will be $59.9 million for 1998 and $64.2 million for 1999.
Actual club payroll is determined by adding the total compensation cost
including cost of benefits, signing bonuses, performance bonuses and deferred
compensation for each player the club has under a major league contract.
Compensation amounts guaranteed under multi-year contracts are reported on the
basis of an average annual value. The luxury tax rate for 1997 and 1998 is 35%
and 34% for 1999. There is no luxury tax imposed in the 2000 season. The amount
that is taxed is the difference between a club's total actual payroll and the
threshold minimum. Proceeds collected from the luxury tax are used to fund
revenue sharing or the Industry Growth Fund, which has a stated objective of
promoting the growth of baseball throughout the world by enhancing fan interest
and increasing the sport's popularity. In 1997, the Indians paid $2.1 million
pursuant to the luxury tax.
Salary Arbitration and MLB Free Agency. Certain player rights provided in
the Collective Bargaining Agreement are determined by credited major league
service. A player is credited for a day of major league service for each day of
the baseball season that he is on a club's active roster. A total of 172 days of
major league service constitutes a year. Under the Collective Bargaining
Agreement, any club, or any player with a total of three or more (but less than
six) years of major league service, may submit the issue of that player's
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<PAGE> 46
salary to final and binding arbitration without the consent of the other party
upon expiration of his then current contract. Those players with more than two
years but less than three years of major league service are also eligible for
arbitration if they fall within the top 17% of such players based on major
league service. When a player completes six years of major league service and
the term of his then current contract has expired, he becomes eligible for free
agency. An eligible player may elect to become a free agent with respect to the
following season by giving notice to the Players Association within a 15-day
period beginning on the later of October 15 or the day following the last game
of the World Series. Generally, once a player is a free agent, he has the right
to negotiate and contract with any MLB club subject to his former team's right
to offer, prior to December 7, to sign the free agent and arbitrate the contract
salary amount. If the former club does not offer to arbitrate or the free agent
does not accept the offer, the former club loses its rights to negotiate with or
sign the free agent until the succeeding May 1. Clubs are compensated with draft
choices if a ranking free agent signs with another club prior to December 7 or
despite his former club's offer to arbitrate. Additionally, a player who has at
least three years of major league service and whose contract is assigned
outright to a minor league team or a player whose contract is being assigned
outright to a minor league team for the second or any subsequent time, may
reject the assignment and elect free agency. Prior to eligibility for
arbitration, a player's salary may be established by the club subject to the MLB
minimum and maximum reduction rules.
MAJOR LEAGUE RULES
The MLB clubs operate under the Major League Rules (the "Rules"). The Rules
govern matters including drafting, signing and trading players, the minor league
system and team and player conduct.
MLB Draft System. Professional baseball conducts an annual draft of first
year players referred to as the "Rule 4" draft each June. Eligible players are
limited to those players who reside in the United States, Canada, Puerto Rico
and other United States territories or possessions and who have not previously
contracted with a major league or minor league club. A player eligible for the
draft may be signed only after the selection meeting. The draft is limited to 50
rounds. The order of selection is based on the prior season overall win-loss
record in the respective league excluding post-season games. Selections
alternate between American League and National League clubs. The first selection
is made by an American League club in odd-numbered years and by a National
League club in even-numbered years.
Signing Players. A club has the exclusive right to contract with the
players it selects in the Rule 4 draft for a period of one year following the
draft, subject to MLB's signing rules. If the drafting club has not signed the
player, he may be eligible for the next Rule 4 draft. Generally, a player who is
a high school student in the United States (including Puerto Rico and other
United States territories and possessions) or Canada is not eligible to enter
into a professional baseball contract during any period he is eligible to
participate in high school athletics. Generally, once a player has attended a
college class he is not eligible for selection in the draft again until he has
completed his junior year or has withdrawn from college and remained out of
college for a period of 120 days. A player who is not eligible for the draft
because he is not a resident of the United States or Canada must be 17 years of
age at the time of signing or will attain 17 years of age prior to the later of
September 1 or the last day of the season for which the player has contracted.
All player contracts for major league and minor league service are uniform
agreements and there is a minimum salary for each level of play. Major league
and minor league contracts can include certain additional provisions that
establish performance incentives and provide benefits to the player. Generally,
players selected by a club initially enter into a contract for minor league
service. After three or four seasons in the minor leagues, depending on the
player's age at the time he is drafted, if a player has not been put on a club's
major league team 40-man roster, he is eligible for the "Rule 5" draft, held
each December, and to be selected by another major league club for its major
league roster. If a club selects a player in the Rule 5 draft, the selecting
club must keep the player on its active 25-man roster for the entire next
season. If the player is not kept on the active roster, the selecting club must
obtain waivers from all other MLB clubs and offer the player back to his
original team before the player may be assigned to a minor league affiliate of
the selecting club.
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<PAGE> 47
Reserve System. Each MLB club is required to maintain and file with the
Commissioner a major league reserve list and a minor league reserve list for
each of its minor league affiliates. A player on a club's major league or minor
league reserve list is not eligible to play or negotiate with any other major
league or minor league club unless that player's contract has been terminated or
assigned. A club may reserve, and retain the rights to, a maximum of 40 players
for its major league club, 38 players for a Class AAA club, 37 players for a
Class AA club and 35 players for each Class A club and each Rookie League club.
From Opening Day until August 31 of each season, the maximum number of players
allowed on a major league active list is 25 and from September 1 until the end
of the season, the maximum number is 40.
Inactive Lists. Upon application to the Commissioner, a club may request
that a player unable to play because of injury or illness be placed on a
disabled list for a minimum period of 15 or 60 days based on the severity of the
ailment. Players on the 15-day list count against the reserve list, but not
against the active list, while players on the 60-day list do not count against
either the reserve or active list. Players may be put on the voluntarily
retired, restricted, disqualified or ineligible list and do not count against
the reserve or active lists. Players put on the suspended list by the
Commissioner count against both the active and reserve lists.
Termination of Player Contracts. A club may unconditionally release a
player from a major league contract at any time, subject to the player's
contractual right to termination pay, if the Club has received waivers of that
player's contract from all the other major league clubs. A waiver is permission
granted for certain assignments or unconditional release of a major league
player. Any other major league team may claim the player's contract for $1 if
unconditional release waivers are requested. Once claimed, a released player has
the option of terminating his contract or accepting the assignment to the major
league team claiming such player. If more than one team in the same league makes
a waiver claim, the contract will go to the club with the lowest standing in the
win-loss records. If claims are made by clubs in different leagues, the contract
will go to a club in the same league as the releasing club.
Assignment of Player Contracts. A team may assign a player's contract to
another major league club (for example, in connection with a trade with that
club) or a minor league club subject to certain rights of the player and other
clubs.
A player with at least five years of major league service may not be
assigned to a minor league club without his written consent. A player with at
least five years of major league service at the time of the assignment of his
contract and whose contract covers the next succeeding season to another major
league club, may elect, at the conclusion of the season following the
assignment, that his contract be assigned to another major league club and he
may specify not more than six clubs that are unacceptable to him for such
assignment. If the club fails to assign the contract in accordance with the
player's request, the player is eligible to become a free agent. Once a player's
contract has been assigned pursuant to that player's request, he does not have
the right to require another assignment or become a free agent until he has
completed another three years of service. During the period beginning August 1
and ending on the last day of the season, waivers from other clubs must be
obtained prior to any assignment to another major league club. A player with at
least ten years of major league service, the last five of which have been with
one club, may not be assigned to any club without his written consent.
A major league player's contract may be assigned to a minor league club
with options to recall that player for up to three seasons without obtaining
waivers. Waivers are required for an optional assignment to the minor leagues if
the player has three or more years of major league service. A club may only have
an optional agreement in place for a player for three seasons, and the maximum
number of optional agreements that any club can have in effect at one time is
16.
If a major league club proposes to remove a player from its 40-man roster
by making an outright assignment of that player's contract to a minor league
team or to cancel a right to recall a player under an existing optional
agreement, waivers are required. If a club is awarded the assignment of a
contract pursuant to that club making a waiver claim, the consideration to be
paid to the assignor club is established by agreement between the clubs, but may
not be less than $20,000.
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<PAGE> 48
MLB PROPERTIES
Major League Baseball Properties ("MLB Properties") was established in 1966
and markets and manages the licensing of the names, logos, uniforms, mascots,
stadium names and other trademarks and intellectual property rights ("Marks") of
all MLB clubs, the American League, the National League, MLB and MLB's special
events (including All-Star and post-season games). Each club owns its own Marks
and has appointed MLB Properties as its exclusive agent to license its Marks.
Each club has the right to operate club-owned stores within a 200-mile radius of
the team's home field. All of the Company's Indians Team Shops are located
within the prescribed area. MLB Properties conducts licensing activities
worldwide and enters into agreements to permit use of the Marks with corporate
sponsors and manufacturers of retail products and media publishers and
producers. MLB Marks are incorporated into advertising campaigns, featured in
clothing and novelties and used in videos, motion pictures and print media. In
addition to promoting MLB and MLB clubs, the activities of MLB Properties
generate a significant amount of revenue. After payment of an agency commission
to MLB Properties, the net revenues are distributed equally among the MLB clubs.
MAJOR LEAGUES CENTRAL FUND
The Major Leagues Central Fund serves as a receipt and disbursement fund
for certain transactions that are shared by the 30 MLB clubs. The Major Leagues
Central Fund's primary sources of funds are national television (broadcast and
cable) and radio broadcasting revenue. The Major Leagues Central Fund's excess
of revenue over expenses is distributed to the clubs or used for specific
purposes, as approved by the clubs.
Currently, the Commissioner, as agent for the MLB clubs, has agreements
with each of Fox Broadcasting Company, Fox Sports Net and The National
Broadcasting Company, Inc. for the telecasting of Major League Baseball games
through the 2000 season and agreements with ESPN, Inc., and Turner Broadcasting
System, Inc. through the 2002 season. The agreements provide for the telecasting
of a specified number of regular season games, the All-Star Game, the Division
Series, the League Championship Series and the World Series.
MLB has an agreement with ESPN Radio for broadcasting Major League Baseball
games through the 2002 season. The agreement provides for the broadcasting of
regular season games, the All-Star Game and post-season games. In addition, MLB
clubs that have broadcast agreements with, or cable distribution through, cable
"superstations" are obligated to contribute a portion of the revenues derived
from those agreements to the Major Leagues Central Fund.
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<PAGE> 49
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information concerning the
directors, proposed directors and executive officers of the Company. The Board
of Directors currently consists of two members, Richard E. Jacobs and Martin J.
Cleary. The Company will expand the Board of Directors on or prior to completion
of the Offering to five members to include Edward G. Ptaszek, Jr. and two
additional Proposed Directors who will be identified in an amendment to this
Registration Statement. The Directors named below have been or will be elected
to serve until the next annual meeting of shareholders or until their successors
are duly elected and qualified. Executive officers of the Company serve at the
pleasure of the Board of Directors, subject to the terms of their employment
agreements.
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
---- --- -------------------------
<S> <C> <C>
Richard E. Jacobs................... 72 Chairman of the Board of Directors,
President and Chief Executive Officer
John H. Hart........................ 49 Executive Vice President and General Manager
Dennis Lehman....................... 46 Executive Vice President, Business
Dan O'Dowd.......................... 38 Vice President, Baseball Operations and
Assistant General Manager
Jeff Overton........................ 41 Vice President, Marketing and Communications
Ken Stefanov........................ 40 Vice President, Finance
David W. Pancoast................... 56 Secretary
Anthony W. Weigand.................. 60 Treasurer
Martin J. Cleary.................... 62 Director
Edward G. Ptaszek, Jr............... 47 Proposed Director and Assistant Secretary
</TABLE>
Biographical information with respect to the Company's executive officers,
other than Mr. Pancoast, is set forth under the heading "Business -- Business
Operations -- Ownership and Management." Biographical information concerning the
Company's Directors, Proposed Directors and Mr. Pancoast is set forth below.
Richard E. Jacobs is Chairman of the Board of Directors, President and
Chief Executive Officer of the Company. Mr. Jacobs has been Chairman of the
Board, Chief Executive Officer and President of the Partnership and has been the
controlling owner of the Indians since 1986. Mr. Jacobs is also Chairman of the
Board and Chief Executive Officer of The Richard E. Jacobs Group Inc., a real
estate management and development company ("The Jacobs Group").
Martin J. Cleary has been Vice Chairman of The Jacobs Group since January
1998. From 1981 to January 1998 he was President and Chief Operating Officer of
The Jacobs Group.
David W. Pancoast has been General Counsel and Secretary of The Jacobs
Group since 1992.
Anthony W. Weigand has been Vice President and Treasurer of The Jacobs
Group since 1975. From 1975 to December 1997 he was also Chief Financial Officer
of The Jacobs Group.
Edward G. Ptaszek, Jr. has been a partner with the law firm of Baker &
Hostetler LLP, Cleveland, Ohio since 1985. From 1978 to 1985 he was an associate
with the firm. Baker & Hostetler provides legal services to the Company.
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
Upon completion of the Offering, the Company's Board of Directors will have
an Audit Committee. The Company's Audit Committee will make recommendations
concerning the engagement of independent public accountants, review with the
independent public accountants the plans and results of the audit engagement,
approve professional services provided by the independent public accountants,
review the independence of the independent public accountants, consider the
range of audit and nonaudit fees, review the independent public accountants'
letter of comments and management's responses, review the adequacy of the
Company's internal
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<PAGE> 50
accounting controls and review major accounting or reporting changes
contemplated or made. The members of the Audit Committee will be Messrs. Cleary,
Ptaszek and an additional outside director.
INDEMNIFICATION
The Company's Code of Regulations provides for the indemnification of
directors and officers of the Company to the maximum extent permitted by Ohio
law, and for the advancement of expenses incurred in connection with the defense
of any action, suit or proceeding that he was a party to by reason of the fact
that he is or was a director of the Company upon the receipt of an undertaking
to repay such amount unless it is ultimately determined that the director is
entitled to indemnification.
The Company has entered into indemnification agreements with each of its
directors and executive officers. These agreements generally: (i) confirm the
existing indemnity provided to them under the Company's Code of Regulations and
assure that this indemnity will continue to be provided; (ii) provide that if
the Company does not maintain directors' and officers' liability insurance, the
Company will, in effect, become a self-insurer of the coverage; (iii) provide
that, in addition, the directors and officers shall be indemnified to the
fullest extent permitted by law against all expenses (including legal fees),
judgments, fines, and settlement amounts paid or incurred by them in any action
or proceeding, including any action by or in the right of the Company, on
account of their service as a director, officer, employee, or agent of the
Company or at the request of the Company as a director, officer, employee,
trustee, fiduciary, manager, member or agent of another corporation,
partnership, trust, limited liability company, employee benefit plan or other
enterprise; and (iv) provide for the mandatory advancement of expenses to the
executive officer or director in connection with the defense of any proceedings,
provided the executive officer or director agrees to reimburse the Company for
that advancement if it is ultimately determined that the executive officer or
director is not entitled to indemnification for that proceeding under the
agreement. Coverage under the agreements is excluded: (A) on account of conduct
which is finally adjudged to be knowingly fraudulent, deliberately dishonest, or
willful misconduct; or (B) if a final court of adjudication shall determine that
such indemnification is not lawful; or (C) in respect of any suit in which
judgment is rendered for violation of Section 16(b) of the Securities Exchange
Act of 1934 or similar provisions of any federal, state, or local statutory law;
or (D) on account of any remuneration paid which is finally adjudged to have
been in violation of law; or (E) on account of conduct occurring prior to the
time the executive officer or director became an officer, director, employee, or
agent of the Company or its subsidiaries (but in no event earlier that the time
such entity became a subsidiary of the Company); or (F) with respect to
proceedings initiated or brought voluntarily by the executive officer or
director and not by way of defense, except for proceedings brought to enforce
rights under the indemnification agreement.
The Company maintains a directors' and officers' insurance policy which
insures the officers and directors of the Company from any claim arising out of
an alleged wrongful act by such persons in their respective capacities as
officers and directors of the Company.
COMPENSATION OF DIRECTORS
Each member of the Company's Board of Directors who is not also an employee
of the Company receives an annual fee of $15,000 for serving as a director of
the Company and a fee of $1,000 for each Board meeting and committee meeting
attended. Directors who are also employees of the Company do not receive any
additional compensation for their services as directors. The Company reimburses
out-of-pocket expenses incurred by all directors in connection with attending
Board and committee meetings.
STOCK OPTION PLAN
The Company's Board of Directors has adopted a Long-Term Incentive Plan
(the "Stock Option Plan"). The purpose of the Stock Option Plan is to enable the
Company to attract, retain and reward key employees of the Company and its
affiliates and to strengthen the mutuality of interest between such key
employees and the Company's shareholders. Grants of incentive or nonqualified
share options, restricted shares, share appreciation rights in tandem with
options ("SARs"), other share-based awards or any combination thereof, may be
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<PAGE> 51
issued under the Stock Option Plan to officers and key employees of the Company,
including employees of the Partnership, who are responsible for or contribute to
the management, growth or profitability of the business of the Company and its
affiliates. The Board of Directors administers the Stock Option Plan and is
responsible for determining the type, amount and timing of grants and awards.
The Company has reserved 640,000 Class A Common Shares for issuance under the
Stock Option Plan. No participant in the Stock Option Plan may be granted stock
options or other share awards in any calendar year for more than 100,000 shares.
The share limitations, shares reserved and the terms of outstanding awards will
be adjusted, as the Board of Directors deems appropriate, in the event of a
share dividend, split or other change in the corporate structure of the Company
affecting the shares.
The term of each option granted under the Stock Option Plan will not exceed
ten years from the date of grant. The Board of Directors may grant tandem SARs
to any person granted an option under the Stock Option Plan. Each tandem SAR
will represent the right to receive, in cash or shares as the Board of Directors
determines, a distribution in an amount equal to the excess of the fair market
value of the option shares (to which the SAR corresponds) on the date of
exercise over the exercise price for those shares. Each tandem SAR expires at
the same time as its corresponding option. The exercise of an option will result
in an immediate forfeiture of its corresponding SAR, and the exercise of an SAR
will cause an immediate forfeiture of its corresponding option. The Stock Option
Plan provides that all options and tandem SARs will become exercisable on a
change in control (as defined in the Stock Option Plan) of the Company.
The Board of Directors may award Common Shares under the Stock Option Plan
and may place restrictions on the transfer or defer the date of receipt of those
shares. Each award will specify any applicable restrictions or deferral date,
the duration of those restrictions, and the time at which the restrictions
lapse. Participants may be required to deposit shares with the Company during
the period of any restrictions.
The Stock Option Plan provides for vesting, exercise or forfeiture of
rights granted under the Stock Option Plan on death, disability, termination of
employment or a change of control. The Board of Directors may modify, suspend or
terminate the Stock Option Plan as long as it does not impair the rights of any
participant.
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with each of Messrs.
Hart, O'Dowd, Lehman and Overton. The term of each agreement is described in
"Business -- Business Operations -- Ownership and Management." Pursuant to their
respective agreements, the executives agree to devote their full time and
efforts exclusively to the Company, agree not to engage in conduct which is
detrimental to the Company and agree to abide by and be subject to the
discipline of the Commissioner. The Company has the right to terminate an
executive prior to the expiration of that executive's agreement if the executive
fails to comply with the employment agreement or is fraudulent or dishonest in
the performance of his duties. If an executive is terminated without cause, the
agreements require the executive to seek and accept other comparable employment,
either from another club or another baseball or non-baseball employer, and the
amount received by the executive from such other employment, if obtained,
reduces the amount the executive is owed by the Company. By their terms, the
agreements are subject to and are governed by all applicable rules and
regulations of Major League Baseball and the American League.
Each agreement establishes an annual salary for each year of the term of
the agreement, including the option years. The salaries for each of the
executives for 1998 are set forth under "-- Executive Compensation." The
agreements provide for specified salary increases over the terms of the
agreements. In addition, the agreements provide for varying bonuses based on the
achievement of specified Company objectives. The agreements permit the
executives to elect to defer the payment of a portion of their salary and have
the Company hold the deferred amount in a non-taxable trust for scheduled
payments following the executive's death, disability or termination of
employment with the Company.
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EXECUTIVE COMPENSATION
The following table sets forth the annual base salary expected to be paid
to the chief executive officer and the other four most highly compensated
executive officers of the Company (each a "Named Executive Officer") during
1998.
<TABLE>
<CAPTION>
NAME PRINCIPAL POSITION BASE SALARY
---- ------------------ -----------
<S> <C> <C>
Richard E. Jacobs................... Chairman of the Board of Directors,
President and Chief Executive Officer $
John Hart........................... Executive Vice President and General
Manager $
Dennis Lehman....................... Executive Vice President, Business $
Dan O'Dowd.......................... Vice President, Baseball Operations
and Assistant General Manager $
Jeff Overton........................ Vice President, Marketing and
Communications $
</TABLE>
PRINCIPAL SHAREHOLDERS
The following table sets forth, upon completion of the Offering, certain
information regarding the beneficial ownership of each class of the Company's
Common Shares by each of the Company's (i) Directors, Proposed Directors and
Named Executive Officers, (ii) each person who is known by the Company to
beneficially own five percent or more of the outstanding Class A Common Shares
or Class B Common Shares, and (iii) all of the Directors, Proposed Directors and
executive officers of the Company as a group.
<TABLE>
<CAPTION>
CLASS A COMMON SHARES CLASS B COMMON SHARES TOTAL
----------------------- ----------------------- PERCENTAGE
NUMBER OF PERCENT OF NUMBER OF PERCENT OF VOTING
NAME(1) SHARES CLASS SHARES CLASS CONTROL
------- --------- ---------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Richard E. Jacobs(2)................. 133,200 3.2 2,281,667 99.9 99.9
Martin J. Cleary..................... 6,176 * 2,290 * *
Edward G. Ptaszek, Jr................ -- -- -- -- --
John Hart............................ -- -- -- -- --
Dennis Lehman........................ -- -- -- -- --
Dan O'Dowd........................... -- -- -- -- --
Jeff Overton......................... -- -- -- -- --
All directors and executive officers
as a group (seven persons)......... 139,376 3.2 2,283,957 99.9 99.9
</TABLE>
- ---------------
* Less than one percent.
(1) Unless otherwise indicated, the listed beneficial owner has sole voting and
investment power over such shares. The table assumes no exercise of the
Underwriters' over-allotment option.
(2) Consists of shares held by Richard E. Jacobs as sole trustee under
Declaration of Trust dated April 23, 1987 (the "Richard Jacobs Trust"), and
as sole trustee of the David H. Jacobs Marital Trust (the "David Jacobs
Trust"). Of the shares listed, 75% are held by the Richard Jacobs Trust, of
which Mr. Jacobs is currently the sole beneficiary, and 25% are held by the
David Jacobs Trust, of which the heirs of David H. Jacobs are the
beneficiaries. Does not include 6,043,334 Class A Common Shares issuable to
CBC (of which the Jacobs family trusts are the sole shareholders) upon
exchange of limited partnership interests in the Partnership. See "The
Partnership -- Limited Partner Rights."
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CERTAIN TRANSACTIONS
In connection with the formation of the Company in March 1998, the Jacobs
family trusts, of which Richard E. Jacobs is the sole trustee, acquired 100
Common Shares of the Company for a price of $1,500. Upon the amendment and
restatement of the Company's articles of incorporation to provide for two
classes of Common Shares, the 100 shares became 100 Class A Common Shares.
In connection with the Formation Transactions, the Jacobs family trusts
will receive 2,281,667 Class B Common Shares, 133,200 Class A Common Shares (in
addition to those described in the preceding paragraph) and $55.7 million in
cash, and Martin J. Cleary will receive 2,290 Class B Common Shares, 6,176 Class
A Common Shares and $55,800 in cash. Richard E. Jacobs, the sole trustee of the
Jacobs family trusts, is the Chairman of the Board, President and Chief
Executive Officer of the Company, and Mr. Cleary is a Director of the Company.
See "Formation Transactions."
As of the date of this Prospectus, the Partnership has borrowed an
aggregate of $35.5 million under the MLB Credit Facility. Substantially all of
those funds have been loaned to CBC. In March 1998, the Partnership distributed
$49.2 million to its partners and CBC repaid its $35.5 million debt to the
Partnership.
Mr. Jacobs is Chairman of the Board and Chief Executive Officer of The
Jacobs Group, a real estate development and management company, and Mr. Cleary,
a director of the Company, is Vice Chairman of The Jacobs Group. The Company has
paid The Jacobs Group for certain legal, accounting and administrative services
it provided to the Company. For the years ended December 31, 1995, 1996 and
1997, the aggregate amounts paid for these services were $327,000, $335,000 and
$267,000, respectively. In addition, during 1996, the Company paid $523,000 of
payroll and related taxes to Ballpark Services, Inc., a company controlled by
the Jacobs family trusts, for the provision of game day labor services.
The Company operates four Cleveland Indians Team Shops in shopping malls
owned and managed by The Jacobs Group. Pursuant to leases between the Company
and affiliates of The Jacobs Group, the Company paid $194,000, $213,000 and
$554,000 in 1995, 1996 and 1997, respectively. The Company believes the terms of
its leases with The Jacobs Group are at least as favorable as those that could
be obtained from an unrelated third party in an arms'-length transaction.
Mr. Jacobs, individually and as trustee of the David H. Jacobs Marital
Trust, is the guarantor of any outstanding amounts under the Company's line of
credit with KeyBank. The maximum amounts outstanding during 1995, 1996 and 1997
were $5.5 million, $0 and $0, respectively.
Edward G. Ptaszek, Jr., a Proposed Director and an Assistant Secretary of
the Company, is a partner with the law firm of Baker & Hostetler LLP. Baker &
Hostetler has provided legal services to the Company in the past and in
connection with the Offering, and the Company expects that the firm will
continue to provide such services.
Following the Offering, all transactions between the Company and its
directors, officers or principal shareholders will require the prior approval of
the Audit Committee of the Board of Directors.
THE PARTNERSHIP
The following summary of the Partnership Agreement, including the
descriptions of certain provisions set forth elsewhere in this Prospectus, is
qualified in its entirety by reference to the Partnership Agreement, which is
filed as an exhibit to the Registration Statement of which this Prospectus is a
part.
ORGANIZATION AND MANAGEMENT
The Partnership is organized as an Ohio limited partnership pursuant to the
terms of the Partnership Agreement. The Company, as the sole general partner of
the Partnership (the "General Partner"), will have full, exclusive, and complete
responsibility and discretion in the management and control of the Partnership,
and the limited partner will have no authority to transact business for, or
participate in the management activities or decisions of, the Partnership. Any
decision for the Partnership, however, to make a general
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assignment for the benefit of creditors, or to appoint or acquiesce in the
appointment of a custodian, receiver, or trustee for all or any part of the
assets of the Partnership, to take title to any property other than in the name
of the Partnership, to institute any proceeding for bankruptcy, to dissolve the
Partnership or to amend the Partnership Agreement, except to admit new limited
partners or to reflect changes in percentage interests in the Partnership, would
require the consent of the limited partner.
Upon completion of the Formation Transactions and the Offering, CBC will be
the sole limited partner of the Partnership.
TRANSFERABILITY OF INTERESTS
The Partnership Agreement provides that the General Partner may not
voluntarily withdraw from the Partnership, or transfer or assign its interest in
the Partnership, except with the consent of the limited partner, after a vote
amending the Partnership Agreement. CBC, as the limited partner, may transfer
its interests in the Partnership without the consent of the General Partner,
subject to certain limitations.
CAPITAL CONTRIBUTIONS
The Partnership Agreement provides that if the Partnership requires
additional funds at any time or from time to time in excess of funds available
to the Partnership from operations, borrowings or capital contributions, the
General Partner may borrow such funds from a financial institution or other
lender and lend such funds to the Partnership on the same terms and conditions
as are applicable to the General Partner's borrowing of such funds or, to the
extent that the General Partner does not borrow all the required funds, the
General Partner may make capital calls for such funds. The limited partner has
no obligation to make any additional capital contribution but the limited
partner's interest in the Partnership will be diluted if the General Partner
makes additional capital contributions pursuant to a capital call and the
limited partner does not.
LIMITED PARTNER RIGHTS
The limited partner is entitled to exchange all or a portion of its Units
in the Partnership for Class A Common Shares, although the Company has the right
to substitute cash for the shares. The limited partner rights permit CBC to
exchange each Unit owned by it for one Class A Common Share. This one-for-one
exchange ratio will be adjusted in the event of a stock split, stock dividend,
or other event having a dilutive or anti-dilutive effect on the limited partner
rights. If an exercise of the limited partner rights would result in CBC
receiving cash, the amount of the cash payment would be based upon the trading
price of the Class A Common Shares for the five trading days prior to exercise.
The limited partner rights may be exercised by CBC at any time commencing
one year after the date of this Prospectus, in whole or in part. The limited
partner rights will expire upon the termination of the Partnership if not
exercised prior to that date.
REGISTRATION RIGHTS
For a description of certain piggy-back registration rights held by CBC
with respect to Class A Common Shares it receives upon exercise of limited
partner rights, see "Shares Available for Future Sale -- Registration Rights."
TAX MATTERS
The General Partner will be the tax matters partner of the Partnership and,
as such, will have authority to make tax elections under the Internal Revenue
Code of 1986, as amended (the "Code"), on behalf of the Partnership.
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ALLOCATION OF NET INCOME OR NET LOSS
The net income or net loss of the Partnership generally will be allocated
to the General Partner and the limited partner in accordance with their
respective percentage interests in the Partnership, subject to compliance with
the provisions of Section 704(b) of the Code and the Treasury Regulations
promulgated thereunder.
A number of special allocations will be made in respect of tax items of the
General Partner and the Partnership. Under Section 754 of the Code, the General
Partner will receive additional amortization attributable to the stepped-up
basis in the Partnership as a result of the General Partner's acquisition of
partnership interests for cash. See "Formation Transactions." Gain recognized by
the Partnership on the sale of Partnership assets which is unrealized gain
attributable to the period prior to the completion of the Offering will be
allocated entirely to the limited partner. Any excess gain recognized by the
Partnership on the sale of Partnership assets will be allocated in accordance
with the partners' percentage interests in the Partnership.
DISTRIBUTIONS
The Company, as the General Partner of the Partnership, is generally not
permitted to distribute any portion of Net Operating Cash Flow or Net Sales
Proceeds (in each case as defined in the Partnership Agreement). However, the
Company is required to cause the Partnership to distribute cash to the partners
on a quarterly basis an amount estimated to approximate the partners' federal,
state and local income taxes as a result of the Partnership's net income for
such period using certain assumptions specified in the Partnership Agreement. In
addition, the Company may cause the Partnership to make distributions to its
partners if, prior to the making of such distributions, the Board of Directors
of the Company shall have approved a cash dividend on its Common Shares in an
amount equal to the Company's share of such distribution. All such distributions
shall be made in accordance with the partners' percentage interests in the
Partnership.
OPERATIONS
Pursuant to the Partnership Agreement, the Partnership will assume and pay
when due, or reimburse the General Partner for payment of all costs and expenses
relating to the formation, continuity of existence, and operations of the
General Partner.
TERM
The Partnership will continue in full force and effect until ,
2048, or until sooner dissolved upon the dissolution or termination of the
General Partner (unless the limited partner elects to continue the Partnership),
the election of the General Partner and the limited partner to dissolve the
Partnership, or the sale or other disposition of all or substantially all the
assets of the Partnership.
DESCRIPTION OF CAPITAL SHARES
GENERAL
As of April 3, 1998, the Company's authorized capital shares consisted of
850 Common Shares, without par value, 100 of which were outstanding and owned by
the Jacobs family trusts. In anticipation of the Formation Transactions and the
Offering, the current shareholders of the Company will adopt Amended and
Restated Articles of Incorporation (the "Articles") to authorize 27,000,000
Class A Common Shares, without par value, 3,000,000 Class B Common Shares,
without par value, and 1,000,000 preferred shares, the terms of which will be
set by the Board of Directors upon issuance (the "Preferred Shares"). Upon the
effectiveness of the Articles, each of the 100 outstanding Common Shares will
become 100 Class A Common Shares.
COMMON SHARES
Upon completion of the Formation Transactions and the Offering, there will
be 4,139,376 Class A Common Shares outstanding (4,739,376 shares if the
Underwriters' over-allotment option is exercised in full)
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<PAGE> 56
and 2,283,957 Class B Common Shares outstanding. The Class A Common Shares and
Class B Common Shares are identical in all respects, except (i) that each Class
A Common Share is entitled to one vote and each Class B Common Share is entitled
to 10,000 votes and (ii) Class B Common Shares are subject to certain
restrictions on transfer described below. In the event of a liquidation,
dissolution or winding up of the Company, the holders of Class A Common Shares
and Class B Common Shares are entitled to share equally and ratably in the
assets of the Company, if any, remaining after paying all debts and liabilities
of the Company. Subject to the rights of holders of Preferred Shares, the
holders of Class A and Class B Common Shares are entitled to receive dividends,
on a share-for-share basis if, as and when declared by the Board of Directors
out of funds legally available therefor, subject to the Governing Documents. See
"Dividend Policy." Beginning one year after the date of this Prospectus, holders
of Class B Common Shares are entitled to exchange each Class B Common Share for
one Class A Common Share at any time. Holders of Common Shares have the right to
cumulate their votes in the election of directors.
The Class B Common Shares are not generally transferrable except (i) in
very limited instances to family members, trusts, other holders of Class B
Common Shares, charitable organizations and entities controlled by such persons
and (ii) in connection with a merger, consolidation or other transaction which
provides that all holders of Class A Common Shares will be entitled to receive
the same type and amount of consideration in respect of their shares as is
provided to the holders of Class B Common Shares. These restrictions are in
addition to those imposed by the Governing Documents.
These restrictions on transfer are subject to a one-time exception that
will permit the estate of Mr. Jacobs to transfer Class B Common Shares to any
person or group of persons (collectively, an "Acquiring Person") in a
transaction within three years following Mr. Jacobs' death. This exception will
not apply to any subsequent transfer by an Acquiring Person, and all Class B
Common Shares acquired by an Acquiring Person will be subject to the
restrictions on transfer described above. In addition, for a period of three
years following the date that an Acquiring Person first becomes the beneficial
owner of Class B Common Shares (the "Acquisition Date") neither the Acquiring
Person nor any affiliate of the Acquiring Person may make a tender offer for
Class A Common Shares or merge or consolidate with the Company, propose to
acquire or authorize the acquisition by the Acquiring Person or its affiliates
of substantially all the assets of the Company, or authorize or vote any Common
Shares in favor of an amendment to the Articles to effect any recapitalization,
reverse stock split or other similar transaction with respect to the Common
Shares which, if effected, would directly or indirectly increase the Acquiring
Person's beneficial ownership of Common Shares, unless in any such case, all
holders of Class A Common Shares receive or are entitled to receive for their
Class A Common Shares consideration having a value equal to the greater of: (i)
the average price per share that the Acquiring Person paid for the Common Shares
(or securities convertible into or exchangeable for Common Shares) in connection
with the transaction or series of transactions in which the Acquiring Person
became such; and (ii) the fair market value of a Class A Common Share on the
date prior to the public announcement of any of the transactions described above
(determined on the basis of the average closing price of a Class A Common Share
during the 20 trading days preceding the date of such announcement).
The Governing Documents contain provisions which may limit, restrict or
require the actions of the Company or the holders of the Class A Common Shares
which may adversely affect the value of those Shares. No holder of Class A
Common Shares, nor any officer, director or employee (including manager or
player) of the Company, may own stock or any other proprietary or financial
interest in any other MLB club. The Governing Documents require that any person
acquiring more than 5% of the Class A Common Shares then outstanding obtain
approval of the Commissioner before making such acquisition, and, such approval
will be specifically withheld if that person owns any interest in another MLB
club or the ownership by such person would otherwise violate any other provision
of the Governing Documents. No president, secretary, treasurer, umpire or
employee of either league is eligible to own stock or any other proprietary or
financial interest in any MLB team, including Class A Common Shares of the
Company.
Failure by a holder of Class A Common Shares to comply with these
restrictions may result in a forced sale of such holder's interest or the
repurchase of such interests by the Company. The Company's Articles of
Incorporation provide that the Company may redeem, at the lower of fair market
value or cost, shares held by any person or entity who becomes the owner of 5%
or more of the Company's Class A Common Shares
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without the approval of MLB. These restrictions will be contained in a legend on
each certificate issued evidencing Class A Common Shares.
All of the Class B Common Shares to be issued in connection with the
Formation Transactions will be fully paid and nonassessable, and all of the
shares of Class A Common Shares offered hereby, when issued, will be fully paid
and nonassessable.
PREFERRED SHARES
The Board of Directors is authorized to issue, from time to time, without
further action by the shareholders, Preferred Shares in one or more classes or
series, and to fix or alter the designations, powers and preferences, and
relative, participating, optional or other rights, if any, and qualifications,
limitations or restrictions thereof, including, without limitation, dividend
rights (and whether dividends are cumulative), conversion rights, if any, rights
and terms of redemption (including sinking fund provisions, if any), redemption
price and liquidation preferences of any unissued shares or wholly unissued
series of Preferred Shares. In addition, the Board may establish the number of
shares constituting any such class or series and the designation thereof, and
increase or decrease the number of shares of any such class or series subsequent
to the issuance of shares of such class or series, but not below the number of
shares of such class or series then outstanding.
CERTAIN PROVISIONS OF OHIO LAW
Section 1701.59 of the Ohio Revised Code (the "Ohio Code") provides, with
certain limited exceptions, that a director shall be held liable in damages for
any action he takes or fails to take as a director only if it is proved by clear
and convincing evidence that his action or failure to act involved an act or
omission undertaken with deliberate intent to cause injury to the corporation or
with reckless disregard for its best interest. In addition, Section 1701.59 of
the Ohio Code provides that a director of an Ohio corporation, in determining
what he reasonably believes to be in the best interests of the corporation,
shall consider the interests of the corporation's shareholders and may consider,
in his discretion, any of the following: (i) the interests of the corporation's
employees, suppliers, creditors and customers; (ii) the economy of the State of
Ohio and the nation; (iii) community and societal considerations; and (iv) the
long-term as well as short-term interests of the corporation and its
shareholders, including the possibility that these interests may be best served
by the continued independence of the corporation.
The Ohio Code also authorizes Ohio corporations to indemnify officers and
directors from liability if the officer or director acted in good faith and in a
manner reasonably believed by the officer or director to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal
actions, if the officer or director had no reason to believe his action was
unlawful. In the case of an action by or on behalf of a corporation,
indemnification may not be made (i) if the person seeking indemnification is
adjudged liable for negligence or misconduct, unless the court in which such
action was brought determines such person is fairly and reasonably entitled to
indemnification or (ii) if liability asserted against such person concerns
certain unlawful distributions. The indemnification provisions of the Ohio Code
require indemnification if a director or officer has been successful on the
merits or otherwise in defense of any action, suit or proceeding that he was a
party to by reason of the fact that he is or was a director or officer of the
corporation. The indemnification authorized under Ohio law is not exclusive and
is in addition to any other rights granted to officers and directors under the
articles of incorporation or code of regulations of the corporation or any
agreement between officers and director and the corporation. A corporation may
purchase and maintain insurance or furnish similar protection on behalf of any
officer or director against any liability asserted against him and incurred by
him in his capacity, or arising out of the status, as an officer or director,
whether or not the corporation would have the power to indemnify him against
such liability under the Ohio Code.
Section 1707.041 of the Ohio Code regulates control bids for corporations
in Ohio having certain concentrations of Ohio shareholders and permits the Ohio
Division of Securities to suspend a control bid if certain information is not
provided to offerees. A control bid includes the purchase or offer to purchase
any equity security of the Company from a resident of Ohio if, after the
purchase of that security, the offeror would
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be directly or indirectly the beneficial owner of more than 10% of any class of
issued and outstanding equity securities of the Company. Section 1707.043 of the
Ohio Code, the so-called "green mail disgorgement" statute, provides an Ohio
corporation, or in certain circumstances the shareholders of an Ohio
corporation, the right to recover profits realized under certain circumstances
by persons who dispose of securities of a corporation within 18 months of
proposing to acquire such corporation.
It is possible that the foregoing provisions will discourage other persons
from making a tender offer for or acquisition of substantial amounts of the
Company's Common Shares, or may delay changes in control or management of the
Company. The Company has elected in its Articles of Incorporation not to be
subject to Ohio's "Merger Moratorium" statute (Chapter 1704 of the Ohio Revised
Code) and its "Control Share Acquisition" statute (Section 1701.831 of the Ohio
Revised Code) in light of the control of the Company represented by the Class B
Common Shares and the Ownership Restrictions imposed by the Governing Documents.
However, Chapter 1704 provides that it will continue to apply to certain
transactions between the Company and certain Interested Shareholders (as defined
in Chapter 1704) for a period of 12 months after , 1998 (the effective
date of the Articles).
REGISTRAR AND TRANSFER AGENT
The registrar and transfer agent for the Class A Common Shares is National
City Bank of Cleveland, Ohio.
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of the Offering, of the 27,000,000 authorized Class A
Common Shares, 4,139,376 Class A Common Shares will be issued and outstanding or
reserved for issuance pursuant to the exercise of presently exercisable stock
options. Of these 4,139,376 Class A Common Shares, the 4,000,000 shares
purchased in the Offering by persons who are not "affiliates" of the Company
will be freely tradeable, without restriction under the Securities Act. The
Company believes that 139,376 Class A Common Shares held by CBC and the
2,283,957 Class B Common Shares are considered "restricted securities" under the
Securities Act and CBC may not utilize Rule 144 until such shares have been held
for at least one year. The 139,376 Class A Common Shares were issued in March
1998. Each of the 6,043,334 limited partnership Units of the Partnership held by
CBC is exchangeable, beginning one year after the date hereof, into one Class A
Common Share. The Class A Common Shares issuable upon such exchange will be
restricted securities within the meaning of the Securities Act. However, the
Company has granted to CBC certain "piggy-back" registration rights with respect
to the Class A Common Shares issued in exchange for Partnership Units. These
rights permit CBC to include, at the cost of the Company, such Class A Common
Shares in certain registration statements filed by the Company with respect to
Class A Common Shares.
The up to 640,000 Class A Common Shares reserved for issuance upon exercise
of outstanding options will become eligible for resale under Rule 144 one year
subsequent to the date or dates that the holders of such options exercise the
same. Subsequent to the Offering, however, the Company intends to file a
registration statement on Form S-8 with respect to the 640,000 Class A Common
Shares reserved for issuance upon exercise of outstanding options.
In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated) who has beneficially owned his or her shares for at
least one year, including an "affiliate," as that term is defined below, is
entitled to sell, within any three-month period, a number of shares that does
not exceed the greater of 1% of the then outstanding shares or the average
weekly trading volume of the then outstanding shares during the four calendar
weeks preceding each such sale. A person (or persons whose shares are
aggregated) who is not deemed an "affiliate" of the Company, and who has
beneficially owned shares for at least two years, is entitled to sell such
shares under Rule 144 without regard to the volume limitations described above.
As defined in Rule 144, an "affiliate" of an issuer is a person that directly or
indirectly, through the use of one or more intermediaries, controls, or is
controlled by, or is under the common control with, such issuer.
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No prediction can be made as to the effect, if any, that future sales of
shares, or the availability of shares for future sale, will have on the market
price of the Class A Common Shares prevailing from time to time. Sales of
substantial amounts of Class A Common Shares (including shares issued upon the
exercise of the outstanding stock options), or the perception that such sales
could occur, could adversely affect the prevailing market prices for the Class A
Common Shares.
The Company and the directors, executive officers and current shareholders
of the Company have agreed that they will not, directly or indirectly, without
the prior written consent of the Underwriters, offer, sell, grant any option to
purchase or otherwise dispose (or announce any offer, sale, grant of any option
to purchase or other disposition) of any Class A Common Shares, or any
securities convertible into, or exchangeable or exercisable for, Class A Common
Shares for a period of 270 days, subject to certain exceptions.
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UNDERWRITING
In the Underwriting Agreement, the Underwriters, represented by McDonald &
Company Securities, Inc. (the "Representative"), have agreed, severally, subject
to the terms and conditions therein set forth, to purchase from the Company, and
the Company has agreed to sell to them, the number of Class A Common Shares
totaling 4,000,000 shares, set forth opposite their respective names below. The
Underwriters are committed to take and pay for all shares if any shares are
purchased.
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITERS SHARES
------------ ---------
<S> <C>
McDonald & Company Securities, Inc..........................
---------
Total............................................. 4,000,000
=========
</TABLE>
The Company has been advised by the Representative that the Underwriters
propose to offer the Class A Common Shares to the public at the public offering
price set forth on the cover page of this Prospectus. The Underwriters may allow
to certain selected dealers who are members of the National Association of
Securities Dealers, Inc. (the "NASD") a discount not exceeding $ per share,
and the Underwriters may allow, and such selected dealers may re-allow, a
discount not exceeding $ per share to other dealers who are members of the
NASD. After the Offering, the public offering price and the discount to dealers
may be changed by the Representative.
The Company has granted an option to the Underwriters, exercisable during
the 30-day period after the date of this Prospectus, to purchase up to a maximum
of 600,000 Class A Common Shares at the public offering price, less the
underwriting discount, as set forth on the cover page of this Prospectus. The
Underwriters may exercise that option only to cover over-allotments in the sale
of the Class A Common Shares that the Underwriters have agreed to purchase. To
the extent that the Underwriters exercise such option, each of the Underwriters
will have a firm commitment, subject to certain conditions, to purchase the same
percentage of the option shares as the number of shares to be purchased and
offered by that Underwriter in the table above bears to the total.
The Company has agreed to indemnify the Underwriters against certain
liabilities which may be incurred in connection with the Offering, including
liabilities under the Securities Act of 1933.
The Company and the directors, executive officers and current shareholders
of the Company have agreed that they will not offer, sell, transfer or otherwise
dispose of any Class A Common Shares, or any securities convertible into or
exchangeable for Class A Common Shares, for a period of 270 days from the date
of this Prospectus, without the prior written consent of McDonald & Company
Securities, Inc.
The Representative has advised the Company that the Underwriters do not
intend to confirm sales of Class A Common Shares offered by this Prospectus to
any accounts over which they exercise discretionary authority. Class A Common
Shares will be offered in round lots (100 shares and multiples thereof) only.
In connection with the Offering and in compliance with applicable law, the
Underwriters may over-allot or effect transactions that stabilize, maintain, or
otherwise affect the market price of the Class A Common Shares at levels above
those that might otherwise prevail in the open market, including by entering
stabilizing bids, effecting syndicate covering transactions or imposing penalty
bids. A stabilizing bid means the placing of any bid, or the effecting of any
purchase, for the purpose of pegging, fixing or maintaining the price of a
security. A syndicate covering transaction means the placing of any bid on
behalf of the underwriting syndicate
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or the effecting of any purchase to reduce a short position created in
connection with the Offering. A penalty bid means an arrangement that permits
McDonald & Company Securities, Inc., as managing underwriter, to reclaim a
selling concession from a syndicate member in connection with the Offering when
securities originally sold by the syndicate member are purchased in stabilizing
or syndicate covering transactions. These transactions may be effected on the
Nasdaq National Market or otherwise. The Underwriters are not required to engage
in any of these activities. Any such activities, if commenced, may be
discontinued at any time.
McDonald & Company Securities, Inc. is one of the Company's major
advertisers and has had a significant advertising relationship with the Company
since 1994. Its advertising expenditures include the purchase of advertising
signage at Jacobs Field, co-sponsorship of Indians' radio and television
broadcasts and sponsorship or co-sponsorship of a variety of advertising and
promotional activities involving the Indians.
Prior to the Offering, there has not been any public market for Class A
Common Shares. Consequently, the initial public offering price for the Class A
Common Shares included in the Offering will be determined by negotiations
between the Company and the Representative. Among the factors considered in
determining that price will be the history of and prospects for the Company's
business and the industry in which it competes, recent sales prices of Major
League Baseball franchises, an assessment of the Company's management and the
present state of the Company's development, the past and present revenues and
earnings of the Company, the prospects for growth of the Company's revenues and
earnings, and the current state of the economy in the United States and the
Cleveland, Ohio, metropolitan area. Since the Company will be one of a few
public companies dedicated primarily to professional sports, and the only
current public company the principal business of which is Major League Baseball,
the Company and the Representative were not able to use market prices of
securities of other companies in the same industry as a basis for setting the
initial public offering price.
EXPERTS
The combined financial statements of Cleveland Indians Baseball Company
Limited Partnership and Ballpark Management Company as of December 31, 1996 and
1997 and for each of the three years in the period ended December 31, 1997 and
the balance sheet of Cleveland Indians Baseball Company, Inc. as of March 31,
1998 included in this Prospectus have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their reports appearing herein, and have been
included in reliance upon the reports of such firm given upon their authority as
experts in accounting and auditing.
VALIDITY OF SHARES
The validity of the issuance of the Class A Common Shares offered hereby
will be passed upon for the Company by Baker & Hostetler LLP, Cleveland, Ohio.
Certain legal matters will be passed upon for the Underwriters by Calfee, Halter
& Griswold LLP, Cleveland, Ohio. Edward G. Ptaszek, Jr., an Assistant Secretary
and a Proposed Director of the Company, is a partner in Baker & Hostetler.
ADDITIONAL INFORMATION
The Company has filed with the Commission a Registration Statement on Form
S-1 (of which this Prospectus is a part) under the Securities Act with respect
to the Class A Common Shares offered hereby. This Prospectus does not contain
all of the information contained in the Registration Statement, certain portions
of which have been omitted as permitted by the rules and regulations of the
Commission, and reference is made to the Registration Statement and the exhibits
thereto for further information with respect to the Company and the Class A
Common Shares to which this Prospectus relates. Statements contained herein
concerning the provisions of any contract, agreement or other document are not
necessarily complete, and, in each instance, reference is made to the copy of
such document filed as an exhibit to the Registration Statement for a more
complete description of the matter involved, and each such statement is
qualified in its entirety by such reference. The Registration Statement,
including the exhibits and schedules filed therewith, may be inspected at the
public reference facilities maintained by the Commission at 450 Fifth Street,
N.W.,
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Washington, D.C. 20549 and at the regional offices of the Commission located at
7 World Trade Center, New York, New York 10048 and Citicorp Center, 500 West
Madison Street, Chicago, Illinois 60606. Copies of these documents may be
obtained, upon payment of a duplication fee, by writing to the Commission.
Please call the Commission at 1-800-SEC-0330 for further information on the
operation of the public reference rooms. The Commission also maintains a Web
site (address http://www.sec.gov) that contains reports, proxy and information
statements and other information regarding registrants that file electronically
with the Commission.
The Company intends to furnish its shareholders with annual reports
containing audited financial statements and quarterly reports for the first
three quarters of each fiscal year containing unaudited summary financial
information.
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INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
CLEVELAND INDIANS BASEBALL COMPANY, INC.
Independent Auditors' Report................................ F-2
Balance Sheet as of March 31, 1998.......................... F-3
Note to Balance Sheet....................................... F-4
CLEVELAND INDIANS BASEBALL COMPANY LIMITED PARTNERSHIP AND
BALLPARK MANAGEMENT COMPANY
Independent Auditors' Report................................ F-5
Combined Balance Sheets as of December 31, 1996 and 1997.... F-6
Combined Statements of Income for the Years Ended December
31, 1995, 1996 and 1997................................... F-7
Combined Statements of Accumulated Equity (Deficit) for the
Years Ended December 31, 1995, 1996 and 1997.............. F-8
Combined Statements of Cash Flows for the Years Ended
December 31, 1995, 1996 and 1997.......................... F-9
Notes to Combined Financial Statements for the Years Ended
December 31, 1995, 1996 and 1997.......................... F-10
</TABLE>
F-1
<PAGE> 64
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of
Cleveland Indians Baseball Company, Inc.
Cleveland, Ohio
We have audited the accompanying balance sheet of Cleveland Indians
Baseball Company, Inc. as of March 31, 1998. This financial statement is the
responsibility of the Company's management. Our responsibility is to express an
opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the balance sheet is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the balance sheet. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall balance sheet presentation. We
believe that our audit of the balance sheet provides a reasonable basis for our
opinion.
In our opinion, such balance sheet presents fairly, in all material
respects, the financial position of Cleveland Indians Baseball Company, Inc. as
of March 31, 1998 in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Cleveland, Ohio
April 1, 1998
F-2
<PAGE> 65
CLEVELAND INDIANS BASEBALL COMPANY, INC.
BALANCE SHEET
MARCH 31, 1998
<TABLE>
<S> <C>
ASSETS...................................................... $
=======
LIABILITIES AND SHAREHOLDERS' EQUITY
COMMITMENTS AND CONTINGENCIES (Note 1)
SHAREHOLDERS' EQUITY:
Common shares, without par value; 850 shares authorized,
100 shares issued and outstanding...................... $ 1,500
Subscriptions receivable.................................. (1,500)
-------
Total shareholders' equity.............................
-------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY.................. $
=======
</TABLE>
See note to balance sheet.
F-3
<PAGE> 66
CLEVELAND INDIANS BASEBALL COMPANY, INC.
NOTE TO BALANCE SHEET
MARCH 31, 1998
1. ORGANIZATION
FORMATION, OFFERING AND USE OF PROCEEDS -- Cleveland Indians Baseball
Company, Inc. (the "Company"), is an Ohio corporation, incorporated on March 17,
1998. The Company has been organized to acquire the sole general partnership
interest of, and controlling interest in, Cleveland Indians Baseball Company
Limited Partnership, an Ohio limited partnership (the "Partnership"), through
several concurrent transactions, more fully described below, with the intent of
selling 4,000,000 Class A Common Shares to the public through an initial public
offering (the "Offering"). The following transactions are being contemplated:
- ISSUANCE OF COMMON STOCK PRIOR TO OFFERING -- The Company will issue and
sell 133,233 common shares to the original shareholders and Martin J. Cleary at
$15.00 per share.
- MERGERS OF BALLPARK MANAGEMENT COMPANY AND MJC BASEBALL, INC. -- Ballpark
Management Company ("Ballpark Management") and MJC Baseball, Inc. ("MJC") will
be merged with and into the Company.
- CONTRIBUTION OF BALLPARK MANAGEMENT ASSETS, BUSINESS AND CONTRACT RIGHTS
TO THE PARTNERSHIP -- Upon completion of the mergers described above, the
Company will contribute to the Partnership all of the assets, business, contract
rights and liabilities held by Ballpark Management immediately prior to the
mergers in exchange for partnership interests in the Partnership.
- PURCHASE OF ADDITIONAL GENERAL PARTNERSHIP INTERESTS -- Upon completion
of the contribution described above, the Company will purchase additional
general partnership interests from Cleveland Baseball Company ("CBC") with the
net proceeds of the Offering. Upon completion of the purchase, the Company will
be the sole general partner of the Partnership with at least a 51% interest in
the Partnership. Upon completion of the sale of partnership interests, CBC will
convert its remaining general partnership interest into a 49% limited
partnership interest in the Partnership.
AMENDMENT OF ARTICLES OF INCORPORATION -- In conjunction with the above
transactions, the Company will amend its Articles of Incorporation to authorize
preferred shares and two classes of common shares. The amendment will authorize
1,000,000 Preferred Shares, without par value, 27,000,000 Class A Common Shares,
without par value, and 3,000,000 Class B Common Shares, without par value. Each
Class A Common Share will entitle the holder to one vote and each Class B Common
Share will entitle the holder to 10,000 votes.
PARTNERSHIP AGREEMENT -- In accordance with the Limited Partnership
Agreement of the Partnership (the "Partnership Agreement"), all allocations of
distributions and profits and losses are to be made in proportion to the
percentage ownership interests of the respective partners.
As sole general partner of the Partnership, the Company will have the
exclusive authority under the Partnership Agreement to manage and conduct the
business of the Partnership, subject to certain limitations contained in the
Partnership Agreement.
EXCHANGE RIGHTS -- Pursuant to the Partnership Agreement, and subject to
certain limits, the limited partner will be granted rights to exchange all, or a
portion of, its limited partnership interests in the Partnership for Class A
Common Shares, subject to the right of the Company to substitute cash for
shares.
F-4
<PAGE> 67
INDEPENDENT AUDITORS' REPORT
To the Partners of Cleveland Indians Baseball Company Limited Partnership
and the Board of Directors of Ballpark Management Company
Cleveland, Ohio
We have audited the accompanying combined balance sheets of Cleveland
Indians Baseball Company Limited Partnership and Ballpark Management Company
(collectively the "Company") as of December 31, 1996 and 1997, and the combined
statements of income, accumulated equity (deficit) and cash flows for each of
the three years in the period ended December 31, 1997. These entities are under
common ownership and common management. These financial statements are the
responsibility of the management of the Company. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the combined financial position of Cleveland Indians Baseball Company
Limited Partnership and Ballpark Management Company as of December 31, 1996 and
1997, and the combined results of their operations and their combined cash flows
for each of the three years in the period ended December 31, 1997 in conformity
with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Cleveland, Ohio
February 14, 1998
(March 31, 1998 as to Note 17)
F-5
<PAGE> 68
CLEVELAND INDIANS BASEBALL COMPANY LIMITED PARTNERSHIP
AND BALLPARK MANAGEMENT COMPANY
COMBINED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1996 1997
-------- --------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................. $ 654 $ 3,732
Investments............................................... 40,985 57,909
Receivables and accrued income............................ 3,662 7,867
Merchandise inventories................................... 1,249 1,568
Prepaid expenses and other current assets................. 2,159 5,040
Deposit for grievance settlement (Note 12)................ 11,519 9,079
-------- --------
Total current assets.............................. 60,228 85,195
FIXED ASSETS:
Leasehold improvements, furniture and fixtures
and other equipment, at cost........................... 5,813 7,685
Less accumulated depreciation and amortization............ 1,896 2,757
-------- --------
Total fixed assets, net........................... 3,917 4,928
PREPAID SIGNING BONUSES AND PLAYER CONTRACTS
(Net of accumulated amortization)......................... 6,383 10,743
INTANGIBLE ASSETS (Net of accumulated amortization) (Note
3)........................................................ 11,745 11,048
OTHER ASSETS (Notes 9 and 11)............................... 4,999 6,238
-------- --------
TOTAL....................................................... $ 87,272 $118,152
======== ========
LIABILITIES AND ACCUMULATED EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable and accrued liabilities (Note 6)......... $ 12,703 $ 18,941
Deferred revenue.......................................... 33,415 41,375
Current portion of long-term liabilities (Note 7)......... 416 7,496
Deferred expansion revenue (Note 8)....................... 4,071
Reserve for players' grievance damages (Note 12).......... 11,519 9,079
-------- --------
Total current liabilities......................... 62,124 76,891
LONG-TERM LIABILITIES (Note 7).............................. 33,458 43,811
COMMITMENTS AND CONTINGENCIES (Notes 12 and 13)
ACCUMULATED EQUITY (DEFICIT):
Common shares, without par value (750 shares authorized,
100 shares issued and outstanding)..................... -- --
Owners' Investment........................................ 15,037 32,950
Loan to general partner (Note 5).......................... (23,347) (35,500)
-------- --------
Total accumulated equity (deficit)................ (8,310) (2,550)
-------- --------
TOTAL....................................................... $ 87,272 $118,152
======== ========
</TABLE>
See notes to combined financial statements.
F-6
<PAGE> 69
CLEVELAND INDIANS BASEBALL COMPANY LIMITED PARTNERSHIP
AND BALLPARK MANAGEMENT COMPANY
COMBINED STATEMENTS OF INCOME
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------
1995 1996 1997
------- ------- -------
<S> <C> <C> <C>
REVENUES:
Net ticket sales.......................................... $32,267 $45,658 $49,279
Local radio and television................................ 9,667 13,631 17,014
Concession and catering (Note 10)......................... 11,872 14,726 14,095
Private suite and club seat rentals....................... 5,635 7,035 8,704
Advertising and promotion................................. 5,742 6,891 8,754
Merchandise............................................... 15,024 14,683 17,449
Major Leagues Central Fund (Note 4)....................... 6,633 12,369 15,505
Other (primarily Major League Baseball Properties)........ 2,979 3,002 3,365
Post-season (Note 16)..................................... 9,888 1,933 13,051
Provision for revenue sharing (Note 15)................... (2,056) (5,731) (7,186)
------- ------- -------
Total revenues.................................... 97,651 114,197 140,030
------- ------- -------
OPERATING EXPENSES:
Major league team (Note 15)............................... 38,904 53,420 66,125
Player development (Note 14).............................. 8,298 8,735 11,146
Ballpark operations....................................... 9,071 10,389 10,965
Cost of merchandise sold.................................. 9,224 11,692 12,982
Administrative and general (Note 14)...................... 9,769 9,275 10,292
Major Leagues Central Fund (Note 4)....................... 1,498 4,146 4,938
Advertising and promotion................................. 3,805 2,960 3,854
Post-season (Note 16)..................................... 5,457 1,309 6,252
Amortization of signing bonuses and player contracts...... 3,242 3,212 3,630
Depreciation and amortization............................. 1,361 1,326 1,629
------- ------- -------
Total operating expenses.......................... 90,629 106,464 131,813
------- ------- -------
OPERATING INCOME............................................ 7,022 7,733 8,217
OTHER INCOME (EXPENSE):
Interest income (Note 5).................................. 1,658 3,855 4,672
Interest expense.......................................... (2,005) (2,045) (2,301)
Gain on player transactions............................... 71 616 2,696
League expansion proceeds (Note 8)........................ 9,286
------- ------- -------
NET INCOME.................................................. $ 6,746 $10,159 $22,570
======= ======= =======
</TABLE>
See notes to combined financial statements.
F-7
<PAGE> 70
CLEVELAND INDIANS BASEBALL COMPANY LIMITED PARTNERSHIP
AND BALLPARK MANAGEMENT COMPANY
COMBINED STATEMENTS OF ACCUMULATED EQUITY (DEFICIT)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
OWNERS' LOAN TO ACCUMULATED
COMMON INVESTMENT GENERAL EQUITY
SHARES (DEFICIT) PARTNER (DEFICIT)
------- ---------- -------- -----------
<S> <C> <C> <C> <C>
BALANCE, January 1, 1995....................... $ -- $ (7,168) $(10,615) $(17,783)
Distributions................................ -- (6,600) -- (6,600)
Repayment of loan to general partner......... -- -- 3,100 3,100
Net income................................... -- 6,746 -- 6,746
------- -------- -------- --------
BALANCE, December 31, 1995..................... -- (7,022) (7,515) (14,537)
Contributions................................ -- 13,900 -- 13,900
Distributions................................ -- (2,000) -- (2,000)
Loan to general partner...................... -- -- (15,832) (15,832)
Net income................................... -- 10,159 -- 10,159
------- -------- -------- --------
BALANCE, December 31, 1996..................... -- 15,037 (23,347) (8,310)
Distributions................................ -- (4,657) -- (4,657)
Loan to general partner...................... -- -- (12,153) (12,153)
Net income................................... -- 22,570 -- 22,570
------- -------- -------- --------
BALANCE, December 31, 1997..................... $ -- $ 32,950 $(35,500) $ (2,550)
======= ======== ======== ========
</TABLE>
See notes to combined financial statements.
F-8
<PAGE> 71
CLEVELAND INDIANS BASEBALL COMPANY LIMITED PARTNERSHIP
AND BALLPARK MANAGEMENT COMPANY
COMBINED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------
1995 1996 1997
-------- -------- --------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income................................................ $ 6,746 $ 10,159 $ 22,570
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization........................... 4,603 4,538 5,259
Gain on player transactions............................. (71) (616) (2,696)
League expansion proceeds............................... -- -- (9,286)
(Increase) decrease in receivables and accrued income... (2,656) 868 (1,205)
Decrease (increase) in merchandise inventories.......... 220 (363) (319)
Increase in prepaid expenses and other current assets... (542) (2,292) (781)
Decrease (increase) in other assets..................... 766 (999) 1,643
Increase in accounts payable and accrued liabilities.... 1,121 2,959 2,710
Increase (decrease) in deferred revenue................. 36,833 (10,556) 7,960
(Decrease) increase in deferred compensation............ (323) 2,854 4,981
Increase in long-term liabilities....................... 300 300 300
-------- -------- --------
Net cash provided by operating activities.......... 46,997 6,852 31,136
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of short-term investments, net................... (16,376) (23,021) (16,924)
Purchase of long-term investments......................... -- (2,227) (4,154)
Expenditures for cash surrender value of life insurance... -- -- (900)
Proceeds from sale of player contracts.................... 185 510 185
Proceeds from expansion teams............................. 2,285 1,786 5,215
Capital expenditures...................................... (1,214) (2,701) (1,699)
Expenditures for the purchase of player contracts and
signing bonuses......................................... (1,754) (3,045) (5,028)
Decrease (increase) in loan to general partner............ 3,100 (15,832) (12,153)
-------- -------- --------
Net cash used in investing activities.............. (13,774) (44,530) (35,458)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Major League Baseball Revolving Credit
Agreement............................................... -- 2,847 12,153
Principal payment on Major League Baseball Revolving
Credit Agreement........................................ (4,300) (1,200) --
Payment of debt issuance costs............................ -- -- (96)
Proceeds from note payable borrowings..................... 3,500 360 --
Repayment of notes payable................................ (5,500) (360) --
Contributions from general partner........................ -- 13,900 --
Distributions to general partner.......................... (6,600) (2,000) (4,657)
-------- -------- --------
Net cash (used in) provided by financing
activities....................................... (12,900) 13,547 7,400
-------- -------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS........ 20,323 (24,131) 3,078
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR................ 4,462 24,785 654
-------- -------- --------
CASH AND CASH EQUIVALENTS, END OF YEAR...................... $ 24,785 $ 654 $ 3,732
======== ======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION -
Cash paid during the year for interest.................... $ 2,218 $ 2,026 $ 2,399
======== ======== ========
SUPPLEMENTAL DISCLOSURE OF NON-CASH INFORMATION:
Increase in receivables relating to player transactions... $ -- $ 169 $ 3,000
======== ======== ========
Increase in accounts payable relating to player signing
bonuses................................................. $ 246 $ 230 $ 3,451
======== ======== ========
</TABLE>
See notes to combined financial statements.
F-9
<PAGE> 72
CLEVELAND INDIANS BASEBALL COMPANY LIMITED PARTNERSHIP
AND BALLPARK MANAGEMENT COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
(DOLLARS IN THOUSANDS)
1. ORGANIZATION AND BASIS OF PRESENTATION
The accompanying combined financial statements include only those assets,
liabilities and results of operations which relate to the business of Cleveland
Indians Baseball Company Limited Partnership (the "Partnership") and Ballpark
Management Company ("Ballpark Management"). The Partnership, an Ohio limited
partnership, has been organized to acquire, own, maintain, operate and control
the membership of the Cleveland Indians Baseball Club (the "Indians") in the
American League of Professional Baseball Clubs ("American League"). Cleveland
Baseball Corporation ("CBC") (an Ohio corporation) is the 99.9% general partner
of the Partnership and MJC Baseball, Inc. ("MJC") is the .1% limited partner of
the Partnership. Ballpark Management (an Ohio Corporation) was formed for the
purpose of operating and managing a baseball facility ("Jacobs Field") under a
long-term management agreement with Gateway Economic Development Corporation of
Greater Cleveland ("Gateway"). Ballpark Management is an S Corporation owned by
the Jacobs family trusts. These entities are affiliated through common ownership
and common management and are collectively referred to as the "Company."
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenue and Expense Recognition -- Revenue from ticket sales, radio and
television broadcasting and advertising and promotions generally are recorded at
the time the game, to which such proceeds relate, is played. Major league team
expenses, principally player compensation and game and post-season expenses, are
recorded as expense on the same basis. Accordingly, advance ticket sales,
payments on private suite and club seat rentals and payments for team and game
expenses not earned or incurred are recorded as deferred revenues, prepaid
signing bonuses and as a component of prepaid expenses and other. Such amounts
are amortized ratably as regular season games are played. Administrative and
general and advertising and promotional expenses are charged to operations as
incurred.
Ticket sales are presented net of local admission taxes of $1,972, $3,009
and $3,968 for the years ended December 31, 1995, 1996 and 1997, respectively,
and net of the American League's assessment of $1,150, $1,598 and $1,612 for the
years ended December 31, 1995, 1996 and 1997, respectively.
Cash Equivalents -- Cash equivalents consist primarily of highly liquid
investments with maturities of three months or less at date of purchase.
Investments -- The Company participates in a cash management arrangement,
along with other entities affiliated through common ownership. Through an
affiliate, cash is accumulated and invested in certificates of deposit, bankers'
acceptances, deposit notes and various debt securities. Included in the combined
balance sheets is the Company's proportionate share of investments. All
marketable securities are classified as available-for-sale and are available to
support current operations or to take advantage of other investment
opportunities. These securities are stated at estimated fair value based upon
market quotes. Unrealized gains and losses are computed on the basis of specific
identification and are included in equity. Due to the nature of the investments,
there were no significant differences between amortized cost and estimated fair
value at December 31, 1997.
F-10
<PAGE> 73
CLEVELAND INDIANS BASEBALL COMPANY LIMITED PARTNERSHIP
AND BALLPARK MANAGEMENT COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
The following table presents the relative composition of investments by
category at December 31, 1997:
<TABLE>
<S> <C>
Certificates of deposit, bankers' acceptances and deposit
notes..................................................... 22%
U.S. government securities.................................. 58
U.S. agency securities...................................... 12
Commercial paper............................................ 8
---
Total....................................................... 100%
===
</TABLE>
The relative contractual maturities at December 31, 1997 are as follows:
<TABLE>
<S> <C>
Due in one year or less..................................... 40%
Due after one year through five years....................... 50
Due after five years........................................ 10
---
Total....................................................... 100%
===
</TABLE>
During 1997, the investment policy was changed resulting in a change in the
composition of the portfolio. Prior to the change in the policy, the instruments
held were classified as held to maturity securities and carried at amortized
cost which approximates market.
Merchandise Inventories -- Inventories consist primarily of apparel and
novelty merchandise and are stated at the lower of cost or market. Cost is
determined using the first-in, first-out (FIFO) method.
Fixed Assets -- Leasehold improvements, furniture and fixtures and other
equipment are stated at cost. Depreciation and amortization are provided by
using accelerated methods over the estimated useful lives of the assets which
range from 5 to 20 years. Leasehold improvements are being depreciated over the
original terms of the respective leases.
Prepaid Signing Bonuses and Player Contracts -- The basis of all major
league player contracts acquired and signing bonuses paid are amortized on a
straight-line basis over the term of the respective player's contract. Minor
league player contracts acquired and signing bonuses paid are amortized on a
straight-line basis over the estimated useful lives of the players, currently
estimated to be 4 to 5 years. For dispositions of contracts not involving a
trade or sale, whether by outright release, or expiration of all ownership
rights, the Company's policy is to write-off the net book value of the contract
in the year of disposition. The Company accounts for trades of player contracts
as like-kind exchanges, whereby the recorded basis of the acquired player(s) is
equal to the net book value of the traded player(s) plus or minus any cash
consideration. Gains or losses resulting from sales are recognized in the
current period. Accumulated amortization of signing bonuses and player contracts
was $4,495 and $5,223 at December 31, 1996 and 1997, respectively.
Membership in American League -- The membership in the American League is
amortized using the straight-line method over a 25-year period. Accumulated
amortization of the membership was $6,138 and $6,752 at December 31, 1996 and
1997, respectively.
Deferred Lease and Other Costs -- Certain initial direct lease costs
associated with the leases of baseball facilities discussed in Note 9, primarily
legal and consulting services rendered to the Company during lease negotiations,
have been capitalized in the accompanying combined balance sheets. The costs are
being amortized on a straight-line basis over the original terms of the
respective leases. Accumulated amortization of the deferred lease costs was $447
and $601 at December 31, 1996 and 1997, respectively.
Deferred Expansion Revenue -- Proceeds received from expansion franchises
were deferred from recognition as revenue until substantial completion of
obligations under the expansion agreement.
F-11
<PAGE> 74
CLEVELAND INDIANS BASEBALL COMPANY LIMITED PARTNERSHIP
AND BALLPARK MANAGEMENT COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
Deferred Compensation -- Provisions of employment contracts of specific
players and front office personnel provide for the deferral of a portion of
their total compensation. The contracts generally provide that payments will
begin upon retirement from baseball. Compensation expense is accrued as earned.
Self Insurance -- The Company is substantially self-insured for losses
related to workers' compensation claims. Losses are accrued based upon the
Company's estimates of aggregate liability for claims incurred based on Company
experience and certain actuarial assumptions followed in the insurance industry.
Income Taxes -- No provision has been made for federal and state income
taxes since these taxes are the responsibility of the owners.
Fair Value of Financial Instruments -- The carrying values of cash and cash
equivalents, marketable securities, accounts receivable, mutual fund shares
included in other assets, accounts payable, accrued expenses and long-term
liabilities are equal to, or approximate, their fair values.
Use of Estimates -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
New Accounting Pronouncements -- During June 1997, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards ("SFAS") No.
130, "Reporting Comprehensive Income," and SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information." During February 1998, the
Financial Accounting Standards Board issued SFAS No. 132, "Employer's
Disclosures about Pensions and Other Postretirement Benefits." SFAS No. 130
requires an enterprise to classify items of other comprehensive income by their
nature in a financial statement and display the accumulated balance of other
comprehensive income separately from retained earnings and additional paid-in
capital in the equity section of a statement of financial position. SFAS No. 131
requires a public enterprise to report financial and descriptive information
about its reportable operating segments such as a measure of segment profit or
loss, certain specific revenue and expense items and segment assets. SFAS No.
132 requires an enterprise to disclose certain information about their pension
and postretirement benefits, including a reconciliation of beginning and ending
balances of the benefit obligation, the funded status of the plans, and the
amount of net periodic benefit cost recognized. The Company is required to adopt
these statements for the year ending December 31, 1998. The Company does not
believe these statements will have a material impact on the combined financial
statements.
3. INTANGIBLE ASSETS
Intangible assets consist of the following at December 31, 1996 and 1997:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1996 1997
------- -------
<S> <C> <C>
Membership in American League............................... $15,345 $15,345
Deferred lease and other costs.............................. 2,985 3,081
------- -------
18,330 18,426
Less accumulated amortization............................... 6,585 7,378
------- -------
Total....................................................... $11,745 $11,048
======= =======
</TABLE>
F-12
<PAGE> 75
CLEVELAND INDIANS BASEBALL COMPANY LIMITED PARTNERSHIP
AND BALLPARK MANAGEMENT COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
4. MAJOR LEAGUES CENTRAL FUND
The Major Leagues Central Fund ("MLCF") was established by the Commissioner
of Baseball to collect certain revenues and pay certain expenses that relate to
the operation of Major League Baseball ("MLB"). Substantially all of the net
revenues of the MLCF are distributed to the 28 major league baseball teams. The
principal component of MLCF revenue is national television and radio revenue.
The principal component of the MLCF expenses is the contribution to the Major
League Baseball Players' Benefit Plan (see Note 11). The remaining expenses are
for the Office of the Commissioner, the Major League Baseball Player Relations
Committee, Inc. and the MLCF operating and administrative costs.
5. LOAN TO GENERAL PARTNER
A loan to the general partner of $23,347 and $35,500 was outstanding at
December 31, 1996 and 1997, respectively. The note is payable upon demand and
interest accrues at rates consistent with the Company's borrowings under the
Major League Baseball Revolving Credit Agreement (see Note 7). Total interest
income recognized on the note was $770, $1,733 and $2,023 for the years ended
December 31, 1995, 1996 and 1997, respectively.
6. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable and accrued liabilities consist of the following at
December 31, 1996 and 1997:
<TABLE>
<CAPTION>
1996 1997
------- -------
<S> <C> <C>
Accrued player bonus/signing bonus.......................... $ 1,324 $ 4,775
Accounts payable............................................ 3,726 3,001
Accrued payroll and related benefits........................ 1,882 3,839
Other....................................................... 5,771 7,326
------- -------
$12,703 $18,941
======= =======
</TABLE>
7. LONG-TERM LIABILITIES
Long-term liabilities consisted of the following at December 31, 1996 and
1997:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1996 1997
------- -------
<S> <C> <C>
Major League Baseball Revolving Credit Agreement............ $23,347 $35,500
Deferred compensation (Note 11)............................. 7,308 12,197
Deferred revenue............................................ 1,434 1,524
Other....................................................... 1,785 2,086
------- -------
33,874 51,307
Less current portion........................................ 416 7,496
------- -------
Total....................................................... $33,458 $43,811
======= =======
</TABLE>
Major League Baseball Revolving Credit Agreement -- In June of 1996, the
Company entered into a revolving credit facility ("facility") which replaced the
previous agreement arranged by MLB and funded by a bank group. The facility is
administered by a trust established by MLB. The trust has borrowings from the
syndicated lenders, the funds of which have been loaned to the participating
clubs. Commitment fees of .25% of the unused portion of the facility are
required. The interest rate is based upon the lender's Commercial Base Rate or
LIBOR plus .875% (LIBOR plus 1.125% in 1996) and was 6.75% and 6.78% at December
31, 1996 and 1997, respectively. Total credit available of $25,000 and $35,500
at December 31, 1996 and 1997,
F-13
<PAGE> 76
CLEVELAND INDIANS BASEBALL COMPANY LIMITED PARTNERSHIP
AND BALLPARK MANAGEMENT COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
respectively, is reduced by a labor contingency reserve sufficient to service
nine months' interest expense as mandated by the agreement. The facility
contains various covenants of which the Company was in compliance at December
31, 1996 and 1997. Additionally, MLB has represented to the Company that the
trust is in compliance with various covenants at December 31, 1996 and 1997. The
Company's borrowings against the facility are secured by its interest in, rights
under, and funds from existing and future national broadcasting contracts,
rights under certain licensing contracts, and rights under the Major League
Agreements. Repayment terms under the facility are as follows: $4,750 in 1998;
$6,250 in 1999; and $24,500 in 2000.
Deferred Revenue -- Deferred revenue includes club seat deposits which will
be applied against the final year payment or refunded in the final year of the
related club seat license agreements.
Line of Credit -- The Company has a line of credit agreement with a bank
that provides for borrowings up to $9,000 at either the bank's base lending rate
or LIBOR plus 1.75%. Availability is reduced to $2,000 during the period from
December 1 to February 28, and the line must be repaid in full for a period of
30 consecutive days throughout the term of the note. During 1996, this agreement
was amended to provide for an extension of the maturity date to November 1,
1998, at which time the outstanding loan balance may be converted to a four-year
term note, subject to certain terms and conditions. No borrowings on this line
were outstanding at December 31, 1996 and 1997. The principals of the general
partner are guarantors on the note. Availability under the line of credit was
reduced by a $375 standby letter of credit at December 31, 1996 and 1997 (see
Note 13).
Scheduled maturities on long-term liabilities as of December 31, 1997 are
as follows:
<TABLE>
<S> <C>
Year ending December 31,
1998...................................................... $ 7,496
1999...................................................... 6,706
2000...................................................... 27,363
2001...................................................... 454
2002...................................................... 1,027
Thereafter................................................ 8,261
-------
Total..................................................... $51,307
=======
</TABLE>
8. LEAGUE EXPANSION PROCEEDS
In March 1995, the American and National Leagues and the 28 existing member
clubs signed an agreement to award expansion franchises to two expansion groups.
The expansion groups each paid a fee of $130,000 in installments from July of
1995 through November of 1997. In 1995, 1996 and 1997, the Company received
$2,285, $1,786 and $5,215, respectively, representing its share of the
installment payments. The Company recognized these fees as income upon
completion of the expansion draft in 1997.
9. LEASE, MANAGEMENT AND NAMING RIGHTS AGREEMENTS
Jacobs Field -- The Company is a party to a lease agreement (the
"Agreement") with Gateway for the construction and use of Jacobs Field. Jacobs
Field is owned by Gateway and leased to and operated by the Company.
The term of the Agreement is 20 years and commenced in April 1994, the date
the Company occupied Jacobs Field. There is no minimum annual lease payment
required, although the Company is liable for rental payments if certain paid
attendance levels are achieved, as defined in the Agreement. If paid attendance
is less than 1.85 million, then no rent is due. The Company incurred $1,303,
$1,634 and $2,144 in rent for 1995, 1996
F-14
<PAGE> 77
CLEVELAND INDIANS BASEBALL COMPANY LIMITED PARTNERSHIP
AND BALLPARK MANAGEMENT COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
and 1997, respectively. Additionally, the Company has the ability under the
Agreement to offset certain capital expenditures incurred against rental
payments due to Gateway.
Under the terms of a related common area management agreement, the Company
receives one-third of all net revenues, as defined, generated from the common
areas. No revenues were received from common areas for the years ended December
31, 1995, 1996 and 1997.
Management Agreement -- Concurrent with entering into the Agreement, the
Company entered into a management agreement with Gateway to manage and operate
Jacobs Field and to market and license all premium seating, as defined. The term
of the management agreement coincides with that of the Agreement. Under the
terms of the management agreement, the Company has the exclusive right to
receive all ballpark related revenues, as defined. The annual management rights
fee payable to Gateway is based upon a share of net main scoreboard advertising
revenue in excess of a base amount as adjusted annually for increases in the
Consumer Price Index plus a share of net special event revenue, as defined in
the management agreement. The Company's management rights fee expense was $78,
$79 and $193 for the years ended December 31, 1995, 1996 and 1997, respectively.
Pursuant to the management agreement, the Company is required to market and
license all premium seating, as defined. Funds collected from premium seating
are remitted to a trustee to the extent of certain portions of Gateway's debt
service obligations. The Company is entitled to revenues in excess of the debt
service obligations, which cannot exceed $2,950 in a term year, as defined in
the management agreement. The Company acts in the capacity of an agent in
regards to the collection of these funds and, accordingly, has reflected only
that amount in excess of Gateway's debt service obligations as revenue in the
accompanying combined statements of income. The total funds collected and
remitted to the trustee in 1995, 1996 and 1997 in connection with the 1995, 1996
and 1997 baseball seasons were $2,505, $2,507 and $2,505, respectively.
Included in other assets at December 31, 1996 and 1997 are deposits for
long-term club seat rentals totaling $1,207 and $1,298, respectively,
representing restricted funds that will be applied against the final year
payment under the related club seat license agreement.
Additionally, as a result of the MLBPA strike during 1994 and 1995, the
Company provided rent credits to non-Founder private suite and club seat
licensees in the amount of $833 during 1995 based on 9 of the 81 home games
being canceled during the 1995 season. The credits were utilized to reduce
rental payments due to the Company for the 1996 season.
Naming Rights Agreement -- The Company and Richard E. Jacobs are parties to
an agreement with Gateway for the naming rights to the baseball facility. The
term of the naming rights agreement coincides with that of the Agreement. Under
the terms of the naming rights agreement, the parties are able to change the
name of the facility throughout the term of the agreement and have the exclusive
merchandising and use rights for the commercial exploitation of the baseball
facility name. Richard E. Jacobs has assigned to the Company all of his rights
under the naming rights agreement and any future revenue generated from the sale
or marketing of the baseball facility name. The Company is required to make
annual payments to Gateway of $400 annually through 2003 and $989 annually
thereafter through 2013. The payments are to be made from premium seating
revenue proceeds. The Company has recognized expense on a straight-line basis
over the term of the agreement.
Retail, Warehouse Space and Spring Training Facilities -- The Company has
entered into various agreements to lease retail, warehouse space and spring
training facilities. Rental expense under the provisions of these agreements was
$320, $403 and $970, inclusive of rental expense to related parties of $194,
$213 and $554 for the years ended December 31, 1995, 1996 and 1997,
respectively. Additionally, the Company shares
F-15
<PAGE> 78
CLEVELAND INDIANS BASEBALL COMPANY LIMITED PARTNERSHIP
AND BALLPARK MANAGEMENT COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
advertising, ticket, concession and parking revenues with the City of Winter
Haven, Florida, for the use of its spring training facilities.
Future minimum annual commitments under the retail and warehouse space
leases, the spring training facilities lease and miscellaneous other leases are
as follows:
<TABLE>
<CAPTION>
THIRD-PARTY RELATED PARTY
LEASES LEASES TOTAL
----------- ------------- ------
<S> <C> <C> <C>
1998............................................. $ 580 $ 320 $ 900
1999............................................. 549 320 869
2000............................................. 313 320 633
2001............................................. 215 320 535
2002............................................. 21 261 282
Thereafter....................................... -- 895 895
------ ------ ------
Total............................................ $1,678 $2,436 $4,114
====== ====== ======
</TABLE>
10. CONCESSION AND CATERING AGREEMENTS
The Company and Cleveland Sportservice, Inc. ("Sportservice") have a
concession agreement granting Sportservice the exclusive rights to manage and
operate certain Jacobs Field food and beverage concession facilities. The
Company and D.B. Kaplan's Delicatessen Limited Partnership II ("Levy") have an
agreement, whereby Levy provides certain other food, beverage and catering
services at Jacobs Field. Pursuant to the terms of the concession and catering
agreements, the Company receives as a commission certain percentages of food and
beverage concession and catering sales at Jacobs Field. In addition, the Company
receives a percentage of the Sportservice and Levy fiscal year net profits
earned at Jacobs Field, as defined.
11. BENEFIT PLANS
Major League Baseball Players' Benefit Plan -- The Company's major league
baseball players and coaches are covered under the Major League Baseball
Players' Benefit Plan which is administered by the MLCF and represents a
multiemployer defined benefit plan. Payments to the Players' Benefit Plan are
made out of proceeds received by the MLCF (see Note 4). The Company's share of
the contribution to the plan was $293, $2,429 and $2,429 in 1995, 1996 and 1997,
respectively. The 1995 contribution was based upon an agreement between the
MLBPA and the Office of the Commissioner of Baseball that a reduced contribution
would be made for the 1995 strike-shortened season.
Major League Baseball Pension Plan for Non-Uniformed Personnel -- The
Company also participates in the Major League Baseball Pension Plan for
Non-Uniformed Personnel, which is administered by the Office of the Commissioner
of Baseball. The benefits are based on years of service and the employee's
compensation during the last five years of employment. The plan is a
single-employer defined benefit plan which covers substantially all employees of
the Company exclusive of major league players and coaches.
Significant assumptions used in the non-uniformed plan actuarial valuation
were as follows:
<TABLE>
<CAPTION>
1995 1996 1997
----- ----- -----
<S> <C> <C> <C>
Discount rate............................................ 7.5% 7.5% 7.0%
Expected rate of increase in compensation................ 5.5% 5.5% 5.5%
Expected long-term rate of return on assets.............. 9.0% 9.0% 9.0%
</TABLE>
F-16
<PAGE> 79
CLEVELAND INDIANS BASEBALL COMPANY LIMITED PARTNERSHIP
AND BALLPARK MANAGEMENT COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
Net periodic pension costs for the non-uniformed plan include the
following:
<TABLE>
<CAPTION>
1995 1996 1997
----- ----- -----
<S> <C> <C> <C>
Service cost-benefits earned during the period........... $ 266 $ 469 $ 570
Interest cost on projected benefit obligation............ 192 265 283
Return on assets......................................... (341) (257) (529)
Amortization and deferral of gains and losses............ 160 67 325
----- ----- -----
Net periodic pension cost................................ $ 277 $ 544 $ 649
===== ===== =====
</TABLE>
The following table sets forth the plan's funded status and amounts
recognized in the combined balance sheets at December 31, 1996 and 1997:
<TABLE>
<CAPTION>
1996 1997
------- -------
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefit obligation................................. $ 2,297 $ 3,183
Nonvested benefit obligation.............................. 126 253
------- -------
Accumulated benefit obligation.............................. $ 2,423 $ 3,436
======= =======
Projected benefit obligation................................ $ 3,751 $ 5,039
Fair value of plan assets (primarily listed stocks)......... 2,431 3,043
------- -------
Projected benefit obligation in excess of plan assets....... 1,320 1,996
Unrecognized net transition obligation...................... (7) (7)
Unrecognized prior service cost............................. (31) (64)
Unrecognized net loss....................................... (155) (343)
------- -------
Accrued pension cost........................................ $ 1,127 $ 1,582
======= =======
</TABLE>
Deferred Compensation Plans -- The Company has nonqualified deferred
compensation programs which permit certain current and former players and
employees to annually elect (via individual contracts) to defer a portion of
their compensation, on a pre-tax basis. Certain amounts under deferred
compensation contracts earn a guaranteed rate of return while other amounts
deferred earn variable rates of return consistent with certain mutual fund
indices (see Note 2).
To assist in the funding of these plans, commencing in 1996 the Company
purchased partnership-owned annuity contracts and shares of mutual funds which
are consistent with the indices that certain of the contracts specify. The cash
surrender value of these policies and the market value of the mutual fund shares
included in non-current "other assets" totaled $3,494 and $5,966 at December 31,
1996 and 1997, respectively, and $2,100 in prepaid expenses and other current
assets at December 31, 1997. Gains and losses on investments directly offset the
deferred compensation liability.
12. LEGAL MATTERS
During 1987 and 1988, two Arbitrators (Roberts and Nicolau) ruled that the
26 Major League Clubs (the "Clubs"), including the Company, violated Article
XVIII(H) of the Basic Agreement with the Major League Baseball Players
Association (the "Basic Agreement") by acting in concert with respect to those
players who became free agents following the 1985 and 1986 seasons. A similar
grievance alleging violation of Article XVIII(H) and certain other provisions of
the Basic Agreement was filed by the MLBPA with respect to players who became
free agents following the 1987 season. No further grievances were filed by the
MLBPA.
F-17
<PAGE> 80
CLEVELAND INDIANS BASEBALL COMPANY LIMITED PARTNERSHIP
AND BALLPARK MANAGEMENT COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
In August 1989, Arbitrator Roberts issued an interim award of $10,528,
representing his judgment of the aggregate amount by which salaries of
approximately 140 players were reduced in 1986 by reason of the contract
violation following the 1985 season. On October 31, 1989, the MLCF, on behalf of
the Clubs, deposited $10,528 in an interest-bearing escrow account, to be
distributed in accordance with Arbitrator Roberts' instructions in a subsequent
phase of the remedial proceedings. The Company's portion of the deposit was
$405.
In December 1990, the owners of the Clubs voted in favor of settling all
collusion claims for the sum of $280 million, plus the grant of "second look"
free agency rights to a group of 16 players, none of whom were employed by the
Company. For the years ended December 31, 1995, 1996 and 1997, the escrow
deposit earned interest of $16,968, $17,284 and $15,847, respectively. During
the years ended December 31, 1995, 1996 and 1997, $9,964, $-0- and $81,230,
respectively, was distributed to the players. The remaining balance will be
distributed in subsequent years.
The Company funded its remaining liability under the settlement of $10,361
in 1991 through reductions in the distributions from the MLCF and prior year
charges against operations. The funds withheld by the MLCF have been classified
as "deposit for grievance settlement" in the accompanying combined balance
sheets. The balance at December 31, 1996 and 1997 represents the net effect of
the Company's share of interest earned on the deposit and distributions made to
players since 1991. The interest and distributions made have been treated as
non-cash activities and have not been reflected in the combined statements of
income.
The Company is involved in various other legal proceedings and claims which
are incidental to its business. Management believes that they have meritorious
defenses and will vigorously defend themselves in these actions. Although the
ultimate disposition of these proceedings is not presently determinable,
management does not believe that such proceedings would have a material adverse
effect upon the financial condition, results of operations or cash flows of the
Company.
13. CONTINGENT LIABILITIES, COMMITMENTS AND OTHER CONTRACTS
Because the American League and MLB are non-profit associations, the
Indians and other members of MLB are generally jointly and severally liable for
the debts and obligations of the associations. Any failure of other members of
MLB to pay their pro rata share of any such debt or obligation could adversely
affect the Company.
Under the terms of working agreements, the Company is required to reimburse
various minor league clubs for certain expenses. Payments under these agreements
amounted to $1,078, $1,071 and $1,227 for the years ended December 31, 1995,
1996 and 1997, respectively.
Employment contracts provide for, among other things, aggregate
compensation in future years as follows:
<TABLE>
<S> <C>
1998................................................. $ 62,381
1999................................................. 54,421
2000................................................. 32,593
2001................................................. 23,075
2002 and thereafter.................................. 12,825
--------
Total................................................ $185,295
========
</TABLE>
Certain player contracts require payments that are contingent upon playing
performance, length of employment with the Indians or attendance at a college
prescribed by the College Scholarship Plan. Payments
F-18
<PAGE> 81
CLEVELAND INDIANS BASEBALL COMPANY LIMITED PARTNERSHIP
AND BALLPARK MANAGEMENT COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
under these contracts amounted to $1,621, $1,467 and $1,664 for the years ended
December 31, 1995, 1996 and 1997, respectively. The Company is contingently
liable for payments under these plans aggregating $8,400 at December 31, 1996
and $21,872 at December 31, 1997. These amounts, which are not included in the
accompanying combined financial statements, relate to contracts in effect at
December 31, 1997, or entered into thereafter through February 14, 1998, the
date of the auditors' report. The contracts are contingent upon continued
employment with the Company, but do guarantee payment in the event a player is
unable to play due to injury or death.
The Company has obtained disability insurance policies for substantially
all of its players under multi-year contracts. In the event of injuries
sustained resulting in lost services as defined in the policies, the policies
provide for payment to the Company of a portion of the player's salary for the
remaining term of the contract or until the player can resume playing.
The Company is substantially self-insured with respect to workers'
compensation in the State of Ohio and in connection therewith, maintains a $375
standby letter of credit with a bank in order to satisfy state deposit
requirements. The current letter of credit expires December 31, 1999.
14. RELATED PARTY TRANSACTIONS
Included in administrative and general expense for the years ended December
31, 1995, 1996 and 1997, are allocations of legal and accounting expenses from
an affiliate of $327, $335 and $267, respectively. Included in ballpark
operations expense during 1996 are $523 of payroll and related taxes for game
day labor services from an affiliate. Included in deferred lease costs at
December 31, 1996 and 1997 are $1,423 of legal and consulting charges from an
affiliate for costs incurred in connection with the development of Jacobs Field.
15. COLLECTIVE BARGAINING AGREEMENT
In the Fall of 1996, MLB Owners and the MLBPA reached an agreement with
respect to a five-year Collective Bargaining Agreement. The agreement became
effective on January 1, 1997 and, with respect to certain provisions, was
retroactive to the 1996 season. The agreement expires on the later of October
31, 2000 or the day following the last game of the 2000 World Series; except
that, the MLBPA has the unilateral option to extend the agreement to October 31,
2001 or the day after the last game of the 2001 World Series, whichever is
later. The Collective Bargaining Agreement introduced a new revenue sharing
system and implemented for the first time a luxury tax on payrolls.
Revenue Sharing -- Member clubs of MLB participate in a revenue sharing
system. The new revenue sharing system is being phased in over a five-year
period and will be fully implemented in the 2000 season. Under the system, each
club must contribute a portion, 12% in 1996 and 1997, of its net local revenue
to a revenue sharing pool. The revenue sharing rate will be 16% in 1998, 17% in
1999 and 20% in 2000 and thereafter. Net local revenue is defined in the
Collective Bargaining Agreement. Once the pool is accumulated, it is
re-distributed to the clubs on a basis defined in the Collective Bargaining
Agreement that disproportionately benefits clubs with below average revenue.
Prior to 1996, local revenue sharing was generally limited to ticket receipts
and local cable revenues, pursuant to which, the visiting club received a
percentage of net gate receipts and local cable television revenues on a per
game basis from the home team during the regular season. The 1995 combined
statement of income has been presented in a similar manner as those in 1996 and
1997 to reflect the comparable effects of the previous arrangement with other
clubs.
Luxury Tax -- The luxury tax became effective at the beginning of the 1997
season and is only assessed on the five clubs with the highest actual payroll,
as defined, above a specified threshold minimum for that season. The threshold
minimum was $55,600 for 1997, and will be $59,900 for 1998 and $64,200 for 1999.
If more than five teams have payrolls that exceed the threshold, the threshold
is increased so that only five teams
F-19
<PAGE> 82
CLEVELAND INDIANS BASEBALL COMPANY LIMITED PARTNERSHIP
AND BALLPARK MANAGEMENT COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
are subject to the tax. The luxury tax rate for 1997 and 1998 is 35% and for
1999 is 34%. There is no luxury tax imposed in the 2000 season. The amount that
is taxed is the difference between a club's total actual payroll and the
threshold minimum, as adjusted if necessary. In 1997, the Indians were assessed
$2,065 pursuant to the luxury tax and have included this amount in major league
team expenses in the accompanying combined statements of income.
16. POST-SEASON
During 1995, 1996 and 1997, the Indians advanced to post-season play and
participated in fifteen, four and eighteen post-season games, respectively. The
following table sets forth the revenues and expenses relating to the post-season
activity:
<TABLE>
<CAPTION>
1995 1996 1997
------ ------ -------
<S> <C> <C> <C>
REVENUES:
Net ticket sales..................................... $4,302 $ 695 $ 6,847
Local radio and television........................... 413 108 515
Concession and catering.............................. 1,473 446 2,114
Private suite rentals................................ 29 17 198
Merchandise.......................................... 2,991 282 2,507
League Championship Series distribution.............. 300 300
Other................................................ 380 385 570
------ ------ -------
Total revenues............................... 9,888 1,933 13,051
------ ------ -------
OPERATING EXPENSES:
Major league team.................................... 705 190 1,054
Ballpark operations.................................. 1,345 518 1,901
Cost of merchandise sold............................. 1,632 224 1,421
Administrative and general........................... 1,385 106 1,417
Advertising and promotion............................ 390 271 459
------ ------ -------
Total operating expenses..................... 5,457 1,309 6,252
------ ------ -------
$4,431 $ 624 $ 6,799
====== ====== =======
</TABLE>
17. SUBSEQUENT EVENT
On March 31, 1998, the Partnership made distributions totaling $49,200 to
its partners and CBC, its general partner, repaid its indebtedness of $35,500 to
the Partnership.
In addition, subsequent to year end, the Partnership, Ballpark Management
and their respective owners, CBC, MJC and the Jacobs family trusts are
reorganizing through several concurrent transactions, more fully described
below, with the intent of selling shares of a newly formed corporation,
Cleveland Indians Baseball Company, Inc. ("CIBC") to the public through an
initial public offering (the "Offering"). The net proceeds of the Offering will
be used to acquire the controlling general partnership interests in the
Partnership from CBC and MJC. The following Reorganization Transactions are
being contemplated:
Mergers of Ballpark Management and MJC -- Ballpark Management and MJC will
be merged with and into CIBC, with CIBC as the surviving corporation.
Contribution of Ballpark Management Assets, Business and Contract Rights to
the Partnership -- Upon completion of the mergers described above, CIBC will
contribute to the Partnership all of the assets, business,
F-20
<PAGE> 83
CLEVELAND INDIANS BASEBALL COMPANY LIMITED PARTNERSHIP
AND BALLPARK MANAGEMENT COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
contract rights and liabilities held by Ballpark Management immediately prior to
the mergers in exchange for additional partnership interests.
Sale of General Partnership Interests -- Upon completion of the
contribution described above, CIBC will purchase partnership interests from CBC
with proceeds generated from the Offering as a result of which CIBC will be the
sole general partner of the Partnership with at least a 51% interest in the
Partnership. Upon completion of the sale of partnership interests, CBC will
convert its remaining general partnership interests to a 49% limited partnership
interest in the Partnership. This limited partnership interest will be
exchangeable for Class A Common Shares of CIBC, subject to the right of CIBC to
substitute cash for shares.
F-21
<PAGE> 84
Photograph depicting the playing field, stands and scoreboard at Jacobs Field,
along with photographs of novelty stands and Company employees
LOGO
<PAGE> 85
======================================================
NO DEALER, SALESMAN OR OTHER PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR
TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY CLASS A COMMON
SHARES BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER TO SELL OR SOLICITATION
IN NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING THE OFFER OR SOLICITATION IS
NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH
OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE
HEREOF.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary......................... 3
Risk Factors............................... 8
Formation Transactions..................... 16
Use of Proceeds............................ 17
Dividend Policy............................ 17
Dilution................................... 17
Capitalization............................. 18
Selected Combined Financial Data........... 19
Management Discussion and Analysis of
Results of Operations and Financial
Condition................................ 24
Business................................... 30
Major League Baseball...................... 41
Management................................. 48
Principal Shareholders..................... 51
Certain Transactions....................... 52
The Partnership............................ 52
Description of Capital Shares.............. 54
Shares Eligible for Future Sale............ 57
Underwriting............................... 59
Experts.................................... 60
Validity of Shares......................... 60
Additional Information..................... 60
Index to Financial Statements.............. F-1
</TABLE>
UNTIL , 1998 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE CLASS A COMMON SHARES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENT OR
SUBSCRIPTIONS.
======================================================
======================================================
4,000,000 SHARES
LOGO
CLEVELAND INDIANS BASEBALL COMPANY, INC.
CLASS A
COMMON SHARES
---------------------
PROSPECTUS
---------------------
MCDONALD & COMPANY
SECURITIES, INC.
, 1998
======================================================
<PAGE> 86
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the fees and expenses in connection with the
issuance and distribution of the securities being registered hereunder. Except
for the Commission registration fee, the NASD filing fee and the Nasdaq National
Market listing fee, all amounts are estimates.
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee......... $21,712
The Nasdaq Stock Market Listing Fee......................... 55,000
National Association of Securities Dealers, Inc. Filing
Fee....................................................... 7,860
Blue Sky Fees and Expenses (including counsel fees)......... *
Printing and Engraving Expenses............................. *
Accounting Fees and Expenses................................ *
Director and Officer Liability Insurance.................... *
Legal Fees and Expenses..................................... *
Transfer Agent's and Registrar's Fees and Expenses.......... *
Miscellaneous............................................... *
-------
Total............................................. $
=======
</TABLE>
- ---------------
* To be filed by amendment
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Ohio Revised Code (the "Code") authorizes Ohio corporations to
indemnify officers and directors from liability if the officer or director acted
in good faith and in a manner reasonably believed by the officer or director to
be in or not opposed to the best interests of the corporation, and, with respect
to any criminal actions, if the officer or director had no reason to believe his
action was unlawful. In the case of an action by or on behalf of a corporation,
indemnification may not be made (i) if the person seeking indemnification is
adjudged liable for negligence or misconduct, unless the court in which such
action was brought determines such person is fairly and reasonably entitled to
indemnification or (ii) if liability asserted against such person concerns
certain unlawful distributions. The indemnification provisions of the Ohio Code
require indemnification if a director or officer has been successful on the
merits or otherwise in defense of any action, suit or proceeding that he was a
party to by reason of the fact that he is or was a director or officer of the
corporation. The indemnification authorized under Ohio law is not exclusive and
is in addition to any other rights granted to officers and directors under the
articles of incorporation or code of regulations of the corporation or any
agreement between officers and directors and the corporation. A corporation may
purchase and maintain insurance or furnish similar protection on behalf of any
officer or director against any liability asserted against him and incurred by
him in his capacity, or arising out of the status, as an officer or director,
whether or not the corporation would have the power to indemnify him against
such liability under the Ohio Code.
The Registrant's Code of Regulations provides for the indemnification of
directors and officers of the Registrant to the maximum extent permitted by Ohio
law as authorized by the Board of Directors of the Registrant, for the
advancement of expenses incurred in connection with the defense of any action,
suit or proceeding that he was a party to by reason of the fact that he is or
was a director of the Registrant upon the receipt of an undertaking to repay
such amount unless it is ultimately determined that the director is entitled to
indemnification. The Code of Regulations authorizes the Registrant to purchase
and maintain insurance on behalf of any director, officer, employee or agent of
the Registrant against any liability asserted against them in such capacity or
arising out of their status as such, whether or not the Registrant would have
power to indemnify such officer, employee or agent against such liability under
the provisions of the Code of Regulations of the Registrant.
II-1
<PAGE> 87
The Company has entered into indemnification agreements with each of its
directors and executive officers. These agreements generally: (i) confirm the
existing indemnity provided to them under the Company's Code of Regulations and
assure that this indemnity will continue to be provided; (ii) provide that if
the Company does not maintain directors' and officers' liability insurance, the
Company will, in effect, become a self-insurer of the coverage; (iii) provide
that, in addition, the directors and officers shall be indemnified to the
fullest extent permitted by law against all expenses (including legal fees),
judgments, fines, and settlement amounts paid or incurred by them in any action
or proceeding, including any action by or in the right of the Company, on
account of their service as a director, officer, employee, or agent of the
Company or at the request of the Company as a director, officer, employee,
trustee, fiduciary, manager, member or agent of another corporation,
partnership, trust, limited liability company, employee benefit plan or other
enterprise; and (iv) provide for the mandatory advancement of expenses to the
executive officer or director in connection with the defense of any proceedings,
provided the executive officer or director agrees to reimburse the Company for
that advancement if it is ultimately determined that the executive officer or
director is not entitled to indemnification for that proceeding under the
agreement. Coverage under the agreements is excluded: (A) on account of conduct
which is finally adjudged to be knowingly fraudulent, deliberately dishonest, or
willful misconduct; or (B) if a final court of adjudication shall determine that
such indemnification is not lawful; or (C) in respect of any suit in which
judgment is rendered for violation of Section 16(b) of the Securities Exchange
Act of 1934 or similar provisions of any federal, state, or local statutory law;
or (D) on account of any remuneration paid which is finally adjudged to have
been in violation of law; or (E) on account of conduct occurring prior to the
time the executive officer or director became an officer, director, employee, or
agent of the Company or its subsidiaries (but in no event earlier that the time
such entity became a subsidiary of the Company); or (F) with respect to
proceedings initiated or brought voluntarily by the executive officer or
director and not by way of defense, except for proceedings brought to enforce
rights under the indemnification agreement.
The Registrant maintains a directors' and officers' insurance policy which
insures the officers and directors of the Registrant from any claim arising out
of an alleged wrongful act by such persons in their respective capacities as
officers and directors of the Registrant.
Reference is made to Section 10 of the Underwriting Agreement, a copy of
which is filed herewith as Exhibit 1.1, for information concerning
indemnification arrangements among the Registrant and the Underwriters.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
In connection with the formation of the Company, 100 Common Shares were
issued and sold to Richard E. Jacobs, Trustee Under Declaration of Trust dated
April 23, 1987 and Richard E. Jacobs, Trustee of the David H. Jacobs Marital
Trust (together, the "Trusts") on April 2, 1998 for $15.00 per share. Also on
such date, the Trusts and Martin J. Cleary, a director of the Company, agreed to
purchase 133,233 Class A Common Shares at $15.00 per share, payable concurrently
with the closing of the transactions contemplated by the Reorganization
Agreement filed as Exhibit 2.1 hereto. Further, pursuant to the Reorganization
Agreement, the Trusts and Mr. Cleary will receive Class A and Class B Common
Shares in connection with the Formation Transactions. The obligations of the
Trusts and Mr. Cleary to pay for the shares they have agreed to purchase and to
complete the Formation Transactions are not subject to any conditions other than
completion of the Offering. The Company relied upon the exemption from
registration contained in Section 4(2) of the Securities Act of 1933 for each of
the foregoing transactions.
II-2
<PAGE> 88
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) EXHIBITS -- The following is a list of exhibits in this Registration
Statement.
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
1.1 Proposed Form of Underwriting Agreement.
2.1 Agreement and Plan of Reorganization dated April 2, 1998
among Cleveland Indians Baseball Company, Inc., Cleveland
Baseball Corporation, MJC Baseball, Inc., Ballpark
Management Company, Cleveland Indians Baseball Company
Limited Partnership, Richard E. Jacobs, Trustee Under
Declaration of Trust dated April 23, 1987, Richard E.
Jacobs, Trustee of the David H. Jacobs Marital Trust and
Martin J. Cleary.
*3.1 Amended and Restated Articles of Incorporation of the
Company.
3.2 Code of Regulations of the Company.
*4.1 Specimen Share Certificate for Class A Common Shares.
*4.2 Specimen Share Certificate for Class B Common Shares.
*5.1 Opinion of Baker & Hostetler LLP regarding the legality of
the Class A Common Shares being registered.
10.1 Basic Agreement between the American League, the National
League and the Players Association dated December 7, 1996
(the Collective Bargaining Agreement).
10.2 Lease Agreement between Gateway and the Partnership dated
July 3, 1991.
10.3 Ground Lease Agreement between Gateway and the Partnership
dated July 3, 1991.
10.4 Management Agreement between Gateway and Ballpark Management
dated July 3, 1991.
10.5 Common Area Maintenance Agreement between Gateway, the
Partnership and Ballpark Management dated July 31, 1991.
10.6 Amended and Restated Use Agreement by and between the City
of Winterhaven, Florida and the Partnership dated October
15, 1993, as amended.
10.7 Club Trust Reducing Revolving Credit Agreement between Major
League Baseball Trust, Fleet Bank and the Club Trusts, dated
June 26, 1996.
10.8 Ratification Agreement between Indians Club Trust and Fleet
National Bank, dated June 28, 1996.
10.9 Club Trust Pledge and Security Agreement between Indians
Club Trust and Major League Baseball Trust dated June 28,
1996.
10.10 Transfer Agreement between the Partnership and Indians Club
Trust, dated May 22, 1992.
10.11 Amendment and Confirmation of Transfer Agreement between the
Partnership and Indians Club Trust dated June 28, 1996.
10.12 Credit Agreement among the Partnership, Ballpark Management
and Key Bank, N.A. (formerly known as Society National Bank)
dated September 1, 1994, as amended.
*10.13 Cleveland Indians Baseball Company, Inc. Long-Term Incentive
Plan.
10.14 Form of Indemnification Agreement between the Company and
each of its Directors.
10.15 Form of Indemnification Agreement between the Company and
each of its executive officers.
*10.16 Employment Agreements with the Company's executive officers.
*10.17 Amended and Restated Limited Partnership Agreement of the
Partnership.
10.18 Second Amendment to the Club Trust Reducing Revolving Credit
Agreement and the Club Trust Pledge and Security Agreement
dated May 27, 1997.
*23.1 Consent of Baker & Hostetler LLP (to be contained in Exhibit
5.1).
23.2 Consent of Deloitte & Touche LLP.
24.1 Powers of Attorney (contained in the signature page).
27.1 Financial Data Schedule.
99.1 Consent of Edward G. Ptaszek, Jr.
</TABLE>
- ---------------
* To be filed by Amendment
(b) FINANCIAL STATEMENT SCHEDULES
Not applicable.
II-3
<PAGE> 89
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes to provide to the Underwriter
at the closing specified in the Underwriting Agreement, certificates in such
denominations and registered in such names as required by the Underwriter to
permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 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 Securities and Exchange Commission
such indemnification is against public policy as expressed in the 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 hereunder, 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 Act and will be governed by the final
adjudication of such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act, the
information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
II-4
<PAGE> 90
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of Cleveland, State of Ohio,
on the 3rd day of April, 1998.
CLEVELAND INDIANS BASEBALL COMPANY, INC.
By: /s/ RICHARD E. JACOBS
-----------------------------------------
Richard E. Jacobs, Chairman of the Board,
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Anthony W. Weigand and Edward G. Ptaszek,
Jr. or either one of them, his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place, and stead, in any and all capacities, to sign any and all amendments to
the Registration Statement, including post-effective amendments, and
registration statements filed pursuant to Rule 462 under the Securities Act of
1933, and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, and does
hereby grant unto said attorneys-in-fact and agents, and each of them, full
power and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or any of them, or their or his
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on the 3rd day of April, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C> <C>
/s/ RICHARD E. JACOBS Chairman of the Board,
- ------------------------------------------------ President, Chief Executive
Richard E. Jacobs Officer and Director
(principal executive officer)
/s/ KEN STEFANOV Vice President, Finance
- ------------------------------------------------ (principal financial officer and
Ken Stefanov principal accounting officer)
/s/ MARTIN J. CLEARY Director
- ------------------------------------------------
Martin J. Cleary
</TABLE>
<PAGE> 91
EXHIBIT INDEX
<TABLE>
<CAPTION>
PAGINATION
BY
SEQUENTIAL
EXHIBIT NUMBERING
NO. DESCRIPTION SYSTEM
- ------- ----------- ----------
<C> <S> <C>
1.1 Proposed Form of Underwriting Agreement.
2.1 Agreement and Plan of Reorganization dated April 2, 1998
among the Cleveland Indians Baseball Company, Inc.,
Cleveland Baseball Corporation, MJC Baseball, Inc., Ballpark
Management Company, Cleveland Indians Baseball Company
Limited Partnership, Richard E. Jacobs, Trustee Under
Declaration of Trust dated April 23, 1987, Richard E.
Jacobs, Trustee of the David H. Jacobs Marital Trust and
Martin J. Cleary.
*3.1 Amended and Restated Articles of Incorporation of the
Company.
3.2 Code of Regulations of the Company.
*4.1 Specimen Share Certificate for Class A Common Shares.
*4.2 Specimen Share Certificate for Class B Common Shares.
*5.1 Opinion of Baker & Hostetler LLP regarding the legality of
the Class A Common Shares being registered.
10.1 Basic Agreement between the American League, the National
League and the Players Association dated December 7, 1996
(the Collective Bargaining Agreement).
10.2 Lease Agreement between Gateway and the Partnership dated
July 3, 1991.
10.3 Ground Lease Agreement between Gateway and the Partnership
dated July 3, 1991.
10.4 Management Agreement between Gateway and Ballpark Management
dated July 3, 1991.
10.5 Common Area Maintenance Agreement between Gateway, the
Partnership and Ballpark Management dated July 31, 1991.
10.6 Amended and Restated Use Agreement by and between the City
of Winterhaven, Florida and the Partnership dated October
15, 1993, as amended.
10.7 Club Trust Reducing Revolving Credit Agreement between Major
League Baseball Trust, Fleet Bank and the Club Trusts, dated
June 26, 1996.
10.8 Ratification Agreement between Indians Club Trust and Fleet
National Bank, dated June 28, 1996.
10.9 Club Trust Pledge and Security Agreement between Indians
Club Trust and Major League Baseball Trust dated June 28,
1996.
10.10 Transfer Agreement between the Partnership and Indians Club
Trust, dated May 22, 1992.
10.11 Amendment and Confirmation of Transfer Agreement between the
Partnership and Indians Club Trust dated June 28, 1996.
10.12 Credit Agreement among the Partnership, Ballpark Management
and Key Bank, N.A. (formerly known as Society National Bank)
dated September 1, 1994, as amended.
*10.13 Cleveland Indians Baseball Company, Inc. Long-Term Incentive
Plan.
10.14 Form of Indemnification Agreement between the Company and
each of its Directors.
10.15 Form of Indemnification Agreement between the Company and
each of its executive officers.
*10.16 Employment Agreements with the Company's executive officers.
*10.17 Amended and Restated Limited Partnership Agreement of the
Partnership.
10.18 Second Amendment to the Club Trust Reducing Revolving Credit
Agreement and the Club Trust Pledge and Security Agreement
dated May 27, 1997.
*23.1 Consent of Baker & Hostetler LLP (to be contained in Exhibit
5.1).
23.2 Consent of Deloitte & Touche LLP.
24.1 Powers of Attorney (contained in the signature page).
27.1 Financial Data Schedule.
99.1 Consents of Proposed Directors.
</TABLE>
- ---------------
* To be filed by Amendment
<PAGE> 1
Exhibit 1.1
DRAFT
AS OF 3-20-98
CLEVELAND INDIANS BASEBALL COMPANY, INC.
4,000,000 Class A Common Shares*
UNDERWRITING AGREEMENT
----------------------
______________, 1998
McDonald & Company Securities, Inc.
As Representative of the Several Underwriters
c/o McDonald & Company Securities, Inc.
McDonald Investment Center
800 Superior Avenue
Cleveland, Ohio 44114
Dear Sirs:
1. INTRODUCTORY. Cleveland Indians Baseball Company, Inc., an Ohio
corporation (the "Company"), proposes to issue and sell 4,000,000 of its Class A
Common Shares, without par value (the "Common Shares"), which are authorized but
unissued, to the public through the underwriters named in Schedule A annexed
hereto (the "Underwriters") for whom you are acting as the Representative. The
4,000,000 Common Shares to be purchased from the Company are hereinafter
referred to as the "Firm Stock." The Company also proposes to sell to the
Underwriters, at their option, an aggregate of not more than 600,000 additional
Common Shares solely to cover over-allotments, which are hereinafter referred to
as the "Option Stock." The Firm Stock and the Option Stock are hereinafter
collectively referred to as the "Stock" and are more fully described in the
Registration Statement and the Prospectus (as hereinafter defined). The Company
hereby confirms its agreements, as set forth herein, with you, acting as the
Representative of the Underwriters.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to each of the Underwriters that:
(a) The Company does not own or control, directly or
indirectly, any corporation, association or other entity other than those listed
in Exhibit 21 to the Registration Statement (as hereinafter defined). The
Company has been duly organized and is validly existing
- ----------
* Plus an option to purchase up to 600,000 additional shares to cover
over-allotments.
<PAGE> 2
as a corporation in good standing under the laws of Ohio with corporate power
and authority to own and lease its properties and conduct its business as
described in the Prospectus (as hereinafter defined). Each of the Company's
subsidiaries (as defined in Rule 1-02(x) of Regulation S-X) (the "Subsidiaries")
has been duly incorporated or, in the case of Cleveland Indians Baseball Company
Limited Partnership (the "Baseball Partnership"), formed and is validly existing
as a corporation or partnership, as the case may be, in good standing under the
laws of its respective jurisdiction of incorporation or formation, as the case
may be, with power and authority to own and lease its properties and conduct its
respective business. The Company and each of its Subsidiaries is duly qualified
to do business as a foreign corporation or partnership, as the case may be, and
is in good standing in all jurisdictions (i) in which the conduct of business,
as presently being conducted, requires such qualification and (ii) in which the
Company or such Subsidiary owns or leases real property (except for those
jurisdictions in which the failure to so qualify will not in the aggregate have
a material adverse effect on the Company and such Subsidiaries, taken as a
whole). Except as disclosed in the Registration Statement and except for the
shares of stock or partnership interest in the Baseball Partnership, as the case
may be, of each Subsidiary owned by the Company, neither the Company nor any
Subsidiary owns, directly or indirectly, any equity securities or securities
convertible into or exchangeable for equity securities of any other corporation,
partnership, joint venture, Massachusetts or other business trust or any other
business enterprise.
(b) This Agreement has been duly and validly authorized,
executed and delivered on behalf of the Company.
(c) The Company has prepared and filed with the Securities and
Exchange Commission (the "Commission"), in conformity with the requirements of
the Securities Act of 1933, as amended (the "Act"), and the Rules and
Regulations of the Commission thereunder (as hereinafter defined), a
registration statement on Form S-1 (Registration No. 333-________) including a
preliminary prospectus relating to the Company's Stock, and such amendments to
such registration statement as may have been required prior to the date hereof
have been similarly prepared and filed with the Commission. The registration
statement as amended at the time when it becomes effective, or, if applicable,
as amended at the time the most recent post-effective amendment to such
registration statement filed with the Commission prior to the execution and
delivery of this Agreement became effective (the "Effective Date"), and
including information (if any) contained in a prospectus subsequently filed with
the Commission pursuant to Rule 424(b) under the Act, and deemed to be part of
the registration statement at the time of effectiveness pursuant to Rule 430A
under the Act is hereinafter referred to as the "Registration Statement"; the
prospectus in the form first used to confirm sales of Stock, whether or not
filed with the Commission pursuant to Rule 424(b) under the Act is hereinafter
referred to as the "Prospectus." If an abbreviated registration statement is
prepared and filed with the Commission in accordance with Rule 462(b) under the
Act (an "Abbreviated Registration Statement"), the term "Registration Statement"
as used in this Agreement includes the Abbreviated Registration Statement.
(d) As of the Effective Date, and at all times subsequent
thereto up to and including the respective Closing Dates (as hereinafter
defined) of the offering, the
-2-
<PAGE> 3
Registration Statement and the Prospectus, and any amendments thereof or
supplements thereto, will contain all statements of material facts which are
required to be stated therein in accordance with the Act and the applicable
rules, regulations and interpretive releases of the Commission thereunder (the
"Rules and Regulations"), and will in all material respects conform to the
requirements of the Act and the Rules and Regulations; and neither the
Registration Statement nor the Prospectus, nor any amendment thereof or
supplement thereto, will include any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading; provided, however, that the Company makes
no representations, warranties or agreements as to information contained in the
Registration Statement or the Prospectus or any such amendment or supplement
thereto in reliance upon and in conformity with written information furnished to
the Company through you as the Representative specifically for use in the
preparation thereof.
(e) The Company's duly authorized, issued and outstanding
capital stock is as set forth under "Capitalization" in the Prospectus; all of
the outstanding shares of capital stock of the Company are duly authorized and
validly issued, fully paid and nonassessable, are free of any preemptive rights,
rights of first refusal or similar rights, were issued and sold in compliance
with the applicable Federal and state securities laws and conform in all
material respects to the description thereof in the Prospectus; except as
described in the Prospectus, there are no outstanding options, warrants or other
rights calling for the issuance of, and there are no commitments, plans or
arrangements to issue any shares of capital stock of the Company or any security
convertible or exchangeable or exercisable for capital stock of the Company.
There are no holders of securities of the Company who, by reason of the filing
of the Registration Statement have the right (and have not waived such right) to
request the Company to include in the Registration Statement securities owned by
them, other than such rights as have been satisfied by the inclusion of
securities in the Registration Statement.
(f) The Common Shares of the Company conform in substance to
all statements in relation thereto contained in the Registration Statement and
the Prospectus; the Stock to be sold by the Company hereunder has been duly
authorized and, when issued and delivered pursuant to this Agreement, will be
validly issued, fully paid and nonassessable and will conform to the description
thereof contained in the Prospectus. All corporate action required to be taken
for the issuance of the Stock by the Company has been validly taken. No
preemptive rights of security holders of the Company exist with respect to the
issuance and sale of the Stock by the Company pursuant hereto.
(g) All the issued shares of capital stock of each corporate
Subsidiary of the Company have been duly and validly authorized and issued, are
fully paid and nonassessable and are owned by the Company free and clear of all
liens, encumbrances, equities, security interests, or claims; and there are no
outstanding options, warrants or other rights calling for the issuance of, and
there are no commitments, plans or arrangements to issue, any shares of capital
stock of any Subsidiary or any security convertible or exchangeable or
exercisable for capital stock of any Subsidiary. All of the general partner
interests in the Baseball Partnership are owned by the Company and all of the
limited partner interests in the Baseball Partnership are owned by Cleveland
Baseball Corporation, a _________ corporation, in each case free and clear
-3-
<PAGE> 4
of all liens, encumbrances, equities, security interests or claims; and there
are no outstanding options, warrants or other rights calling for the issuance
of, and there are no commitments, plans or arrangements to issue, any interests
in the Baseball Partnership or any security convertible or exchangeable or
exercisable for interests in the Baseball Company.
(h) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus up to and including
the respective Closing Dates (as hereinafter defined), except as set forth or
contemplated in the Prospectus, (i) there has not been and will not have been
any change on a pro forma basis or otherwise in the capital stock (or
partnership interests in the case of the Baseball Partnership) or funded debt of
the Company and its Subsidiaries which is material or any material adverse
change in the business or the financial position or results of operations of the
Company and its Subsidiaries, taken as a whole, and (ii) no loss or damage
(whether or not insured) to the property of the Company and its Subsidiaries has
been sustained which materially and adversely affects the operations of the
Company and its Subsidiaries taken as a whole.
(i) The consummation of the transactions herein contemplated
and the fulfillment of the terms hereof will not conflict with or result in a
breach of any of the terms and provisions of, or constitute a default under, the
Articles of Incorporation or the Code of Regulations of the Company, or the
organizational documents of any of its Subsidiaries, or, in the case of the
Baseball Partnership, its Certificate of Limited Partnership or Partnership
Agreement, or any indenture, mortgage, deed of trust or other agreement or
instrument to which the Company or any of its Subsidiaries is a party or by
which the Company or any of its Subsidiaries is bound, or any order, rule or
regulation applicable to the Company or any of its Subsidiaries of any court or
of any federal or state regulatory body or administrative agency or other
governmental body having jurisdiction over the Company or any of its
Subsidiaries or any of their properties, or any rule, regulation, guideline,
bulletin, directive, policy or agreement pertaining to Major League Baseball,
including, without limitation, the American League Constitution, the Major
League Agreement, the Major League Rules, the MLB Collective Bargaining
Agreement and Ownership Guidelines (together, the "MLB Governing Documents").
(j) The financial statements of the Company included in the
Registration Statement and the Prospectus fairly present the financial position
and results of operations of the Company and its Subsidiaries at the respective
dates and for the respective periods to which they apply, and such financial
statements have been prepared in conformity with generally accepted accounting
principles consistently applied throughout the periods involved. The pro forma
financial statements of the Company included in the Prospectus fairly present
the pro forma financial position and results of operations of the Company and
its Subsidiaries at the dates and for the periods to which they apply, and have
been prepared to give effect to certain assumptions and proposed transactions
made on reasonable bases which are fully and accurately described in the
Prospectus, and the pro forma adjustments have been properly applied on the
bases described therein.
(k) Deloitte & Touche LLP, who have examined and expressed
their opinion on the financial statements of the Company referenced in their
opinion set forth in the
-4-
<PAGE> 5
Prospectus, are independent accountants within the meaning of the Act and the
Rules and Regulations.
(l) The Company and its Subsidiaries hold all necessary
material authorizations, approvals, orders, licenses, certificates and permits
of and from all governmental regulatory officials and bodies (collectively the
"licenses") required for the conduct of its business as described in the
Prospectus, and all such licenses are valid and in full force and effect, and
the Company and its Subsidiaries are operating in compliance in all material
respects with the terms and provisions of such licenses and with all material
laws, regulations, orders and decrees applicable to the Company and its
Subsidiaries, and their respective businesses and assets.
(m) Neither the Company nor any of its Subsidiaries is in
violation of any applicable Federal, state or local laws, statutes, rules,
regulations or ordinances relating to public health, safety or the environment,
including, without limitation, relating to releases, discharges, emissions or
disposal to air, water, land or groundwater, to the withdrawal or use of
groundwater, to the use, handling or disposal of polychlorinated biphenyls
(PCBs), asbestos or urea formaldehyde, to the treatment, storage, disposal or
management of hazardous substances (including, without limitation, petroleum,
crude oil or any fraction thereof, or other hydrocarbons), pollutants or
contaminants, to exposure to toxic, hazardous or other controlled, prohibited or
regulated substances, which violation would have a material adverse effect on
the business, condition (financial or other) or results of operations of the
Company and its Subsidiaries, taken as a whole, or which might materially and
adversely affect the consummation of the transactions contemplated by this
Agreement. In addition, and irrespective of such compliance, to the Company's
knowledge, neither the Company nor any of its Subsidiaries is subject to any
liabilities for environmental remediation or clean-up, including any liability
or class of liability of the lessee under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, or the Resource
Conservation and Recovery Act of 1976, as amended, which liability would have a
material adverse effect on the business, condition (financial or other) or
results of operations of the Company and its Subsidiaries, taken as a whole, or
which might materially and adversely affect the consummation of the transactions
contemplated by this Agreement.
(n) There are no legal or governmental actions, suits or
proceedings pending or, to the knowledge of the Company, threatened to which the
Company or any of its Subsidiaries, or any of their executive officers or
directors is a party or of which the business or property (including, without
limitation, any of the licenses referred to in (l) above) of the Company or any
of its Subsidiaries or any of the Company's or any of its Subsidiaries'
employees is the subject which could have a material adverse effect on the
business, condition (financial or other) or results of operations of the Company
and its Subsidiaries, except as set forth in the Prospectus.
(o) Neither the Company nor any of its Subsidiaries is in
violation of its Articles of Incorporation or its Code of Regulations or other
organizational documents, or, in the case of the Baseball Partnership, its
Certificate of Limited Partnership or Partnership
-5-
<PAGE> 6
Agreement, and no material default exists by the Company or any of its
Subsidiaries in the due performance and observance of any term, covenant or
condition of any agreement material to the Company and its Subsidiaries to which
the Company or any of its Subsidiaries is a party or by which the Company or any
of its Subsidiaries is bound.
(p) The Company and its Subsidiaries have good title to, or
valid and enforceable leasehold estates in, all properties and assets used for
their businesses (including the property described in the Prospectus as being
owned or leased by the Company), in each case free and clear of all liens,
encumbrances and defects other than those set forth or referred to in the
Registration Statement or Prospectus or those which do not materially affect the
value of such property or leasehold and do not materially interfere with the use
made or proposed to be made of such property or leasehold by the Company and its
Subsidiaries; and all of the leases and subleases under which the Company and
its Subsidiaries hold such properties are in full force and effect.
(q) Other than as set forth in the Prospectus, the Company and
its Subsidiaries own or possess, or can acquire on reasonable terms, the
patents, patent rights, licenses, inventions, copyrights, know-how (including
trade secrets, applications and other unpatented or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service marks, and
trade names (collectively, "Proprietary Rights") used in or necessary for the
conduct of their businesses as now conducted and as proposed to be conducted as
described in the Prospectus; the Company and its Subsidiaries have the right to
use all Proprietary Rights used in or necessary for the conduct of their
businesses without infringing the rights of any person or violating the terms of
any licensing or other agreement to which the Company or any of its Subsidiaries
is a party, and to the knowledge of the Company no person is infringing upon any
Proprietary Right which the Company or any of its Subsidiaries has the sole and
exclusive right to use; no charges, claims or litigation have been asserted and
remain pending or to the knowledge of the Company have been threatened against
the Company or any of its Subsidiaries and not withdrawn that contest the right
of the Company or any of its Subsidiaries to use, or the validity of, any
Proprietary Right or challenging or questioning the validity or effectiveness of
any license or agreement pertaining thereto or asserting the misuse thereof,
and, to the Company's knowledge, no valid basis exists for the assertion of any
such charge, claim or litigation; all licenses and other agreements to which the
Company or any of its Subsidiaries is a party relating to Proprietary Rights are
in full force and effect and constitute valid, binding and enforceable
obligations of the Company or such Subsidiary, and, to the Company's knowledge,
the other respective parties thereto, and, to the Company's knowledge, there
have not been and there currently are not any defaults thereunder which would
have a material adverse effect on the Company and its Subsidiaries, taken as a
whole, and no event has occurred which (whether by notice or lapse of time or
both) would constitute such a default under any license or other agreement
affecting Proprietary Rights used in or necessary for the conduct of the
businesses of the Company and its Subsidiaries by any party; and except as set
forth in the Prospectus, the validity, continuation and effectiveness of all
such licenses and other agreements and the current terms thereof will not be
affected by the transactions contemplated by this Agreement.
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<PAGE> 7
(r) No approval, authorization, consent or other order of any
public board or body (other than in connection with or in compliance with the
provisions of the Act and the securities or Blue Sky laws of various
jurisdictions) is legally required for the sale of the Stock by the Company.
(s) The Common Shares have been registered under Section 12(g)
of the Securities Exchange Act of 1934, as amended, and have been authorized for
trading over-the-counter on the National Association of Securities Dealers
Automated Quotation National Market ("NASDAQ/NM") subject to notice of issuance
or sale, as the case may be.
(t) The outstanding debt, the properties and the business of
the Company and its Subsidiaries conform in all material respects to the
description thereof contained in the Registration Statement and the Prospectus.
(u) The Company and its Subsidiaries have filed on a timely
basis all necessary federal, state, local and foreign income and franchise tax
returns required to be filed through the date hereof and have paid all taxes
shown as due thereon; and no tax deficiency has been asserted against the
Company or any of its Subsidiaries that has not been satisfied, nor does the
Company know of any tax deficiency which is likely to be asserted against the
Company or any of its Subsidiaries which if determined adversely to the Company
or such Subsidiary could materially adversely affect the business, prospects,
properties, assets, results of operations or condition (financial or otherwise)
of the Company and its Subsidiaries, taken as a whole. All tax liabilities are
adequately provided for on the books of the Company.
(v) The Company and each of its Subsidiaries maintain
insurance of the types and in the amounts generally deemed adequate for their
businesses, including, but not limited to, insurance covering (i) personal
injury claims and (ii) real and personal property owned or leased by the Company
and its Subsidiaries against theft, damage, destruction, acts of vandalism and
all other risks customarily insured against, all of which insurance is in full
force and effect.
(w) To the best of the Company's knowledge, no labor problem
exists with its employees or is threatened or imminent that could materially
adversely affect the Company and its Subsidiaries, taken as a whole, and the
Company is not aware of any existing, threatened or imminent labor disturbance
by the employees of any of its principal suppliers, contractors or customers
that could be expected to materially adversely affect the business, prospects,
properties, assets, results of operation or condition (financial or other) of
the Company and its Subsidiaries, taken as a whole.
(x) The Company has obtained the agreement of each of its
executive officers, directors and shareholders that, for a period of 270 days
from the date of the final prospectus, such persons will not, without the prior
written consent of McDonald & Company Securities, Inc., directly or indirectly
sell, offer to sell, grant any option for the sale of, or otherwise dispose of
Common Shares (including, without limitation, Common Shares which may
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<PAGE> 8
be deemed to be beneficially owned by such persons in accordance with the 1934
Act Regulations) or any securities convertible into Common Shares.
(y) Neither the Company nor any of its officers, directors or
affiliates (as defined in the Act and the Rules and Regulations), has taken or
will take, directly or indirectly, any action designed to stabilize or
manipulate, or which has constituted, or might in the future reasonably be
expected to cause or result in, stabilization or manipulation of, the price of
the Stock of the Company in order to facilitate the sale or resale of the Stock
or otherwise.
(z) The Company's system of internal accounting controls is
sufficient to meet the broad objectives of internal accounting control insofar
as those objectives pertain to the prevention or detection of errors or
irregularities in amounts that would be material in relation to the Company's
financial statements; and, to the best of the Company's knowledge, neither the
Company nor any employee or agent of the Company or any of its Subsidiaries has
made any payment of funds of the Company or any of its Subsidiaries or received
or retained any funds and no funds of the Company or any of its Subsidiaries
have been set aside to be used for any payment in violation of any law, rule or
regulation.
(aa) Neither the Company nor any of its Subsidiaries is or
intends to conduct its business in a manner in which it would become, an
"investment company" as defined in Section 3(a) of the Investment Company Act of
1940, as amended.
(bb) All contracts and documents which are required to be
filed as exhibits to the Registration Statement have been so filed.
3. SALE, PURCHASE AND DELIVERY OF STOCK. (a) On the basis of the
representations and warranties herein contained, but subject to the terms and
conditions herein set forth, the Company hereby agrees to sell to each
Underwriter, and each Underwriter, severally and not jointly, agrees to purchase
from the Company the respective number of shares of the Firm Stock set forth
opposite the Underwriter's name in Schedule A hereto, at a price of $______ per
share.
(b) The Company will deliver the Firm Stock to you for the
respective accounts of the several Underwriters at the office of McDonald &
Company Securities, Inc., McDonald Investment Center, 800 Superior Avenue,
Cleveland, Ohio 44114, at 10:00 A.M., Cleveland time, or to your designee at a
specified place at the same time, against payment of the purchase price at the
place of such Closing, by certified or official bank checks in next day funds
drawn to the order of the Company on the third full business day after the
effective date of the Registration Statement (or, if the Firm Stock is priced
after 4:30 p.m., Cleveland time on the effective date of the Registration
Statement, the fourth full business day after the effective date of the
Registration Statement), or at such other time not later than seven full
business days after such initial public offering as you shall determine, such
time and place being herein referred to as the "Closing Date." The certificates
for the Firm Stock so to be delivered will be in such denominations and
registered in such names as you may specify to the Company at or before 3:00
P.M., Cleveland time, on the second full business day prior to the Closing Date.
Such
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<PAGE> 9
certificates will be made available for checking and packaging at least 24 hours
prior to the Closing Date.
(c) On the basis of the representations and warranties herein
contained, but subject to the terms and conditions herein set forth, the Company
hereby grants an option to the several Underwriters to purchase, severally and
not jointly, up to 600,000 additional shares in the aggregate of the Option
Stock at the purchase price set forth in Section 3(a) hereof, for use solely in
covering any over-allotments made by the Underwriters in the sale and
distribution of the Firm Stock. The option granted hereunder may be exercised at
any time (but not more than once) within 30 days after the date the Registration
Statement becomes effective, upon written or telegraphic notice by the
Representative to the Company setting forth the aggregate number of shares of
the Option Stock as to which the Underwriters are exercising the option and the
time and place at which certificates will be delivered, such time (which, unless
otherwise determined by you and the Company, shall not be earlier than three nor
later than seven full business days after the exercise of said option) being
herein called the "Second Closing Date." The number of shares of the Option
Stock to be sold by the Company to each Underwriter and purchased by such
Underwriter from the Company shall be the same percentage of the total number of
shares of the Option Stock to be purchased by the several Underwriters on the
Second Closing Date as such Underwriter purchased of the total number of shares
of the Firm Stock, as adjusted by the Representative to avoid fractions and to
reflect any adjustment required by Section 13 hereof. The Company will deliver
certificates for the shares of the Option Stock being purchased by the several
Underwriters to you on the Second Closing Date at the place and time of such
Closing, or to your designee at a specified place at the same time, against
payment of the purchase price at the place of such Closing, by certified or
official bank checks in next day funds drawn to the order of the Company. The
certificates for the Option Stock so to be delivered will be in such
denominations and registered in such names as you may specify to the Company at
or before 3:00 P.M., Cleveland time, on the second full business day prior to
the Second Closing Date. Such certificates will be made available for checking
and packaging at least 24 hours prior to the Second Closing Date. The option
granted hereby may be cancelled by you as the Representative of the several
Underwriters, as to the shares of the Option Stock for which the option is
unexercised, at any time prior to the expiration of the 30-day period, upon
notice to the Company.
4. OFFERING BY UNDERWRITERS. Subject to the terms and conditions
hereof, the several Underwriters agree that (i) they will offer the Stock to the
public as set forth in the Prospectus as soon after the Registration Statement
becomes effective as may be practicable, but in no event later than 5:00 p.m.,
Cleveland time, on the 15th business day subsequent to the date that the
Registration Statement becomes effective, and (ii) they will offer and sell the
Stock to the public only in those jurisdictions, and in such amounts, where due
qualification and/or registration has been effected or an exemption from such
qualification and/or registration is available under the applicable securities
or Blue Sky laws of such jurisdiction; it being understood, however, that such
agreement only covers the initial sale of the Stock by the Underwriters and not
any subsequent sale of such Stock in any trading market which may develop after
the public offering.
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<PAGE> 10
5. COVENANTS OF THE COMPANY. The Company covenants and agrees with each
of the Underwriters that:
(a) The Company will make every reasonable effort to cause the
Registration Statement to become effective and will advise you when it is
effective under the Act. The Company will not file any amendment to the
Registration Statement, or supplement to the Prospectus, of which you have not
been previously advised and furnished with a copy, or to which you have
reasonably objected in writing.
(b) The Company will advise you promptly of any request of the
Commission for amendment of the Registration Statement or Prospectus or for
additional information and of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or of the institution
of any proceedings for that purpose of which it has knowledge, and the Company
will make every reasonable effort to prevent the issuance of any such stop order
and to obtain as soon as possible the lifting thereof, if issued.
(c) The Company will comply, to the best of its ability, with
the Act so as to permit the continuance of sales of and dealings in the Stock
under the Act for such period as may be required by the Act; whenever it is
necessary to amend or supplement the Prospectus to make the statements therein
not misleading, furnish, without charge to you as the Representatives, either
amendments to the Prospectus or supplemental information, so that the statements
in the Prospectus as so amended or supplemented will not be misleading; and file
a post-effective amendment to the Registration Statement whenever such an
amendment may be required and furnish, without charge to you, a reasonable
number of copies of any such amendment and related Prospectus.
(d) Not later than the 45th day following the end of the
fiscal quarter first occurring after the first anniversary of the Effective
Date, the Company will make generally available to its security holders and
deliver to you an earnings statement (which need not be audited) covering a
period of at least 12 months beginning not earlier than the Effective Date which
shall satisfy the provisions of Section 11(a) of the Act and/or Rule 158
promulgated under the Act.
(e) The Company will furnish to you copies of the Registration
Statement (two of which will be signed and will include all exhibits thereto),
each preliminary prospectus, the Prospectus, all amendments of and supplements
to such documents, and all correspondence between the Commission and the Company
or its counsel or accountants relating thereto, in each case as soon as
available and in such quantities as you may reasonably request.
(f) For a period of three years from the date of the
Prospectus, the Company will deliver to you (i) within 90 days after the end of
each fiscal year, consolidated balance sheets, statements of income, statements
of cash flow and statements of changes in stockholders' equity of the Company
and its consolidated Subsidiaries, if any, as at the end of and for such year
and the last preceding year, all in reasonable detail and certified by
independent
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<PAGE> 11
accountants, (ii) within 45 days after the end of each of the
first three quarterly periods in each fiscal year, unaudited consolidated
balance sheets and statements of income, statements of cash flow and statements
of changes in stockholders' equity of the Company and its consolidated
Subsidiaries, if any, as at the end of and for such period, all in reasonable
detail, (iii) as soon as available, all such proxy statements, financial
statements and reports as the Company shall send or make available to its
stockholders or the stockholders or partners, as the case may be, of any
Subsidiary any of whose stock or partnership interests are owned by any person
other than the Company or any Subsidiary, and (iv) copies of all annual or
periodic reports as the Company or any Subsidiary shall file with the Commission
as required by the Act, the Exchange Act and any rules or regulations
thereunder, which are available for public inspection at the Commission, or any
material reports filed in connection with the Company's listing on any stock
exchange.
(g) The Company will apply the net proceeds from the sale of
the Stock sold by it in the manner set forth in the Prospectus.
(h) If, at the time that the Registration Statement becomes
effective, any information shall have been omitted therefrom in reliance upon
Rule 430A promulgated under the Act, then promptly following the execution of
this Agreement, the Company will prepare, and file or transmit for filing with
the Commission in accordance with Rule 430A and Rule 424(b) promulgated under
the Act, copies of an amended Prospectus or, if required by such Rule 430A, a
post-effective amendment (including an amended Prospectus), containing all
information so omitted.
(i) The Company will file with the NASD all documents and
notices required of companies that have issued securities that are traded in the
over-the-counter market and quotations for which are reported by the NASDAQ/NM.
(j) The Company will cooperate with you and your counsel to
qualify the Stock for sale under the securities or Blue Sky laws of such
jurisdictions within the United States as you designate, including furnishing
such information and executing such instruments as may be required, and will
continue such qualifications in effect for a period of at least three months
from the date hereof; provided, however, the Company shall not be required to
register or qualify as a foreign corporation or as a dealer in securities nor,
except as to matters and transactions relating to the offer and sale of the
Stock, consent to a service of process in any jurisdiction.
(k) For a period of 270 days from the time of the initial
public offering of the Stock by the Underwriters, the Company will not publicly
sell, except with your prior written consent, any Common Shares or securities
convertible into Common Shares for cash, except pursuant to the exercise of any
outstanding stock options of the Company that are described in the Prospectus.
(l) After the Closing Dates, the Company and the Subsidiaries
will be in compliance with the financial record-keeping requirements and
internal accounting control requirements of Section 13(b)(2) of the Exchange
Act.
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<PAGE> 12
6. PAYMENT OF EXPENSES. The Company will pay or cause to be paid all
costs and expenses incident to the performance of the obligations of the Company
hereunder, including, but not limited to, the reasonable fees and disbursements
of its counsel; the reasonable fees, costs and expenses of preparing, printing
and delivering the certificates for the Stock; the reasonable fees, costs and
expenses of the transfer agent and registrar for the Common Shares; the
reasonable fees and disbursements of its accountants; the filing fees and
reasonable expenses incurred in connection with the qualification, registration
or exemption of the Stock under state securities or Blue Sky laws and the fees
and disbursements of counsel for the Underwriters in connection with such
qualification, registration or exemption and the preparation and printing of the
preliminary and final Blue Sky Surveys; the filing fees and reasonable expenses
paid and incurred by the Underwriters, including fees and disbursements of
counsel for Underwriters, in connection with the review of the terms of the
underwriting arrangements by the NASD; the costs and expenses in connection with
the preparation, printing and filing of the Registration Statement (including
exhibits thereto) and the Prospectus and the furnishing to the Underwriters of
such copies of each preliminary and final Prospectus as the Underwriters may
reasonably require; and the costs and expenses in connection with the printing
of this Agreement, the Agreement Among Underwriters, the Selected Dealers
Agreement and other documents distributed to the Underwriters.
7. CONDITIONS OF THE OBLIGATION OF THE UNDERWRITERS. The obligations of
the several Underwriters to purchase and pay for the Firm Stock on the Closing
Date and the Option Stock on the Second Closing Date shall be subject to the
condition that the representations and warranties made by the Company herein are
true and correct as of the date hereof and as of the respective Closing Dates,
to the condition that the written statements of Company officers made pursuant
to the provisions hereof are true and correct, and to the performance by the
Company of their obligations hereunder and to the following additional
conditions:
(a) The Registration Statement shall have become effective not
later than 5:00 P.M., Cleveland time, on the date of this Agreement, or at such
later time as shall have been consented to by you, and prior to each Closing
Date no stop order suspending the effectiveness of the Registration Statement
shall have been issued and no proceedings for that purpose shall have been
instituted or shall be pending, or to the knowledge of the Company or you, shall
be contemplated by the Commission.
(b) You shall not have advised the Company that the
Registration Statement or Prospectus or any amendment thereof or supplement
thereto contains an untrue statement of fact which, in the reasonable opinion of
Calfee, Halter & Griswold LLP, counsel for the Underwriters, is material, or
omits to state a fact which, in the opinion of such counsel, is material and is
required to be stated therein or is necessary to make the statements therein not
misleading.
(c) You shall have received as of each Closing Date (or prior
thereto as indicated) the following:
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<PAGE> 13
(i) An opinion of Baker & Hostetler LLP, dated the respective
Closing Dates, to the effect that:
(aa) The Company has been duly organized and is
validly existing as a corporation in good standing under the laws of Ohio with
corporate power and authority to own its properties and conduct its business as
described in the Prospectus. Each of the Company's Subsidiaries has been duly
incorporated or, in the case of the Baseball Partnership, formed and is validly
existing as a corporation or partnership, as the case may be, in good standing
under the laws of its respective jurisdiction of incorporation or formation, as
the case may be, with power and authority to own and lease its properties and
conduct its respective business. The Company and each of its Subsidiaries are
duly qualified to do business as a foreign corporation and are in good standing
in all jurisdictions (i) in which the conduct of business, as presently being
conducted, requires such qualification (except for those jurisdictions in which
the failure to so qualify will not in the aggregate have a material adverse
effect on the Company and its Subsidiaries) and (ii) in which the Company or
such Subsidiary owns or leases real property.
(bb) The authorized capital stock of the Company is
as set forth under "Capitalization" in the Prospectus; all issued and
outstanding Common Shares of the Company have been duly authorized and validly
issued and are fully paid and nonassessable, and are free of preemptive rights
of stockholders, rights of first refusal or similar rights. Except as described
in the Prospectus, there are no outstanding options, warrants or other rights
calling for the issuance of and there are no commitments, plans or arrangements
to issue any shares of capital stock of the Company or any security convertible
or exchangeable or exercisable for capital stock of the Company, and there are
no holders of securities of the Company who, by reason of the filing of the
Registration Statement, have the right (and have not waived such right) to
request the Company to include in the Registration Statement securities owned by
them, other than such rights as have been satisfied by the inclusion of
securities in the Registration Statement.
(cc) The Common Shares of the Company to be issued
and sold by the Company hereunder have been duly authorized, and, when issued,
delivered and paid for pursuant to this Agreement, will be validly issued, fully
paid and nonassessable. No preemptive rights of security holders of the Company
exist with respect to the issuance and sale of the Stock by the Company pursuant
to this Agreement. The Common Shares of the Company conform to the description
thereof contained in the Prospectus and the certificates for the Common Shares
of the Company (including the Stock) are in due and legal form under Ohio law.
(dd) The Company has the corporate power and
authority to enter into and perform this Agreement, and to issue and deliver the
Stock as provided herein. The execution, delivery and performance of this
Agreement by the Company has been duly authorized by all necessary action of the
Company. This Agreement constitutes the legal, valid and binding obligation of
the Company, enforceable in accordance with its terms, except as rights to
indemnity may be limited by public policy and applicable federal or state
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<PAGE> 14
securities laws and except as enforcement thereof may be limited by bankruptcy,
insolvency or other laws of general application affecting the enforcement of
creditors' rights or limitations upon the availability of certain remedies that
may be precluded by general principles of equity.
(ee) All the issued shares of capital stock of each
corporate Subsidiary of the Company have been duly and validly authorized and
issued, are fully paid and non-assessable and are owned by the Company free and
clear of all liens, encumbrances, equities, security interests, or claim; and
there are no outstanding options, warrants or other rights calling for the
issuance of, and there are no commitments, plans or arrangements to issue, any
shares of capital stock of any Subsidiary or any security convertible or
exchangeable or exercisable for capital stock of any Subsidiary; except as
disclosed in the Registration Statement and except for the shares of stock or
partnership interest in the Baseball Partnership, as the case maybe, of each
Subsidiary owned by the Company, neither the Company nor any Subsidiary owns,
directly or indirectly, any shares of capital stock of any corporation or has
any equity interest in any firm, partnership, joint venture, association or
other entity.
(ff) All of the general partner interests in the
Baseball Partnership are owned by the Company and all of the limited partner
interests in the Baseball Partnership are owned by Cleveland Baseball
Corporation, a __________ corporation, in each case free and clear of all liens,
encumbrances, equities, security interests or claims; and there are no
outstanding options, warrants or other rights calling for the issuance of, and
there are no commitments, plans or arrangements to issue, any interests in the
Baseball Partnership or any security convertible or exchangeable or exercisable
for interests in the Baseball Partnership.
(gg) The Registration Statement has become effective
under the Act and, to the best of the knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement has been issued and
no proceedings for that purpose have been instituted or are pending or
contemplated under the Act. The Registration Statement and the Prospectus, and
each amendment thereof or supplement thereto (except for the financial
statements and schedules included therein as to which such counsel need express
no opinion) comply as to form in all material respects with the requirements of
the Act and the Rules and Regulations (except for the financial statements and
schedules included therein as to which such counsel need express no opinion);
the descriptions in the Registration Statement and the Prospectus of the Common
Shares, statutes, regulations, leases, employee benefit plans, contracts and
other documents are materially accurate and fairly present the information
required to be shown; and such counsel does not know of any legal or
governmental proceedings, pending or threatened, which are required by the Act
and the Rules and Regulations to be described in the Prospectus and which are
not described as so required, or of any leases, contracts or other documents of
a character which are required by the Act and the Rules and Regulations to be
described in the Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement and which are not described and/or filed
as so required.
(hh) The consummation of the transactions herein
contemplated and the fulfillment of the terms hereof will not result in a breach
of any of the terms and provisions of, or constitute a default under, any
indenture, mortgage, deed of trust or
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<PAGE> 15
other agreement or instrument to which the Company or any of its Subsidiaries is
a party and of which such counsel has knowledge after reasonable investigation,
or the Articles of Incorporation or Code of Regulations of the Company, or the
organizational documents of any of its Subsidiaries, or, in the case of the
Baseball Partnership, its Certificate of Limited Partnership or partnership
agreement, or any of the MLB Governing Documents, or, to the knowledge of such
counsel, any order, rule or regulation applicable to the Company or any of its
Subsidiaries of any court or of any federal or state regulatory body or
administrative agency or other governmental body having jurisdiction over the
Company or any of its Subsidiaries or the properties of any of them, except for
such breaches or defaults as will not have a material adverse effect on the
consummation of the transactions herein contemplated and the fulfillment of the
terms hereof by the Company.
(ii) All approvals, consents and orders of all
governmental bodies required in connection with the valid authorization,
issuance and sale of the Stock as contemplated by this Agreement have been
obtained, except such as may be required under the securities or Blue Sky laws
of any jurisdiction as to which such counsel need express no opinion.
(jj) To such counsel's knowledge, neither the Company
nor any of its Subsidiaries is in violation of its Articles of Incorporation or
its Code of Regulations or other organizational documents, or, in the case of
the Baseball Partnership, its Certificate of Limited Partnership or partnership
agreement, and, to the best of the knowledge of such counsel, no default exists
by the Company or any of its Subsidiaries in the due performance and observance
of any term, covenant or condition of any indenture, mortgage, deed of trust,
loan agreement or other agreement filed as an exhibit to the Registration
Statement and by which the Company or any of its Subsidiaries is a party or by
which the Company or any of its Subsidiaries is bound.
(kk) The Company is not an "investment company" or a
company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
(ll) To the best of such counsel's knowledge, the
Company and its Subsidiaries are not in violation of any Federal or Ohio laws
and regulations that are of general application to corporations or partnerships
in the conduct of their business, except where the failure so to comply or
conform would not have a material adverse effect on the business, condition
(financial or other) or results of operations of the Company and its
Subsidiaries, taken as a whole.
(mm) No facts have come to the attention of such
counsel which would lead such counsel to believe that either the Registration
Statement at the time it became effective and at the Closing Date or the Second
Closing Date, as the case may be, contained an untrue statement of a material
fact or omitted to state any material fact required to be stated therein or
necessary to make the statements therein not misleading or that the Prospectus
as of the date thereof and as of the Closing Date or the Second Closing Date, as
the
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<PAGE> 16
case may be, contained an untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading (it being understood that such counsel need express no belief or
opinion with respect to the financial statements and schedules included
therein).
In rendering such opinion, such counsel may rely (A)
as to matters involving the application of laws other than the laws of the
United States and jurisdictions in which they are admitted, to the extent
specified in such opinion, if at all, upon an opinion or opinions of other
counsel, familiar with the applicable laws; and (B) as to matters of fact on
certificates of officers of the Company and certificates or other written
statements of officers of departments of various jurisdictions having custody of
documents respecting the corporate existence or good standing of the Company and
its Subsidiaries. The opinion of such counsel for the Company shall state that
the opinion of any such other counsel is in form satisfactory to such counsel
and, in their opinion, you and they are justified in relying thereon.
(ii) Such opinion or opinions of Calfee, Halter &
Griswold LLP, counsel for the Underwriters, dated the respective Closing Dates,
with respect to the sufficiency of all corporate proceedings and other legal
matters relating to this Agreement, the validity of the Stock, the Registration
Statement, the Prospectus, and other related matters as you may reasonably
request, and the Company shall have furnished to such counsel such documents as
they may request for the purpose of enabling them to pass upon such matters. In
connection with such opinions, such counsel may rely on representations or
certificates of officers of the Company.
(iii) A certificate of the Company executed by the
principal executive officer and the principal financial and accounting officer
of the Company, dated each respective Closing Date, to the effect that:
(aa) The representations and warranties of the
Company in Section 2 of this Agreement are true and correct as of each
respective Closing Date, and the Company has complied with all the agreements
and satisfied all the conditions on its part to be performed or satisfied at or
prior to each respective Closing Date.
(bb) No stop order suspending the effectiveness of
the Registration Statement has been issued and, to the knowledge of the
respective signers of the certificate, no proceedings for that purpose have been
instituted or are pending or are contemplated under the Act.
(cc) The signers of the certificate have carefully
examined the Registration Statement and the Prospectus; no facts have come to
their attention which would lead them to believe that either the Registration
Statement at the time it became effective (or any amendment thereof or
supplement thereto made prior to the Closing Date or the Second Closing Date, as
the case may be, as of the date of such amendment or supplement) contained an
untrue statement of a material fact or omitted to state any material fact
required to
-16-
<PAGE> 17
be stated therein or necessary to make the statements therein not misleading or
that the Prospectus as of the date thereof (or any amendment thereof or
supplement thereto made prior to the Closing Date or the Second Closing Date, as
the case may be, as of the date of such amendment or supplement) contained an
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading; since the
latest respective dates as of which information is given in the Registration
Statement, there has been no material adverse change in the financial position,
business or results of operations of the Company and its Subsidiaries, except as
set forth in or contemplated by the Prospectus; and since the Effective Date of
the Registration Statement there has occurred no event required to be set forth
in an amended or supplemented Prospectus which has not been set forth.
(iv) Letters from Deloitte & Touche LLP dated
respectively the date of this Agreement and each respective Closing Date,
addressed to you and in form and substance previously approved by you, with
respect to the financial statements and certain financial and statistical
information contained in the Registration Statement and the Prospectus.
(d) Prior to the Closing Date the Company shall have furnished
to you such further certificates and documents as you may reasonable request.
(e) Prior to each Closing Date no stop orders suspending the
qualification of the Stock under the securities or Blue Sky laws of the states
in which the Stock is to be offered and sold shall have been issued and no
proceedings for that purpose shall have been instituted or shall be pending, or
to the knowledge of the Company or you, shall be contemplated by the applicable
state securities administrators.
If any condition of the Underwriters' obligations hereunder to be
satisfied prior to any Closing Date is not so satisfied, this Agreement may be
terminated by you prior to such Closing Date, by notice in writing or by
telegram confirmed in writing to the Company.
All such opinions, certificates, letters and documents furnished to you
pursuant to this Section 7 will be in compliance with the provisions hereof only
if they are in all material respects satisfactory to you and to Calfee, Halter &
Griswold LLP, counsel for the Underwriters, as to which both you and such
counsel shall act reasonably. The Company will furnish you with such executed
and conformed copies of such opinions, certificates, letters and documents as
you may request.
You, on behalf of the Underwriters, may waive in writing the compliance
by the Company of any one or more of the foregoing conditions or extend the time
for their performance.
8. REPRESENTATIONS OF THE UNDERWRITERS. Each of the Underwriters
severally represents and warrants to the Company that the information furnished
to the Company in writing by such Underwriters or by you expressly for use in
the preparation of the Registration Statement or the Prospectus does not, and
any amendments thereof or supplements thereto thus
-17-
<PAGE> 18
furnished will not, contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading. Through you each Underwriter has
only furnished to the Company expressly for such use, the statements made in the
last paragraph of the cover page of the Prospectus and the statements relating
to the terms of the offering by the several Underwriters set forth under the
caption "Underwriting" in the Prospectus.
9. TERMINATION OF AGREEMENT. This Agreement shall become effective: (i)
upon the execution and delivery hereof by the parties hereto; or (ii) if, at the
time this Agreement is executed and delivered, it is necessary for the
registration statement or a post-effective amendment thereto to be declared
effective before the offering of the Stock may commence, when notification of
the effectiveness of the registration statement or such post-effective amendment
has been released by the Commission. At any time before the happening of such
occurrence, the Company may, by notice to you, terminate this Agreement; and at
any time prior to such time, you, as the Representative of the several
Underwriters, may, by notice to the Company, terminate this Agreement.
This Agreement may also be terminated by you, as the Representative of
the several Underwriters, by notice to the Company on or after the Effective
Date of the Registration Statement and prior to each respective Closing Date, if
at any time during such period any of the following has occurred: (i) except as
disclosed in or contemplated by the Registration Statement, since the respective
dates as of which information is given in the Registration Statement and the
Prospectus, any material adverse change or any development involving a
prospective material adverse change in or affecting the condition, financial or
otherwise, of the Company and its Subsidiaries taken as a whole or the earnings,
business affairs, management or business prospects of the Company and its
Subsidiaries taken as a whole, whether or not arising in the ordinary course of
business; (ii) any outbreak of hostilities or escalation in existing hostilities
anywhere in the world or other national or international calamity or crisis or
change in economic or political conditions, if the effect of such outbreak,
escalation, calamity, crisis or change on the financial markets in the United
States would, in your reasonable judgment, make it impracticable to offer for
sale or to enforce contracts made by the Underwriters for the resale of the
Stock agreed to be purchased hereunder; (iii) any general suspension of trading
in securities on the New York Stock Exchange or the American Stock Exchange or
the NASDAQ/NM or any general limitation on prices for such trading or any
general restrictions on the distribution of securities, all to such a degree as
would in your reasonable judgment materially adversely affect the market for the
Stock; or (iv) a banking moratorium shall have been declared by either Federal,
Ohio or New York State authorities.
This Agreement may also be terminated as provided in Sections 7 and 11
hereof.
If this Agreement shall be terminated by you because of any failure on
the part of the Company to comply with any of the terms or to fulfill any of the
conditions of this Agreement, the Company shall pay, in addition to the costs
and expenses referred to in Section 6, all reasonable out-of-pocket expenses
incurred by the Underwriters in contemplation of the performance by them of
their obligations hereunder, including but not limited to the reasonable
-18-
<PAGE> 19
fees and disbursements of counsel for the Underwriters, the Underwriters'
reasonable printing and traveling expenses and postage, telegraph and telephone
charges relating directly to the offering contemplated by the Prospectus, and
also including reasonable advertising expenses of the Representative incurred
after the Effective Date of the Registration Statement and so relating, it being
understood that such out-of-pocket expenses shall not include any compensation,
salaries or wages of the officers, partners or employees of any of the
Underwriters. Only such out-of-pocket expenses as shall be accounted for by the
Underwriters shall be paid to the Underwriters by the Company.
The Company shall not in any event be liable to the several
Underwriters for damages on account of loss of anticipated profits arising out
of the transactions contemplated by this Agreement.
10. INDEMNIFICATION. (a) The Company will indemnify and hold harmless
each Underwriter, and each person, if any, who controls each Underwriter within
the meaning of the Act, against any losses, claims, damages or liabilities,
joint or several, to which such Underwriter or such controlling person may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
in whole or in part on any inaccuracy in the representations and warranties of
the Company contained herein or any failure of the Company to perform its
obligations hereunder, or arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the Registration
Statement, any related preliminary prospectus (if used prior to the Effective
Date), the Prospectus or any amendment thereof or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and, subject to the provisions of Section 10(c), will
reimburse each Underwriter and each such controlling person for any legal or
other expenses reasonably incurred by such Underwriter or such controlling
person in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the indemnity agreement
contained in this Section 10(a) with respect to any preliminary prospectus shall
not inure to the benefit of any Underwriter or to the benefit of any person
controlling such Underwriter in respect of any loss, claim, damage, liability or
action asserted by a person who purchases shares of the Stock from such
Underwriter, if such Underwriter failed to send or give a copy of the Prospectus
(as the same may then be amended or supplemented) to such person with or prior
to written confirmation of the sale to such person; and provided, further, that
the Company will not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon any untrue
statement or omission or alleged omission made in the Registration Statement,
any preliminary prospectus, the Prospectus or any amendment thereof or
supplement thereto in reliance upon or in conformity with written information
furnished to the Company by an Underwriter specifically for use in the
preparation thereof, as referred to in the last sentence of Section 8 hereof.
This indemnity agreement will be in addition to any liability which the Company
may otherwise have.
(b) Each Underwriter will indemnify and hold harmless the Company, each
person, if any, who controls the Company within the meaning of the Act, each of
its directors, and each of its officers who have signed the Registration
Statement, against any losses, claims,
-19-
<PAGE> 20
damages or liabilities to which the Company, or any such director or officer may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement, any preliminary prospectus, the
Prospectus, or any amendment thereof or supplement thereto, or arise out of or
are based upon the omission or the alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged omission was
made in the Registration Statement, any preliminary prospectus, the Prospectus
or any amendment thereof or supplement thereto in reliance upon or in conformity
with written information furnished to the Company by such Underwriter through
you, as the Representative of the Underwriters, specifically for use in the
preparation thereof, as referred to in the last sentence of Section 8 of this
Agreement; and will reimburse the Company and each such director or officer for
any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action.
This indemnity agreement will be in addition to any liability which the
Underwriters may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying party under this
Section, notify each party against whom indemnification is to be sought in
writing of the commencement thereof; but the omission so to notify an
indemnifying party will not relieve it from any liability which they may have to
any indemnified party otherwise than under this Section. In case any such action
is brought against any indemnified party, and it notifies the indemnifying party
of the commencement thereof, the indemnifying party will be entitled to
participate in, and to the extent that it may wish, to assume the defense
thereof, with counsel approved by such indemnified party (which approval shall
not be unreasonably withheld), and after notice from the indemnifying party to
such indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof except as provided
below and except for the reasonable costs of investigation subsequently incurred
by such indemnified party in connection with the defense thereof. The
indemnified party shall have the right to employ its counsel in any such action,
but the fees and expenses of such counsel shall be at the expense of such
indemnified party unless (i) the employment of counsel by such indemnified party
has been authorized in writing by the indemnifying parties, (ii) the named
parties to any such action include both the indemnifying party and the
indemnified party, and the indemnified party shall have reasonably concluded
that there is an actual or potential conflict of interest between the
indemnifying parties and the indemnified party in the conduct of the defense of
such action (in which case the indemnifying parties shall not have the right to
direct the defense of such action on behalf of the indemnified party) or (iii)
the indemnifying parties shall not have employed counsel to assume the defense
of such action within a reasonable time after notice of the commencement
thereof, in each of which cases the fees and expenses of counsel shall be at the
expense of the indemnifying parties. In no event shall the indemnifying party or
parties be liable for the fees and expenses of more than one counsel for all
indemnified parties in connection with any one or separate but similar or
related actions in the same jurisdiction arising out of the same
-20-
<PAGE> 21
allegations or circumstances. Anything in this Section to the contrary
notwithstanding, an indemnifying party shall not be liable for any settlement of
any claim or action effected without its written consent.
(d) In order to provide for contribution in circumstances in which the
indemnification provided for in this Section is for any reason held to be
unavailable from the Company or the Underwriters or is insufficient to hold
harmless a party indemnified hereunder, the Company and the Underwriters shall
contribute to the aggregate losses, claims, damages, liabilities and expenses of
the nature contemplated by such indemnification provisions (including any
investigation, legal and other expenses incurred in connection with, and any
amount paid in settlement of, any action, suit or proceeding or any claims
asserted, but after deducting in the case of losses, claims, damages,
liabilities and expenses suffered by the Company, any contribution received by
the Company from persons, other than the Underwriters, who may also be liable
for contribution, including persons who control the Company within the meaning
of the Act, officers of the Company who signed the Registration Statement and
directors of the Company) to which the Company and one or more of the
Underwriters may be subject, in such proportions as is appropriate to reflect
the relative benefits received by the Company and the Underwriters from the
offering of the Stock or, if such allocation is not permitted by applicable law
or indemnification is not available as a result of the indemnifying party not
having received notice as provided in this Section, in such proportion as is
appropriate to reflect not only the relative benefits referred to above but also
the relative fault of the Company and the Underwriters in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company and the Underwriters shall be
deemed to be in the same proportion as (x) the total proceeds from the offering
(net of underwriting discounts and commissions but before deducting expenses)
received by the Company and (y) the underwriting discounts and commissions
received by the Underwriters, respectively, in each case as set forth in the
table on the cover page of the Prospectus. The relative fault of the Company and
of the Underwriters shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omissions or alleged omission to state a material fact relates to information
supplied by the Company or the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the Underwriters agree that it would not
be just and equitable if contribution pursuant to this Section 10(d) were
determined by pro rata allocation even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above. Notwithstanding
the provisions of this Section 10(d), (i) in no case shall any Underwriter
(except as may be provided in the Agreement Among Underwriters) be liable or
responsible for any amount in excess of the underwriting discounts and
commissions applicable to the Stock purchased by such Underwriter hereunder and
(ii) no person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) shall be entitled to contribution from any person, if
any, who was not guilty of such fraudulent misrepresentation. For purposes of
this Section 10(d), each person, if any, who controls an Underwriter within the
meaning of Section 15 of the Act shall have the same rights to contribution as
such Underwriter, and each person, if any, who controls the Company within the
meaning of Section 15 of the Act, each officer of the Company
-21-
<PAGE> 22
who shall have signed the Registration Statement and each director of the
Company shall have the same rights to contribution as the Company, subject in
each case to clauses (i) and (ii) of this Section 10(d). Any party entitled to
contribution will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim for
contribution may be made against another party or parties under this Section
10(d), notify such party or parties from whom contribution may be sought, but
the omission to so notify such party or parties shall not relieve the party or
parties from whom contribution may be sought from any obligation it or they may
have under this Section 10(d) or otherwise. No party shall be liable for
contribution for any settlement of any action or claim effected without its
written consent.
11. DEFAULT OF THE UNDERWRITERS. If any Underwriter or Underwriters
default in their obligations to purchase the Stock hereunder and arrangements
satisfactory to you and the Company, evidenced by a writing or writings signed
by you and the Company, for the purchase of such Stock by other persons are not
made within 36 hours after such default, this Agreement will terminate without
liability on the part of any non-defaulting Underwriter and the Company (except
that the Company shall be liable for the expenses to be paid by it pursuant to
the provisions of Section 6), provided, however, that if the number of shares of
the Stock which all such defaulting Underwriters have agreed but failed to
purchase shall not exceed 10% of the number of shares of the Firm Stock or the
Option Stock, as the case may be, agreed to be purchased pursuant to this
Agreement (other than the shares agreed to be taken up hereunder which the
defaulting Underwriters failed to purchase) by all non-defaulting Underwriters,
the non-defaulting Underwriters shall be obligated proportionately to take up
and pay for the shares of the Firm Stock or the Option Stock which such
defaulting Underwriters failed to purchase.
If any such default occurs, either you or the Company shall have the
right to postpone the Closing Date for not more than seven business days in
order that the necessary changes in the Registration Statement, Prospectus and
any other documents, as well as any other arrangement, may be effected. As used
in this Agreement, the term "Underwriters" includes any person substituted for
an Underwriter under this Section. Nothing herein will relieve a defaulting
Underwriter from its liability to the other several Underwriters and the Company
for its default hereunder.
12. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY. The respective
indemnities, agreements, representations and warranties of the Company and the
several Underwriters, set forth in or made pursuant to this Agreement, will
remain in full force and effect, regardless of any investigation made by or on
behalf of any Underwriter, the Company or any of its officers or directors or
any controlling person, and will survive delivery of and payment for the Stock
and, in the case of the agreements contained in Sections 6, 9 and 10 hereof,
will survive any termination of this Agreement.
13. NOTICES. All communications hereunder will be in writing and, if
sent to the Underwriters, will be mailed, delivered or telegraphed and confirmed
to you at McDonald & Company Securities, Inc., McDonald Investment Center, 800
Superior Avenue, Cleveland, Ohio 44114, Attention: Ralph M. Della Ratta, Jr.,
with a copy to Calfee, Halter & Griswold LLP, 1400 McDonald Investment Center,
800 Superior Avenue, Cleveland, Ohio 44114, Attention:
-22-
<PAGE> 23
Thomas F. McKee, Esq., or if sent to the Company, will be mailed, delivered or
telegraphed and confirmed to the Company at 2401 Ontario Street, Cleveland, Ohio
44115, Attention: Dennis Lehman, Executive Vice President, with a copy to Baker
& Hostetler LLP, 3200 National City Center, 1900 East Ninth Street, Cleveland,
Ohio 44114, Attention: Edward G. Ptaszek, Esq.
14. SUCCESSORS, GOVERNING LAW. This Agreement will inure solely to the
benefit of and be binding upon the parties hereto and the officers and directors
and controlling persons referred to in Section 10 hereof and their respective
successors, assigns, heirs, executors and administrators, and no other persons
will have any right or obligation hereunder. This Agreement will be governed by
and construed in accordance with the laws of the State of Ohio, without giving
effect to the principles of conflicts of laws thereof.
15. EXECUTION IN COUNTERPARTS. This Agreement may be executed by any
one or more of the parties hereto in any number of counterparts, each of which
shall be deemed to be an original, but all such counterparts shall together
constitute one and the same instrument.
16. AUTHORITY OF THE REPRESENTATIVE. You represent and warrant that you
have been authorized by the several Underwriters to enter into this Agreement on
their behalf and to act for them in the manner hereinbefore provided.
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<PAGE> 24
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us the enclosed copies hereof, whereupon it
will become a binding agreement by and between the Company and the several
Underwriters in accordance with its terms.
Very truly yours,
CLEVELAND INDIANS BASEBALL
COMPANY, INC.
By:________________________________
Its:____________________________
The foregoing Agreement is hereby confirmed and accepted by us in Cleveland,
Ohio, acting on our own behalf and as the Representative of the several
Underwriters named on Schedule A annexed hereto, as of
the date first above written.
McDONALD & COMPANY SECURITIES, INC.
As Representative of the Several Underwriters
By:___________________________________
Managing Director
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<PAGE> 25
SCHEDULE A
UNDERWRITERS
<TABLE>
<CAPTION>
Number of Shares to
Underwriter be Purchased
----------- ------------
<S> <C>
McDonald & Company Securities, Inc.....................................
Total ...............................................
</TABLE>
A-1
<PAGE> 1
Exhibit 2.1
AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement"), made and
entered into this 2nd day of April, 1998, by and among Cleveland Indians
Baseball Company, Inc., an Ohio corporation (the "Company"), Cleveland Baseball
Corporation, an Ohio corporation ("CBC"), MJC Baseball, Inc., an Ohio
corporation ("MJC"), Ballpark Management Company, an Ohio corporation ("Ballpark
Management"), Cleveland Indians Baseball Company Limited Partnership, an Ohio
limited partnership (the "Partnership"), Richard E. Jacobs, Trustee Under
Declaration of Trust dated April 23, 1987 (the "Richard E. Jacobs Trust"),
Richard E. Jacobs, Trustee of the David H. Jacobs Marital Trust (the "David H.
Jacobs Marital Trust"), and Martin J. Cleary, an individual ("Cleary");
WITNESSETH:
WHEREAS, the Company has been formed to acquire a controlling general
partnership interest in the Partnership and intends to sell its Class A Common
Shares, without par value ("Class A Common Shares"), in a registered initial
public offering (the "Offering"), pursuant to a Registration Statement on Form
S-1 (the "Registration Statement") to be filed with the Securities and Exchange
Commission (the "Commission") after the execution and delivery of this Agreement
by all parties hereto; and
WHEREAS, CBC is the 99.9% general partner of the Partnership and MJC is
the .1% limited partner of the Partnership; and
WHEREAS, the Company desires to acquire Ballpark Management through the
merger of Ballpark Management into the Company in exchange for the issuance of
Class B Common Shares, without par value, of the Company ("Class B Common
Shares") and Class A Common Shares and thereafter contribute to the Partnership
the assets, business, contract rights and liabilities related to the business of
Ballpark Management in exchange for an interest in the Partnership; and
WHEREAS, the Company desires to acquire MJC through the Merger of MJC
into the Company in exchange for cash and the issuance of Class A Common Shares
and Class B Common Shares; and
WHEREAS, the Company desires to acquire certain of CBC's interest as a
general partner in the Partnership with the proceeds of the Offering; and
WHEREAS, CBC desires to sell interests in the Partnership to the
Company as described above; and
WHEREAS, upon completion of the transactions described above, CBC and
the Company desire to amend and restate the Limited Partnership Agreement of the
Partnership to provide, among other things, that all of CBC's interest in the
Partnership will
<PAGE> 2
be as a limited partner and all of the Company's interest in the Partnership
will be as a general partner; and
WHEREAS, the parties desire that the foregoing transactions be
conditioned upon and be completed concurrently with completion of the Offering;
NOW, THEREFORE, the parties hereto, intending to be legally bound, in
consideration of the mutual premises contained herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, agree as follows:
ARTICLE I
REORGANIZATION
Section 1.1 REORGANIZATION TRANSACTIONS. At or immediately prior to the
Closing (defined below), each of the transactions set forth in this Section 1.1
shall be effected.
a. MERGER OF BALLPARK MANAGEMENT INTO THE COMPANY. Ballpark Management
shall be merged (the "Ballpark Management Merger") with and into the Company,
with the Company as the surviving corporation. In the Ballpark Management
Merger, (i) each issued and outstanding Common Share of Ballpark Management
shall be converted into the right to receive 22,816.67 Class B Common Shares
(with the total number of shares issued to a shareholder being rounded to the
nearest whole share); and (ii) each Class A Common Share issued and outstanding
immediately prior to the Ballpark Management Merger shall remain issued and
outstanding and unaffected by the Ballpark Management Merger. The Ballpark
Management Merger shall be effected by the filing by the Company of a
certificate of merger (the "Certificate of Merger") with the Ohio Secretary of
State which complies with Section 1701.81 of the Ohio Revised Code. The articles
of incorporation and regulations of the Company in effect immediately prior to
the filing of the Certificate of Merger shall be the articles of corporation and
regulations of the surviving corporation. The effect of the Merger shall be as
provided in Section 1701.82 of the Ohio Revised Code.
b. MERGER OF MJC INTO THE COMPANY. MJC shall be merged (the "MJC
Merger") with and into the Company, with the Company as the surviving
corporation. In the MJC Merger (i) each outstanding share of MJC shall be
converted into the right to receive (A) a number of Class A Common Shares equal
to the quotient of 6,043 divided by the number of common shares of MJC
outstanding immediately prior to the effective time of the MJC Merger, (B) a
number of Class B Common Shares equal to the quotient of 2,290 divided by the
number of common shres of MJC outstanding immediately prior to the effective
time of the MJC Merger, and (C) an amount of cash equal to the quotient of
55,800 divided by the number of common shares of MJC immediately prior to the
effective time of
-2-
<PAGE> 3
the MJC Merger, and (ii) each Class A Common Share issued and outstanding
immediately prior to the MJC Merger shall remain issued and outstanding and
unaffected by the MJC Merger. The MJC Merger shall be effected by the filing by
the Company of a certificate of merger with the Ohio Secretary of State which
complies with Section 1701.81 of the Ohio Revised Code and which may be the
Certificate of Merger used to effect the Ballpark Management Merger. The
articles of incorporation and regulations of the Company in effect immediately
prior to the filing of the certificate of merger shall be the articles of
incorporation and regulations of the surviving corporation.
c. CONTRIBUTION OF BALLPARK MANAGEMENT ASSETS, BUSINESS AND CONTRACT
RIGHTS TO THE PARTNERSHIP. Upon completion of the Merger, the Company shall
immediately transfer and contribute to the Partnership (the "Contribution") all
of the assets, business, contract rights and liabilities held by Ballpark
Management immediately prior to the Merger in exchange for 2,281,667 Units in
the Partnership (there being 12,333,333 total Partnership Units outstanding
after giving effect to the contribution). Each of CBC and the Company, as the
only partners of the Partnership prior to the Contribution, hereby agree and
consent to the Contribution and the issuance of such Partnership Units in
exchange therefor. Immediately following the Contribution (and prior to the
transactions described in Section 1.1(d)), the Company and CBC, as the only
partners of the Partnership, agree that the number of Partnership Units held by
them shall be as follows:
<TABLE>
<CAPTION>
Partner Partnership Units
------- -----------------
<S> <C>
The Company 2,294,000
CBC 10,039,333
Total: 12,333,333
</TABLE>
The Contribution shall be effected by the execution and delivery by the Company
and the Partnership of one or more assignment instruments reasonably
satisfactory to the Company.
d. SALE OF PARTNERSHIP INTERESTS. Upon completion of the Contribution,
the Company immediately purchase from CBC and CBC shall immediately sell, convey
and transfer to the Company, 3,996,000 Partnership Units for a cash purchase
price per Unit equal to the initial public offering price per share of the Class
A Common Shares in the Offering, less the underwriting discount. If more than
4,000,000 Class A Common Shares are sold in the Offering pursuant to the
underwriters' over-allotment option or otherwise, the Company shall purchase
from CBC, at the same price per Unit, a number of Units in the Partnership
equal to the number of additional Class A Common Shares sold in the Offering .
The sale of the CBC partnership interests to the Company shall be effected by
the execution and delivery by CBC of an assignment instrument, in form and
substance reasonably satisfactory to the Company, against payment of the
purchase price therefor. Upon completion of the Partnership Interest Sale, the
Company and CBC shall enter into an Amended and Restated Agreement of Limited
Partnership for the Partnership to provide, among other things, that all of
CBC's interest in the Partnership upon completion of the transactions
contemplated by this
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<PAGE> 4
Agreement shall be a limited partnership interest and all of the Company's
interest in the Partnership upon completion of the transactions contemplated by
this Agreement shall be a general partnership interest.
e. PAYMENT OF SUBSCRIPTION OBLIGATION. The entire amount of the
outstanding obligations of the Richard E. Jacobs Trust, the David H. Jacobs
Marital Trust (together, the "Trusts"), and Martin J. Cleary under the
Subscription to Purchase Shares dated April 2, 1998 shall be paid in full.
ARTICLE II
CLOSING
Section 2.1 CLOSING. Completion of the transactions contemplated by
this Agreement (the "Closing") shall take place on the date of the closing of
the Offering (the "Closing Date") at the offices of Baker & Hostetler LLP, 3200
National City Center, Cleveland, Ohio, or at such other place as the Company
shall determine. The Closing shall be effected by the delivery or filing (in the
case of the Certificate of Merger) of the documents referred to in Section 1.1.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY,
BALLPARK MANAGEMENT AND MJC
Each of the Company, Ballpark Management and MJC represents and
warrants to each other party hereto as follows:
Section 3.1 ORGANIZATION AND STANDING. It is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Ohio.
Section 3.2 POWER AND AUTHORITY. It has all requisite power and
authority, corporate and otherwise, to conduct its business as presently
conducted, to execute and deliver this Agreement and to consummate the
transactions provided for herein.
Section 3.3 DUE AUTHORIZATION. The execution and delivery of this
Agreement and the consummation of the transactions provided for herein have been
duly authorized and approved by all necessary corporate action, and this
Agreement constitutes its legal, valid and binding agreement and obligation,
enforceable in accordance with the terms hereof.
Section 3.4 CONFLICTS; DEFAULTS. Neither the execution and delivery of
this Agreement by it nor the consummation of the transactions provided for
herein will violate, conflict with, or constitute a breach of or default under,
any of the terms of its articles of incorporation or regulations, or any
provision of, or result in the acceleration of any
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<PAGE> 5
obligation under, any contract, lien, permit, lease, instrument, order,
judgment, decree or agreement to which it is a party or by which any of its
assets are bound, and will not constitute an event which, after notice or lapse
of time, or both, will result in such violation, conflict, breach, default or
acceleration.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PARTNERSHIP
The Partnership represents and warrants to each other party hereto as
follows:
Section 4.1 STATUS. The Partnership is a limited partnership validly
existing under the laws of the State of Ohio.
Section 4.2 POWER AND AUTHORITY. The Partnership has all requisite
power and authority, partnership and otherwise, to conduct its business as
presently conducted, to execute and deliver this Agreement and to consummate the
transactions provided for herein.
Section 4.3 DUE AUTHORIZATION. The execution and delivery of this
Agreement and the consummation of the transactions provided for herein have been
duly authorized and approved by all necessary partnership action, and this
Agreement constitutes the legal, valid and binding agreement and obligation of
the Partnership, enforceable in accordance with the terms hereof.
Section 4.4 CONFLICTS; DEFAULTS. Neither the execution and delivery of
this Agreement by the Partnership nor the consummation of the transactions
provided for herein will violate, conflict with, or constitute a breach of or
default under, any of the terms of the Original Partnership Agreement, or any
provision of, or result in the acceleration of any obligation under, any
contract, lien, permit, deed, lease, instrument, order, judgment, decree or
agreement to which the Partnership is a party or by which the Partnership is
bound, and will not constitute an event which, after notice or lapse of time, or
both, will result in such violation, conflict, breach, default or acceleration.
ARTICLE V
INVESTMENT REPRESENTATIONS
Section 5.1 The Shareholders (as defined below) represent and warrant
to the Company as follows:
(a) Each of the Richard E. Jacobs Trust, the David H. Jacobs Marital
Trust and Cleary (the "Shareholders") is acquiring Class A or Class B Common
Shares of the Company in connection with the Ballpark Management Merger or the
MJC Merger and such shares are being acquired for such Shareholder's own account
and not directly or
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<PAGE> 6
indirectly with a view to, or for sale in connection with, any distribution
thereof. Such Shareholder acknowledges that (i) such shares have not been
registered under the Securities Act of 1933 (the "Securities Act"), (ii) such
shares may not be resold unless they are subsequently registered under the
Securities Act, or an exemption from such registration is available, and (iii)
restrictive legends to that effect will be placed on the certificates
representing such shares.
(b) Each Shareholder is an accredited investor as such term is defined
in Regulation D under the Securities Act. In addition, (i) each Shareholder has
been granted the opportunity to ask questions of, and receive answers from,
representatives of the Company concerning the Company and the terms and
conditions of the Ballpark Management Merger and the MJC Merger contemplated by
this Agreement and to obtain any additional information that such Shareholder
deems necessary, and (ii) such Shareholder's knowledge and experience in
financial business matters is such that such Shareholder is capable of
evaluating the merits and risks of the investment in such shares.
ARTICLE VI
GENERAL PROVISIONS
Section 6.1 NOTICES. All notices or other communications provided for
herein to be given or sent to a party by another party shall be deemed validly
given or sent if in writing and mailed, postage prepaid, by registered or
certified United State mail, or if personally delivered, addressed to the
parties at their addresses set forth below. Any party may give notice to the
other parties at any time, by the method specified above, of a change in the
address at which, or the person to whom, notice is to be addressed.
Section 6.2 WAIVER. The failure of a party to enforce any term,
provision, or condition of this Agreement at any time or times shall not be
deemed a waiver of that term, provision, or condition for the future, nor shall
any specific waiver of a term, provision, or condition at one time be deemed a
waiver of such term, provision, or condition for any future time or times.
Section 6.3 PARTIES. This Agreement shall be binding upon, and shall
inure to the benefit of, the parties hereto and their successors and assigns.
Section 6.4 GOVERNING LAW. The validity, interpretation, and
performance of this Agreement shall be governed by the laws of the State of
Ohio, without giving effect to the principles of conflicts of laws thereof.
Section 6.5 CAPTIONS. The captions of this Agreement have been assigned
thereto for convenience only and shall not be construed to limit, define or
modify the substantive terms hereof.
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Section 6.6 ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties hereto concerning the subject matter hereof, and
supersedes all prior agreements, memoranda, correspondence, conversations and
negotiations.
Section 6.7 EXECUTION IN COUNTERPARTS. This Agreement may be executed
in one or more counterparts which together shall constitute but one and the same
Agreement. This Agreement may be executed by the parties executing separate
counterpart signature pages, each of which may contain the signature of one or
more but fewer than all the parties.
CLEVELAND INDIANS BASEBALL COMPANY,
INC.
By: /s/ Richard E. Jacobs
--------------------------------------------
Richard E. Jacobs, President
CLEVELAND BASEBALL CORPORATION
By: /s/ Richard E. Jacobs
--------------------------------------------
Richard E. Jacobs, President
BALLPARK MANAGEMENT COMPANY
By: /s/ Richard E. Jacobs
---------------------------------------------
Richard E. Jacobs, President
MJC BASEBALL, INC.
By: /s/ Martin J. Cleary
---------------------------------------------
Martin J. Cleary, President
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<PAGE> 8
CLEVELAND INDIANS BASEBALL COMPANY
LIMITED PARTNERSHIP
By: Cleveland Baseball Corporation,
its General Partner
By: /s/ Richard E. Jacobs
----------------------------------------
Richard E. Jacobs, President
/s/ Richard E. Jacobs
------------------------------------------------
Richard E. Jacobs, Trustee Under Declaration of
Trust dated April 23, 1987
/s/ Richard E. Jacobs
------------------------------------------------
Richard E. Jacobs, Trustee Under the
David H. Jacobs Marital Trust
/s/ Martin J. Cleary
------------------------------------------------
Martin J. Cleary
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<PAGE> 1
Exhibit 3.2
CODE OF REGULATIONS
-------------------
OF
--
CLEVELAND INDIANS BASEBALL COMPANY, INC.
----------------------------------------
ARTICLE I
---------
Meetings of Shareholders
------------------------
Section 1. ANNUAL MEETING. The annual meeting of shareholders
shall be held at such time and on such date of each year (commencing in 1999) as
may be fixed by the Board of Directors and stated in the notice of the meeting,
for the election of directors, the consideration of reports to be laid before
such meeting and the transaction of such other business as may properly come
before the meeting.
Section 2. SPECIAL MEETING. Special meetings of shareholders
of the Corporation may be held on any business day when called by the chairman
of the board, the president, a vice president, a majority of the directors
acting without a meeting, or persons who hold fifty percent (50%) of all shares
outstanding and entitled to vote at the meeting. Upon request in writing
delivered either in person or by registered mail to the president or the
secretary by any persons entitled to call a meeting of shareholders, such
officer shall forthwith cause to be given to shareholders entitled thereto,
notice of a meeting to be held on a date not less than seven (7) or more than
sixty (60) days after receipt of the request, as such officer may fix. If such
notice is not given within thirty (30) days after the delivery or mailing of the
request, the persons calling the meeting may fix the time of the meeting and
give notice thereof in the manner provided by law or as provided in these
Regulations or cause the notice to be given by any designated representative.
Each special meeting shall be held at the principal office of the Corporation
unless the meeting is called by the directors, acting with or without a meeting,
in which case the meeting may be held at any place either within or without the
State of Ohio designated by the Board of Directors and specified in the notice
of the meeting.
Section 3. NOTICE OF MEETINGS. Unless waived, written notice
of each annual or special meeting of shareholders stating the time, place, and
purposes thereof shall be given either by personal delivery or by mail to each
shareholder of record entitled to notice of the meeting, not less than seven (7)
or more than sixty (60) days before any such meeting by or at the direction of
the president or the secretary or any other person required or permitted by
these Regulations to give such notice. If mailed, such notice shall be directed
to the shareholder at his address as the same appears upon the records of the
Corporation. Any shareholder, either before or after any meeting, may waive any
notice required to be given by law or under these Regulations.
Section 4. PLACE OF MEETINGS. Meetings of shareholders shall
be held at the principal office of the Corporation unless the Board of Directors
determines that a meeting shall be held at some other place within or without
the State of Ohio and causes the notice thereof to so state.
<PAGE> 2
Section 5. QUORUM. The holders of shares entitling them to
exercise a majority of the voting power of the Corporation entitled to vote at
any meeting, present in person or by proxy, shall constitute a quorum for the
transaction of business to be considered at such meeting; provided, however,
that no action required by law or by the Amended and Restated Articles of
Incorporation or these Regulations to be authorized or taken by the holders of a
designated proportion of the shares of any particular class or of each class may
be authorized or taken by a lesser proportion. The holders of a majority of the
voting shares represented at a meeting, whether or not a quorum is present, may
adjourn such meeting from time to time, until a quorum shall be present.
Section 6. RECORD DATE. The Board of Directors may fix a
record date for any lawful purpose, including without limiting the generality of
the foregoing, the determination of shareholders entitled to (i) receive notice
of or to vote at any meeting, (ii) receive payment of any dividend or
distribution, (iii) receive or exercise rights of purchase of or subscription
for, or exchange or conversion of, shares or other securities, subject to any
contract right with respect thereto, or (iv) participate in the execution of
written consents, waivers or releases. Said record date shall not be a date
earlier than the date on which the record is fixed and shall not be more than
sixty (60) days preceding the date of such meeting, the date fixed for the
payment of any dividend or distribution or the date fixed for the receipt or the
exercise of rights, as the case may be.
If a record date shall not be fixed, the record date for the
determination of shareholders who are entitled to notice of, or who are entitled
to vote at, a meeting of shareholders, shall be the close of business on the
date next preceding the day on which notice is given, or the close of business
on the date next preceding the day on which the meeting is held, as the case may
be.
Section 7. PROXIES. A person who is entitled to attend a
shareholders' meeting, to vote thereat, or to execute consents, waivers or
releases, may be represented at such meeting or vote thereat, and execute
consents, waivers and releases, and exercise any of his other rights, by proxy
or proxies appointed by a writing signed by such person.
Section 8. ORDER OF BUSINESS.
(a) The chairman of the board, or such other officer of the
Corporation as may be designated by the Board of Directors, will call meetings
of shareholders to order and will preside at the meetings. The presiding officer
will determine the order of business at the meeting and have the authority to
regulate the conduct of the meeting, including (i) limiting the persons (other
than shareholders and their duly appointed proxies) who may attend the meeting,
(ii) determining whether any shareholder or his or her proxy should be excluded
from the meeting because the shareholder or proxy has disrupted or is likely to
disrupt the meeting, (iii) determining the circumstances in which any person may
make a statement or ask questions at the meeting, and (iv) establishing such
other procedures as the presiding officer may deem
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<PAGE> 3
appropriate for the orderly conduct of the meeting.
(b) At an annual meeting of shareholders, only such business
as is properly brought before the meeting will be considered. To be properly
brought before an annual meeting, business must be (i) specified in the notice
of the meeting (or any supplement to that notice) given by or at the direction
of the president, a vice president, the secretary, or an assistant secretary in
accordance with Section 3 of this Article I, (ii) brought before the meeting by
the presiding officer or by or at the direction of the Board of Directors, or
(iii) properly requested by a shareholder to be brought before the meeting in
accordance with subsection (c) of this Section 8.
(c) For business to be properly requested by a shareholder of
the Corporation to be submitted to shareholders for their approval or adoption
at any annual or special meeting of shareholders, all of the following
requirements must be met:
(i) the shareholder submitting the proposal (the
"proponent") must submit the proposal to the Corporation in writing at
the Corporation's principal executive offices;
(ii) at the time the proponent submits such proposal
the proponent must be a shareholder of record of the Corporation and
must continue to be a shareholder of record of the Corporation as of
the close of business on the record date for determining shareholders
entitled to notice of and to vote at such annual or special meeting of
shareholders, in both instances as reflected in the shareholder records
of the Corporation;
(iii) at the time the proponent submits such
proposal, the proponent must provide the Corporation in writing with
the proponent's name, address, the number of voting securities held of
record, the date upon which the proponent acquired such securities, and
a list of all other proposals submitted by the proponent to the
Corporation during the preceding five years;
(iv) at the time the proponent submits such proposal,
the proponent must also provide the Corporation in writing with the
reasons for submitting the proposal at the meeting and any material
interest in such proposal of such proponent and the beneficial
owner(s), if any, on whose behalf the proposal is made; and
(v) the proposal must be received at the
Corporation's principal executive offices (A), in the case of a
proposal to be acted upon at an annual meeting of shareholders, not
less than 120 calendar days in advance of the date of the previous
year's annual meeting of shareholders, or, if no annual meeting was
held in the previous year, a reasonable time (as determined by the
Corporation in
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<PAGE> 4
its sole discretion) before the scheduled date of the current year's
annual meeting; and (B) in the case of a proposal to be acted upon at a
special meeting of shareholders, a reasonable time (as determined by
the Corporation in its sole discretion) before the scheduled date of
the special meeting.
(d) The determination of whether any business sought to be
brought before any annual or special meeting of shareholders is properly brought
in accordance with this Section 8 will be made by the presiding officer of the
meeting. If the presiding officer determines that any business is not properly
brought before the meeting, he or she will so declare to the meeting, and the
business will not be considered or acted upon.
(e) Notwithstanding the foregoing provisions of this Section
8, in the case of any proposal that the Corporation is required to include in
its proxy statement and form of proxy under the provisions of Rule 14a-a (as
from time to time amended, or any successor thereto) promulgated under the
Securities Exchange Act of 1934, as amended (or any similar or successor rule or
regulation under that or any successor act), compliance by the proponent with
all of the requirements of such rule shall be deemed to constitute compliance
with the provisions of this Section 8.
ARTICLE II
----------
Directors
---------
Section 1. NUMBER OF DIRECTORS. Until changed in accordance
with the provisions of this section, the number of directors of the Corporation,
none of whom need be shareholders or residents of the State of Ohio, shall be
two (2). The number of directors may be increased or decreased by action of the
Board of Directors upon the vote of the majority of the Board or by the vote of
the shareholders that are present in person or by proxy at a meeting to elect
directors at which a quorum is present and that are holders of a majority of the
shares represented at the meeting and entitled to vote on the proposal;
provided, however, that in no case shall the number of directors be fewer than
three (3) or more than seven (7); and provided further than no decrease in the
number of directors shall have the effect of removing any director prior to the
expiration of his or her term of office. Notwithstanding the foregoing, the
aggregate number of members of the Board of Directors shall automatically
increase by the number of directors elected pursuant to Article Fourth, Division
C, Section 5(b) of the Amended and Restated Articles of Incorporation of the
Corporation, such directors to be elected and hold office in accordance with
such provisions of the Amended and Restated Articles of Incorporation of the
Corporation, notwithstanding any other provision of these Regulations.
Section 2. ELECTION OF DIRECTORS. Directors shall be elected
at the annual meeting of shareholders, but when the annual meeting is not held
or directors are not elected thereat, they may be elected at a special meeting
called and held for that purpose. Such election shall be by
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<PAGE> 5
ballot whenever requested by any shareholder entitled to vote at such election;
but, unless such request is made, the election may be conducted in any manner
approved at such meeting. At each meeting of shareholders for the election of
directors, the persons receiving the greatest number of votes shall be
directors.
Section 3. NOMINATION OF CANDIDATES FOR ELECTION AS DIRECTORS.
(a) At a meeting of shareholders at which directors are to be
elected, only persons properly nominated as candidates will be eligible for
election as directors. Candidates may be properly nominated either (i) by the
Board of Directors or (ii) by any shareholder in accordance with subsection (b)
of this Section 3.
(b) For a shareholder properly to nominate a candidate for
election as a director at a meeting of shareholders, the shareholder must (i) be
a shareholder of the Company of record at the time of the giving of the notice
for the meeting, (ii) be entitled to vote at the meeting in the election of
directors, and (iii) have given timely written notice of the nomination to the
secretary. To be timely, a shareholder's notice must be delivered to or mailed
and received at the principal executive offices of the Company not less than
sixty (60) nor more than ninety (90) days prior to the meeting; except that, if
the first public announcement of the date of the meeting is not made at least
seventy (70) days prior to the date of the meeting, notice by the shareholder
will be timely if it is so received not later than the close of business on the
tenth day following the day on which the first public announcement of the date
of the meeting is made. A shareholder's notice must set forth, as to each
candidate, all of the information about the candidate required to be disclosed
in a proxy statement complying with the rules of the Securities and Exchange
Commission that is used connection with the solicitation of proxies for the
election of the candidate as a director. If the officer presiding at the meeting
determines that one or more of the candidates has not been nominated in
accordance with these procedures, he or she will so declare at the meeting, and
the candidates will not be considered or voted upon at the meeting.
Section 4. TERM OF OFFICE. Each director shall hold office
until the annual meeting next succeeding his election and until his or her
successor is elected and qualified, or until his or her earlier resignation,
removal from office or death.
Section 5. REMOVAL. All the directors, or all the directors of
a particular class, or any individual director may be removed from office,
without assigning any cause, by the vote of the holders of a majority of the
voting power entitling them to elect directors in place of those to be removed,
provided that unless all the directors, or all the directors of a particular
class, are removed, no individual director shall be removed in case the votes of
a sufficient number of shares are cast against his removal which, if
cumulatively voted at an election of all the directors, or all the directors of
a particular class, as the case may be, would be sufficient to elect at least
one director. In case of any such removal, a new director may be elected at the
same meeting for the unexpired term of each director removed.
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Section 6. VACANCIES. Vacancies in the Board of Directors may
be filled by a majority vote of the remaining directors until an election to
fill such vacancies is had. A vacancy or vacancies in the Board of Directors
shall be deemed to exist if the number of directors of any class is increased by
the Board. Any person or persons chosen by the Board shall hold office until the
next meeting of shareholders called for the election of directors. Shareholders
entitled to elect directors shall have the right to fill any vacancy in the
board (whether the same has been temporarily filled by the remaining directors
or not) at any meeting of shareholders called for that purpose, and any
directors elected at any such meeting of shareholders shall serve until the next
annual election of directors and until their successors are elected and
qualified or until their earlier resignation, removal from office or death.
Section 7. QUORUM AND TRANSACTION OF BUSINESS. A majority of
the whole authorized number of directors shall constitute a quorum for the
transaction of business, except that a majority of the directors in office shall
constitute a quorum for filling a vacancy on the board. Whenever less than a
quorum is present at the time and place appointed for any meeting of the board,
a majority of those present may adjourn the meeting from time to time, until a
quorum shall be present. The act of a majority of the directors present at a
meeting at which a quorum is present shall be the act of the board.
Section 8. ANNUAL MEETING. Annual meetings of the Board of
Directors shall be held immediately following annual meetings of shareholders,
or as soon thereafter as is practicable. If no annual meeting of shareholders is
held, or if directors are not elected thereat, then the annual meeting of the
Board of Directors shall be held immediately following any special meeting of
shareholders at which directors are elected, or as soon thereafter as is
practicable. If such annual meeting of directors is held immediately following a
meeting of shareholders, it shall be held at the same place at which such
shareholders' meeting was held.
Section 9. REGULAR MEETINGS. Regular meetings of the Board of
Directors shall be held at such times and places, within or without the State of
Ohio, as the Board of Directors may, by resolution or by-law, from time to time,
determine. The secretary shall give notice of each such resolution or by-law to
any director who was not present at the time the same was adopted, but no
further notice of such regular meeting need be given.
Section 10. SPECIAL MEETINGS. Special meetings of the Board of
Directors may be called by the chairman of the board, the president, any vice
president, or any two members of the Board of Directors, and shall be held at
such times and places, within or without the State of Ohio, as may be specified
in such call.
Section 11. NOTICE OF ANNUAL OR SPECIAL MEETINGS. Notice of
the time and place of each annual or special meeting shall be given to each
director by the secretary or by the person or persons calling such meeting. Such
notice need not specify the purpose or purposes of the meeting and may be given
in any manner or method and at such time so that the director receiving it may
have reasonable opportunity to participate in the meeting. Such notice shall, in
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all events, be deemed to have been properly and duly given if mailed at least
forty-eight (48) hours prior to the meeting and directed to the residence of
each director as shown upon the secretary's records and, in the event of a
meeting to be held through the use of communications equipment, if the notice
sets forth the telephone number at which each director may be reached for
purposes of participation in the meeting as shown upon the secretary's records
and states that the secretary must be notified if a director desires to be
reached at a different telephone number. The giving of notice shall be deemed to
have been waived by any director who shall participate in such meeting and may
be waived, in a writing, by any director either before or after such meeting.
Section 12. ACTION WITHOUT A MEETING. Any action that may be
authorized or taken at a meeting of the Board of Directors may be authorized or
taken without a meeting with the affirmative vote or approval of, and in a
writing or writings signed by, all of the directors, which writing or writings
shall be filed with or entered upon the records of the Corporation.
Section 13. COMPENSATION. The directors, as such, shall be
entitled to receive such reasonable compensation for their services as may be
fixed from time to time by resolution of the board, and expenses of attendance,
if any, may be allowed for attendance at each annual, regular or special meeting
of the board. Nothing herein contained shall be construed to preclude any
director from serving the Corporation in any other capacity and receiving
compensation therefor. Members of the executive committee or of any standing or
special committee may by resolution of the board be allowed such compensation
for their services as the board may deem reasonable, and additional compensation
may be allowed to directors for special services rendered.
Section 14. BY-LAWS. For the government of its actions, the
Board of Directors may adopt by-laws consistent with the Amended and Restated
Articles of Incorporation and these Regulations.
ARTICLE III
-----------
Committees
----------
Section 1. EXECUTIVE COMMITTEE. The Board of Directors may
from time to time, by resolution passed by a majority of the whole board, create
an executive committee of three or more directors, the members of which shall be
elected by the Board of Directors to serve during the pleasure of the board. If
the Board of Directors does not designate a chairman of the executive committee,
the executive committee shall elect a chairman from its own number. Except as
otherwise provided herein and in the resolution creating an executive committee,
such committee shall, during the intervals between the meetings of the Board of
Directors, possess and may exercise all of the powers of the Board of Directors
in the management of the business and affairs of the Corporation, other than
that of filling vacancies among the directors or in any
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<PAGE> 8
committee of the directors. The executive committee shall keep
full records and accounts of its proceedings and transactions. All action by the
executive committee shall be reported to the Board of Directors at its meeting
next succeeding such action and shall be subject to control, revision and
alteration by the Board of Directors, provided that no rights of third persons
shall be prejudicially affected thereby. Vacancies in the executive committee
shall be filled by the directors, and the directors may appoint one or more
directors as alternate members of the committee who may take the place of any
absent member or members at any meeting.
Section 2. MEETINGS OF EXECUTIVE COMMITTEE. Subject to the
provisions of these Regulations, the executive committee shall fix its own rules
of procedure and shall meet as provided by such rules or by resolutions of the
Board of Directors, and it shall also meet at the call of the president, the
chairman of the executive committee or any two members of the committee. Unless
otherwise provided by such rules or by such resolutions, the provisions of
Section 11 of Article II relating to the notice required to be given of meetings
of the Board of Directors shall also apply to meetings of the executive
committee. A majority of the executive committee shall be necessary to
constitute a quorum. The executive committee may act in a writing, or by
telephone with written confirmation, without a meeting, but no such action of
the executive committee shall be effective unless concurred in by all members of
the committee.
Section 3. OTHER COMMITTEES. The Board of Directors may by
resolution provide for such other standing or special committees as it deems
desirable, and discontinue the same at pleasure. Each such committee shall have
such powers and perform such duties, not inconsistent with law, as may be
delegated to it by the Board of Directors. The provisions of Section 1 and
Section 2 of this Article shall govern the appointment and action of such
committees so far as the same are consistent with such appointment and unless
otherwise provided by the Board of Directors. Vacancies in such committees shall
be filled by the Board of Directors or as the Board of Directors may provide.
ARTICLE IV
----------
Officers
--------
Section 1. GENERAL PROVISIONS. The Board of Directors shall
elect a president, such number of vice presidents as the board may from time to
time determine, a secretary and a treasurer and, in its discretion, a chairman
of the board. The Board of Directors may from time to time create such offices
and appoint such other officers, subordinate officers and assistant officers as
it may determine. The chairman of the board shall be, but the other officers
need not be, chosen from among the members of the Board of Directors. Any two of
such offices, other than that of president and vice president, may be held by
the same person, but no officer shall execute, acknowledge or verify any
instrument in more than one capacity if such instrument is required by law or
the Amended and Restated Articles of Incorporation or these Regulations to be
executed, acknowledged or verified by two (2) or more officers.
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<PAGE> 9
Section 2. TERM OF OFFICE. The officers of the Corporation
shall hold office at the pleasure of the Board of Directors, and, unless sooner
removed by the Board of Directors, until the annual meeting of the Board of
Directors following the date of their election and until their successors are
chosen and qualified. The Board of Directors may remove any officer at any time,
with or without cause. A vacancy in any office, however created, may only be
filled by the Board of Directors.
ARTICLE V
---------
Duties of Officers
------------------
Section 1. CHAIRMAN OF THE BOARD. The chairman of the board,
if one is elected, shall preside at all meetings of the Board of Directors,
shall, unless that duty has been delegated by the Board of Directors to the
president or another officer, preside at all meetings of shareholders, and
subject to directions of the Board of Directors and to the delegation by the
Board of Directors to the president of specific or general executive
supervision, the chairman of the board shall have general executive supervision
over the property, business, and affairs of the Corporation. The chairman of the
board shall have the authority to sign all certificates for shares, deeds,
mortgages, bonds, contracts, and other obligations in the name of the
Corporation and shall have such other authority and shall perform such other
duties as may be determined by the Board of Directors.
Section 2. PRESIDENT. In the absence of the Chairman of the
Board, the President shall preside at all meetings of the shareholders and at
all meetings of the Board of Directors. He shall preside at all meetings of
shareholders, and, in the absence of the chairman of the board, or if a chairman
of the board shall not have been elected, shall also preside at meetings of the
Board of Directors. He shall have authority to sign all certificates for shares
and all deeds, mortgages, bonds, agreements, notes, and other instruments
requiring his signature; and shall have all the powers and duties prescribed by
Chapter 1701 of the Revised Code of Ohio and such others as the Board of
Directors may from time to time assign to him.
Section 3. VICE PRESIDENTS. The vice presidents shall have
such powers and duties as may from time to time be assigned to them by the Board
of Directors or the president. At the request of the president, or in the case
of his absence or disability, the vice president designated by the president (or
in the absence of such designation, the vice president designated by the board)
shall perform all the duties of the president and, when so acting, shall have
all the powers of the president. The authority of vice presidents to sign in the
name of the Corporation certificates for shares and deeds, mortgages, bonds,
agreements, notes and other instruments shall be coordinate with like authority
of the president.
Section 4. SECRETARY. The secretary shall keep minutes of all
the proceedings of
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the shareholders and Board of Directors and shall make proper record of the
same, which shall be attested by him; shall have authority to execute and
deliver certificates as to any of such proceedings and any other records of the
Corporation; shall have authority to sign all certificates for shares and all
deeds, mortgages, bonds, agreements, notes and other instruments to be executed
by the Corporation which require his signature; shall give notice of meetings of
shareholders and directors; shall produce on request at each meeting of
shareholders a certified list of shareholders arranged in alphabetical order;
shall keep such books and records as may be required by law or by the Board of
Directors; and, in general, shall perform all duties incident to the office of
secretary and such other duties as may from time to time be assigned to him by
the Board of Directors or the president.
Section 5. TREASURER. The treasurer shall have general
supervision of all finances; he shall receive and have in charge all money,
bills, notes, deeds, leases, mortgages and similar property belonging to the
Corporation, and shall do with the same as may from time to time be required by
the Board of Directors. He shall cause to be kept adequate and correct accounts
of the business transactions of the Corporation, including accounts of its
assets, liabilities, receipts, disbursements, gains, losses, stated capital and
shares, together with such other accounts as may be required, and upon the
expiration of his term of office shall turn over to his successor or to the
Board of Directors all property, books, papers and money of the Corporation in
his hands; and shall have such other powers and duties as may from time to time
be assigned to him by the Board of Directors or the president.
Section 6. ASSISTANT AND SUBORDINATE OFFICERS. The Board of
Directors may appoint such assistant and subordinate officers as it may deem
desirable. Each such officer shall hold office during the pleasure of the Board
of Directors, and perform such duties as the Board of Directors or the president
may prescribe. The Board of Directors may, from time to time, authorize any
officer to appoint and remove subordinate officers, to prescribe their authority
and duties, and to fix their compensation.
Section 7. DUTIES OF OFFICERS MAY BE DELEGATED. In the absence
of any officer of the Corporation, or for any other reason the Board of
Directors may deem sufficient, the Board of Directors may delegate, for the time
being, the powers or duties, or any of them, of such officers to any other
officer or to any director.
ARTICLE VI
----------
Transactions with Officers-directors-employees
----------------------------------------------
Section 1. TRANSACTIONS WITH DIRECTORS, OFFICERS, AND
EMPLOYEES. No contract, action, or transaction shall be void, or be voidable by
the Corporation, for the reason that it is between or affects the Corporation
and one or more of the directors, officers, or employees of the Corporation or
is between or affects the Corporation and another corporation, partnership,
joint venture, trust, or other enterprise in which one or more of the directors,
officers, or employees of
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the Corporation are directors, trustees, or officers or have a financial or
personal interest or for the reason that one or more interested directors,
officers, or employees of the Corporation participate in or vote at the meeting
of the Board of Directors or a committee of the Board of Directors that
authorizes the contract, action, or transaction if, in any such case, the
contract, action, or transaction is approved, ratified, or authorized in the
manner prescribed in these Regulations or by law or if, in any such case, the
contract, action, or transaction is fair as to the Corporation as of the time it
is authorized or approved by the directors, a committee of the Board of
Directors, or the shareholders.
ARTICLE VII
-----------
Indemnification and Insurance
-----------------------------
Section 1. INDEMNIFICATION IN NON-DERIVATIVE ACTIONS. The
Corporation 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 Corporation, by reason of the fact that
he is or was a director, officer, employee, or agent of the Corporation, or is
or was serving at the request of the Corporation as a director, trustee,
officer, partner, employee, member, manager, or agent of another corporation,
domestic or foreign, nonprofit or for profit, a limited liability company, or a
partnership, joint venture, trust, or other enterprise, 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 Corporation, and with respect
to any criminal action or proceeding, if he had no reasonable cause to believe
his conduct was unlawful. The termination of any action, suit, or proceeding by
judgment, order, settlement or conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he reasonably believed to be in or
not opposed to the best interests of the Corporation, and with respect to any
criminal action or proceeding, he had reasonable cause to believe that his
conduct was unlawful.
Section 2. INDEMNIFICATION IN DERIVATIVE ACTIONS. The
Corporation 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 Corporation to procure a judgment in its favor by reason of
the fact that he is or was a director, officer, employee, or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, trustee, officer, partner, employee, member, manager, or agent of
another corporation, domestic or foreign, nonprofit or for profit, a limited
liability company, or a partnership, joint venture, trust, or other enterprise,
against expenses, including attorneys' fees, 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
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<PAGE> 12
Corporation, except that no indemnification shall be made in respect of (a) any
claim, issue or matter as to which such person shall have been adjudged to be
liable for negligence or misconduct in the performance of his duty to the
Corporation unless, and only to the extent that the Court of Common Pleas, or
the court in which such action or suit was brought, shall determine upon
application that, despite the adjudication of liability, but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses as the Court of Common Pleas or such court shall
deem proper; or (b) any action or suit in which the only liability asserted
against a director is pursuant to Section 1701.95 of the Ohio Revised Code.
Section 3. INDEMNIFICATION AS MATTER OF RIGHT. To the extent
that a director, trustee, officer, partner, employee, member, manager, or agent
has been successful on the merits or otherwise in defense of any action, suit,
or proceeding referred to in Sections 1 and 2 of this Article VII, 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.
Section 4. DETERMINATION OF CONDUCT. Any indemnification under
Sections 1 and 2 of this Article VII, unless ordered by a court, shall be made
by the Corporation only as authorized in the specific case upon a determination
that indemnification of the director, trustee, officer, partner, employee,
member, manager, or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in Sections 1 and 2 of this Article
VII. Such determination shall be made (a) by a majority vote of a quorum
consisting of directors of the Corporation who were not and are not parties to
or threatened with any such action, suit, or proceeding; or (b) if such a quorum
is not obtainable or if a majority vote of a quorum of disinterested directors
so directs, in a written opinion by independent legal counsel, other than an
attorney or a firm having associated with it an attorney who has been retained
by or who has performed services for the Corporation or any person to be
indemnified within the past five years; or (c) by the shareholders; or (d) by
the Court of Common Pleas or the court in which such action, suit, or proceeding
was brought. Any determination made by the disinterested directors under Section
4(a) or by independent legal counsel under Section 4(b) of this Article VI shall
be promptly communicated to the person who threatened or brought the action or
suit by or in the right of the Corporation under Section 2 of this Article VII,
and within ten days after receipt of such notification, such person shall have
the right to petition the Court of Common Pleas or the court in which such
action or suit was brought to review the reasonableness of such determination.
Section 5. MANDATORY ADVANCE PAYMENT OF EXPENSES. Unless at
the time of a director's act or omission that is the subject of an action, suit
or proceeding referred to in Sections 1 and 2 of this Article VII, the Amended
and Restated Articles of Incorporation or these Regulations of the Corporation
state that the provisions of Section 1701.13(E)(5)(a) of the Ohio Revised Code
do not apply to the Corporation and unless the only liability asserted against
the director in an action, suit or proceeding referred to in Sections 1 and 2 of
this Article VII is
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<PAGE> 13
pursuant to Section 1701.95 of the Ohio Revised Code, expenses, including
attorneys' fees, incurred by a director in defending the action, suit or
proceeding shall be paid by the Corporation as they are incurred, in advance of
the final disposition of the action, suit or proceeding, upon receipt of an
undertaking by or on behalf of the director in which he agrees to do both of the
following: (a) repay such amount if it is proved by clear and convincing
evidence in a court of competent jurisdiction that his action or failure to act
involved an act or omission undertaken with deliberate intent to cause injury to
the Corporation or undertaken with reckless disregard for the best interests of
the Corporation; and (b) reasonably cooperate with the Corporation concerning
the action, suit or proceeding.
Section 6. ADVANCE PAYMENT OF EXPENSES. Expenses, including
attorneys' fees, incurred in defending any action, suit, or proceeding referred
to in Sections 1 and 2 of this Article VII, may be paid by the Corporation as
they are incurred, in advance of the final disposition of such action, suit, or
proceeding as authorized by the directors in the specific case upon receipt of
an undertaking by or on behalf of the director, trustee, officer, partner,
employee, member, manager, or agent to repay such amount, if it shall ultimately
be determined that he is not entitled to be indemnified by the Corporation as
authorized in this Article VII.
Section 7. NONEXCLUSIVITY. The indemnification provided by
this Article VII shall continue as to a person who has ceased to be a director,
officer, employee, or agent of the Corporation and shall inure to the benefit of
the heirs, executors, and administrators of such a person and shall not be
deemed exclusive of, and shall be in addition to, any other rights to which
those seeking indemnification may be entitled under the Amended and Restated
Articles of Incorporation, these Regulations, any agreement, vote of
shareholders or disinterested directors, or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such office
and shall continue as to a person who has ceased to be a director, trustee,
officer, partner, employee, member, manager, or agent and shall inure to the
benefit of the heirs, executors, and administrators of such a person.
Section 8. LIABILITY INSURANCE. The Corporation may purchase
and maintain insurance or furnish similar protection on behalf of or for any
person, including, but not limited to, any person who is or was a director,
officer, employee, or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, trustee, officer, partner, employee,
member, manager, or agent of another corporation, domestic or foreign, nonprofit
or for profit, a limited liability company, or a partnership, joint venture,
trust or other enterprise against any liability asserted against him and
incurred by him in any such capacity, or arising out of his status as such,
whether or not the Corporation would have the power to indemnify him against
such liability under the provisions of this Article VII or of Chapter 1701 of
the Ohio Revised Code.
Section 9. NO OBLIGATION OF REPAYMENT. The authority of the
Corporation to indemnify persons pursuant to Sections 1 and 2 of this Article
VII does not limit the payment of expenses as they are incurred,
indemnification, insurance, or other protection that may be
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<PAGE> 14
provided pursuant to Sections 5, 6, 7 and 8 of this Article VII. Sections 1 and
2 of this Article VII do not create any obligation to repay or return payments
made by the Corporation pursuant to Sections 5, 6, 7 and 8 of this Article VII.
ARTICLE VIII
------------
Certificates for Shares
-----------------------
Section 1. FORM AND EXECUTION. Certificates for shares,
certifying the number of fully paid shares owned, shall be issued to each
shareholder in such form as shall be approved by the Board of Directors. Such
certificates shall be signed by the chairman of the board, the president or a
vice president and by the secretary or an assistant secretary or the treasurer
or an assistant treasurer; provided, however, that if such certificates are
countersigned by a transfer agent and/or registrar, the signatures of any of
said officers and the seal of the Corporation upon such certificates may be
facsimiles, engraved, stamped or printed. If any officer or officers, who shall
have signed, or whose facsimile signature shall have been used, printed or
stamped on any certificate or certificates for shares, shall cease to be such
officer or officers, because of death, resignation or otherwise, before such
certificate or certificates shall have been delivered by the Corporation, such
certificate or certificates, if authenticated by the endorsement thereon of the
signature of a transfer agent or registrar, shall nevertheless be conclusively
deemed to have been adopted by the Corporation by the use and delivery thereof
and shall be as effective in all respects as though signed by a duly elected,
qualified and authorized officer or officers, and as though the person or
persons who signed such certificate or certificates, or whose facsimile
signature or signatures shall have been used thereon, had not ceased to be an
officer or officers of the Corporation.
Section 2. REGISTRATION OF TRANSFER. Any certificate for
shares of the Corporation shall be transferable in person or by attorney upon
the surrender thereof to the Corporation or any transfer agent therefor (for the
class of shares represented by the certificate surrendered) properly endorsed
for transfer and accompanied by such assurances as the Corporation or such
transfer agent may require as to the genuineness and effectiveness of each
necessary endorsement.
Section 3. LOST, DESTROYED OR STOLEN CERTIFICATES. A new share
certificate or certificates may be issued in place of any certificate
theretofore issued by the Corporation which is alleged to have been lost,
destroyed or wrongfully taken upon (i) the execution and delivery to the
Corporation by the person claiming the certificate to have been lost, destroyed
or wrongfully taken of an affidavit of that fact, specifying whether or not, at
the time of such alleged loss, destruction or taking, the certificate was
endorsed, and (ii) the furnishing to the Corporation of indemnity and other
assurances satisfactory to the Corporation and to all transfer agents and
registrars of the class of shares represented by the certificate against any and
all losses, damages, costs, expenses or liabilities to which they or any of them
may be subjected by reason of the issue and delivery of such new certificate or
certificates or in respect of the original certificate.
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<PAGE> 15
Section 4. REGISTERED SHAREHOLDERS. A person in whose name
shares are of record on the books of the Corporation shall conclusively be
deemed the unqualified owner and holder thereof for all purposes and to have
capacity to exercise all rights of ownership. Neither the Corporation nor any
transfer agent of the Corporation shall be bound to recognize any equitable
interest in or claim to such shares on the part of any other person, whether
disclosed upon such certificate or otherwise, nor shall they be obliged to see
to the execution of any trust or obligation.
ARTICLE IX
----------
Fiscal Year
-----------
The fiscal year of the Corporation shall end on December 31 in
each year, or on such other date as may be fixed from time to time by the Board
of Directors.
ARTICLE X
---------
Seal
----
The Board of Directors may provide a suitable seal containing
the name of the Corporation. If deemed advisable by the Board of Directors,
duplicate seals may be provided and kept for the purposes of the Corporation.
ARTICLE XI
----------
Amendments
----------
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This Code of Regulations may be amended, or new regulations
may be adopted, at any meeting of shareholders called for such purpose by the
affirmative vote of, or without a meeting by the written consent of, the holders
of shares entitling them to exercise a majority of the voting power of the
Corporation on such proposal.
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Exhibit 10.1
1997-2000 (2001) BASIC AGREEMENT
TABLE OF CONTENTS
Page
----
ARTICLE I-Intent and Purpose........................................... 1
ARTICLE II-Recognition................................................. 1
ARTICLE III-Uniform Player's Contract.................................. 1
ARTICLE IV-Negotiation and Approval of Contracts ...................... 2
ARTICLE V-Scheduling................................................... 3
A. Length of Season............................................... 3
B. Championship Schedules ........................................ 3
C. Additional Scheduling Agreements .............................. 4
ARTICLE VI-Salaries.................................................... 7
A. Definition of Salary........................................... 7
B. Minimum Salary ................................................ 9
C. Standard Length of Season ..................................... 12
D. Maximum Salary Reduction ...................................... 12
E. Salary Continuation-Military Encampment ....................... 12
F. Salary Arbitration ............................................ 13
(1) Eligibility................................................ 13
(2) Trade Demand-Club Consent to Arbitration .................. 13
(3) Notice of Submission ...................................... 13
(a) Player Submission................................... 13
(b) Club Submission..................................... 14
(c) Special Exceptions to Maximum Salary
Reduction Rules.................................... 14
(4) Withdrawal from Arbitration................................ 14
(5) Timetable and Decision .................................... 14
(6) Form of Submission ........................................ 15
(7) Selection of Arbitrators .................................. 15
(8) Location of Hearings ...................................... 16
(9) Conduct of Hearings ....................................... 16
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Page
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(10) Continuances, Adjournments or Postponements .............. 16
(11) Hearing Costs ............................................ 16
(12) Criteria ................................................. 16
(13) Confidential Major League Salary Data .................... 17
(14) Prohibition Regarding Luxury Tax ......................... 17
ARTICLE VII-Expenses And Expense Allowances ........................... 18
A. Transportation and Travel Expenses............................. 18
B. In-Season Meal and Tip Allowance .............................. 19
C. Spring Training Allowances .................................... 20
D. Single Rooms on the Road ...................................... 22
E. All-Star Game ................................................. 22
F. In-Season Supplemental Allowances ............................. 22
ARTICLE VIII-Moving Allowances......................................... 23
ARTICLE IX-Termination Pay............................................. 24
A. Off-Season..................................................... 24
B. Spring Training ............................................... 24
C. In-Season ..................................................... 25
D. Split Contracts ............................................... 25
E. Injury ........................................................ 26
F. Non-Duplication ............................................... 26
ARTICLE X-World Series, League Championship Series
and Division Series Players' Pool............................ 26
A. Creation of Pool............................................... 26
B. Distribution of Pool .......................................... 27
C. Division of Players' Pool ..................................... 27
D. Guarantee of Pool ............................................. 27
ARTICLE XI-Grievance Procedure......................................... 28
A. Definitions.................................................... 28
B. Procedure ..................................................... 32
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Page
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C. Special Procedure with Regard to Certain
Disciplinary Action....................................... 33
D. Grievances Initiated or Appealed by a Club .................... 34
E. Grievances Initiated or Appealed
by the Association........................................ 35
F. Miscellaneous ................................................. 35
G. Survival Following Termination of
Basic Agreement........................................... 36
ARTICLE XII-Discipline................................................. 36
A. Just Cause..................................................... 36
B. Notice ........................................................ 37
C. Discovery ..................................................... 37
D. Compliance .................................................... 37
E. Investigations ................................................ 37
F. Major League Rules 15 and 16 .................................. 38
ARTICLE XIII-Safety and Health......................................... 38
A. Safety and Health Advisory Committee .......................... 38
(1) Safety and Health Advisory Committee ...................... 38
(2) Committee Meetings ........................................ 38
(3) Power and Authority of Committee .......................... 39
(4) Other Rights and Remedies ................................. 39
B. Safety Complaints-Responsibility of
League President.......................................... 39
C. Disabled List ................................................. 39
D. Second Medical Opinion ........................................ 40
E. Trainers ...................................................... 40
F. Locker Room Equipment ......................................... 41
G. Medical Records ............................................... 41
ARTICLE XIV-Spring Training Conditions................................. 41
A. Reporting...................................................... 41
B. Living Away from Club Headquarters ............................ 41
C. Meetings with Players ......................................... 41
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Page
----
ARTICLE XV-Miscellaneous............................................... 42
A. No Discrimination.............................................. 42
B. Parking Facilities ............................................ 42
C. Winter League Play ............................................ 42
D. College Scholarship Plan ...................................... 42
E. Active Player Limit ........................................... 42
F. Spanish Translations and ESL Courses .......................... 43
G. Future Expansion .............................................. 43
H. Default Notice ................................................ 44
I. International Play ............................................ 44
J. Interest Rate ................................................. 46
K. Players Association Tickets ................................... 46
L. Family and Medical Leave Act .................................. 47
ARTICLE XVI-Deferred Compensation...................................... 47
ARTICLE XVII-Existing Agreements....................................... 47
ARTICLE XVIII-Rule Changes............................................. 48
ARTICLE XIX-Assignment of Player Contracts ............................ 48
A. Consent to Assignment.......................................... 48
B. Assignment to National Association Club ....................... 50
C. Disabled List-Assignment to
National Association Club................................. 50
D. Foreign Assignments ........................................... 51
E. Optional Assignments .......................................... 51
F. Waivers ....................................................... 51
G. Designated Player ............................................. 52
H. Unconditional Release ......................................... 52
ARTICLE XX-Reserve System.............................................. 53
A. Reservation Rights Of Clubs.................................... 53
B. Free Agency ................................................... 54
(1) Eligibility................................................ 54
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Page
----
(2) Procedure ................................................. 54
(3) Rights of Former Club to Sign Free Agent .................. 55
(4) Compensation .............................................. 56
(5) Quota ..................................................... 58
(6) Miscellaneous ............................................. 58
C. Right to Require Assignment of Contract ....................... 58
(1) Eligibility................................................ 58
(2) Procedure ................................................. 59
(a) Notice ............................................. 59
(b) Player Veto Rights.................................. 59
(c) Free Agency if Assignment Not Made ................. 59
(3) Retraction by Player....................................... 59
(4) Waiver by Player .......................................... 60
(5) Repeater Rights ........................................... 60
D. Outright Assignment to National Association Club .............. 61
(1) Election of Free Agency-3-Year Player ..................... 61
(2) Election of Free Agency-Second
Outright Assignment.................................... 61
(3) Effect of Free Agency Election ............................ 61
(4) Procedure ................................................. 62
E. Individual Nature of Rights.................................... 62
ARTICLE XXI-Credited Major League Service ............................. 64
A. Definition..................................................... 64
B. Optional Assignments .......................................... 65
ARTICLE XXII-Management Rights......................................... 65
ARTICLE XXIII-Luxury Tax............................................... 65
A. General Definitions............................................ 65
B. Determination of Luxury Tax ................................... 66
(1) Calculation of Tax ........................................ 66
(2) Initial Thresholds ........................................ 67
(3) Threshold Adjustment Mechanism ............................ 67
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Page
----
(4) Additional 1997 Threshold Adjustment ...................... 67
(5) Tax Rate .................................................. 68
(6) Collection of Luxury Tax Proceeds ......................... 68
C. Determination of Actual Club Payroll .......................... 68
(1) Definition of Actual Club Payroll.......................... 68
(2) Rules for Allocation of Salary ............................ 69
(a) General Rule........................................ 69
(b) Assignment of Contract.............................. 69
(c) Salary Increase Upon Assignment..................... 69
(d) Contract Signed After Opening Day................... 69
(e) Termination of Contract............................. 70
(f) Split Contracts..................................... 70
(g) Outright Assignment to
National Association ............................... 70
D. Benefits or Player Benefit Costs............................... 71
(1) Definition................................................. 71
(2) Limitation on Annual Increase ............................. 72
E. Determination of Salary........................................ 72
(1) General Rule............................................... 72
(2) Average Annual Value of
Guaranteed Multi-Year Contracts ....................... 72
(3) Signing Bonuses ........................................... 73
(4) Performance, Award and Other Bonuses ...................... 73
(5) Option Contracts .......................................... 73
(6) Deferred Compensation ..................................... 77
(7) Loans to Players .......................................... 78
F. Association's Rights .......................................... 79
(1) Actual Club Payroll Information............................ 79
(2) Association's Rights to Challenge ......................... 80
G. Other Undertakings............................................. 82
H. Uses Of Luxury Tax Proceeds ................................... 83
ARTICLE XXIV-Payroll Tax............................................... 84
A. Purpose........................................................ 84
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Page
----
B. Total Payment ................................................. 84
C. Modifications to Definition of Final Actual Club
Payroll for Contract Years 1996 and 1997 ................. 84
D. Calculation of Total Payment .................................. 85
E. Date of Payment and Uses ...................................... 86
ARTICLE XXV-The Revenue Sharing Plan................................... 86
A. Definitions.................................................... 86
B. General Principles ............................................ 88
(1) Intent of the Plan......................................... 88
(2) Other Sharing ............................................. 89
(3) Accounting Rules .......................................... 89
(4) Interests of the Association .............................. 90
(5) Other Undertakings ........................................ 90
C. Operation...................................................... 91
(1) 1996 ...................................................... 91
(2) 1997 ...................................................... 92
(3) 1998 ...................................................... 92
(4) 1999 ...................................................... 94
(5) 2000 ...................................................... 95
(6) 2001 (If Association Option Exercised) .................... 95
D. Administration................................................. 95
(1) Responsibility............................................. 95
(2) Duties of Administrator ................................... 95
(3) Specific Prohibition ...................................... 97
E. Participation of the Association............................... 98
(1) Consultation............................................... 98
(2) Right to Information ...................................... 99
(3) Right to Audit ............................................ 100
(4) Confidentiality ........................................... 101
ARTICLE XXVI-The Industry Growth Fund.................................. 102
A. Objective and Purposes......................................... 102
B. Joint Activities .............................................. 102
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Page
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C. Administration ................................................ 102
(1) Board of Directors......................................... 102
(2) Co-Operating Officers ..................................... 103
D. Dispute Resolution............................................. 103
(1) Disputes Concerning Joint Activities ...................... 103
(2) Disputes Subject to Resolution by the
Independent Member..................................... 104
(3) Other Disputes ............................................ 104
E. Funding........................................................ 104
(1) Initial Funding............................................ 104
(2) Luxury Tax Proceeds ....................................... 105
(3) Payroll Tax Proceeds ...................................... 105
(4) Additional Voluntary Contributions ........................ 105
F. Option Exercise................................................ 105
G. Continuation of IGF After the
Termination of the Basic Agreement ....................... 105
ARTICLE XXVII-Term..................................................... 106
A. Duration of the Contract....................................... 106
B. Association Option to Extend Through the
2001 Season............................................... 106
C. Events Affected by the Option to Extend ....................... 106
(1) Division Series Pool....................................... 106
(2) Creation of the Fictional Option Pool Account ............. 106
(3) Events That Occur if the Association Exercises
its Option............................................. 107
(4) Events That Occur if the Association Does Not
Exercise its Option.................... ............... 107
ARTICLE XXVIII-Antitrust............................................... 107
ARTICLE XXIX-Comprehensive Agreement................................... 107
ARTICLE XXX-Execution of this Agreement................................ 108
ATTACHMENT 1-Delivery and Availability of
Player Contracts..................................................... 110
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ATTACHMENT 2-Interleague Play.......................................... 110
ATTACHMENT 3-Division Series Play...................................... 112
ATTACHMENT 4-Article VII(B)(5)(b)-Disabled Players
Who Do Not Travel with Club.......................................... 118
ATTACHMENT 5-Commissioner's Letter on
Grievance Procedure.................................................. 118
ATTACHMENT 6-Interest Awards........................................... 119
ATTACHMENT 7-Safe and Healthful Working Conditions .................... 119
ATTACHMENT 8-Standard Form of Diagnosis................................ 120
ATTACHMENT 9-Translated Notices........................................ 121
ATTACHMENT 10-Major League Expansion Rules
and Procedures....................................................... 121
ATTACHMENT 11-Disabled Player Not on Disabled
List-Assignment to National Association.............................. 126
ATTACHMENT 12-Article XX(A)-Exercise of Free
Agency Rights by Player on Restricted, Suspended,
Disqualified, Ineligible, Voluntarily Retired or
Military Lists....................................................... 126
ATTACHMENT 13-Article XX(A)-Clubs' Obligations to
Tender and Renew Contracts of Players on Restricted,
Suspended, Disqualified, Ineligible, Voluntarily
Retired or Military Lists............................................ 127
ATTACHMENT 14-Article XX(A)-National Association
Player with No Existing Major League Contract ....................... 128
ATTACHMENT 15-Information Bank......................................... 128
ATTACHMENT 16-Supplemental Pool-Growth Increases ...................... 129
ATTACHMENT 17-Confidentiality Agreement................................ 130
ATTACHMENT 18-Sale of Club............................................. 132
ATTACHMENT 19-Scheduling of Games...................................... 132
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ATTACHMENT 20-Family Security.......................................... 133
ATTACHMENT 21-Player Development Issues................................ 134
ATTACHMENT 22-Strike Settlement........................................ 135
EXHIBIT 1-1994 Major League Service............................... 143
EXHIBIT 2-1994 Major League Service .............................. 146
EXHIBIT 3-1994 Major League Service .............................. 147
EXHIBIT 4-Service Issues.......................................... 148
EXHIBIT 5-Benefit Plan Documents.................................. 150
EXHIBIT 6-Contributions to Benefit Plans ......................... 155
SCHEDULE A-Uniform Player's Contract................................... 159
-Regulations................................................. 169
APPENDIX A-Rules of Procedure-Grievance
Arbitration Hearings ....................................... 172
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1997-2000 (2001) BASIC AGREEMENT
This Agreement, dated as of the 7th of December 1996, is between the Clubs
comprising The National League of Professional Baseball Clubs and the Clubs
comprising The American League of Professional Baseball Clubs (hereinafter
referred to as the "Clubs"), and the Major League Baseball Players Association
(hereinafter referred to as the "Players Association" or the "Association").
The provisions of this Agreement shall be effective January 1, 1997, unless a
provision herein provides otherwise.
In making this Agreement the Association represents that it contracts for and on
behalf of the Major League Baseball Players and individuals who may become Major
League Baseball Players during the term of this Agreement, and the Clubs
represent that they contract for and on behalf of themselves, any additional
Clubs which may become members of the Major Leagues and the successors thereof.
ARTICLE I-INTENT AND PURPOSE
The intent and purpose of the Clubs and the Association (hereinafter "the
Parties") in entering into this Agreement is to set forth their agreement on
certain terms and conditions of employment of all Major League Baseball Players
for the duration of this Agreement. Each of the Parties acknowledges the rights
and responsibilities of the other Party and agrees to discharge its
responsibilities under this Agreement.
ARTICLE II-RECOGNITION
The Clubs recognize the Association as the sole and exclusive collective
bargaining agent for all Major League Players, and individuals who may become
Major League Players during the term of this Agreement, with regard to all terms
and conditions of employment, provided that an individual Player shall be
entitled to negotiate in accordance with the provisions set forth in this
Agreement (1) an individual salary over and above the minimum requirements
established by this Agreement and (2) Special Covenants to be included in an
individual Uniform Player's Contract, which actually or potentially provide
additional benefits to the Player.
ARTICLE III-UNIFORM PLAYER'S CONTRACT
The form of the Uniform Player's Contract between a Club and a Player is
attached hereto as Schedule A which is incorporated herein by reference and made
a part hereof.
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During the term of this Agreement, no other form of Uniform Player's Contract
will be utilized. Should the provisions of any Contract between any individual
Player and any of the Clubs be inconsistent with the terms of this Agreement,
the provisions of this Agreement shall govern. Subject to the limitations set
forth in Article IV below, nothing herein contained shall limit the right of
any Club and Player to enter into Special Covenants in the space provided in a
manner not inconsistent with the provisions of this Agreement. The termination
of this Agreement shall not impair, limit or terminate the rights and duties of
any Club or Player under any Contract between any individual Player and any of
the Clubs.
ARTICLE IV-NEGOTIATION AND APPROVAL OF CONTRACTS
A Player, if he so desires, may designate an agent to conduct on his behalf, or
to assist him in, the negotiation of an individual salary and or Special
Covenants to be included in his Uniform Player's Contract with any Club,
provided such agent has been certified to the Clubs by the Association as
authorized to act as a Player Agent for such purposes.
A Club may require a Player's physical presence only once during contract
negotiations. This limitation shall not apply to telephone conference calls, at
reasonable times, with a Player and his certified Player Agent. A Player
required to be physically present during negotiations shall be entitled to be
paid by the Club for round-trip first-class transportation and first-class hotel
costs.
Upon execution of a Uniform Player's Contract by the Club and Player, the Club
promptly shall submit the Contract, in duplicate, to the Commissioner (or his
designee) who, after review, shall forward it to the appropriate League
President for approval. Within 20 days of receipt by the Commissioner, the
League President shall approve or disapprove the Contract (with notice to the
Association), or provide the Association with a written explanation of why the
Contract has not been approved. This period is extended to 30 days if a Contract
is received by the Commissioner between February 15 and April 15. Within ten
days after the League President is to provide an explanation of why a Contract
has not been approved, the League President shall approve or disapprove the
Contract. (See Attachment 1.) Any Grievance challenging the Commissioner's or
the League President's conduct under this Article shall be handled by the
Parties on an expedited basis with documents being exchanged within 10 days of
the filing of the Grievance, a hearing commencing within 15 days of the filing
of the Grievance and the Panel issuing an Award (with an opinion to follow, if
necessary) no later than 15 days following the commencement of the hearing.
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ARTICLE V-SCHEDULING
A. LENGTH OF SEASON
During the term of this Agreement, each Club shall be scheduled to play 162
games during each championship season. (See Attachment 2 (Interleague Play).) A
championship season will not be scheduled over a period of less than 178 days or
more than 183 days. (See also Article VI(C), below.) Following completion of
each championship season, eight Clubs shall engage in best of five (seven if the
Division Series is expanded) Division Series. (See Attachment 3.) The winners of
the Division Series in each League shall then engage in a best of seven League
Championship Series, and the winners of the two League Championship Series shall
engage in a best of seven World Series. If during the term of this Agreement the
format of the Division Series, the League Championship Series or the World
Series is proposed to be changed, the Clubs shall give the Association notice
thereof and shall negotiate the proposed change with the Association; provided,
however, that if during the term of this Agreement the Division Series is
proposed to be changed to the best of seven games, the Clubs shall give the
Association notice thereof and shall negotiate with the Association but the
Clubs shall not be required to negotiate with the Association over contributions
to the Players' pool beyond those specified in Article X. Any failure to play
the Division Series, the League Championship Series or the World Series, in
whole or in part, by reason of causes beyond the control of the Clubs, shall not
constitute a change in the format of such Series or a breach of this Agreement.
During any negotiations between the Parties on the subject of a renewal of or
successor to this Agreement, the Clubs agree that any proposal made by the
Association to reduce the number of championship season games shall not be
resisted on the ground of commitments made by the Clubs in local television and
radio contracts. However, nothing herein shall interfere with or limit the right
of the Clubs to resist such proposal on any other ground or the right of either
Party to take any other position in future negotiations on this or any other
proper subject for collective bargaining.
B. CHAMPIONSHIP SCHEDULES
On or before July 1st of each year, copies of the tentative championship
schedules of the Major Leagues for the next ensuing season shall be submitted to
the Association for review. The Association shall complete its review not later
than October 15th.
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C. ADDITIONAL SCHEDULING AGREEMENTS
(1) Split doubleheaders shall not be scheduled in the original schedule.
Provided that neither of the Clubs involved in the proposed rescheduled game
already has played or has been rescheduled to play a total of two split
doubleheaders in that championship season:
(a) each Club shall have the right to reschedule any postponed game as
a split doubleheader when ticket sales for the game at the time of
postponement exceed, in any respect, the number of comparable tickets
available to be exchanged by the Club for the balance of the championship
season, and both the postponed and rescheduled game occur in the last
regularly scheduled series between the two Clubs at the Club's park; and
(b) when there is no practical alternative to doing so, the Boston Red
Sox and Chicago Cubs shall have the right to reschedule a postponed game as
a split doubleheader to be played in, respectively, Fenway Park and Wrigley
Field, even if the criteria set out in subparagraph (a) above are not met.
Scheduling a postponed game as part of a conventional doubleheader will not
be considered a practical alternative.
The Association shall have the exclusive right to approve the additional
rescheduling of postponed games as split doubleheaders in circumstances
that are not automatically permitted by subparagraph (a) or (b) above.
(2) One-day stands will not be scheduled except as "openers" or
doubleheaders to be followed by an open day. A game will not be rescheduled
as a one-game stand except as required to complete the championship schedule.
(3) Not more than one exhibition game shall be played by any Club during
the championship season, unless the Club is permitted one additional
exhibition game by its League President from a quota of four additional
exhibition games each League President may distribute in his League,
excluding the All-Star Game and the Hall of Fame Game. No Club may play more
than two exhibition games during a championship season. The scheduling and
rescheduling of exhibition games shall be in accordance with the scheduling
and rescheduling rules set forth in this Article V with respect to
championship season games, except that paragraph (2) above prohibiting
one-day stands shall not apply. For purposes of this paragraph (3), an
exhibition game that is scheduled to commence at least three hours before the
scheduled start of the first championship season game shall not be considered
played "dur-
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ing the championship season." No exhibition game shall be scheduled to
commence within three (3) hours before the scheduled start of the first
championship season game of any year.
(4) The following shall apply to the scheduling or rescheduling of games
prior to day doubleheaders:
(a) a game will not be scheduled to start after 5 P.M. if either Club
is scheduled to play a day doubleheader the next day;
(b) a game will not be rescheduled to start after 5 P.M. if either Club
is scheduled to play a day doubleheader the next day unless such
rescheduling is necessary to complete the championship schedule.
(5) Day games shall not be scheduled or (unless necessary to complete the
championship schedule) rescheduled to start before 1 P.M., except as provided
in paragraph (6) below, and except that such games may be scheduled or
rescheduled to start between Noon and 1 P.M., if each Club meets one of the
following two conditions:
(a) if an off-day occurred the previous day; or
(b) if a game were played in the same city within the previous 24
hours.
Day games may be scheduled or rescheduled to start between Noon and 1 P.M. on
holidays if each Club meets one of the above conditions or if an afternoon
game starting not later than 5 P.M. or a doubleheader starting not later than
1:30 P.M. was played in another city the previous day and the travel time
required in-flight is 1 1/2 hours or less.
(6) With the approval of the League President, not more than 4 games per
League per year may be scheduled or rescheduled to start between 10:30 A.M.
and Noon, if, with respect to both Clubs, the conditions stated in paragraph
(5) above with respect to scheduling and rescheduling of day games between
Noon and 1 P.M. are met.
(7) Games shall not be scheduled or rescheduled to start later than 5 P.M.
on a getaway day if either Club is required to travel for a day game,
scheduled the next day, between cities in which the in-flight time is more
than 1 1/2 hours. Each championship season the Clubs may utilize six
exceptions to the foregoing rule provided that the exceptions must be
utilized by a Club traveling to Chicago to play the Cubs and the in-flight
time cannot exceed 2 1/2 hours.
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(8) To the extent reasonably practicable, open days shall be non-travel
days, except as permitted in paragraph (9) below.
(9) An open day shall be scheduled for or following travel from cities in
the Pacific time zone to cities in the Eastern time zone except that, each
League may schedule not more than seven (7) games per championship season
with a starting time after 7 P.M. in the Eastern time zone which include a
Club that the day before played a game scheduled to start prior to 5 P.M. in
the Pacific time zone. In any championship season, however, no Club may be
scheduled to play more than one (1) game in the Eastern time zone the day
after it has played a game in the Pacific time zone.
(10) No Club shall be scheduled, or rescheduled if practicable, to play
more than 20 consecutive dates without an open day, or 21 consecutive dates
if necessary to accommodate the Hall of Fame Game. A rained-out game may be
rescheduled to an open date in the same series, or to an open date at the end
of the same series, if (a) the open date is a road off-day for the visiting
Club, and (b) the rescheduling does not result in the home team playing more
than 20 consecutive dates without an open day, or 21 consecutive dates if
necessary to accommodate the Hall of Fame Game.
(11) Commencing with its second scheduled championship season game, a Club
shall not be scheduled for more than two open days in any seven-day period.
For each violation of this provision, the number of exhibition games which
have been or may be scheduled at any time for the Club under paragraph (3)
above, shall be reduced by one. Any other appropriate remedy may be imposed
for a violation of this provision if a Club has already played the maximum
permitted number of exhibition games.
(12) Home games which are scheduled or rescheduled away from the park of
the home Club shall be considered road games for the purposes of Players'
meal and tip allowances, hotel accommodations and transportation.
(13) Doubleheaders shall not be scheduled on consecutive dates in the
original schedule.
(14) Twi-night doubleheaders will be limited in the original schedule to
three per home Club per season. A twi-night doubleheader will not be
scheduled on a getaway day.
(15) Only postponed, suspended and tied games shall be rescheduled, except
as may be required to accommodate network
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television commitments or to comply with stadium leases, in any of which
events the rescheduling rules set forth in this Article V shall apply;
provided, however, that any game may be rescheduled for any reason if as
rescheduled it conforms to the rules governing the original schedule.
(16) Club championship or exhibition games shall not be played during the
All-Star break. Further, any workout scheduled by a Club for the day
following the All-Star Game shall be voluntary.
(17) With respect to the rescheduling of any game, except for games
rescheduled as split doubleheaders as set forth in Section C(1), any
scheduling or rescheduling rule set forth in this Article V may be waived by
the secret ballot vote of a majority of the Players on the Club(s) that would
be in violation of the rule. Separate votes shall be required with regard to
each game for which a waiver is sought. A waiver granted pursuant to this
provision, as well as a waiver granted by the Association pursuant to Section
C(1), shall not constitute a precedent with regard to future waiver requests.
With respect to the rescheduling of any such game, and all games rescheduled
pursuant to Section C(1), the Club(s) shall consult with the Association
concerning the actual date and time of such rescheduled game. The Club(s)
shall use best efforts to notify the Association in advance of notifying the
Players on the Club(s) affected.
ARTICLE VI-SALARIES
Individual Player salaries shall be those as agreed upon between a Player and a
Club, as evidenced by the execution of a Uniform Player's Contract, subject to
the following:
A. DEFINITION OF SALARY
The term "salary" for the purposes of interpretation and application of the
maximum salary cut, contract tender, signing and renewal rules shall be
determined by applying the following principles:
(1) Multi-year contract providing for current salary only (no up-front
payment or deferred compensation).
(a) If the annual salary payment schedule satisfies the maximum salary
cut rule, the salary specified for the last year of the contract shall be the
base for applying the maximum salary cut rule to the year following the
expiration of the contract.
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(b) If the annual salary payment schedule does not satisfy the maximum
salary cut rule, that rule shall not be applicable during the term of the
contract and the aggregate salary payment provided by the contract shall be
averaged and the average annual salary shall be the base for applying the
maximum salary cut rule to the year following the contract's expiration.
(2) Multi-year contract including up-front payments and/or deferred
compensation which are specifically allocated to one or more years of the
contract.
Treat as in (1) above with the allocated up-front or deferred
amounts included as specified as part of the salary for each year.
(3) Multi-year contract including up-front payments and/or deferred
compensation which are not specifically allocated to certain years of the
contract.
Average the aggregate of such payments, include the annual average
as part of the salary for each year, and then treat as in (1) above.
(4) Deferred Compensation.
If any deferred compensation is included in the base determined as
described above, it may be payable as deferred on the same terms, or
the Club and Player may elect to substitute the discounted present
value of such deferred amount.
(5) Performance Bonuses.
Regardless of whether or not any portion of a performance bonus is
earned, the Club has the option of either: (a) including the entire
bonus (both earned and unearned portions) in the salary base or (b)
excluding it from the base but repeating the performance bonus on the
same terms.
(6) Other Forms of Additional Compensation.
All other forms of compensation, including but not limited to the
following, are not addressed herein and are to be determined according
to the facts in each situation:
(a) payments for performing services for a Club in addition to
skilled services as a baseball player;
(b) cash, lump sum, payments made in accordance with agreed upon
special covenants to compensate for trading a Player, releasing a
Player, etc.;
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(c) the value of individual property rights granted to a Player by a Club;
(d) any compensation for post-active Major League Baseball playing career
employment;
(e) other payments not specifically made for performance as a Major League
Baseball Player;
provided that any amounts payable upon the occurrence of a specific event or
events shall not be included in the definition of "salary" if such event or
events fail to occur within the specified period.
(7) Disputes.
In the event of a dispute regarding a contract tender, signing or renewal
with respect to any form of additional compensation referred to in paragraph
(6) above, either the Player or Club may file a Grievance in order to obtain
a determination with respect thereto as the exclusive means of resolving such
dispute, and both parties shall be bound by the resulting decision. The
contract tender, signing or renewal shall be altered as necessary to conform
to the decision, and such tender, signing or renewal shall remain valid.
B. MINIMUM SALARY
(1) The minimum rate of payment to a Player for each day of service on a
Major League Club shall be as follows:
1996-at the rate per season of $109,000 from the beginning of the
championship season up to and including July 30, 1996, and at the rate per
season of $150,000 beginning on July 31, 1996 up to and including the end of
the 1996 championship season;
1997-at the rate per season of $150,000;
1998-at the rate per season of $170,000;
1999-at the rate per season of $200,000;
2000-at the rate per season of $200,000, if the Association exercises its
option to extend this Agreement under Article XXVII. If the Association does
not exercise its option, the minimum salary shall be at the rate per season
of $200,000 plus a cost of living adjustment, rounded to the nearest $500,
provided that the cost of living adjustment shall not reduce the minimum
salary below $200,000. Any adjusted minimum salary
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shall apply for the entire championship season and retroactive payments, if
required, shall be made no later than 15 days from the date the Association
does not exercise its option;
2001-at the rate per season of $200,000, if the Association exercises its
option to extend this Agreement under Article XXVII. If the Association does
not exercise its option, the minimum salary shall be at the rate per season
equal to the adjusted rate for the 2000 season plus a cost of living
adjustment, rounded to the nearest $500, provided that the cost of living
adjustment shall not reduce the minimum salary below the adjusted 2000 rate.
(2) For all Players (a) signing a second Major League contract (not covering
the same season as any such Player's initial Major League contract) or a
subsequent Major League contract, or (b) having at least one day of Major League
service, the minimum salary shall be as follows:
(i) for Major League service-at a rate not less than the Major League
minimum salary;
(ii) for National Association service-at a rate not less than the
following:
1996-$28,900 per season;
1997-at the rate per season of $37,000;
1998-at the rate per season of $37,000;
1999-at the rate per season equal to $37,000 plus a cost of living
adjustment, rounded to the nearest $100, provided that the cost of living
adjustment shall not reduce the minimum salary below $37,000;
2000-at the 1999 rate per season, if the Association exercises its
option to extend this Agreement under Article XXVII. If the Association
does not exercise its option, the minimum salary shall be at the rate per
season equal to the rate for the 1999 season plus a cost of living
adjustment, rounded to the nearest $100, provided that the cost of living
adjustment shall not reduce the minimum salary below the 1999 rate. Any
adjusted minimum salary shall apply for the entire championship season and
retroactive payments, if necessary, shall be made no later than 15 days
from the date the Association does not exercise its option;
2001-if the Association exercises its option to extend this Agreement
under Article XXVII, at the rate per season equal
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to the rate for the 1999 season plus a cost of living adjustment, rounded
to the nearest $100, provided that the cost of living adjustment shall not
reduce the minimum salary below the 1999 rate. If the Association does not
exercise its option, the minimum salary shall be at the rate per season
equal to the adjusted rate for the 2000 season plus a cost of living
adjustment, rounded to the nearest $100, provided that the cost of living
adjustment shall not reduce the minimum salary below the adjusted 2000
rate.
(3) (a) Cost of living adjustments for the Major League minimum salary
described above in paragraph (1) shall be computed as follows, if required:
to determine the 2000 salary rate, $200,000 shall be multiplied by a
fraction, the numerator of which is the Consumer Price Index for Urban Wage
Earners and Clerical Workers published by the Bureau of Labor Statistics
(CPIW) for November 1999 and the denominator of which is the CPIW for
November 1998;
to determine the 2001 salary rate, the adjusted 2000 rate shall be
multiplied by a fraction, the numerator of which is the CPIW for November
2000 and the denominator of which is the CPIW for November 1999.
(b) Cost of living adjustments for the split minimum salary for National
Association service described above in paragraph (2) shall be computed as
follows:
to determine the 1999 salary rate, $37,000 shall be multiplied by a
fraction, the numerator of which is the CPIW for November 1998 and the
denominator of which is the CPIW for November 1996;
to determine the 2000 salary rate, if required, the 1999 salary rate
shall be multiplied by a fraction, the numerator of which is the CPIW for
November 1999 and the denominator of which is the CPIW for November 1998;
to determine the 2001 salary rate, if the Association exercises its
option to extend this Agreement under Article XXVII, the salary rate for
the 2000 season shall be multiplied by a fraction, the numerator of which
is the CPIW for Novem-ber 2000 and the denominator of which is the CPIW for
November 1998;
to determine the 2001 salary rate, if the Association does not exercise
its option, the adjusted salary rate for 2000 shall
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be multiplied by a fraction, the numerator of which is the CPIW for
November 2000 and the denominator of which is the CPIW for November 1999.
C. STANDARD LENGTH OF SEASON
For the purpose of calculating a Player's daily rate of pay, a champion-ship
season shall be deemed to commence on the date of the first regularly scheduled
championship season game and to conclude on the date of the last regularly
scheduled championship season game. This rule shall apply uniformly to all
Players and all Clubs notwithstanding differences in a particular Club's
schedule.
D. MAXIMUM SALARY REDUCTION
(1) No Player's contract shall be renewed pursuant to paragraph 10(a) of
the Uniform Player's Contract in any year for a salary which constitutes a
reduction in excess of 20% of his previous year's salary or in excess of 30%
of his salary two years previous. For the purposes of this section, the
"salary" of a Player with a salary stipulated in paragraph 2 of his Major
League contract of less than the then applicable Major League minimum salary
shall be deemed to be the greater of either (a) the total amount of his
actual baseball salary earnings from Major League Clubs (and from National
Association clubs if any) in that season or (b) the amount stipulated in
paragraph 2 of his Major League contract for that season.
(2) The term "salary" shall include any salary amounts which were not paid
to a Player for the season by reason of any fine or suspension which may have
been imposed on the Player, or by reason of any other deduction from salary.
(3) In tendering a contract to a Player pursuant to paragraph 10(a) of the
Uniform Player's Contract, no Major League Club shall offer a salary which
constitutes a reduction in excess of 20% of the Player's previous year's
salary or in excess of 30% of his salary two years previous.
E. SALARY CONTINUATION-MILITARY ENCAMPMENT
Payment of Player salaries shall be continued throughout any period in which a
Player is required to attend a regularly scheduled military encampment of the
Reserve of the Armed Forces or of the National Guard during the Club's playing
season.
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F. SALARY ARBITRATION
The following salary arbitration procedure shall be applicable:
(1) Eligibility. The issue of a Player's salary may be submitted to final
and binding arbitration by any Player or his Club, provided the other party
to the arbitration consents thereto. Any Club, or any Player with a total of
three or more years of Major League service, however accumulated, but with
less than six years of Major League service, may submit the issue of the
Player's salary to final and binding arbitration without the consent of the
other party, subject to the provisions of paragraph (4) below.
In addition, a Player with at least two but less than three years of Major
League service shall be eligible for salary arbitration if: (a) he has
accumulated at least 86 days of service during the immediately preceding
season; and (b) he ranks in the top seventeen percent (17%) (rounded to the
nearest whole number) in total service in the class of Players who have at
least two but less than three years of Major League service, however
accumulated, but with at least 86 days of service accumulated during the
immediately preceding season. If two or more Players are tied in ranking,
ties shall be broken consecutively based on the number of days of service
accumulated in each of the immediately preceding seasons. If the Players
remain tied, the final tie breaker will be by lot.
(2) Trade Demand-Club Consent to Arbitration. Any Player whose Club has
offered to proceed to salary arbitration pursuant to Article XX(C)(5) may
elect salary arbitration in the same manner and at the same time as other
Players.
(3) Notice of Submission.
(a) PLAYER SUBMISSION. Election of submission shall be communicated by
telephone or any other method of communication by the Player to the
Association. Written notice of submission shall then be given, within the
specified time limits, by the Association on behalf of the Player to the
designated representative of the Major League Baseball Player Relations
Committee, Inc. ("PRC").
Within three days after the notice of submission has been given, the
Association and the PRC shall exchange salary figures. It shall be the
responsibility of the Association during this three-day period to obtain
the salary figure from the Player, and the PRC shall have a similar
responsibility to obtain the Club's figure.
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(b) CLUB SUBMISSION. Written notice of submission by the Club shall be
communicated to the Player by registered letter mailed between January 2
and January 12 (both inclusive) to the last address the Player has supplied
to the Club, with copies to the Association and the PRC. The submission
shall be deemed to be made on the third day following the date of mailing
by the Club. Salary figures shall be exchanged by the Association and the
PRC as soon as practicable thereafter.
(c) SPECIAL EXCEPTIONS TO MAXIMUM SALARY REDUCTION RULES.
(i) A Club may submit a salary figure for salary arbitration that
is at least 80% of the Player's previous year's salary and earned
performance bonuses (and at least 70% of his salary and earned
performance bonuses two years previous), the provisions of Section A(5)
above notwithstanding. This exception shall not be used by any party,
or considered by any salary arbitrator, in support of, or in opposition
to, any argument regarding the evaluation of Player contracts.
(ii) A Club may submit a salary arbitration figure without regard
to the provisions of Section D above if the figure submitted is with
respect to a Player who, in the immediately preceding year, won a
salary arbitration which increased the Player's prior year's salary by
in excess of 50%.
The above exceptions to the maximum salary reduction rules do not alter the
obligations of the Clubs to comply with Articles VI(D) and XX(A) of this
Agreement and paragraph 10(a) of the Uniform Player's Contract for the
purposes of contract tender and renewal.
(4) Withdrawal from Arbitration. In the event the Club submits the matter
to arbitration, the Player may within 7 days after receipt of the Club's
salary arbitration figure notify the Club that he does not wish to arbitrate
and the matter shall be deemed withdrawn from arbitration. In such event, or
in the event that neither the Club nor the Player submits to arbitration, the
rights and obligations of the Club and Player shall be as they would have
been had the salary arbitration procedure never been invoked. In the event
the Club and Player reach agreement on salary before the arbitrator or
arbitration panel reaches a decision, the matter shall be deemed withdrawn
from arbitration.
(5) Timetable and Decision. Submission may be made at any time between
January 5 and January 15. In the event the offer of the Club is reduced on or
subsequent to January 15, the Player's right to submit to arbitration shall
be reinstated for a period of 7
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days. Arbitration hearings shall be held as soon as possible after submission
and, to the extent practicable, shall be scheduled to be held from February 1
to February 20. The arbitrator or arbitration panel may render the decision
on the day of the hearing, and shall make every effort to do so not later
than 24 hours following the close of the hearing. The arbitrator or
arbitration panel shall be limited to awarding only one or the other of the
two figures submitted. There shall be no opinion. There shall be no release
of the arbitration award by the arbitrator or arbitration panel except to the
Club, the Player, the Association and the PRC. In each case involving an
arbitration panel, the panel chair shall initially inform the Association and
the PRC of the award only and not how the panel members voted. The panel
chair shall disclose to the Association and the PRC the individual votes of
the panel members on the June 15 following the February 1998 hearings and
each March 15 following the February 1999, 2000 and 2001 (if the Association
exercises its option to extend this Agreement under Article XXVII) hearings.
The arbitrator or arbitration panel chair shall insert the figure awarded in
paragraph 2 of the duplicate Uniform Player's Contracts delivered at the
hearing and shall forward both copies to the League office of the Player and
Club concerned.
(6) Form of Submission. The Player and the Club shall exchange with each
other in advance of the hearing single salary figures for the coming season
(which need not be figures offered during the prior negotiations) and then
shall submit such figures to the arbitrator or arbitration panel. At the
hearing, the Player and Club shall deliver to the arbitrator or arbitration
panel a Uniform Player's Contract executed in duplicate, complete except for
the salary figure to be inserted in paragraph 2. Upon submission of the
salary issue to arbitration by either Player or Club, the Player shall be
regarded as a signed Player (unless the Player withdraws from arbitration as
provided in paragraph (4) above).
(7) Selection of Arbitrators. The Association and the PRC shall annually
select the arbitrators. In the event they are unable to agree by January 1 in
any year, they jointly shall request that the American Arbitration
Association furnish them lists of prominent, professional arbitrators. Upon
receipt of such lists, the arbitrators shall be selected by alternately
striking names from the lists. In 1997, all cases shall be assigned to single
arbitrators, unless the Player and the Club jointly request assignment to a
three-arbitrator panel. In 1998, 50% of the cases shall be assigned to
three-arbitrator panels and 50% of the cases shall be assigned to single
arbitrators. In 1999, 75% of the cases shall be assigned to
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three-arbitrator panels and 25% of the cases shall be assigned to single
arbitrators. In 2000 and 2001 (if the Association exercises its option to
extend this Agreement under Article XXVII), all cases shall be assigned to
three-arbitrator panels. In 1998 and 1999, the Association and the PRC shall
use an agreed-upon method of random selection to determine which cases are to
be assigned to three-arbitrator panels and which cases are to be assigned to
single arbitrators. Further, in each case involving a three-arbitrator panel,
the Association and the PRC shall designate one arbitrator to serve as the
panel chair.
(8) Location of Hearings. The single hearing site for each year will be
agreed upon by the parties with preference being given to either Los Angeles,
Tampa/Orlando, or Phoenix.
(9) Conduct of Hearings. The hearings shall be conducted on a private and
confidential basis. Each of the parties to a case shall be limited to one
hour for initial presentation and one-half hour for rebuttal and summation.
The aforesaid time limitations may be extended by the arbitrator or
arbitration panel in the event of lengthy cross-examination of witnesses, or
for other good cause.
(10) Continuances, Adjournments or Postponements. There shall be no
continuances or adjournments of a hearing, but the commencement of a hearing
may be postponed by the arbitrator or arbitration panel upon the application
of either the Player or Club based upon a showing of substantial cause. Any
request for the postponement of a scheduled hearing shall be made to the
arbitrator or arbitration panel chair in writing, with copies to the
Association and the PRC. Disclosure of individual votes by panel members
shall be in accordance with paragraph (5) above.
(11) Hearing Costs. The Player and Club shall divide equally the costs of
the hearing, and each shall be responsible for his own expenses and those of
his counsel or other representatives.
(12) Criteria.
(a) The criteria will be the quality of the Player's contribution to
his Club during the past season (including but not limited to his overall
performance, special qualities of leadership and public appeal), the length
and consistency of his career contribution, the record of the Player's past
compensation, comparative baseball salaries (see paragraph (13) below for
confidential salary data), the existence of any physical or mental defects
on the part of the Player, and the recent performance record of the Club
including but not limited to its League standing and attendance
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as an indication of public acceptance (subject to the exclusion stated in
subparagraph (b)(i) below). Any evidence may be submitted which is relevant
to the above criteria, and the arbitrator or arbitration panel shall assign
such weight to the evidence as shall appear appropriate under the
circumstances. The arbitrator or arbitration panel shall, except for a
Player with five or more years of Major League service, give particular
attention, for comparative salary purposes, to the contracts of Players
with Major League service not exceeding one annual service group above the
Player's annual service group. This shall not limit the ability of a Player
or his representative, because of special accomplishment, to argue the
equal relevance of salaries of Players without regard to service, and the
arbitrator or arbitration panel shall give whatever weight to such argument
as is deemed appropriate.
(b) Evidence of the following shall not be admissible:
(i) The financial position of the Player and the Club;
(ii) Press comments, testimonials or similar material bearing on
the performance of either the Player or the Club, except that
recognized annual Player awards for playing excellence shall not be
excluded;
(iii) Offers made by either Player or Club prior to arbitration;
(iv) The cost to the parties of their representatives, attorneys,
etc.;
(v) Salaries in other sports or occupations.
(13) Confidential Major League Salary Data. For his or its confidential
use, as background information, the arbitrator or arbitration panel will be
given a tabulation showing the minimum salary in the Major Leagues and
salaries for the preceding season of all players on Major League rosters as
of August 31, broken down by years of Major League service. The names and
Clubs of the Players concerned will appear on the tabulation. In utilizing
the salary tabulation, the arbitrator or arbitration panel shall consider the
salaries of all comparable Players and not merely the salary of a single
Player or group of Players.
(14) Prohibition Regarding Luxury Tax. No participant in a salary
arbitration shall refer in any fashion, either orally or in writing, to any
of the provisions in Article XXIII (Luxury Tax). No salary arbitrator or
arbitration panel shall consider in any fashion any of the provisions in
Article XXIII (Luxury Tax).
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ARTICLE VII-EXPENSES AND EXPENSE ALLOWANCES
A. TRANSPORTATION AND TRAVEL EXPENSES
Each Club shall pay the following expenses of Players:
(1) All proper and necessary traveling expenses of Players while "abroad,"
or traveling with the Club in other cities, including board, and first-class
jet air and hotel accommodations, if practicable.
Each Club shall give written notice to the team's Player Representative and
the Association, prior to February 1 of each year, of the in-season hotels
the Club intends to utilize during the next succeeding season.
On regularly scheduled commercial flights, when first-class accommodations
cannot practicably be provided and Players travel in the coach section, the
Club shall provide three seats for each two Players and first-class meals.
(2) First-class jet air fare and meals en route, of Players to their homes
at the end of the season, regardless of where the Club finished its season.
If the Club finishes its season "abroad" and appropriate transportation is
not provided back to the Club's home city, any Player who elects to return
home via the Club's home city shall be paid an amount equal to the
first-class jet air fare and meals en route back to the Club's home city plus
the first-class jet air fare and meals en route from the Club's home city to
the Player's home. A Player who has more than one home shall receive payment
based on the home to which he actually travels.
(3) All necessary traveling expenses, including first-class jet air fare
and meals en route, of Players from their homes to the spring training place
of the Club, whether they are ordered to go there directly or by way of the
home city of the Club. A Player who has more than one home shall receive
payment based on the home from which he actually travels.
(4) In the case of assignment of a Player's contract during the
championship season or during spring training, all traveling expenses,
including first-class jet air fare and meals en route, of the Player as may
be necessary to enable him to report to the assignee Club. The Club shall
also reimburse the Player for all travel expenses, including first-class jet
air fare and meals en route, for the Player's wife for one assignment during
the championship season. Such expenses may not be claimed by the Player as
part of his moving expenses under Article VIII(C), unless not paid under this
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provision. A Club may offset such expenses against any moving allowance
provided pursuant to Article VIII(A).
(5) In the case of termination by the Club of a Player's contract during
the championship season or during spring training, reasonable traveling
expenses, including first-class jet air fare and meals en route, to the
Player's home city.
(6) In the event a Player is required to attend a regularly scheduled
military encampment of the Reserve of the Armed Forces or of the National
Guard during the championship season or during spring training, the Player's
air fare to and from the encampment.
B. IN-SEASON MEAL AND TIP ALLOWANCE
(1) During the championship season, each Player shall receive a daily meal
and tip allowance for each date a Club is on the road and for each traveling
day. No deductions will be made for meals served on an airplane.
(2) If, when a Club departs from the home city, departure is scheduled
prior to 12:00 Noon, Players will receive the full daily allowance for that
date; if departure is after 12:00 Noon, Players will receive one-half of the
daily allowance for that date. Returning to the home city, if arrival is
later than 6:00 P.M., Players will receive the full daily allowance; if
arrival is prior to 6:00 P.M., Players will receive one-half of the daily
allowance. The Club may require the Player to sign checks for meals at a
hotel in lieu of the cash meal allowance.
(3) During the 1996 championship season, the daily allowance was $60.50.
During the 1997 championship season, the daily allowance shall be $67.00.
During the 1998, 1999 and 2000 championship seasons, and the 2001
championship season, if the Association exercises its option to extend this
Agreement under Article XXVII, the daily allowance shall be a base of $67.00
plus a cost of living adjustment to the nearest $.50, provided, however, that
the cost of living adjustment shall not reduce the daily allowance below
$67.00.
(4) Cost of living adjustments shall be computed as follows.
(a) To determine the allowance figure effective for the 1998 season,
the 1997 base allowance figure provided by this Agreement shall be
multiplied by a fraction, the numerator of which is the Consumer Price
Index for Urban Wage Earners and Clerical Workers (CPIW) published by the
Bureau of Labor
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Statistics for November, 1997 and the denominator of which is the CPIW for
the month of November, 1996.
(b) To determine the allowance figure effective for the 1999 season,
the allowance figure for the 1998 season, as adjusted, shall be multiplied
by a fraction, the numerator of which is the CPIW for November, 1998 and
the denominator of which is the CPIW for the month of November, 1997.
(c) To determine the allowance figure effective for the 2000 season,
the allowance figure for the 1999 season, as adjusted, shall be multiplied
by a fraction, the numerator of which is the CPIW for November, 1999 and
the denominator of which is the CPIW for the month of November, 1998.
(d) In the event that the Association exercises its option to extend
this Agreement under Article XXVII, the allowance figure effective for the
2001 season shall be the allowance figure for the 2000 season, as adjusted,
multiplied by a fraction, the numerator of which is the CPIW for November,
2000 and the denominator of which is the CPIW for the month of November,
1999.
(5) A disabled Player who is not traveling with his Club on the road shall
receive:
(a) the full allowance if he is residing at a hotel or motel in either
the metropolitan area of the Club, or one to which the Player has gone at
the request of the Club;
(b) no allowance if he is residing at his in-season residence or
permanent residence in the metropolitan area of the Club, which residence
is not a hotel or motel; and
(c) no allowance if he is in a hospital or is residing at his permanent
residence located outside the metropolitan area of the Club.
(See Attachment 4.)
(6) To the maximum extent possible, each Club shall provide the daily
allowance pursuant to an accountable plan whereby to the maximum extent
possible the daily allowance will be excluded from a Player's gross income.
C. SPRING TRAINING ALLOWANCES
(1) During the 1996 spring training season, each Player received a weekly
allowance of $188.50, payable in advance, to cover training camp expenses. In
addition, each Player living away from
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the Club's spring training headquarters received a supplemental weekly
allowance of $34.00. During the 1997 spring training season, the weekly
allowance shall be $211.00 and the supplemental weekly allowance shall be
$38.00. In 1998, 1999 and 2000 and, if the Association exercises its option
to extend this Agreement -under Article XXVII, 2001, there shall be added to
both allowances a cost of living adjustment to the nearest $.50, provided,
however, that the cost of living adjustment shall not reduce the weekly
allowances below $211.00 and $38.00, respectively.
(2) A Player living away from the Club's spring training headquarters shall
receive the following daily meal and tip allowance (except that Players who
make an overnight trip shall receive for the day following the night on the
road the daily championship season meal and tip allowance in lieu of the
daily allowance provided in this paragraph). No deduction shall be made for
lunch or sandwiches served at the ballpark. In 1996, the daily allowance was
$53.50. In 1997, the daily allowance shall be $60.00. In 1998, 1999 and 2000
and, if the Association exercises its option to extend this Agreement under
Article XXVII, 2001, there shall be added to the daily allowance a cost of
living adjustment to the nearest $.50, provided, however, that the cost of
living adjustment shall not reduce the daily allowance below $60.00.
Players living at the Club's spring training headquarters also shall
receive the daily meal and tip allowance if the Club does not otherwise
provide meals. Except where the Club owns facilities (such as Los Angeles),
no Player shall be required to sign meal checks or take his meals in lieu of
receiving the daily meal and tip allowance.
A Player whose Major League Uniform Player's Contract has been optionally
assigned but who is in uniform for a Major League spring training game shall
receive the daily allowance for each such game.
(3) A Player living away from the Club's spring training headquarters shall
receive a room allowance of $25.00 per day. Where the Club owns facilities
which are considered the equivalent of first-class hotel accommodations (such
as Los Angeles), the Club shall pay a daily room allowance of $15.00.
(4) Cost of living adjustments shall be computed as set forth in Section
B(4) above.
(5) To the maximum extent possible, each Club shall provide spring training
allowances pursuant to an accountable plan whereby to the maximum extent
possible such allowances will be excluded from a Player's gross income.
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D. SINGLE ROOMS ON THE ROAD
Each Player on a Club's Active List (including disabled Players who travel with
the Club) shall have single rooms in the Club's hotels on all road trips during
the Club's championship season and post-season. Nothing herein shall prohibit
the Clubs from making or continuing agreements with individual Players which
provide more favorable arrangements for such Players.
E. ALL-STAR GAME
A Player who is a member of his League's All-Star team shall, in addition to
being reimbursed in accordance with past practice, be reimbursed by the League
for the first-class jet air fare to and from the site of the All-Star Game for
one guest from the guest's place of residence, and for hotel accommodations for
a maximum of three days for such guest.
F. IN-SEASON SUPPLEMENTAL ALLOWANCES
(1) A Player shall be entitled to receive the "in-season supplemental
allowance" provided by this Section F if:
(a) his contract is assigned by a National Association club to a Major
League Club,
(b) he had no Major League service (or his entire Major League service
is only after the preceding August 31) and is on a Major League Club's
opening day roster, or
(c) his contract is assigned by a Major League Club to another Major
League Club during the championship season or after the sixteenth day prior
to the start of the championship season.
(2) A Player entitled to receive the in-season supplemental allowance
shall be treated by the assignee Club as if he were on the road for each of
the first seven days of the assignment in the assignee Club's home city, to
include the assignee Club providing the Player with first-class hotel
accommodations and the full daily meal and tip allowance described in
paragraphs (3) and (4) of Section B for this period. If this entitlement
arises under paragraph (1)(a) or (b) above, first-class hotel accommodations
shall be provided at the Club's expense or an allowance for housing expenses,
not to exceed the first-class hotel accommodations rate, shall be provided to
the Player in advance on a daily basis, as long as the Player incurs actual
housing expenses.
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(3) This in-season supplemental allowance shall be provided
automatically to such a Player in advance (a) at the time of the
assignment for assignments between Major League Clubs, and (b) on a daily
basis if the entitlement arises under paragraph 1(a) or (b) above.
(4) This Section F shall apply to each such assignment made during a
championship season. For a covered assignment from a National Association
club to a Major League Club made during the off-season, the Player shall be
entitled to the benefits provided by this Section F only for the days he
serves on a Major League Club's active roster before his contract is
reassigned to a National Association club.
ARTICLE VIII-MOVING ALLOWANCES
A. If a Player's contract is assigned by a Major League Club to another Major
League Club during the championship season, the assignee Club shall pay the
Player, for all moving and other expenses resulting from such assignment, the
sum of $850 if the distance between the home ballparks of the assignor and
assignee Clubs is 1,000 air miles or less; the sum of $1,150 if the distance
between the home ballparks of the assignor and assignee Clubs is greater than
1,000 but less than 2,000 air miles; and the sum of $1,450 if the distance
between the home ballparks of the assignor and assignee Clubs is equal to, or
greater than 2,000 air miles.
This allowance will be paid to the Player automatically at the time of the
assignment.
This advance payment will be credited against the reimbursement for reasonable
and actual moving expenses should the Player elect to claim such expenses in
accordance with the provisions of Section C below.
B. If a Player is assigned to another Major League Club located within 50 miles
of the assignor Club's home city, the Player shall not receive any moving
allowance under Section A above, subject to the following exception. If a Player
is assigned to another Major League Club and moves from a residence located
further than 25 miles from the assignee Club's home ballpark to a residence
located closer to, and within 50 miles of, such ballpark, the Player shall
receive the moving allowance in accordance with Section A above.
C. A Player may elect, within two years after the date of the assignment of his
contract, regardless of when his contract is assigned or whether the assignment
is between Major League Clubs or a Major League Club and a National Association
club, to be reimbursed for
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(1) the reasonable and actual moving expenses of the Player and his immediate
family resulting therefrom, including first-class jet air transportation for the
Player and his immediate family, provided that, if the Player relocates more
than one year from the date of the assignment, the Player must relocate in the
assignee Club's home city and the Player must still be playing for the assignee
Club at the time he incurs such expenses and (2) all rental payments for living
quarters in the city from which he is transferred (and/or spring training
location, if applicable), for which he is legally obligated after the date of
assignment and for which he is not otherwise reimbursed. Such rental payments
shall not include any period beyond the end of a season or prior to the start of
spring training. The Club paying reimbursement for rent shall have use and/or
the right to rent such living quarters for the period covered by the rental
reimbursement.
In the event a Player is required to report to a Major League Club from a
National Association club in any year on or after September 1, the foregoing
paragraph shall not apply.
Reimbursement shall be made by the assignee Club, except, should a Player's
Contract be assigned from a Major League Club to a National Association club,
reimbursement shall be made by the assignor Major League Club.
ARTICLE IX-TERMINATION PAY
A. OFF-SEASON
A Player who is tendered a Major League contract which is subsequently
terminated by a Club during the period between the end of the championship
season and prior to the beginning of the next succeeding spring training under
paragraph 7(b)(2) of the Uniform Player's Contract for failure to exhibit
sufficient skill or competitive ability, shall be entitled to receive
termination pay from the Club in an amount equal to thirty (30) days' payment at
the rate stipulated in paragraph 2 of (1) his Contract for the next succeeding
championship season, or (2) if he has no Contract for the next succeeding
championship season, in an amount equal to thirty (30) days' payment at the rate
stipulated in paragraph 2 of the Contract tendered to him by his Club for the
next succeeding championship season.
B. SPRING TRAINING
A Player whose Contract is terminated by a Club under paragraph 7(b)(2) of the
Uniform Player's Contract for failure to exhibit sufficient skill or competitive
ability, shall be entitled to receive termina-
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tion pay from the Club in an amount equal to thirty (30) days' payment at the
rate stipulated in paragraph 2 of his Contract, if the termination occurs during
spring training but on or before the 16th day prior to the start of the
championship season. If the termination occurs during spring training, but
subsequent to the 16th day prior to the start of the championship season, the
Player's termination pay shall be in an amount equal to forty-five (45) days'
payment at the rate stipulated in paragraph 2 of his Contract.
C. IN-SEASON
A Player whose Contract is terminated by a Club during the championship season
under paragraph 7(b)(2) of the Uniform Player's Contract for failure to exhibit
sufficient skill or competitive ability, shall be entitled to receive
termination pay from the Club in an amount equal to the unpaid balance of the
full salary stipulated in paragraph 2 of his Contract for that season.
D. SPLIT CONTRACTS
In the case of a Player who signs a Major League Contract which sets forth a
separate rate of pay for National Association service, the rate of pay to be
utilized in calculating termination pay under the preceding Sections A, B and C
shall be:
(1) The National Association rate, if the termination occurs in the
off-season;
(2) The National Association rate, if the termination occurs during spring
training, but on or before the 16th day prior to the start of the
championship season;
(3) The Major League rate, if the termination occurs during spring
training, but subsequent to the 16th day prior to the start of the
championship season;
(4) The National Association rate, if the termination occurs during the
season and the Player is, at the time of termination, in the National
Association; and the Major League rate, if the termination occurs during the
season and the Player is, at the time of termination, in the Major Leagues.
In the application of this paragraph (4), a Player's Contract may not be
assigned to the National Association for the purpose of reducing the Player's
termination pay.
Notwithstanding the above, a Player whose Contract is not assignable to the
National Association without his consent, or a Player selected by a Major League
Club in the immediately preceding Rule 5
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draft, shall be entitled to receive termination pay at the Major League rate
unless terminated during the championship season at a time when his Contract is
under assignment to the National Association.
E. INJURY
If a Player's Contract is terminated by a Club by reason of the Player's failure
to render his services due to a disability resulting directly from injury
sustained in the course and within the scope of his employment under the
Contract, and notice is received by the Club in accordance with Regulation 2 of
the Uniform Player's Contract, the Player shall be entitled to receive from the
Club the unpaid balance of the full salary for the year in which the injury was
sustained, less all workmen's compensation payments received by the Player as
compensation for loss of income for the specific period for which the Club is
compensating him in full.
F. NON-DUPLICATION
The foregoing provisions of this Article IX shall be applied regardless of the
number of times a Player may be released during a year, subject to the following
limitations:
(1) The maximum amount of termination pay which a Player shall be entitled
to receive for any year shall not exceed the amount by which:
(a) the salary stipulated in the Player's original Contract for such
year exceeds
(b) the aggregate amount which the Player earns during that year from
any Club or Clubs, including any amounts deferred to later years,
calculated at present value, and bonuses.
(2) In the event a released Player refuses to accept a reasonable Major
League Contract offered by a Club other than the Club which released him,
such Player shall forfeit that portion of the termination pay which would not
have been payable if such Contract had been accepted.
ARTICLE X-WORLD SERIES, LEAGUE CHAMPIONSHIP SERIES AND DIVISION SERIES PLAYERS'
POOL
A. CREATION OF POOL
One Players' pool shall be created from the World Series, the two League
Championship Series and the four Division Series. Contributions shall be made
into the pool as follows:
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(1) 60% of the total gate receipts from the first 4 World Series games;
(2) 60% of the total gate receipts from the first 4 games of each League
Championship Series; and
(3) 60% of the total gate receipts from the first 3 games (4 if the
Division Series is expanded to the best of 7 games) of each Division Series.
B. DISTRIBUTION OF POOL
The Players' pool shall be distributed to the Players, by Club, as follows:
World Series Winner............................................ 36%
World Series Loser............................................. 24%
League Championship Series Losers (2) ......................... 24%
Division Series Losers (4)..................................... 12%
Non-Wild Card Second Place Teams (4) .......................... 4%
Distribution of the Players' pool shall be made to the Players within 30 days
after the completion of the World Series, unless for good cause the Parties
agree to extend the period.
C. DIVISION OF PLAYERS' POOL
The division of the Players' pool shall be made by a vote of the Players, in a
meeting chaired by the Player Representative, at which attendance shall be
limited to Players, except that the field manager, prior to being excused from
such meeting, shall be given first the opportunity to express his views as to
the division of the pool. At the invitation of the Player Representative, the
field manager may be present during the remainder of the meeting, or any part
thereof. The vote of the Players shall not be subject to alteration, except as
may be required to conform to the Major League Rules.
Non-uniformed personnel of a Club shall not be eligible to receive a percentage
share of the Players' pool, but shall be eligible to receive cash awards of
defined dollar value, provided that no cash award may exceed the value of a full
share.
D. GUARANTEE OF POOL
(1) To the extent, if any, that the Players' pool provides a total of less
than $2,416,450 for the World Series winner, the amount
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to be distributed to such winner shall be increased to $2,416,450. To the
extent, if any, that the Players' pool provides a total of less than
$1,611,000 for the World Series loser, the amount to be distributed to such
loser shall be increased to $1,611,000.
(2) To the extent, if any, that the Players' pool provides a total of less
than $1,611,000 for both League Championship Series losers ($850,500 each),
the amount to be distributed to such losers shall be increased to $1,611,000
($850,500 each).
(3) To the extent, if any, that the Players' pool provides a total of less
than $644,400 for the Division Series losers, the total amount to be
distributed to such Division Series losers shall be increased to $644,400.
(4) To the extent, if any, that the Players' pool provides a total of less
than $161,100 for the non-Wild Card second place teams in each division, the
total amount to be distributed to such non-Wild Card second place teams shall
be increased to $161,100.
(5) If, during the term of this Agreement, the Clubs raise World Series
ticket prices, the guarantees set forth in the above paragraphs (1), (2), (3)
and (4) shall be increased a pro rata amount, such amount established by
averaging the percentage increase of a box seat ticket and the percentage
increase of a reserved seat ticket and increasing each guarantee by such
percentage.
ARTICLE XI-GRIEVANCE PROCEDURE
For the purpose of providing an orderly and expeditious procedure for the
handling and resolving of certain grievances and complaints, as hereinafter
provided, the following shall apply as the exclusive remedy of the Parties.
A. DEFINITIONS
As used herein, the following terms shall have the meanings indicated:
(1) (a) "Grievance" shall mean a complaint which involves the existence or
interpretation of, or compliance with, any agreement, or any provision of any
agreement, between the Association and the Clubs or any of them, or between a
Player and a Club, except that disputes relating to the following agreements
between the Association and the Clubs shall not be subject to the Grievance
Procedure set forth herein:
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(i) The Major League Baseball Players Benefit Plan;
(ii) The Agreement Re Major League Baseball Players Benefit Plan;
(iii) The Agreement regarding dues check-off.
Any procedures or remedies available to the Parties for the resolution of
disputes arising under said agreements which were available as of their
respective execution dates, shall continue to be available and not be altered or
abridged in any way as a result of this Basic Agreement between the Association
and the Clubs.
(b) Notwithstanding the definition of "Grievance" set forth in subparagraph
(a) above, "Grievance" shall not mean a complaint which involves action taken
with respect to a Player or Players by the Commissioner involving the
preservation of the integrity of, or the maintenance of public confidence in,
the game of baseball. Within 30 days of the date of the action taken, such
complaint shall be presented to the Commissioner who promptly shall conduct a
hearing in accordance with the Rules of Procedure attached hereto as Appendix
A. The Commissioner shall render a written decision as soon as practicable
following the conclusion of such hearing. The Commissioner's decision shall
constitute full, final and complete disposition of such complaint, and shall
have the same effect as a Grievance decision of the Arbitration Panel. In the
event a matter filed as a Grievance in accordance with the procedure
hereinafter provided in Section B gives rise to issues involving the
integrity of, or public confidence in, the game of baseball, the Commissioner
may, at any stage of its processing, order that the matter be withdrawn from
such procedure and thereafter be processed in accordance with the procedure
provided above in this subparagraph (b). The order of the Commissioner
withdrawing such matter shall constitute a final determination of the
procedure to be followed for the exclusive and complete disposition of such
matter, and such order shall have the same effect as a Grievance decision of
the Arbitration Panel. (See also Attachment 5.)
The Association may reopen this Agreement, with reference solely to Section
A(1)(b) and Section C of this Article, upon the giving of 10 days' written
notice at any time, based upon experience under the aforesaid Sections which,
in its opinion, is unsatisfactory.
Any reopening notice served by the Association, in accordance with the
foregoing, will be based only on actual experience with
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the operation of such Sections in the processing of grievances or complaints
and such reopening cannot occur unless there is actual experience under such
Sections.
Also, in the event either of the incumbent League Presidents leaves that
Office, the Association may reopen this Agreement, with reference solely to
Section C of this Article as it affects the role of the League Presidents,
upon the giving of 10 days' written notice.
(c) Notwithstanding the definition of "Grievance" set forth in subparagraph
(a) above, "Grievance" shall not mean a complaint or dispute which involves
the interpretation or application of, or compliance with the provisions of
the first sentence of paragraph 3(c) of the Uniform Player's Contract.
However, nothing herein shall alter or abridge the rights of the Parties, or
any of them, to resort to a court of law for the resolution of such complaint
or dispute.
Anything in the Grievance Procedure provided for in the Basic Agreement to
the contrary notwithstanding, complaints or disputes as to any rights of the
Players or the Clubs with respect to the sale or proceeds of sale of radio or
television broadcasting rights in any baseball games by any kind or method of
transmission, dissemination or reception shall not be subject to said
Grievance Procedure. However, nothing herein or in the Grievance Procedure
shall alter or abridge the rights of the Parties, or any of them, to resort
to a court of law for the resolution of such complaint or dispute.
The reference herein to the above types of complaints or disputes shall not
be deemed to define exclusively the types of complaints or disputes which are
not subject to said Grievance Procedure.
(2) "League" shall mean The American League of Professional Baseball Clubs or
The National League of Professional Baseball Clubs.
(3) "Commissioner" shall mean the person holding the office of Commissioner
of Baseball as defined in the Major League Agreement.
(4) "Player" or "Players" shall mean a Player or Players on the active roster
of a Major League Club or on a disabled, restricted, disqualified, ineligible,
suspended or military list of a Major League Club. The term "Player" shall also
include a former
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Player or Players who have a grievance or complaint arising by reason of their
former status as a Player as defined in the preceding sentence.
(5) "Club" or "Clubs" shall mean a Club or Clubs with membership in a League.
(6) "Association" shall mean the Major League Baseball Players Association.
(7) "Player Relations Committee" or "PRC" shall mean the Major League
Baseball Player Relations Committee established by the Clubs or any department
of the Commissioner's Office which assumes on behalf of the Commissioner the
responsibilities formerly held by the Major League Baseball Player Relations
Committee.
(8) "Grievant" shall mean a party who initiates or appeals a Grievance.
(9) "Arbitration Panel" shall mean the impartial arbitrator or, where either
Party so elects, a tripartite panel so empowered and composed of the impartial
arbitrator and two party arbitrators, one appointed by the Association, the
other appointed by the PRC. The impartial arbitrator, who shall in all instances
be designated as the Panel Chairman, shall be appointed by agreement of the
Association and the PRC. In the event the Association and the PRC are unable to
agree upon the appointment of the impartial arbitrator, they jointly shall
request that the American Arbitration Association furnish them a list of
prominent, professional arbitrators. Upon receipt of said list, they shall
alternate in striking names from the list until only one remains. The arbitrator
whose name remains shall be deemed appointed as the impartial arbitrator.
At any time during the term of this Agreement either the Association or the PRC
may terminate the appointment of the impartial arbitrator by serving written
notice upon him and the other Party; provided that no such termination shall in
any way impair the authority of the impartial arbitrator to render awards with
respect to matters fully submitted to him. Within 30 days of any such
termination, the Association and PRC shall either agree upon a successor
impartial arbitrator or select a successor from an American Arbitration
Association list, as set forth above.
Decisions of the Arbitration Panel shall be made by the impartial arbitrator or,
where the panel is tripartite, by majority vote.
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B. PROCEDURE
STEP 1. Any Player who believes that he has a justifiable Grievance shall first
discuss the matter with a representative of his Club designated to handle such
matters, in an attempt to settle it. If the matter is not resolved as a result
of such discussions, a written notice of the Grievance shall be presented to the
Club's designated representative, provided, however, that for a Grievance to be
considered beyond Step 1, such written notice shall be presented within (a) 45
days from the date of the occurrence upon which the Grievance is based, or (b)
45 days from the date on which the facts of the matter became known or
reasonably should have become known to the Player, whichever is later. Within 10
days following receipt of such written notice (within 2 days if disciplinary
suspension or a grievance involving Player safety and health), the Club's
designated representative shall advise the Player in writing of his decision and
shall furnish a copy to the Association. If the decision of the Club is not
appealed further within 15 days of its receipt, the Grievance shall be
considered settled on the basis of that decision and shall not be eligible for
further appeal.
STEP 2. A Grievance, to be considered in Step 2, shall be appealed in writing by
the Grievant or by the Association to a designated representative of the PRC
within 15 days following receipt of the Club's written decision. The Grievance
shall be discussed within 10 days thereafter (within 2 days if disciplinary
suspension or a grievance involving Player safety and health) between
representatives of the PRC and representatives of the Association in an attempt
to settle it. Within 10 days following such discussion (within 2 days if
disciplinary suspension or a grievance involving Player safety and health), the
designated representative of the PRC shall advise the Grievant in writing of
his decision and shall furnish a copy to the Association. If the decision of the
PRC representative is not appealed further within 15 days of its receipt, the
Grievance shall be considered settled on the basis of that decision and shall
not be eligible for further appeal. Grievances which involve (a) more than one
Club, or (b) a Player who is not under contract to a Club which is party to the
Grievance, may be filed initially in Step 2, provided that written notice of the
Grievance shall be presented to the designated representative of the PRC within
(a) 30 days from the date of the occurrence upon which the Grievance is based,
or (b) 30 days from the date on which the facts of the matter became known or
reasonably should have become known to the Player, whichever is later
ARBITRATION. Within 15 days following receipt of the Step 2 decision, the
Grievant or the Association may appeal the Grievance in
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writing to the Panel Chairman for impartial arbitration. Upon receipt of the
notice of appeal, the Chairman of the Arbitration Panel shall set a time, date
and place for hearing the appeal, which hearing shall be commenced as soon as
practicable but no later than 20 days following receipt of the notice of appeal
(5 days if disciplinary suspension or a grievance involving Player safety and
health). Such hearing shall be conducted in accordance with the Rules of
Procedure attached hereto as Appendix A. The Arbitration Panel shall render a
written decision as soon as practicable following the conclusion of such hearing
(within 5 days if disciplinary suspension or a grievance involving Player safety
and health), and may affirm, modify or reverse the decision from which the
appeal is taken. The decision of the Arbitration Panel shall constitute full,
final and complete disposition of the Grievance appealed to it.
With regard to the arbitration of Grievances, the Arbitration Panel shall have
jurisdiction and authority only to determine the existence of or compliance
with, or to interpret or apply agreements or provisions of agreements between
the Association and the Clubs or any of them, or between individual Players and
Clubs. The Arbitration Panel shall not have jurisdiction or authority to add to,
detract from, or alter in any way the provisions of such agreements.
All costs of arbitration, including the fees and expenses of the impartial
arbitrator, shall be borne equally by the parties, provided that each of the
parties shall bear the cost of its own party arbitrator, witnesses, counsel and
the like.
C. SPECIAL PROCEDURE WITH REGARD TO CERTAIN DISCIPLINARY ACTION
Complaints involving a fine or suspension imposed upon a Player by a League or
by the Commissioner for conduct on the playing field or in the ballpark shall be
subject exclusively to this Section C, as follows:
(1) Any Player who believes that he has a justifiable complaint regarding
such discipline may, within 7 days of his receipt of written notification of
the discipline, appeal in writing to the League President if the discipline
was imposed by him, or to the Commissioner, if the discipline was imposed by
him, for a hearing. Upon receipt of the notice of appeal, the League
President or Commissioner, as the case may be, shall designate a time and
place for hearing the appeal, which hearing shall be commenced within 10 days
from the date of receipt of the appeal. Such hearing shall be conducted in
accordance with the Rules of Procedure attached hereto as Appendix A. The
League President or Com-
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missioner, as the case may be, shall render a written decision as soon as
practicable following the conclusion of such hearing, and may affirm, modify,
or revoke the disciplinary action originally imposed. The decision of the
League President or Commissioner, as the case may be, shall constitute full,
final and complete disposition of the complaint and shall have the same
effect as a Grievance decision of the Arbitration Panel.
(2) Notwithstanding the provisions of paragraph (1) above, if any such
discipline imposed upon a Player by a League involves a fine in an amount
which exceeds $500 or a suspension exceeding 10 days, any complaint relating
thereto shall be appealable from the decision of the League President to the
Commissioner for determination in the same manner and with the same effect as
provided in paragraph 1(b) of Section A hereof.
D. GRIEVANCES INITIATED OR APPEALED BY A CLUB
STEP 1. Any Club which believes it has a justifiable Grievance shall present a
written notice of the Grievance to the Player with a copy to the Association,
provided, however, that for a Grievance to be considered beyond Step 1, such
written notice shall be presented within (a) 45 days from the date of the
occurrence upon which the Grievance is based, or (b) 45 days from the date on
which the facts of the matter became known or reasonably should have become
known to the Club, whichever is later. Within 10 days following receipt of such
written notice, the Player shall advise the Club in writing of his decision and
shall furnish a copy to the PRC. If the decision of the Player is not appealed
further within 15 days of its receipt, the Grievance shall be considered settled
on the basis of that decision and shall not be eligible for further appeal.
STEP 2. A Grievance, to be considered in Step 2, shall be appealed in writing
by the Club or the PRC to the Association within 15 days following receipt of
the Player's written decision. The Grievance shall be discussed within 10 days
thereafter between representatives of the PRC and representatives of the
Association in an attempt to settle it. Within 10 days following such
discussion, the Association shall advise the PRC in writing of its decision. If
the decision of the Association is not appealed further within 15 days of its
receipt, the Grievance shall be considered settled on the basis of that decision
and shall not be eligible for further appeal.
Grievances which involve (a) more than one Club, (b) more than one Player, or
(c) a Player who is not under contract to a Club which is party to the
Grievance, may be filed initially in Step 2, provided that
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written notice of the Grievance shall be presented to the Association within (a)
30 days from the date of the occurrence upon which the Grievance is based, or
(b) 30 days from the date on which the facts of the matter became known or
reasonably should have become known to the Club, whichever is later.
ARBITRATION. Within 15 days following receipt of the Step 2 decision of the
Association, the PRC may appeal the Grievance in writing to the Panel Chairman
for impartial arbitration. The procedures to be followed in arbitration and the
jurisdiction of the Arbitration Panel shall be as set forth in Section B above.
Nothing contained in this Section D shall be deemed to limit or impair the right
of any Club to impose discipline upon a Player or Players or to take any other
action not inconsistent with the Uniform Player's Contract or any agreement with
the Association to which the Club is a Party. Any complaint or dispute which may
be a subject for discipline shall not constitute a proper basis for a Club
Grievance under this Section D.
E. GRIEVANCES INITIATED OR APPEALED BY THE ASSOCIATION
(1) The Association may on its own motion appeal Grievances or complaints
on behalf of a Player or Players as provided in this Grievance Procedure,
except that the Association will not appeal a Grievance or complaint
involving player discipline without the approval of the Player or Players
concerned.
(2) The Association may on its own motion initiate Grievances or complaints
on behalf of a Player or Players on all matters not involving player
discipline. Nothing herein shall interfere with the right of a Player who
initiates a disciplinary Grievance or complaint to be represented by the
Association at any Step of the Grievance Procedure.
F. MISCELLANEOUS
(1) Each of the time limits set forth herein may be extended by mutual
agreement of the parties involved.
(2) If any Grievance is not processed in accordance with the prescribed
time limits in any Step, unless an extension of time has been mutually agreed
upon, either party, after notifying the other party of its intent in writing,
may appeal to the next Step.
(3) Any decision which is appealable under this Grievance Procedure but
which is not appealed within the time allowed or
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within any time mutually agreed upon by the parties shall constitute a full,
final and complete disposition of the Grievance involved.
(4) In any discussion or hearing provided for in the Grievance Procedure, a
Player may be accompanied by a representative of the Association who may
participate in such discussion or hearing and represent the Player. In any
such discussion or hearing, any other party may be accompanied by a
representative who may participate in such discussion or hearing and
represent such party.
G. SURVIVAL FOLLOWING TERMINATION OF BASIC AGREEMENT
Unless eliminated or modified following an impasse in bargaining, Article XI
shall remain in full force and effect after termination of this Agreement;
provided, however, that disputes arising after the termination of this Agreement
related to the legality or validity of unilateral changes of terms and
conditions of employment following an impasse in bargaining and any other
self-help conduct of the Parties, including but not limited to, unilateral
changes in nonmandatory subjects of bargaining, shall not be subject to Article
XI.
ARTICLE XII-DISCIPLINE
A. JUST CAUSE
The Parties recognize that a Player may be subjected to disciplinary action for
just cause by his Club, League or the Commissioner. Therefore, in Grievances
regarding discipline, the issue to be resolved shall be whether there has been
just cause for the penalty imposed.
If discipline imposed upon a Player is determined to be improper by reason of a
final decision under this Grievance Procedure, the Player shall promptly be made
whole.
The term "make whole" means:
(1) if a fine is found to have been imposed improperly, the fine will be
promptly repaid;
(2) any salary loss as a result of an improper suspension will be promptly
paid; and
(3) in the application of items (1) and (2) above, interest will also be
paid at the rate per annum set forth in Article XV(J) below.
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B. NOTICE
Written notice of discipline of a Player (a fine, or suspension, or both)
imposed by the Commissioner of Baseball, a League President or a Club (except
for actions arising from participation in the Winter Leagues) and the reason
therefore shall in every case be given to the Player and the Association.
With respect to discipline imposed upon a Player by a League or the
Commissioner, the League or the Commissioner shall immediately give to the
Association notice by mail of fines, and facsimile notice of suspension and of
an appeal for a hearing.
C. DISCOVERY
A Player who is disciplined shall have the right to discover, in timely fashion,
all documents and evidence adduced during any investigation of the charges
involved.
D. COMPLIANCE
(1) Nothing contained in this Grievance Procedure shall excuse a Player
from prompt compliance with any discipline imposed upon him.
(2) Payment of Fines
(a) CLUB FINES. A fine imposed by a Club pursuant to Regulation 5 of
the Uniform Player's Contract in excess of $250 may not be deducted from
the Player's salary until such fine is finally upheld in the Grievance
Procedure or the time in which to file a Grievance has expired.
(b) FINES IMPOSED BY LEAGUE OR COMMISSIONER. A fine imposed by either
League or the Commissioner in an amount of $500 or less shall continue to
be payable when imposed. Fines in an amount greater than $500 shall be
payable only when such fine becomes final. When a fine imposed by either
League or by the Commissioner becomes final, the Player's employing Club is
authorized, at the request of the League involved, or the Commissioner in
the case of a fine imposed by the Commissioner, to deduct the amount of the
fine from the Player's salary and transmit such sum to the League involved,
or to the Commissioner, as the case may be.
E. INVESTIGATIONS
Except where circumstances require expeditious handling, the Player and the
Association shall receive reasonable advance notice of any
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investigatory interview with a Player. Where circumstances requiring expeditious
handling are present, the Player and the Association shall receive as much
advance notice as is possible, but in no event shall the Association receive
less notice than the Player. All parties recognize the right of the Player to be
represented at such interview by the Association and counsel of his choice.
F. MAJOR LEAGUE RULES 15 AND 16
The following time limit provisions set forth in Major League Rules 15 and 16
shall be inapplicable in disciplinary matters:
(1) the prohibition in Rule 16(a) against reinstatement of a Player on the
Restricted, Disqualified and Ineligible Lists in the period August 1 to
October 31, inclusive;
(2) the prohibition in Rules 15(c)(1) and 16(c) against application for
reinstatement from the Ineligible List until after the lapse of one year from
the date of placement on such list; and
(3) the requirement of Rule 16(a) that the Player's Club shall be entitled
to 30 days' written notice prior to his reinstatement from the Disqualified
or Ineligible Lists, if application for such reinstatement is filed after
February 1 of any year.
ARTICLE XIII-SAFETY AND HEALTH
A. SAFETY AND HEALTH ADVISORY COMMITTEE
(1) Safety and Health Advisory Committee
The Parties shall establish and maintain a bipartisan Safety and Health
Advisory Committee which shall be comprised of an equal number of members
representing the Association and representing the Clubs. The purpose of the
Committee shall be
(a) to deal with emergency safety and health problems as they
arise, and attempt to find solutions, and
(b) to engage in review of, planning for and maintenance of safe
and healthful working conditions for Players.
(2) Committee Meetings
A meeting of the Safety and Health Advisory Committee may be called by any
member thereof who believes that an emergency
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safety and health problem exists and requires immediate attention, and a
meeting shall be held as soon as practicable thereafter. In addition, the
Committee shall hold at least one regular meeting annually for purposes of
review and planning.
(3) Power and Authority of Committee
The Safety and Health Advisory Committee shall make recommendations to the
Parties as to the solution of problems and the establishment of policies. The
Committee shall use its best efforts to persuade the Parties to adopt the
Committee's recommendations. The Committee, however, shall only have advisory
authority and it shall not have the power to impose its views or
recommendations upon the Parties.
(4) Other Rights and Remedies
Nothing herein shall diminish or interfere with any other rights and
remedies the Players or the Association may pursue under the Grievance
Procedure of this Agreement or under the procedures established pursuant to
the Occupational Safety and Health Act. It is not a necessary prerequisite to
utilization of the Grievance Procedure that the Safety and Health Advisory
Committee procedures be instituted or exhausted. (See Attachment 7.)
B. SAFETY COMPLAINTS-RESPONSIBILITY OF LEAGUE PRESIDENT
Notwithstanding the provisions of Section A, when a safety complaint is made by
the Association to the Office of the League President, the League President
shall promptly designate a representative to investigate and to attempt to
resolve the problem. The League President shall promptly notify the Association
of the results of the investigation and of all attempts to resolve the problem.
C. DISABLED LIST
Application by a Club to the League President to place a Player on the Disabled
List shall be accompanied by a Standard Form of Diagnosis. (See Attachment 8.)
This Standard Form of Diagnosis shall be completed by the Club physician and
shall include, as a separate item, an estimated time period for recovery. A copy
of the completed Standard Form will be given to the Player. The Club physician
will also complete and submit the Standard Form of Diagnosis for recertification
of a Player on the Disabled List at the date when he first becomes eligible for
reinstatement to active status and then every fifteen days following the date
upon which the Player first became
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eligible for reinstatement (except for Players placed upon the Emergency
Disabled List).
D. SECOND MEDICAL OPINION
Within 20 days following the execution of this Agreement, the Clubs will provide
an updated, accepted listing of medical specialists, by specialty and by
geographic regions, to whom Players may upon their request go for diagnosis and
a second medical evaluation of an employment related illness or injury being
treated by the Club physician. At least two physicians will be designated for
each specialty in each region. Further, the Association and the Clubs shall
promptly agree on appropriate procedures by which this listing of medical
specialists will be updated annually. A Player may seek a "second evaluation"
from a medical specialist on the accepted listing who is located outside of the
geographic region within which the Player's Club is located, provided that the
Player is not absent from the Club for an unreasonable period of time.
If a Player uses the services of a medical specialist who is on the accepted
listing and is located within the geographic region within which the Player's
Club is located, then the Club shall pay the cost of the "second evaluation,"
including transportation and hotel costs.
If a Player uses the services of a medical specialist who is on the accepted
listing but is not located within the geographic region within which the
Player's Club is located, then the Club shall pay the cost of the "second
evaluation." Payment of the Player's transportation and hotel costs shall be the
responsibility of the Player.
Expenses for "second evaluations" by medical specialists who are not on the
accepted listing will be authorized and paid only by prior mutual agreement
between the Player and the Club.
E. TRAINERS
Each Club shall employ two trainers on a full-time basis. Both trainers will
travel with the Club on the road; provided, that one trainer may remain in the
Club's home city if necessary for the Club to fulfill its obligations, as
expressed in Attachment 4, to disabled players who do not travel with the Club.
Individuals newly appointed as trainers shall be certified by the National
Athletic Trainers Association (NATA) or the Canadian Athletic Therapists
Association (CATA), or shall be physical therapists licensed by an appropriate
state authority.
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F. LOCKER ROOM EQUIPMENT
Each visiting locker room shall be equipped with the following equipment, all in
good working order, and of a size and capacity adequate for the treatment of
professional baseball players: whirlpool, hydroculator, ultrasound machine and
examining table.
G. MEDICAL RECORDS
If a Player on a visiting Club receives medical treatment from the home Club's
doctor, a copy of any written medical evaluation prepared by the home Club's
doctor shall, when authorized by the Player, be provided to the Player and his
Club doctor.
ARTICLE XIV-SPRING TRAINING CONDITIONS
A. REPORTING
No Player shall be required to report for spring training workouts more than
thirty-three (33) days prior to the start of the championship season, provided
that:
(1) injured Players, pitchers and catchers may be invited to attend spring
training workouts no earlier than forty-five (45) days prior to the start of
the championship season; and
(2) all other Players may be invited to attend spring training workouts no
earlier than forty (40) days prior to the start of the championship season.
B. LIVING AWAY FROM CLUB HEADQUARTERS
Any Major League Player may live away from the Club's spring training
headquarters, unless the Club can demonstrate good cause for not permitting him
to do so.
C. MEETINGS WITH PLAYERS
The Association shall have the right to hold one team meeting during the
Players' normal working hours, with the Players on each Club in the Club's
spring training clubhouse, provided the Association gives the Club involved as
much advance notice as possible, but in no event less than 10 days; such meeting
to be approximately 60 minutes but not more than 90 minutes in duration starting
with the normal reporting time of Players on each Club but not earlier than 9:30
A.M. No "B" games shall be scheduled to conflict with such meetings.
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ARTICLE XV-MISCELLANEOUS
A. NO DISCRIMINATION
The Clubs will not interfere with, restrain or coerce Players because of
membership in or lawful activity on behalf of the Association, nor will they
discriminate because of Association activity in regard to hire, tenure or
employment or any term or condition of employment.
The provisions of this Agreement shall be applied to all Players covered by this
Agreement without regard to race, color, religion or national origin.
B. PARKING FACILITIES
Each Club shall provide or arrange for appropriate automobile parking spaces for
Players and, to the extent practicable, van and small truck parking spaces for
Players, at its home ballpark on game or practice days, without cost to the
Players.
C. WINTER LEAGUE PLAY
No Major League Player shall be required to play in the Winter Leagues, provided
that this provision shall not bar a Club from recommending the advisability of
such activity to any Player.
D. COLLEGE SCHOLARSHIP PLAN
A Major League Player for whom there is in effect on or after January 1, 1973 a
valid and unexpired scholarship under the College Scholarship Plan may commence
or resume his studies under the Plan at any time within two years after his last
day of Major League service. If his college studies have not commenced under the
Plan within two years after his last day of Major League service, his
scholarship shall terminate.
Otherwise, his scholarship shall continue unless he shall fail to attend college
for more than two consecutive years after his last day of Major League service,
without proper reason as set forth in Major League Rule 3(c) (4)(D).
Participation by a Player in Winter League or Instructional League play shall
constitute proper reason for tolling the time limitation in the preceding
sentence.
E. ACTIVE PLAYER LIMIT
(1) The active Player limit set forth in Major League Rule 2(c) for the
period beginning with opening day of the championship
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season and ending at midnight, August 31, shall be 25, provided that the
minimum number of active Players maintained by each Club throughout the
championship season shall be 24. However, if a reduction below 24 occurs as a
result of unforeseen circumstances, the Club shall, within 48 hours (plus
time necessary for the Player to report), bring its active roster back to a
minimum of 24 Players. The utilization or non-utilization of rights under
this paragraph (1) is an individual matter to be determined solely by each
Club for its own benefit. Clubs shall not act in concert with other Clubs.
(2) The active Player limit set forth in Major League Rule 2(c) for the
period beginning with September 1 and ending with the close of the
championship season shall be 40 for the duration of this Agreement.
F. SPANISH TRANSLATIONS AND ESL COURSES
This Agreement and the notices listed in Attachment 9 shall be translated and
printed in Spanish and shall be made available to all Spanish-speaking Players.
The costs for the translation and printing shall be borne equally by the
Association and the Clubs. In the event of any dispute involving the
interpretation of, or compliance with, the provisions of this Agreement or these
notices, the English version shall govern. Further, during each championship
season covered by this Agreement, each Club will make available an
English-as-a-second-language course, at its expense, provided that at least one
Player on that Club requests such a course.
G. FUTURE EXPANSION
During the term of this Agreement, the Clubs have the right to expand the number
of Major League Clubs beyond 28 by adding up to four (4) new Expansion Clubs.
Two of these Expansion Clubs will commence play in 1998, one of which will be
located in Arizona and the other in Tampa Bay/St. Petersburg. In addition, the
Clubs shall have the right to expand by another two (2) Clubs as long as they
notify the Association of their intention to so expand by December 31, 1999, and
schedule the new expansion Clubs to commence play no later than the 2002
championship season. Notice of a decision to expand beyond the two Clubs
scheduled to commence play in 1998 shall promptly be given to the Association
and the Association may reopen this Agreement with reference solely to the
effect upon the Players of such expansion, upon the giving of 10 days' written
notice. (See Attachment 10.)
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H. DEFAULT NOTICE
During the term of this Agreement, the right of a Player to terminate his
Uniform Player's Contract pursuant to the provisions of the first sentence of
paragraph 7(a) of such Contract shall be limited to defaults or failures to
perform which are material in nature; and any notice of alleged default filed by
a Player under paragraph 7(a) of the Uniform Player's Contract must be filed
with the Club (with a copy to the PRC) by the Association, in writing, plainly
labeled as a default notice. Should such a material breach on the part of a Club
be alleged, the Club, the Player involved, the PRC and the Association will
cooperate in scheduling the handling of any Grievance brought with respect to
such alleged breach so that such Grievance may be submitted to arbitration on an
expedited basis.
I. INTERNATIONAL PLAY
(1) Definition
International play is defined as any game or series of games played by a
Club or Clubs (or a group or groups of Players, such as All-Star squads)
(a) outside the United States and Canada; or
(b) within or without the United States or Canada against a foreign
club or clubs.
Championship season, All-Star, Division Series, League Championship Series
and World Series games played in the United States and/or Canada shall not be
considered international play.
(2) Possible Expansion
Notwithstanding the foregoing definition of international play, if a Major
League franchise is awarded to a city outside the United States and Canada,
then championship season, All-Star, Division Series, League Championship
Series and World Series games played in that city by such franchise shall not
be considered international play.
(3) Prior Agreement Required
The Clubs agree that there will be no international play conducted anywhere
in the world at any time without the prior consent of the Association, except
for exhibition games during spring training and the championship season
against any non-Major League club if such games are played in the United
States, Canada or Puerto Rico and are not part of a national or international
tour by a foreign club.
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(4) All International Activities Subject to Joint Cooperation
The Association and the Clubs shall cooperate with each other regarding all
international activities, including but not limited to, international play,
international events for which Player participation is sought by or on behalf
of a Club or Clubs (such as clinics or skill competitions), international
competition among nations, such as the Olympic Games, and the exploitation of
international rights, such as media and sponsorship contracts. In this
regard, the Association and the Clubs shall keep each other informed of
contemplated or planned international activities. Further, the Association
and the Clubs agree to honor reasonable requests of each other to be present
when international activities are discussed with third parties. Moreover, the
Association and the Clubs agree that in discussions with third parties
regarding international play or international events for which Player
participation is sought by or on behalf of a Club or Clubs, third parties
will be advised that the Clubs cannot enter into agreements that bind the
Players or the Association, and that the Association cannot enter into
agreements that bind the Clubs.
(5) International Play Committee
In furtherance of joint efforts to develop the sport internationally, the
Association and the PRC, on behalf of the Clubs, will designate
representatives to constitute an International Play Committee within 30 days
from the date of execution of this Agreement. The Executive Director of the
Association and the Chief Labor Negotiator of the PRC shall serve as
Co-Chairs of the Committee.
The Committee shall be kept informed by the Parties regarding all
contemplated or planned international activities. The Committee shall meet at
least once every calendar quarter (and more frequently, if circumstances
warrant) to discuss efforts in furtherance of the international development
of the sport. At each such meeting, the Association and the Clubs shall
report to each other about their respective efforts regarding international
activities. Further, no later than September 1 of each calendar year, the
Committee shall discuss and decide upon a plan of international activities,
if any, that will be jointly executed by Players and Clubs during the
following year. In this regard, each of the Co-Chairs of the Committee shall
designate a Co-Operating Officer who shall be responsible for carrying out
the decisions of the Committee.
(6) International Play and Events
The terms and conditions of the participation of Players in any game or
games considered to be international play pursuant to
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paragraphs (1) and (3) above, or in any other international event (such as a
clinic or skills competition) for which Player participation is sought by or
on behalf of a Club or Clubs, shall be negotiated by the Association and the
PRC in advance. For each such project, all direct expenses, including, but
not limited to, Player and/or Club compensation, travel costs, fees and/or
prizes, shall be funded, to the extent practicable, by revenues or rights
fees from third parties. The Association and the PRC shall negotiate and
agree upon the budget for direct expenses on a project-by-project basis. For
each such project, the Association and the PRC, on behalf of the Clubs, shall
each be entitled to direct the distribution of one-half of any of the
remaining revenues or rights fees from third parties after payment of direct
expenses. This paragraph (6) does not address any licensing issues.
J. INTEREST RATE
A uniform annual interest rate, equal to the total of the prime interest rate
in effect at The Chase Manhattan Bank on the immediately preceding November 1,
plus one percent, rounded to the nearest full percentage point, shall be applied
with respect to the following matters:
(1) the calculation of the "discounted present value" referred to in
Article VI(A)(4) above, unless the Club and Player mutually agree otherwise;
(2) the calculation of the "present value" referred to in Article
IX(F)(1)(b) above;
(3) the calculation of the interest referred to in Article XII(A)(3) above;
(4) the calculation of the "present value" referred to in Article XVI
below.
K. PLAYERS ASSOCIATION TICKETS
The Association shall have the right to purchase 12 tickets for the All-Star
Game, the Division Series, the League Championship Series and the World Series
which tickets shall not be used for commercial purposes. Such tickets will be
for seats located between first base and home plate or home plate and third base
on field level or the first level above field level, except the Clubs will not
require the holders of full regular season ticket plans to be relocated.
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L. FAMILY AND MEDICAL LEAVE ACT
The Clubs will comply with the requirements of the Family and Medical Leave Act
(29 U.S.C. 2601 et seq.)
ARTICLE XVI-DEFERRED COMPENSATION
There shall be no limitations on either the amount of deferred compensation or
the percentage of total compensation attributable to deferred compensation for
which a Uniform Player's Contract may provide.
Deferred compensation obligations incurred in Contracts executed after December
31, 1985 must be fully funded, in an amount equal to the present value of the
total deferred compensation obligation, within four calendar years of the year
in which the deferred compensation is earned. The year in which the deferred
compensation is earned shall be considered a calendar year for such purposes.
Notwithstanding the above funding requirement, each Club shall be entitled to a
deductible amount of deferred compensation which need not be funded. Such
amount, for the term of this Agreement, shall be $2,000,000 of the present value
of the aggregate deferred compensation owed by the Club pursuant to Uniform
Player's Contracts executed after December 7, 1996. Unless the Uniform Player's
Contract provides otherwise, a Club may fund deferred compensation obligations
in such manner as it elects; provided that each Club shall certify to the PRC
and the Association, by January 31 of each year, the manner in which deferred
compensation obligations have been funded during the preceding calendar year.
Club records relating to deferred compensation funding arrangements shall be
made available upon request to the PRC and/or to the Association in the event a
question arises concerning a Club's funding of deferred compensation.
ARTICLE XVII-EXISTING AGREEMENTS
The Parties recognize that there are existing agreements between a Major League
Club or Clubs and the Players or the Association, and between either of the
Major Leagues separately and the Players or the Association. The Parties
reaffirm such agreements and incorporate them as part of this Agreement insofar
as they are not inconsistent with this Agreement. Such agreements shall be
considered agreements between the Association and the Clubs or any of them for
the purpose of the Grievance Procedure provided for in Article XI hereof.
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The following three agreements between the Clubs and the Association shall not
be incorporated as part of this Agreement and shall not be affected by the
adoption of this Agreement:
(a) The Major League Baseball Players Benefit Plan;
(b) The Agreement Re Major League Baseball Players Benefit Plan; and
(c) The Agreement regarding dues check-off.
ARTICLE XVIII-RULE CHANGES
If during the term of this Agreement any Major League rule, or rule or
regulation of the American or National Leagues is proposed to be changed, the
Clubs agree that they shall give the Association notice thereof, and shall
negotiate the proposed change with the Association, provided that the obligation
to negotiate with the Association provided by this Article XVIII shall apply
only to (a) a change in a Player benefit under an existing rule or regulation
and (b) the adoption of a rule or regulation which would change a Player benefit
under an existing rule or regulation or impose an obligation upon the Players
which had not previously existed. Except as specifically provided in this
Article XVIII, the right of the Clubs to make any rule change whatsoever shall
not be impaired or limited in any way, provided that the Clubs shall not make
any change which is inconsistent with the provisions of any then existing
agreement between the Clubs and the Association.
Notwithstanding the foregoing paragraph, if during the term of this Agreement
any playing or scoring rule is proposed to be changed, the Clubs agree that they
shall give the Association notice thereof, and shall negotiate the proposed
change with the Association, provided that the obligation to negotiate with the
Association shall apply only to changes which significantly affect terms and
conditions of employment. Such proposals to change playing or scoring rules
shall normally be made only during the off-season. If the Clubs and the
Association fail to reach agreement on a proposed change which is subject to
negotiation, the proposed change shall not be put into effect until the
completion of the next complete succeeding season (including the Division
Series, League Championship Series and World Series) following the date the
change was proposed.
ARTICLE XIX-ASSIGNMENT OF PLAYER CONTRACTS
A. CONSENT TO ASSIGNMENT
(1) The contract of a Player with ten or more years of Major League
service, the last five of which have been with one Club,
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shall not be assignable to another Major League Club without the Player's
written consent. No consent from a Player shall be considered effective until
twenty-four hours from the Club's request to the Player for such consent.
(2) (a) The contract of a Player with five or more years of Major League
service, not including service while on the Military List (or seven or more
years of Major League service, including service while on the Military
List), shall not be assigned otherwise than to another Major League Club,
without the Player's written consent.
(b) Not earlier than 4 days prior to the contemplated date of an
assignment requiring the Player's consent under sub-paragraph (a) above, or
8 days, if the Player has no options remaining or if the assignment is
during the period from the close of the championship season to the opening
of spring training, the Club shall give written notice to the Player, with
a copy to the Association, which shall advise the Player that he may (i)
consent to the assignment, (ii) refuse the assignment or (iii) elect to
become a free agent. Additionally, the notice shall advise that in the
event that the Player consents to the assignment, he may elect free agency
between the end of the then current Major League season and the next
following October 15, unless he is returned to a Major League roster prior
to making such election.
The Player shall also be informed in the notice that, within the 3 days
after the date of the notice, or 8 days, if during the period from the
close of the championship season to the opening of spring training, he must
advise the Club in writing as to his decision to consent to the assignment
or to elect to become a free agent. A failure on the part of the Player to
respond to the notice shall constitute a refusal of the assignment. No
response from the Player shall be considered effective until twenty-four
hours from his receipt of the Club's notice.
(c) A Player who elects to become a free agent under this paragraph (2)
shall immediately be eligible to negotiate and contract with any Club
without any restrictions or qualifications. Such Player shall not be
entitled to receive termination pay. Such a free agent shall receive
transportation and travel expenses in the same manner as he would if he had
been unconditionally released except that he shall be limited to receiving
travel expenses to his new club if he reports to it directly, provided such
expenses are less than to his home city.
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(3) Any Player who has a right to refuse the assignment of his contract
under paragraph (2)(a) above may consent to an assignment of his contract in
advance of any specific contemplated assignment if such consent (a) is
granted not more than ten (10) days prior to the start of the championship
season for which the consent is given, (b) is in writing, (c) designates the
assignee club and (d) requires that the assignment take place within 45 days
from the start of the championship season or the date on which the consent is
granted, whichever is later. The Club shall provide a copy of the Player's
consent to the Association contemporaneously upon the Club's receipt of such
consent.
B. ASSIGNMENT TO NATIONAL ASSOCIATION CLUB
When a Player's contract is assigned from a Major League Club to a National
Association club, the rights and benefits of such Player that do, and do not,
follow him to the National Association shall be in accordance with past
practices. Additionally, such a Player shall retain the right, if any, to
become a free agent, or to require the assignment of his contract, which he
possessed under his then current Major League contract as provided in Article XX
hereof, which right shall not be diminished or interfered with as a result of
such assignment or the signing by the Player of a National Association contract,
provided that such right shall terminate if and when such Player signs a
National Association contract following the time when his free agency rights
arise under Article XX.
C. DISABLED LIST-ASSIGNMENT TO NATIONAL ASSOCIATION CLUB
(1) There shall be no assignment of a Player by a Major League Club to a
National Association club while such Player is on a Major League Disabled
List; provided, however, that with the Player's written consent, a copy of
which shall be forwarded to the Association, and with the approval of the
League President, a Player on the Disabled List may be assigned to a National
Association club for up to a maximum of twenty days (thirty days for
pitchers) for each injury, or reoccurrence of an injury, for the purpose of
rehabilitation. (See Attachment 11.) Separate consent shall be required for a
rehabilitation assignment for a new injury or a reoccurrence of an injury. No
consent shall be effective for longer than twenty days (thirty days for
pitchers).
Notwithstanding the foregoing, a Player who is injured may be assigned to a
National Association club, provided that (a) the Player has less than 3 years
of Major League service, and (b) the
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contemplated assignment would not be the Player's second (or subsequent)
career outright assignment since March 19, 1990, and (c) the Player had no
Major League service the prior championship season, and (d) the Player was
not selected by the assignor Major League Club in the immediately preceding
Rule 5 Draft, and (e) the assignment is not made in the period commencing
with the 16th day prior to the start of a championship season and ending with
the close of that championship season.
(2) Any service with a National Association club while on rehabilitation
assignment shall be deemed to be Major League service as defined in Article
XXI. A Player so assigned shall continue to receive his Major League salary
and the other rights and benefits of such Player shall be in accordance with
past practices relating to assignments to National Association clubs,
provided, however, that all such players shall be treated as if they were
Major League Players on the road for purposes of hotel accommodations and the
daily meal and tip allowance. Such assignment shall not be counted as an
optional assignment under Major League Rule 11 or for any other purpose, and
waivers shall not be required.
D. FOREIGN ASSIGNMENTS
Except for the return of conditional assignments from outside the United States
and Canada, the contract of a Player shall not be assigned otherwise than within
the United States and Canada, without the Player's written consent.
E. OPTIONAL ASSIGNMENTS
If a Player is optioned for a total of less than 20 days in one season, as
determined by the dates of the optional assignments and recalls, respectively,
such optional assignments shall not count as an optional transfer in connection
with the limitation upon optional assignments provided for in Major League Rule
11(c). (See Article XXI(B).)
F. WAIVERS
Any assignment of a Player contract must conform to the rules regarding waivers
contained in Major League Rule 10.
In addition, each Friday, not later than 3 P.M. E.D.T., the Leagues shall notify
the Association, by facsimile transmission, of all waiver requests and their
disposition. Notification shall include:
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(1) the date on which the waiver request was made;
(2) the date of expiration of the waiver period;
(3) if the waiver period has expired, whether or not claims were filed;
(4) if claims are not filed, the period for which waivers have been
granted; and
(5) if claims were filed, whether or not the Club requesting waivers has
withdrawn its request. In the event claims were filed and the Club requesting
waivers has withdrawn its request, the Leagues need not identify the claiming
Club or Clubs.
G. DESIGNATED PLAYER
A Player who is in the status of a "designated player" under Major League Rule
2(k) shall, during the period he is in such status, be
(1) paid at the rate of his Major League salary and
(2) credited with Major League service.
A Club that desires to unconditionally release a Player who is in the status of
a "designated player" under Major League Rule 2(k) shall request the necessary
waivers by 2:00 P.M. on the seventh day following such designation; provided,
however, that if the seventh day falls on a non-business day, the Club shall
request such waivers not later than 2:00 P.M. on the next business day.
H. UNCONDITIONAL RELEASE
Notwithstanding the provisions of Major League Rule 8 and paragraph 7(d) of the
Uniform Player's Contract, the following procedure may be used to give notice to
a Player in connection with his unconditional release.
At the same time the Club advises a Player in writing that the Club has
requested waivers for the purpose of unconditional release, and the date on
which the waiver request will expire, the Player shall advise the Club in
writing of the address and telephone number to which the Club should telephone
or telegraph notice of termination to the Player upon the expiration of the
waiver period. If the Player fails to supply a telephone number or address, the
Club may use the most recent address or telephone number the Player has supplied
the Club.
Upon the expiration of the waiver period, the Club shall either give notice to
the Player by telephone or by sending a telegraph notice of
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termination to the Player. In addition, the Player may make a collect telephone
call to the Club to determine whether his contract has been claimed.
ARTICLE XX-RESERVE SYSTEM
A. RESERVATION RIGHTS OF CLUBS
Subject to the rights of Players as set forth in this Agreement, each Club may
have title to and reserve up to 40 Player contracts. A Club shall retain title
to a contract and reservation rights until one of the following occurs:
(1) The Player becomes a free agent, as set forth in this Agreement;
(2) The Player becomes a free agent as a result of
(a) termination of the contract by the Club pursuant to paragraph 7(b)
thereof,
(b) termination of the contract by the Player pursuant to paragraph
7(a) thereof,
(c) failure by the Club to tender to the Player a new contract within
the time period specified in paragraph 10(a) of the contract, or
(d) failure by the Club to exercise its right to renew the contract
within the time period specified in paragraph 10(a) thereof; or
(3) The contract is assigned outright by the Club.
With the exception of an untimely tender or renewal, any inadvertent error in
the tendering or renewal of a contract shall result in free agency under
paragraph (2)(c) or (2)(d) above, whichever is applicable, only if the Player
has first given the Club written notice that the tendered or renewed contract
does not conform to the requirements of Article VI of this Agreement and the
Club has not retendered or reexercised a renewal in conformance with all
applicable rules within seven (7) days after receipt by the Club of written
notice of such defect. In the event of an untimely tender or renewal, the Player
shall immediately become a free agent under paragraph (2)(c) or (2)(d) above,
whichever is applicable, and the Club shall have no right to cure such a tender
or renewal. (But see Article VI(A)(7).)
A Club may also reserve, under separate headings on a Reserve List, Players who
properly have been placed on the Voluntarily
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Retired List, the Military List, the Suspended List, the Restricted List, the
Disqualified List or the Ineligible List. (See Attachments 12, 13 and 14.)
B. FREE AGENCY
(1) Eligibility
Following the completion of the term of his Uniform Player's Contract, any
Player with 6 or more years of Major League service who has not executed a
contract for the next succeeding season shall be eligible to become a free
agent, subject to and in accordance with the provisions of this Section B.
(2) Procedure
The procedure set forth in this paragraph (2) shall apply to Players
eligible to become free agents pursuant to paragraph (1) above. Players who
otherwise become free agents under this Agreement shall be eligible to
negotiate and contract with any Club without any restrictions or
qualifications and the Clubs signing such free agents shall do so without
regard to the compensation and quota provisions of this Section B.
(a) A Player eligible to become a free agent under paragraph (1) above
may give notice of his election of free agency within the 15 day period
beginning on October 15 (or the day following the last game of the World
Series, whichever is later). Election of free agency shall be communicated
by telephone or any other method of communication by the Player to the
Association. Written notice of such election shall then be given within the
specified time limits by the Association, on behalf of the Player, to a
designated representative of the PRC and, effective upon receipt, the
Player shall become a free agent.
(b) During the period beginning on the day the Player becomes a free
agent and ending on the expiration of the free agency election period as
defined above in subparagraph (a), any Club representative and any free
agent or his representative may talk with each other and discuss the merits
of the free agent contracting, when eligible therefor, with the Club,
provided, however, that the Club and the free agent shall not negotiate
terms or contract with each other. The following subjects are among those
which may properly be discussed between any Club and such Player:
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(i) the Player's interest in playing for the Club, and the Club's
interest in having the Player play for it;
(ii) the Club's plans about how it intends to utilize the Player's
services (as a starting pitcher or reliever, as a designated hitter or
not, platooning, etc.);
(iii) the advantages and disadvantages of playing for the Club
including the nature of the organization, the climate of the city,
availability of suitable housing, etc.;
(iv) length of contract;
(v) guarantee provisions;
(vi) no-trade or limited no-trade provisions.
Notwithstanding the foregoing, the free agent and his former Club may
engage in negotiations and enter into a contract during said period. Should
they enter into a contract during said period, the Club shall be deemed not
to have signed a free agent for purposes of paragraph (5) of this Section
B.
(c) Players who become free agents pursuant to this Section B shall,
upon compliance with the notice provisions of the above subparagraph (a)
and the expiration of the free agency election period, be eligible to
negotiate and contract with any Club, subject to the provisions of this
Section B.
(3) Rights of Former Club to Sign Free Agent
The following provision shall apply only to those Players who become free
agents under this Section B.
The former Club of a free agent, no later than by the December 7 following
the free agency election period, may offer to proceed with the Player to
salary arbitration under Article VI of this Agreement, for the next following
season. The Club's offer shall be communicated to the PRC, which shall notify
the Association in writing. Said offer shall be effective upon receipt by the
Association and the Club will not be permitted to retract the offer. If the
former Club of the free agent does not so offer, it shall not be entitled and
shall lose all rights to negotiate with, and sign, the free agent, until the
succeeding May 1.
On or before December 19, the Player may accept the Club's offer to
arbitrate. The Player's acceptance shall be communicated to the Association,
which shall notify the PRC. The Player's failure to accept the Club's offer
on or before December 19 shall be deemed to constitute rejection of the
offer.
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If the Player accepts the offer to arbitrate, he shall be a signed player
for the next season and the parties will conduct a salary arbitration
proceeding under Article VI, provided, however, that the rules concerning
maximum salary reduction set forth in Article VI shall be inapplicable and the
parties shall be required to exchange figures on the last day established for
the exchange of salary arbitration figures under Article VI. The Club shall be
deemed not to have signed a free agent for purposes of paragraph (5) of this
Section B when a Player accepts salary arbitration pursuant to this paragraph
(3).
If the Player does not accept the former Club's offer to proceed to salary
arbitration as provided above, the former Club, after the succeeding January
8, shall not be entitled and shall lose all rights to negotiate with or sign
the Player, until the succeeding May 1.
(4) Compensation
(a) The former Club of a Player who: (i) became a free agent under this
Section B; and (ii) ranks as a Type A, B or C Player as defined below, shall
be entitled to receive compensation subject to the provisions of subparagraph
(c) below. Such compensation shall consist solely of the amateur draft
choices described in subparagraph (c) below and shall be awarded in the Major
League Rule 4 Draft succeeding the Player's election of free agency.
(b) A Type A, B or C Player shall be a Player who became a free agent under
this Section and who ranks as a Type A, B or C Player under the statistical
system of ranking Players set forth in the document entitled "A Statistical
System for the Ranking of Players," using statistics based on a two-year
average for each respective position group.
Type A Players: A Type A Player shall be a Player who ranks in the upper
thirty percent (30%) of his respective position group.
Type B Players: A Type B Player shall be a Player who ranks in the upper
fifty percent (50%) but not in the upper thirty percent (30%) of his
respective position group.
Type C Players: A Type C Player shall be a Player who ranks in the upper
sixty percent (60%) but not in the upper fifty percent (50%) of his
respective position group.
(c) A Type A, B or C Player shall be subject to compensation only if (i) he
is offered salary arbitration by his former Club on or before December 7
pursuant to Section B(3) of this Article
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XX and signs a contract with another Club; or (ii) he signs a contract with
another Club prior to December 7. Further, a Type C Player shall not be
subject to compensation if he (iii) has not signed a Uniform Player's
Contract or reached agreement on terms as of the March 1 succeeding his
election of free agency; or (iv) has previously elected free agency under
this Section B (or under Article XVII(B)(2) of the 1976 Basic Agreement, or
under Article XVIII(B)(2) of the 1980 Basic Agreement as amended or under
Article XX(B)(2) of the 1990 Basic Agreement); or (v) has 12 or more years of
credited Major League service.
For such Type A Players, compensation to the Player's former Club shall be
an amateur draft choice ("Regular Draft Choice") of the signing Club and an
added amateur draft choice ("Special Draft Choice") in the Major League Rule
4 Draft. For such Type B Players, compensation to the Player's former Club
shall be a Regular Draft Choice of the signing Club in the Major League Rule
4 Draft. For such Type C Players, compensation to the Player's former Club
shall be a Special Draft Choice in the Major League Rule 4 Draft.
(d) The Regular Draft Choice of the signing Club described in subparagraph
(c) above shall be assigned as follows. If the signing Club is among the
first half of selecting Clubs, then the choice to be assigned for the highest
ranking free agent Player signed by such Club shall be its second choice,
with choices in the next following rounds to be assigned as compensation for
the signing of the other Players in descending order of ranking. If the
signing Club is among the second half of selecting Clubs, then such
compensation shall begin with the Club's first choice.
The Special Draft Choices described in subparagraph (c) above to be awarded
to the former Club shall be made as follows. If the Club has lost a Type A
Player, it shall be awarded an additional draft choice to be made immediately
following the first complete round of the draft and preceding the
commencement of the second round. Clubs which have lost Type A Players shall
make their choices in the reverse order of their won-lost percentage in the
preceding season. Ties shall be broken by lot. If the Club has lost a Type C
Player, it shall be awarded a draft choice to be made immediately following
the second complete round of the draft and preceding the commencement of the
third round. Clubs which have lost Type C Players shall make their choices in
the reverse order of their won-lost percentage in the preceding season. Ties
shall be broken by lot.
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(5) Quota
(a) Clubs shall be limited in the number of Type A and B Players they may
subsequently sign to contracts. The number of signings permitted shall be
related to the number of Players electing free agency under this Section B.
If there are 14 or less such Players, no Club may sign more than one Type A
or B Player. If there are from 15 to 38 such Players, no Club may sign more
than two Type A or B Players. If there are from 39 to 62 such Players, no
Club may sign more than three Type A or B Players. If there are more than 62
such Players, the Club quotas shall be increased accordingly. There shall be
no restrictions on the number of Type C or unranked Players which a Club may
sign to contracts.
(b) Irrespective of the provisions of subparagraph (a) above, a Club shall
be eligible to sign at least as many Type A and B Players as it may have lost
through Players having become free agents under this Section at the close of
the season just concluded.
(6) Miscellaneous
(a) Any Club signing a contract after the expiration of the election period
with a Player under this Section B may not assign his contract until after
the next June 15. However, notwithstanding the foregoing, such contract may
be assigned for other Player contracts and/or cash consideration of $50,000
or less prior to the next June 16 if the Player gives written consent to such
transaction.
(b) There shall be no restriction or interference with the right of a free
agent to negotiate or contract with any baseball club outside the structure
of organized baseball, nor shall there be any compensation paid for the loss
of a free agent except as provided for in this Section B.
C. RIGHT TO REQUIRE ASSIGNMENT OF CONTRACT
(1) Eligibility
Any Player who has 5 or more years of Major League service at the time of
the assignment of his contract and whose contract covers the next succeeding
season, may elect, at the conclusion of the season following the assignment,
to require that his contract be assigned to another Club. If the Player,
however, subsequently signs a contract with the assignee Club, the Player
shall not be eligible to require that Club to assign his contract if the
contract executed with the assignee Club covers the next succeeding season. A
Player who requires the assignment of his contract pur-
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suant to this Section C shall not be entitled to receive a Moving Allowance.
(2) Procedure
(a) NOTICE. A Player may exercise his right to require the assignment of
his contract by giving notice as hereinafter provided within the 15 day
period beginning on October 15 (or the day following the last game of the
World Series, whichever is later). Election to require the assignment of his
contract shall be communicated by telephone or any other method of
communication by the Player to the Association. Written notice thereof shall
then be given within the specified time limits by the Association, on behalf
of the Player, to a designated representative of the PRC, and shall become
effective upon receipt.
(b) PLAYER VETO RIGHTS. At the time notice is given as provided in
subparagraph (a) above, the Player may also designate not more than 6 Clubs
which he will not accept as assignee of his contract, and the Player's Club
shall be bound to assign his contract thereafter to a Club not on such list.
(c) FREE AGENCY IF ASSIGNMENT NOT MADE. If the Player's Club fails to
assign his contract, as set forth in this Section C, on or before March 15,
the Player shall become a free agent immediately eligible to negotiate a
contract with any Club without any restrictions or qualifications. The Player
shall not be deemed to have exercised his right to demand a trade, for
purposes of paragraph (5) below, and the Club signing such a free agent shall
do so without regard to the compensation and quota provisions of Section B. A
Player who becomes a free agent pursuant to this subparagraph shall not be
entitled to receive termination pay. Such a free agent shall receive
transportation and travel expenses in the same manner as he would have if he
had been unconditionally released except he shall be limited to receiving
travel expenses to his new Club if he reports to it directly, provided such
expenses are less than to his home city.
(3) Retraction by Player
A Player who has elected to exercise his right to require an assignment of
his contract may retract such election on or before March 15, by providing,
by hand or by facsimile transmission, written notice to his Club, provided
that such written notice must be provided prior to the time written notice is
provided, by hand or by facsimile transmission, to him (or to his certified
agent and to the Association in the event facsimile transmission is used) by
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his Club notifying him that his contract has been assigned. If such a Player
has 10 or more years of Major League service, the last 5 of which have been
with one Club, he shall, upon such retraction, be deemed to relinquish his
right to approve any assignment of his contract to another Major League Club
which is completed within 60 days after such retraction or until March 15,
whichever is later. A Player who retracts his election shall be deemed not to
have exercised his right to require an assignment for purposes of paragraph
(5) below.
(4) Waiver by Player
At his sole election, a Player may, at the time he signs a multi-year
contract with a Club, waive the right to require the assignment of his
contract under this Section C, provided that the Player's contract with the
signing Club contains a no-trade provision which limits the signing Club's
right to assign the Player's contract to no more than sixteen (16) Clubs
designated or subsequently to be designated by the Player.
(5) Repeater Rights
Any Player whose contract is assigned as a result of a trade required
pursuant to this Section C, until he has completed an additional 3 years of
Major League service, shall not subsequently be eligible to exercise his
right to (i) require the assignment of his contract or (ii) become a free
agent, subject to subparagraphs (a) through (c) below.
(a) Any Club that retains reservation rights to a Player for a
succeeding championship season by virtue of the provisions of this
paragraph (5) shall notify such Player, at any time within the first five
(5) days of the free agency election period described in Section B(2) of
this Article XX, whether the Club offers to proceed with the Player to
salary arbitration for the succeeding season. The Club's offer shall be
communicated to the PRC, which shall notify the Association in writing.
Said offer shall be effective upon receipt by the Association and the Club
will not be permitted to retract the offer.
(b) In the event the Club notifies the Player of such a salary
arbitration offer, the Club shall be required to tender a contract to the
Player for the succeeding season and the Player may elect salary
arbitration in the same manner and at the same time as other Players, as
provided in Article VI(F). If a Player who is offered salary arbitration is
released pursuant to paragraph 7(b)(2) of the Uniform Player's Contract
prior to the date
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he is actually tendered a Contract, he shall receive termination pay in
accordance with the provisions of Article IX(A), computed at a rate not
less than his previous year's salary.
(c) In the event the Club fails to notify the Player in writing of a
salary arbitration offer within the first five (5) days of the free agency
election period described in Section B(2) of this Article XX, the Player
thereafter may elect free agency pursuant to Section B of this Article XX
without any restrictions or qualifications. The Club signing the Player
shall do so without regard to the compensation and quota provisions of
Section B of this Article XX.
D. OUTRIGHT ASSIGNMENT TO NATIONAL ASSOCIATION CLUB
(1) Election of Free Agency-3-Year Player
Any Player who has at least 3 years of Major League service and whose
contract is assigned outright to a National Association club may elect, in
lieu of accepting such assignment, to become a free agent. In the event that
such Player does not elect free agency in lieu of accepting such assignment,
he may elect free agency between the end of the then current Major League
season and the next following October 15, unless such Player is returned to a
Major League roster prior to making such election.
(2) Election of Free Agency-Second Outright Assignment
Any Player whose contract is assigned outright to a National Association
club for the second time or any subsequent time in his career may elect, in
lieu of accepting such assignment, to become a free agent. In the event that
such Player does not elect free agency in lieu of accepting such assignment,
he may elect free agency between the end of the then current Major League
season and the next following October 15, unless such Player is returned to a
Major League roster prior to making such election.
(3) Effect of Free Agency Election
A Player who becomes a free agent under this Section D shall immediately be
eligible to negotiate and contract with any Club without any restrictions or
qualifications. Such Player shall not be entitled to receive termination pay.
Such a free agent shall receive transportation and travel expenses in the
same manner as he would if he had been unconditionally released except he
shall be limited to receiving travel expenses to his new club if he reports
to it directly, provided such expenses are less than to his home city.
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(4) Procedure
Not earlier than 4 days prior to the contemplated date of an outright
assignment, or 8 days, if the Player has no options remaining or if the
assignment is during the period from the close of the championship season to
the opening of spring training, the Club shall give written notice to the
Player, with a copy to the Association, which shall advise the Player that he
may either (a) accept the assignment or (b) elect to become a free agent, and
that in the event he accepts the assignment, he may elect free agency between
the end of the then current Major League season and the next following
October 15, unless he is returned to a Major League roster prior to making
such election. The Player shall also be informed in the notice that, within 3
days after the date of the notice, or 8 days, if during the period from the
close of the championship season to the opening of spring training, he must
advise the Club in writing as to his decision whether to accept the
assignment. No such decision from a Player shall be considered effective
until twenty-four hours from his receipt of the Club's notice.
If the Club fails to give written notice, as set forth herein, to the
Player prior to the date of such assignment, the Player may, at any time,
elect to become a free agent pursuant to this Section D, provided, however,
that if the Club subsequently gives such written notice to the Player, he
shall, within 3 days thereafter, or 10 days, if during the period from the
close of the championship season to the opening of spring training, advise
the Club in writing as to his decision. No such decision from a Player shall
be considered effective until twenty-four hours from his receipt of the
Club's notice.
E. INDIVIDUAL NATURE OF RIGHTS
(1) The utilization or non-utilization of rights under Article XIX(A)(2)
and Article XX is an individual matter to be determined solely by each Player
and each Club for his or its own benefit. Players shall not act in concert
with other Players and Clubs shall not act in concert with other Clubs.
(2) Upon any finding of a violation of Section E(1) of this -Article XX by
two or more Clubs, any injured Player (or Players) shall be entitled to
recover in monetary damages three (3) times the lost baseball income, he (or
they) would have had but for the violation. Such lost baseball income shall
be limited to lost salary and other lost contractual terms, including lost
additional contract
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years, lost signing bonuses, lost trade restriction provisions, lost option
buy-out provisions, and lost incentive bonuses (e.g., performance, awards,
attendance and weight bonuses). Damages (and fees and interest) may be
recovered only from the Clubs found to have violated Section E(1) of this
Article XX.
(3) Notwithstanding any other provision of this Basic Agreement, the
Arbitration Panel shall further order payment by the Clubs found to have
violated Section E(1) of this Article XX of all reasonable attorneys' fees
and expenses, expert witness fees and expenses and prejudgment interest on
the single damage calculation of the lost baseball income pursuant to
paragraph (2).
(4) Any injured Player (or Players or the Association) shall not be
entitled to recover any monetary damages pursuant to this Article XX(E)
other than those enumerated in paragraphs (2) and (3). However, nothing in
paragraphs (2) and (3) is intended to reflect any agreement between the
parties on mitigation issues.
(5) In addition, upon any finding by the Arbitration Panel of a violation
by five (5) Clubs or more of Section E(1) of this Article XX, the Association
shall have the right to reopen this Agreement upon sixty (60) days written
notice to the PRC.
(6) Upon any finding by the Arbitration Panel of a violation of Section
E(1) of this Article XX by two (2) or more Clubs, any injured free agent
Player will have the right to terminate his existing contract (or reserve
status) at his option immediately following the issuance of the finding by
the Arbitration Panel. However, no such termination shall take effect during
the period beginning on February 15 and ending with the conclusion of the
World Series. If the finding of the Arbitration Panel is issued at any time
on or after January 15, but before February 15, the Player shall have the
right to terminate his existing contract (or reserve status) at his option
either (a) immediately; or (b) within the fifteen (15) day period following
the conclusion of the next succeeding World Series. At the time any contract
(or reserve status) is terminated pursuant to this paragraph (6), such free
agent Player shall immediately have the right to negotiate with and enter
into a contract with any Club, without any restrictions or qualifications. If
the contract (or reserve status) is terminated, the free agent Player may
choose to reinstate his contract (or reserve status) at any time up until the
March 15 succeeding such termination.
(7) If a Player does not exercise his right pursuant to paragraph (6) to
reinstate his contract (or reserve status), all obligations of the Player and
of the Club under said contract (or reserve status)
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shall cease as of the end of the period in which the Player has the right to
reinstate his contract (or reserve status), except the obligation of the Club
to pay the Player's compensation to that date. If at the end of the period
the Player has not signed a new contract and has not exercised his right to
reinstate his existing contract (or reserve status), at that point, the
Player shall be considered an unrestricted free agent.
(8) Utilization or non-utilization of the procedures set forth in paragraph
(6) above shall be without prejudice to any injured free agent Player.
However, the experience of each Player who utilizes such procedures shall be
considered by the Arbitration Panel in determining such further relief, if
any, to which he may be entitled.
(9) It is understood that in the event of a violation of Section E(1) of
this Article XX, the Arbitration Panel shall have the authority to order
such other and further non-monetary (e.g., injunctive) relief as may be
necessary to give full force and effect to the purposes of and to the rights
and benefits afforded to Players under this Article XX.
ARTICLE XXI-CREDITED MAJOR LEAGUE SERVICE
A. DEFINITION
Those Player rights expressly set forth in the Basic Agreement for which a
Player's eligibility is dependent upon credited Major League service will be
determined as follows:
(1) One full day of Major League service will be credited for each day of
the championship season a Player is on a Major League Club's Active List. A
total of 172 days of Major League credited service will constitute one full
year of credited service. A Player may not be credited with more than one
year of credited service, 172 days, in one championship season. Major League
service will be computed commencing with the date of the first regularly
scheduled championship season game, through and including the date of the
last regularly scheduled championship season game. This rule shall apply
uniformly to all Players and all Clubs notwithstanding differences in a
particular Club's schedule.
(2) For purposes of calculating credited service, a Player will be
considered to be on a Club's Active List if:
(a) placed on a disciplinary suspension by a Club, the League President
or the Commissioner, or on the Disabled List;
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(b) called to active military duty for up to two years or if called to
emergency duty by the National Guard for a period of up to thirty days.
B. OPTIONAL ASSIGNMENTS
In the event a Player is optionally assigned to a National Association club in
any championship season for a total period of less than twenty (20) days, as
determined by the dates of the assignments and recalls respectively, the Player
shall be credited with Major League service during the period of such optional
assignments. (See Article XIX(E).)
ARTICLE XXII-MANAGEMENT RIGHTS
Nothing in this Agreement shall be construed to restrict the rights of the Clubs
to manage and direct their operations in any manner whatsoever except as
specifically limited by the terms of this Agreement.
ARTICLE XXIII-LUXURY TAX
A. GENERAL DEFINITIONS
The following definitions shall apply only to this Article XXIII, unless
expressly adopted for use in another Article of this Agreement.
(1) "Contract Year" shall mean the period from December 20 of one year
through and including December 19 of the following year, or such other
one-year period to which the PRC and the Association may agree. To the extent
that a Contract Year is referenced by a number in connection with a
particular calculation, the reference shall be to the calendar year of the
championship season that falls in that Contract Year.
(2) "Uniform Player's Contract" shall mean a National League or American
League Uniform Player's Contract. (See Schedule A.)
(3) "Split Contract" shall mean a Uniform Player's Contract which sets out
separate rates of pay for service with a minor league club and service with a
Major League Club.
(4) "Imputed Loan Interest Rate" for each Contract Year shall mean the
annual "Federal mid-term rate" as defined in Section 1274(d) of the Internal
Revenue Code for the October preceding that Contract Year.
(5) "Performance Bonus" shall mean a payment to a Player conditioned upon
the Player having achieved certain specified
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levels of activity, provided that such bonuses must be consistent with Major
League Rule 3(b).
(6) "Award Bonus" shall mean a payment to a Player conditioned upon the
Player having achieved a particular status in connection with a recognized or
agreed-upon award or honor.
(7) "Base Salary" shall mean the amount set out in paragraph 2 of a Uniform
Player's Contract for a given championship season or any amount included in a
Special Covenant in lieu of inclusion in paragraph 2.
(8) "Guaranteed Year" shall mean any championship season included in a
Uniform Player's Contract for which more than 50% of the Player's Base Salary
is guaranteed by the Contract in the event of termination under paragraph
7(b)(2).
(9) "Tax Threshold" and "Applicable Tax Threshold" shall be defined as
provided in Section B below.
(10) "Actual Club Payroll" shall be defined as provided in Section C below.
Each Club's final Actual Club Payroll for a Contract Year in which the Luxury
Tax is applicable shall be calculated on the December 21 following that
Contract Year and shall be the exclusive figure used for the purpose of
determining whether a Club has exceeded the Applicable Tax Threshold.
(11) "Salary" shall be defined as provided in Section E below and shall be
attributable to Contract Years as provided in Sections C and E below.
(12) "Benefits" or "Player Benefit Costs" shall be defined as provided in
Section D below.
B. DETERMINATION OF LUXURY TAX
(1) Calculation of Tax.
There shall be no Luxury Tax for the 1996 Contract Year. During the 1997,
1998 and 1999 Contract Years, a Club with a final Actual Club Payroll that
exceeds the Tax Threshold applicable in that Contract Year ("Applicable Tax
Threshold") shall be assessed a Luxury Tax on the difference between its
final Actual Club Payroll and the Applicable Tax Threshold. Except as
specifically provided in Section B(4) below, a Club with a final Actual Club
Payroll at or below the Applicable Tax Threshold shall incur no Luxury Tax
for that Contract Year. There shall be no Luxury Tax in the 2000 Contract
Year and, if the Association exercises its
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option to extend this Agreement under Article XXVII, in the 2001 Contract
Year.
(2) Initial Thresholds.
The Applicable Tax Threshold shall be $51 Million in the 1997 Contract
Year, $55 Million in the 1998 Contract Year and $58.9 Million in the 1999
Contract Year, unless adjusted pursuant to Section B(3) below. Under no
circumstance shall the Applicable Tax Thresholds for 1997, 1998 and 1999 be
less than these initial Thresholds.
(3) Threshold Adjustment Mechanism.
(a) The "Midpoint" for a Contract Year shall be the arithmetic mean of the
final Actual Club Payrolls of the Clubs with the fifth and sixth highest
final Actual Club Payrolls for that Contract Year.
(b) If the 1997 Midpoint is greater than $51 Million, then
(i) the Applicable Tax Threshold for the 1997 Contract Year shall be
the 1997 Midpoint; and
(ii) the Tax Threshold for the 1998 Contract Year shall become the 1997
Midpoint multiplied by 1.078.
(c) If the 1998 Midpoint is greater than $55 Million (or, if applicable,
the number calculated by operation of Section B(3)(b)(ii) above), then
(i) the Applicable Tax Threshold for the 1998 Contract Year shall be
the 1998 Midpoint; and
(ii) the Tax Threshold for the 1999 Contract Year shall become the 1998
Midpoint multiplied by 1.071.
(d) If the 1999 Midpoint is greater than $58.9 Million (or, if applicable,
the number calculated by operation of Section B(3) (c) (ii) above), then the
Applicable Tax Threshold for the 1999 Contract Year shall be the 1999
Midpoint.
(4) Additional 1997 Threshold Adjustment.
For the 1997 Contract Year only, the amount of Luxury Tax that the Club
with the fifth highest final Actual Club Payroll ("Fifth Club") would
otherwise have paid shall instead be allocated among and paid by the Fifth
Club and any other Club that has a final Actual Club Payroll that is (a)
greater than $51 Million and (b) less than but within $500,000 of the Fifth
Club's final Actual Club Payroll. If such adjustment is made, the Luxury Tax
that the
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Fifth Club would otherwise have paid shall be allocated among the Clubs
identified above in proportion to the amount that each Club's final 1997
Actual Club Payroll exceeds $51 Million.
(5) Tax Rate.
The Luxury Tax rate shall be 35% in the 1997 and 1998 Contract Years and
34% in the 1999 Contract Year.
(6) Collection of Luxury Tax Proceeds.
(a) On the December 21 following each Contract Year, the Commissioner's
Office shall notify the Association and all Clubs of any amounts owed by any
Clubs under the Luxury Tax. Clubs shall make Luxury Tax payments to the
Commissioner's Office on or before January 31 of the next calendar year.
(b) Any Club that does not remit the full amount of Luxury Tax due by that
date shall have its next Major Leagues Central Fund ("Central Fund")
distribution and subsequent distributions, each net of any debt service
obligation to Fleet Bank, reduced by up to 50% until such obligation is
satisfied. For purposes of this subparagraph (b) only, proceeds from
expansion beyond 28 Major League Clubs shall not be considered part of a
Club's Central Fund distribution. Further, royalty payments from Major League
Baseball Properties shall not be considered part of a Club's Central Fund
distribution. Beginning with the day following the payment date specified in
subparagraph (a) above, interest shall be charged on any unpaid Luxury Tax
amounts at the Imputed Loan Interest Rate for the then current Contract Year.
Any interest collected pursuant to the preceding sentence shall be for the
benefit of and made available to the Industry Growth Fund and used for the
purposes set out in Article XXVI.
C. DETERMINATION OF ACTUAL CLUB PAYROLL
(1) Definition of Actual Club Payroll.
"Actual Club Payroll" of a Club in a Contract Year shall be the sum of:
(a) a 1/28th share (and a similar pro rata share following Major League
expansion) of Player Benefit Costs, as determined in Section D below;
(b) the sum of the yearly Salaries (as determined in accordance with
Section E below and as allocated among Clubs in
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accordance with this Section C) attributable to that Contract Year of all
Players under a Uniform Player's Contract with the Club for that Contract
Year (including optionally assigned contracts); and
(c) any other amount includible in or deductible from Actual Club
Payroll as a result of the operation of Section C(2)(g) below or as a
result of any Club, any Player and/or either of the Parties hereto having
engaged in a transaction contrary to Section G(1) below or as a result of
an award by the Arbitration Panel under Article XI and/or Section F below.
(2) Rules for Allocation of Salary.
(a) GENERAL RULE.
If a Player remains on a Major League Club's Active List (as defined in
Article XXI) for an entire championship season, then all of the Salary
attributable to the Contract Year in which that championship season falls
shall be allocated to the Club's Actual Club Payroll in that Contract
Year.
(b) ASSIGNMENT OF CONTRACT.
If a Uniform Player's Contract is assigned by any means to another
Major League Club, the assignor Club shall be allocated Salary through the
date of the assignment and Salary shall begin being allocated to the
assignee Club on the following day, regardless of the Player's reporting
date.
(c) SALARY INCREASE UPON ASSIGNMENT.
If a Uniform Player's Contract provides for an increase in Salary upon
its assignment to another Major League Club, such increase shall be
included in a Player's Salary upon assignment and attributed to the
Contract Year (or Years) in which it is to be paid. Any such increase in
Salary attributable to the Contract Year during which the assignment
occurred shall be allocated to the Actual Club Payrolls of the assignor and
assignee Clubs pursuant to Section C(2)(b) above. Any such increase in
Salary attributable to a later Contract Year shall be allocated exclusively
to the assignee Club.
(d) CONTRACT SIGNED AFTER OPENING DAY.
If a Player first enters into a Uniform Player's Contract with a Club
after opening day of the championship season and has a Base Salary payable
over a full championship season, the Club shall include in Actual Club
Payroll such pro rata portion of the
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Base Salary attributable to that Contract Year as the number of days that
the Player was on the Club's Active List (as defined in Article XXI) bears
to the number of days in the championship season. If such a Player has a
Base Salary expressly payable only over the portion of the championship
season that the Player is on the Club's Active List, the Club shall include
in Actual Club Payroll the entire Base Salary attributable to that Contract
Year.
(e) TERMINATION OF CONTRACT.
(i) If a Club terminates a Uniform Player's Contract that covers a
single championship season, the Club shall include in its Actual Club
Payroll for the Contract Year in which that season falls any Salary paid
to that Player, either under this Agreement or a Special Covenant to the
Contract (subject to any offset called for by this Agreement or a Special
Covenant).
(ii) If a Club terminates a multi-year Uniform Player's Contract while
it remains obligated to pay Salary under either this Agreement or a Special
Covenant to the Contract, Salary shall be allocated to that Club for each
Contract Year during which its obligation continues. Salary shall be
attributed to each such Contract Year pursuant to this Article XXIII
(subject to any offset called for by this Agreement or a Special Covenant).
This attribution shall apply even if the Club pays the Salary in advance.
(iii) Any Salary owed by a Club pursuant to a Uniform Player's Contract
terminated before December 7, 1996, shall not be included in any Club's
final Actual Club Payroll.
(f) SPLIT CONTRACTS.
A Player signatory to a Split Contract shall be included in Actual Club
Payroll at the total amount of his actual baseball earnings under that
Contract from Major League Clubs (and from National Association clubs, if
any) for that Contract Year, subject to subparagraph (g) below.
(g) OUTRIGHT ASSIGNMENT TO NATIONAL ASSOCIATION.
If a Uniform Player's Contract is assigned outright to a National
Association club, the Club shall exclude from its Actual Club Payroll such
pro rata portion of the Salary attributable to that Contract Year as the
number of days during the championship season that the Player was off the
Major League Club's 40-man roster bears to the number of days in the
championship season; provided, however, that the above exclusion shall
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not apply to the Salary of any Player whose Contract has been assigned
outright to a National Association Club for the purpose of defeating or
circumventing the intention of the Parties as reflected by this Article
XXIII.
D. BENEFITS OR PLAYER BENEFIT COSTS
(1) Definition.
The Clubs' Benefits or Player Benefit Costs for a particular Contract Year
shall include the sums paid (or to be paid on a proper accrual basis for that
Contract Year) by or on behalf of the Clubs for, to, or on behalf of present
Players (and former Players when expressly noted) for:
(a) Contributions to the Major League Baseball Players Benefit Plan, in
the full amounts called for by paragraph 5 of the Agreement Re: Major
League Baseball Players Benefit Plan (including contributions made on
behalf of former Players and others); provided, however, that any
additional contribution allocated to the 1996 Plan year shall not be
included in 1997 Benefits;
(b) Workers' compensation premiums, payroll, unemployment compensation
and social security taxes (including payments made on behalf of a Player
released from a Contract that covers that Contract Year, provided that the
Player's Salary is included in a Club's final Actual Club Payroll for that
Contract Year);
(c) Spring training allowances (as described in Article VII(C)),
championship season meal and tip allowances (as described in Article
VII(B)), All-Star Game expenses (as adescribed in Article VII(E)) and
"in-season supplemental allowances" (as described in Article VII(F));
(d) Moving and traveling expenses (as described in Article VIII),
including payments made to former Players in connection with relocations
resulting from assignments while they were active Players;
(e) Contributions (in their entirety) to the post-season Players' pool
as described in Article X;
(f) The College Scholarship Plan (including payments made on behalf of
former players); and
(g) Player medical costs (I.E., fees to doctors, hospitals, and other
health care providers, and the drugs and other medical
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supplies for the treatment of Player injuries), but not including salaries
of trainers or other Club personnel, or the costs of Club medical or
training equipment, or any costs reimbursed or paid for through workers'
compensation or any other medical insurance. Notwithstanding the foregoing,
the amount of Player medical costs included in "Benefits" may not increase
by more than ten percent (10%) each Contract Year beginning with the
increase from the 1996 to the 1997 Contract Year.
(2) Limitation on Annual Increase.
Notwithstanding the foregoing, beginning with the increase from the 1996 to
the 1997 Contract Year, the annual rate of increase for Player Benefit Costs
in any Contract Year may not exceed the annual rate of increase over that
year in the combined "sum of the yearly Salaries" (described in Section
C(1)(b) above) for all Clubs.
E. DETERMINATION OF SALARY
The determination of a Player's Salary for a particular Contract Year for the
purposes of interpretation and application of this Article XXIII only shall be
in accordance with the following rules.
(1) General Rule.
"Salary" shall mean the value of the total compensation (cash or otherwise)
paid to a Player pursuant to the terms of a Uniform Player's Contract,
including any guarantee by the Club of payments by third parties, for a
particular championship season. Consistent with the rules set out below, all
compensation paid to a Player pursuant to the terms of a Uniform Player's
Contract shall be attributable to the Contract Year(s) in which the Player is
required under the Contract to render services to a Club as a baseball
player, regardless of how the compensation is characterized under the
Contract.
(2) Average Annual Value of Guaranteed Multi-Year Contracts.
A Uniform Player's Contract with a term of more than one (1) championship
season ("Multi-Year Contract") shall be deemed to have a Salary in each
Guaranteed Year equal to the "Average Annual Value" of the Contract (plus any
bonuses subsequently included by operation of Section E(4) below). "Average
Annual Value" shall be calculated as follows: the sum of (a) the Base Salary
in each Guaranteed Year plus (b) any portion of a Signing
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Bonus (or any other payment that this Article deems to be a Signing Bonus)
attributed to a Guaranteed Year in accordance with Section E(3) below plus
(c) any deferred compensation or annuity compensation costs attributed to a
Guaranteed Year in accordance with Section E(6) below shall be divided by
the number of Guaranteed Years.
(3) Signing Bonuses.
(a) Any Signing Bonus in a Uniform Player's Contract (and any other payment
this Article deems to be a Signing Bonus) shall be attributed, pro rata, over
the Guaranteed Years of the Contract. If a Contract contains no Guaranteed
Years, the Signing Bonus shall be attributed in full to the first year of the
Contract.
(4) Performance, Award and Other Bonuses.
(a) Any amounts that are actually earned by a Player as Performance
Bonuses, Award Bonuses or any other bonuses properly included in a Uniform
Player's Contract shall be included as part of the Player's Salary in the
Contract Year in which the service or performance giving rise to the Bonus
was provided. Potential bonuses shall not be included in the Average Annual
Value calculation made pursuant to Section E(2) above.
(b) A Special Covenant in a Uniform Player's Contract that provides that
Player performance or achievement in one year of the Contract will increase
the Base Salary in other year(s) of the Contract shall not be considered in
the determination of Salary until the triggering event occurs (other than, if
applicable, as a "potential bonus"), unless it is determined by the
Arbitration Panel that the Special Covenant was designed to defeat or
circumvent the intention of the Parties as reflected in this Article XXIII.
As long as such a finding is not made, the additional Base Salary triggered
by the Special Covenant shall count as part of the Player's Salary in the
Contract Year(s) to which it is attributed by the Contract once the
triggering event has occurred. Multi-Year Contracts shall not be recalculated
on an Average Annual Value basis once the triggering event has occurred; the
additional Base Salary shall be added to the Salary as originally calculated
for the Contract Year in question.
(5) Option Contracts.
(a) DEFINITIONS.
(i) A "Club Option Year" shall mean a championship season covered by a
Uniform Player's Contract in which the amount
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payable pursuant to paragraph 2 of the Contract becomes due or guaranteed
at the election of the Club or by reason of specified performance by a
Player. Club Option Years shall not be considered "Guaranteed Years." In
addition, any other championship season covered by a Uniform Player's
Contract that is not a Guaranteed Year shall be treated as a Club Option
Year.
(ii) A "Player Option Year" shall mean a championship season covered by
a Uniform Player's Contract: (A) in which the amount payable pursuant to
paragraph 2 of the Contract becomes due or guaranteed at the election of
the Player; or (B) that can be nullified by a Player for a reason other
than those set forth in paragraph 7 of the Contract. A Player Option Year
shall be considered a "Guaranteed Year" if, pursuant to the Player's right
to elect or subject to his right to nullify, the terms of that year are
guaranteed within the definition in Section A(8).
(iii) The Parties recognize that Uniform Player's Contracts have
covered and may cover championship seasons that could be characterized
under the above definitions as both "Club Option Years" and "Player Option
Years" (hereinafter referred to as a "Mutual Option Year"). Salaries under
any such Contract that cannot extend beyond the 1999 Contract Year shall be
calculated as if the Mutual Option Year is a Player Option Year. Salaries
under any such Contract that can extend into the 2000 Contract Year (or
beyond) shall be calculated as if the Mutual Option Year is a Player Option
Year unless, pursuant to subparagraph (c)(ii) below, the "Club Option Year
Value" exceeds 122.5% of the "Highest Guaranteed Year Value" prior to the
Mutual Option Year, or its substitute. In the latter event, Salaries under
the Contract shall be calculated as if the Mutual Option Year is a Club
Option Year and the calculation called for in subparagraph (c)(ii)(B) below
shall be made and the entire Signing Bonus shall be allocated over the
Guaranteed Years prior to the Mutual Option Year.
(b) OPTION BUYOUTS.
(i) GENERAL RULE.
(A) If a Uniform Player's Contract contains a Club Option Year and
the Player is to receive consideration upon the non-exercise of that
option ("Option Buyout"), then such Option Buyout shall be deemed a
Signing Bonus.
(B) If a Contract contains more than one Option Buyout, then only
the Option Buyout that relates to the earliest Club
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Option Year in the Contract shall be deemed a Signing Bonus. If,
however, the Player ultimately receives an Option Buyout that relates
to a Club Option Year other than the earliest Club Option Year, that
Option Buyout shall be included in Salary in the Contract Year covered
by the option that was not exercised.
(ii) POTENTIAL ADJUSTMENT TO PAYROLL OR TAX REFUND.
Notwithstanding subparagraph (b)(i) above, if the Player ultimately
does not receive the Option Buyout, then for the Contract Year covered by
that option, no portion of the Buyout shall be included in any Club's final
Actual Club Payroll. In addition, any Club whose final Actual Club Payroll
in a previous Contract Year had included that Buyout (or a portion thereof)
may elect to:
(A) receive a deduction (in the full amount of the Buyout included
in previous Contract Years) in its final Actual Club Payroll in the
Contract Year covered by that option; or
(B) receive a distribution from the Luxury Tax proceeds described
in Section H(4) below in the amount of any Luxury Tax paid by that Club
for any Contract Year as a result of the previous inclusion of the
Buyout in the Club's final Actual Club Payroll.
(c) CLUB OPTION YEARS.
(i) GENERAL RULE. If a Uniform Player's Contract covers one or more
seasons that are Club Option Years, the Player's Salary for the
championship seasons that are Club Option Years, if exercised, shall be the
total of the Base Salary and any bonuses included by operation of Section
E(4) above.
(ii) CONTRACTS EXTENDING INTO 2000 OR BEYOND. This subparagraph (ii)
shall apply only to a Uniform Player's Contract agreed to after December 7,
1996 that includes one or more Club Option Years that fall in the 2000
Contract Year or later.
(A) SPECIAL DEFINITIONS. For the purposes of this subparagraph (ii)
only, the following definitions shall apply:
"Club Option Year Value" shall be the Salary attributed to a Club
Option Year under subparagraph (i) above, plus any potential bonuses
(other than Award Bonuses) attributable to that Year, minus any Option
Buyout that relates to that Club Option Year.
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"Highest Guaranteed Year Value" shall be the sum of the Base Salary
plus any attributed Signing Bonus, deferred compensation or annuity
costs, plus any potential bonuses (other than Award Bonuses) in the
Guaranteed Year of the Contract with the highest such sum; provided,
however, that if the Highest Guaranteed Year Value is itself greater
than 127.5% of the Average Annual Value of the Contract, then 127.5% of
the Average Annual Value of the Contract shall be substituted for the
Highest Guaranteed Year Value in the calculation called for by
subparagraph (c)(ii)(B) below.
(B) RULE. If the Club Option Year Value exceeds 122.5% of the
Highest Guaranteed Year Value, then the difference between the Club
Option Year Value and 122.5% of the Highest Guaranteed Year Value shall
be treated as a Signing Bonus in the calculation of the Contract's
Average Annual Value.
(C) POTENTIAL TAX REFUND. If a Club Option Year in a Uniform
Player's Contract subject to subparagraph (ii) is not exercised, any
Club (including a Club to which the Contract was assigned) that paid
Luxury Tax in a Contract Year in which that Club's final Actual Club
Payroll included an amount attributed under subparagraph (ii) shall
receive a distribution from the Luxury Tax proceeds described in
Section H(4) below in the amount of any Luxury Tax paid as a result of
that attribution.
(d) PLAYER OPTION YEARS.
(i) If a Player fails to exercise or chooses to nullify a Player Option
Year that falls before the 2000 Contract Year, the difference between the
amount paid to the Player under his Contract and the amount that has been
attributed to Actual Club Payroll of a Club shall be added to (or
subtracted from) Actual Club Payroll in the Contract Year in which the
Player Option Year falls. If the Contract has been assigned, the adjustment
called for in the preceding sentence shall be made to the Actual Club
Payroll(s) of the Club(s) to which Salary under that Contract had been
attributed in any Contract Year.
(ii) If a Player Option Year falls in the 2000 Contract Year or later,
and the Base Salary (plus any attributed Signing Bonus, deferred
compensation or annuity costs) ("Player Option Year Value") is less than
80% of the Base Salary (plus any attributed Signing Bonus, deferred
compensation or annuity costs) in the Guaranteed Year with the smallest
such figure before the first such Player Option Year (80% Figure), then the
difference
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between the 80% Figure and the Player Option Year Value shall be allocated
pro rata across the Guaranteed Years preceding the first such Player Option
Year; provided, however, that if the 80% Figure is itself less than 75% of
the Average Annual Value of the Contract (calculated as if the Player
Option Year was not a Guaranteed Year), then the 80% Figure shall instead
be 75% of the Average Annual Value calculation set out immediately above.
(iii) POTENTIAL TAX REFUND. If a Player exercises or chooses not to
nullify a Player Option Year subject to subparagraph (ii) above, any Club
(including a Club to which the Contract was assigned) that paid Luxury Tax
in any Contract Year in which that Club's final Actual Club Payroll
included an amount attributed under subparagraph (ii) above shall receive a
distribution from the Luxury Tax proceeds described in Section H(4) below
in the amount of any Luxury Tax paid as a result of that attribution.
(6) Deferred Compensation.
(a) DEFINITION.
"Deferred Compensation" shall mean any Salary payable to a Player pursuant
to a Uniform Player's Contract in a Contract Year after the last championship
season for which the Contract requires services as a baseball player to be
rendered.
(b) ATTRIBUTION.
(i) Deferred Compensation shall be included in a Player's Salary as if
paid in the championship season to which it is attributed under a Uniform
Player's Contract. If a Contract does not attribute Deferred Compensation,
the Contract shall be treated as if the Deferred Compensation was
attributed equally to each of the Guaranteed Years in the Contract.
(ii) If the Deferred Compensation is to be paid with interest at an
effective rate that is within one and one-half percentage points of the
Imputed Loan Interest Rate for the first Contract Year covered by the
Contract, then the Deferred Compensation shall be included at its stated
value. Otherwise, the Deferred Compensation shall be included at its
present value in the season to which it is attributed, said present value
to be calculated by increasing any such payments by the Contract's stated
interest rate, if any, and then reducing such payments back to their
present value by applying as a discount rate the Imputed Loan Interest Rate
for the first Contract Year
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covered by the Contract. If the terms of a Contract are confirmed by the
Association and the PRC before the Imputed Loan Interest Rate for the first
Contract Year covered by the contract is available, the Imputed Loan
Interest Rate shall be the annual "Federal mid-term rate" as defined in
section 1274(d) of the Internal Revenue Code for the month preceding the
month in which terms are confirmed. If a Uniform Player's Contract uses the
date or year in which a Player retires as a triggering event for the
commencement of payment of the Deferred Compensation, it will be assumed
for purposes of calculating Salary under this Article only that the Player
retires on the day that he reaches age 40 or at the end of the Contract,
whichever is later.
(c) An "Annuity Compensation Arrangement" is an agreement in a Uniform
Player's Contract whereby the Club promises to purchase an annuity to pay the
Player after he is no longer required to render services as a baseball player
under such Uniform Player's Contract.
(i) The portion of the cost of the annuity to be paid by the Club while
the Player is required to render services as a baseball player under the
Contract shall be included as Salary for the Contract Year in which such
cost is to be paid.
(ii) The portion of the cost of the annuity instrument to be paid by
the Club after the Player is no longer required to render services as a
baseball player under such Contract, if any, shall be treated as Deferred
Compensation attributable pro rata over the Guaranteed Years of the
Contract at its present value as calculated pursuant to paragraph (6)(b)
above. Any compensation that the Player is scheduled to receive pursuant to
such Annuity Compensation Arrangement shall not be considered Salary or
Deferred Compensation.
(7) Loans to Players.
For purposes of this Article XXIII, the following rules shall apply to any
loans made by a Club to or at the direction of a Player.
(a) If any such loan bears no interest rate or an effective interest
rate more than one and one-half percentage points below the Imputed Loan
Interest Rate, then an amount of "Imputed Income" as calculated pursuant to
subparagraph (b) below shall be included in the Player's Salary for each
Contract Year that the loan remains unpaid. For any other loan, there shall
be no "Imputed Income" (as defined in subparagraph (b) below) included in
the Player's Salary.
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(b) "Imputed Income" for each Contract Year covered by a Uniform
Player's Contract shall be calculated by multiplying the difference between
the Imputed Loan Interest Rate and the stated rate, if any, by the
outstanding balance of the loan.
(c) If a Club has made a loan to a Player and forgives part or all of
the loan, the forgiven loan amount shall be counted as Salary in the
Contract Year in which the loan is forgiven; provided, however, that if a
loan that is made after December 7, 1996 is forgiven in a Contract Year in
which there is no Luxury Tax, whether such Contract Year is during the term
of this Agreement or not, and if the Club forgiving the loan would have
been assessed a Luxury Tax for any Contract Year had the loan, by itself or
in combination with other loans, been considered Salary from the outset,
then the forgiveness of the loan shall be presumed to be an action designed
to defeat or circumvent the Luxury Tax. Unless the Club that forgave such a
loan can rebut the foregoing presumption, the Club shall be required to pay
into the Central Fund an amount equal to the Luxury Tax(es) that the Club
would have paid (based on the Applicable Tax Thresholds that were in effect
when final Actual Club Payrolls were calculated for the Contract Year(s)
in which a Luxury Tax would have been paid) had the forgiven loan (or
portion thereof) originally been considered Salary.
F. ASSOCIATION'S RIGHTS
(1) Actual Club Payroll Information.
(a) On or before opening day of the 1997 championship season, the PRC shall
provide the Association with a list for the 1996 Contract Year of each Club's
final Actual Club Payroll, broken down by Player, and 1996 Player Benefit
Costs.
(b) In each Contract Year in which the Luxury Tax is operational, the PRC
shall provide the Association with two "Preliminary Actual Club Payroll
Compilations," the first of which shall be provided within 14 days following
opening day of that championship season and the second of which shall be
provided within 14 days following that season's All-Star Game. Each
Preliminary Actual Club Payroll Compilation shall consist of a list of each
Club's Actual Club Payroll, broken down by Player, and an estimate of Player
Benefit Costs for that Contract Year, as of opening day and the All-Star
game, respectively. In addition to the above, the Association may, from time
to time, request the PRC to produce a Preliminary Actual Club Payroll
Compilation or any portion
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thereof (including the PRC's evaluation of any Uniform Player's Contract, the
terms of which have been confirmed by the Association and the PRC) and the
PRC shall provide such information within 14 days of each such request,
provided that the Association will not make an unreasonable number of
requests in any Contract Year.
(c) Upon the presentation of any evidence that a Player and a Club are
prepared to agree to a Uniform Player's Contract, either Party to this
Agreement (I.E., the Association or PRC) may initiate a process whereby the
Parties prepare and exchange evaluations of that prospective Contract for
Luxury Tax purposes. The evaluations shall be exchanged within 48 hours of
the initiation of the process by either Party.
(d) The PRC shall provide the Association with a list of the final Actual
Club Payrolls, broken down by Player, and Player Benefit Costs for that
Contract Year and the Luxury Tax assessed against each Club ("final Actual
Club Payroll Compilation"), if any, for the just completed championship
season on or before the December 21 following each championship season
covered by this Agreement in which the Luxury Tax is applicable.
(2) Association's Rights to Challenge.
(a) INFORMATION PROVIDED PURSUANT TO SECTION F(1)(b).
The Association shall have the right to question any calculation included
in any information provided pursuant to Section F(1)(b) above and the PRC
shall provide an answer to any such question within 10 days. If thereafter
the Association disagrees with any calcu-lation, it may file a challenge in
the Grievance Procedure in Article XI at any time before the next November
30. At the request of either Party, any such Grievance shall be handled on an
expedited basis, with documents being exchanged within 10 days of the filing
of the Grievance, a hearing commencing within 15 days of the filing of the
Grievance and the Panel issuing an Award (with opinion to follow, if
necessary) no later than 15 days after the commencement of the hearing.
Failure by the Association to challenge any such calculation shall not
preclude the Association from challenging that calculation if contained in a
final Actual Club Payroll Compilation nor shall such failure be of any
relevance in such a challenge.
(b) INFORMATION PROVIDED PURSUANT TO SECTION F(1)(c).
The Association shall have the right to question any calculation included
in any information exchanged pursuant to Section
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F(1)(c) above and the PRC shall provide an answer to any such question within
24 hours. If thereafter the Association disagrees with the calculation put
forward by the PRC, it may file a challenge in the Grievance Procedure in
Article XI within three business days. Any such Grievance shall be handled on
an expedited basis, with documents being exchanged as soon as possible, a
hearing commencing within three business days of the filing of the Grievance
(or as soon thereafter as is practicable) and the Panel issuing an Award
(with opinion to follow, if necessary) no later than three business days
after the commencement of the hearing. Failure by the Association to
challenge any such calculation shall not preclude the Association from
challenging that calculation if contained in a final Actual Club Payroll
Compilation, nor shall such failure be of any relevance in such a challenge.
Failure by the PRC to raise or pursue with the Arbitration Panel any
disagreement with the Association concerning information exchanged pursuant
to Section F(1)(c) above shall be irrelevant to any challenge by the
Association to any calculation.
(c) INFORMATION PROVIDED PURSUANT TO SECTION F(1)(d).
The Association may challenge any calculation included in information
provided pursuant to Section F(1)(d) (the final Actual Club Payroll
Compilation) by filing a Grievance pursuant to Article XI. If the Association
disagrees with any calculation that affects the Luxury Taxes assessed for
that Contract Year, it shall file a Grievance within 45 days after it has
received that Year's final Actual Club Payroll Compilation and the notice of
assessed Luxury Taxes (see Section B(6)(a)). Failure by the Association to
challenge any calculation included in a final Actual Club Payroll Compilation
shall not preclude the Association from challenging that calculation if
contained in a final Actual Club Payroll Compilation for a later Contract
Year, nor shall such failure be of any relevance in such a challenge. Such a
challenge, however, will not result in changes to Luxury Tax amounts assessed
for prior Contract Years.
Any Grievance challenging a final Actual Club Payroll Compilation shall be
handled by the Parties on an expedited basis with documents being exchanged
within 10 days of the filing of the Grievance, a hearing commencing within 15
days of the filing of the Grievance and the Panel issuing an Award (with
opinion to follow, if necessary) no later than 15 days after the commencement
of the hearing. The filing of a Grievance by the Association shall not
preclude the PRC from assessing and collecting the Luxury Tax in accordance
with Section B and using Luxury Tax
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proceeds in accordance with Section H, unless the Chairman of the Arbitration
Panel, upon application by the Association, provides otherwise. Unless the
Chairman provides otherwise, any adjustments to the Luxury Tax assessments
and distributions made pursuant to Section F above necessitated by the
resolution of an Association Grievance shall be made by the PRC once the
Grievance is finally resolved.
(d) RELATIONSHIP TO GRIEVANCE PROCEDURE.
(i) Nothing in this Section F is intended to affect the application of
the Grievance Procedure to any other complaint involving the existence or
interpretation of, or compliance with, this Article XXIII or any provision
therein. Moreover, unless specifically modified by this Section F, it is
intended that the provisions of Article XI will govern the resolution of
disputes under this Article XXIII.
(ii) It is agreed that the existence of the expedited procedures in
this Section F will not prohibit either Party from arguing that another
dispute subject to Article XI should be heard prior to any dispute related
to this Article XXIII.
G. OTHER UNDERTAKINGS
(1) Neither the Parties hereto nor any Club or any Player shall enter into
any agreement, Uniform Player's Contract or other transaction, that includes
any terms designed to defeat or circumvent the intention of the Parties as
reflected by this Article XXIII.
(2) At the time a Club and a Player enter into any Uniform Player's
Contract, or at the time of the assignment of any Uniform Player's Contract,
there shall be no unreported understandings or agreements of any kind between
the Player and the Club. No other understandings or agreements, whether made
before or after the signing of the Uniform Player's Contract or its
assignment, shall be valid, recognizable or of any effect whatsoever, unless
expressly set forth in a new or supplemental Uniform Player's Contract
executed by the Player and the Club and complying with this Agreement and the
Major League Rules. (See "Supplemental Agreements" paragraph of the Uniform
Player's Contract.)
(3) If a Club and a Player currently signatory to a Uniform Player's
Contract desire to modify or amend their contractual relationship, they must
enter into a new Uniform Player's Contract that covers the then current
championship season or, if signed after the championship season has started,
the next immediate championship season.
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The Average Annual Value of such new Contract shall be increased or
decreased, whichever is applicable, by the figure arrived at by subtracting
the amount of Salary that has been attributed under the rules of this Article
XXIII to a Club in previous Contract Years under the Contract that is being
replaced from the amount that was actually paid to the Player by a Club in
those Contract Years. If a new Contract is signed during a championship
season to commence with the next championship season, the calculation called
for in this paragraph (3) shall be performed at the end of the then current
championship season. Except for the limited circumstances described in this
paragraph (3), no Player may be signatory to more than one unexpired Uniform
Player's Contract at any time.
H. USES OF LUXURY TAX PROCEEDS
Luxury Tax proceeds collected pursuant to Section B(6) above shall be used as
follows.
(1) The first $10 million of the proceeds collected for the 1997 Contract
Year shall be used for those purposes described in Article XXV (C)(2).
(2) The next $7 million of the proceeds collected for the 1997 Contract
Year shall be used for the purposes described in Article XXV (C)(1)(b).
(3) The next $3 million of the proceeds (collected for any Contract Year)
shall be used to reimburse any initial funding provided by the Clubs to the
Industry Growth Fund under Article XXVI (E)(1), with the balance of the $3
million, if any, being for the benefit of and made available to the Industry
Growth Fund.
(4) The next $2.5 million of the proceeds (collected for any Contract Year)
shall be held in reserve for the purposes described in paragraphs (5)(b)(ii),
(5)(c)(ii)(C) and (5)(d)(iii) of Section E and, if the Parties agree based on
experience under such Salary attribution rules, another $2.5 million of
proceeds (collected for any Contract Year) shall be held in reserve for such
purposes. Any amount held in reserve pursuant to this paragraph (4) (and
interest earned on such amounts) shall be for the benefit of and made
available to the Industry Growth Fund and used for the purposes set out in
Article XXVI if and when the Parties agree that there is no longer any need
for such reserve.
(5) The remaining proceeds, if any, shall be for the benefit of and made
available to the Industry Growth Fund and used for the purposes set out in
Article XXVI.
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ARTICLE XXIV-PAYROLL TAX
A. PURPOSE
The Association, as part of this Agreement, has agreed to make a contribution on
behalf of members to be used to further the growth and development of the Game
and the industry on an individual Club and on an aggregate basis with the view
toward advancing the interests of both the Clubs and the Players.
B. TOTAL PAYMENT
The total amount of contribution ("the Total Payment") shall be equal to the sum
of 2.5% of the final Actual Club Payrolls for all Clubs for Contract Years 1996
and 1997, as defined in Article XXIII, subject to the modifications set forth in
Section C below. The Association guarantees that the Total Payment shall be no
less than $43,088,692. The Association, in its discretion, shall determine the
source or sources of funds from which the Total Payment shall be contributed.
Subject to any applicable legal limitations, the Parties agree that the
Association, in its discretion, may require the Clubs to deduct and retain a
specified percentage of payroll as one of the sources of the Total Payment (or a
portion thereof).
C. MODIFICATIONS TO DEFINITION OF FINAL ACTUAL CLUB PAYROLL FOR CONTRACT YEARS
1996 AND 1997
In calculating the Total Payment pursuant to this Article, the definition of
final Actual Club Payroll in Article XXIII shall be used subject to the
following modifications.
(1) A Club's final Actual Club Payroll shall not include a pro rata share
of Player Benefit Costs, as described in Section C(1)(a) and Section D of
Article XXIII.
(2) A Club's final Actual Club Payroll shall include only the Salaries of
those Players who are on a Club's 25-man roster or Major League Disabled List
pursuant to Major League Rule 2(g) on August 31 of the Contract Year in
question.
(3) The Salary of each Player described in Section C(2) above for a given
Contract Year shall be calculated as if the Player spent the entire
championship season on the 25-man roster or Major League Disabled List of the
Club he was on as of that August 31. No such assumption, however, shall be
made for purposes of calculating any bonuses.
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(4) Notwithstanding paragraphs (2) and (3) above, the following amounts
shall be deducted from each Club's final Actual Club Payroll:
(a) for the 1996 Contract Year, $109,000 for each Player identified in
Section C(2) above with a Base Salary for 1996 of $150,000 or less; and
(b) for the 1997 Contract Year, $109,000 for each Player identified in
Section C(2) above with a Base Salary for 1997 of $175,000 or less.
(5) Salary shall be determined in accordance with Section E of Article
XXIII, except that:
(a) Paragraphs (5)(c)(ii) and (5)(d)(ii) of Section E shall not be
applied in any circumstance; and
(b) any Mutual Option year (as defined in Section E(5)(a)(iii)), shall
be considered a Player Option Year in all circumstances; the rule
applicable to Mutual Option Years extending into the 2000 Contract Year or
beyond, as described in Section E(5)(a)(iii), shall not be applied.
D. CALCULATION OF TOTAL PAYMENT
(1) The Total Payment shall be calculated initially by the PRC. The PRC
will provide the Association with an initial calculation of the 2.5% sum for
the 1996 Contract Year on or before opening day of the 1997 championship
season. The PRC will provide the Association with an initial calculation of
the 2.5% sum for the 1997 Contract Year on or before February 1, 1998. Each
initial calculation shall include the aggregate amount owed and an
explanation therefor, including a Club-by-Club listing of the Salaries used
to calculate the aggregate amount.
(2) Within 45 days after the PRC provides the Association with the initial
calculations for the 1996 Contract Year and for the 1997 Contract Year, the
PRC and the Association shall meet to discuss the PRC's initial calculation
for that Contract Year.
(3) If there is any dispute as to the initial calculations or as to the
Total Payment, either Party shall provide notice to the other of such dispute
by filing a Grievance pursuant to Article XI no later than 45 days after the
date on which the PRC and the Association meet to discuss the PRC's initial
calculation for the 1997 Contract Year. At the request of either Party, any
such Grievance shall be handled on an expedited basis. Unless the Chairman of
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the Arbitration Panel provides otherwise, any adjustments to the Total
Payment made pursuant to this paragraph (3) necessitated by the resolution of
a Grievance shall be made by the Association once the Grievance is finally
resolved.
(4) Other than as expressly provided in paragraph (3) above, nothing in
this Section D is intended to affect the application of the Grievance
Procedure to any complaint involving the existence or interpretation of, or
compliance with this Article XXIV or any provision herein.
E. DATE OF PAYMENT AND USES
The Total Payment shall be paid and used as follows.
(1) The first $4,088,692 million shall be paid in accordance with, and be
used for the purposes described in, Section I(A)(2) of the Strike Settlement.
(See Attachment 22.)
(2) The next $3 million shall be used to reimburse any initial funding
provided by the Association to the Industry Growth Fund under Article
XXVI(E)(1), with the balance of the $3 million, if any, being for the benefit
of and made available to the Industry Growth Fund.
(3) The next $36 million shall be used for the purposes described in
Article XXV(C)(3)(b) and (C)(4)(b).
(4) The balance of the Total Payment shall be for the benefit of and made
available to the Industry Growth Fund and used for the purposes set out in
Article XXVI.
ARTICLE XXV-THE REVENUE SHARING PLAN
A. DEFINITIONS
(1) "Financial Information Questionnaire," or "FIQ," shall mean the
questionnaire completed by each of the Major League Clubs and submitted,
together with audited financial statements, on an annual basis for each
revenue sharing year to the Office of the Commissioner. A revenue sharing
year is defined as the fiscal year of the championship season that falls in
that year (and shall be referred to, for any specific revenue sharing year
under this Article, as "1996," "1997," "1998," ETC., or the "1996 revenue
sharing year," the "1997 revenue sharing year," ETC.). From time to time,
Clubs are also required by the Office of the Commissioner to supplement the
FIQ by submitting additional information in a "Supplementary Information
Questionnaire" ("SIQ").
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(2) "Defined Gross Revenue" shall mean the aggregate operating revenues
from baseball operations received, or to be received on an accrual basis, by
each Club on an annual basis as reported in the Club's FIQ. "Baseball
Operations" shall mean all activities of a Club that generate revenue, except
those wholly unrelated to the business of Major League Baseball. Baseball
Operations shall include (by way of example, but not by way of limitation):
(a) an activity that could be conducted by a non-Club entity but which
is conducted by a Club because its affiliation or connection with Major
League Baseball increases the activity's appeal; and
(b) an activity from which revenue or value is received as a result of
a decision or agreement to forego what otherwise would be Defined Gross
Revenue.
(3) "Central Revenue" shall mean all of the centrally-generated operating
revenues of the Major League Clubs that are administered by the Office of the
Commissioner or central baseball including, but not limited to, revenues from
national and international broadcasting agreements (television, cable and
radio), Major League Baseball Properties, Baseball Television, Inc., Major
League Baseball Enterprises, the Copyright Arbitration Royalty Panel,
superstation agreements between the Commissioner's Office and the Clubs whose
games are transmitted on a distant signal ("Superstation Agreements"), the
All-Star Game and national marketing and licensing.
(4) "Local Revenue" shall mean a Club's Defined Gross Revenue less its
share of Central Revenue.
(5) "Actual Stadium Expenses" shall mean the "Stadium Operating Expenses"
of each Club, as reported on an annual basis in the Club's FIQ.
(6) "Net Local Revenue" shall mean a Club's Local Revenue less its Actual
Stadium Expenses.
(7) The "Participating Clubs" shall be all existing Clubs (even if
relocated) for all years of this Agreement, except the Colorado Rockies and
the Florida Marlins shall be included as Participating Clubs beginning with
1998. The Tampa Bay Devil Rays and the Arizona Diamondbacks shall be included
as Participating Clubs beginning with 2000.
(8) For the "Straight Pool Plan" operating at full (100%) implementation,
the amount of net payment or net receipt for each Participating Club shall be
determined as follows: Each Participating Club contributes 39% of its Net
Local Revenue to a putative pool; that pool is then divided equally among all
Participating Clubs,
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with the difference between each Club's payment into the putative pool and
its receipt therefrom producing the net payment or net receipt for that Club.
(9) For the "Split Pool Plan" operating at full (100%) implementation, the
amount of net payment or net receipt for each Participating Club shall be
determined as follows: Each Participating Club contributes 20% of its Net
Local Revenue to a putative pool; 75% of that pool is divided equally among
all Participating Clubs; the remaining 25% of the pool is divided only among
Participating Clubs below the arithmetic mean of Net Local Revenue in
proportion to each such Club's distance from said average, with the
difference between each Club's payment into the putative pool and its receipt
or receipts therefrom producing the net payment or net receipt for that Club.
(10) The "Hybrid Plan" operates by assigning to each Participating Club the
more favorable result to that Club at full (100%) implementation of the
Straight Pool Plan or the Split Pool Plan. The operation of the Hybrid Plan
will create a "Shortfall," in the sense that payments due from Participating
Clubs will be less than the payments due to other Participating Clubs.
(11) Those Participating Clubs that receive net receipts in a given revenue
sharing year under the revenue sharing plan shall be referred to for that
year as "Payee Clubs." Those Participating Clubs that make net payments in a
given revenue sharing year shall be referred to for that year as "Payor
Clubs."
(12) For 1998 and 1999 only, "Supplemental Pool Payments" shall be made
available to certain Participating Clubs from a total of $36 Million produced
pursuant to Article XXIV. The Supplemental Pool Payments shall be payable $18
Million in December 1998 and $18 Million in December 1999.
(13) The "Administrator" shall be the representative (or representatives)
responsible, in consultation with the Association, for administration of the
revenue sharing plan under this Article. (See Section D, Administration,
below.)
B. GENERAL PRINCIPLES
(1) Intent of the Plan.
(a) NET TRANSFER VALUE. The intent of the revenue sharing plan is to effect
a net transfer of Net Local Revenue among Participating Clubs of $70 Million
at 100% implementation of the plan, based on 1994 projections.
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(b) MARGINAL TAX RATE. The maximum marginal tax rate on Payor Clubs under
the plan shall not exceed 20% at full (100%) implementation of the plan.
(2) Other Sharing.
(a) GATE RECEIPTS AND LOCAL PAY CABLE. Effective with 1996, the Clubs shall
cease sharing gate receipt revenues pursuant to Article 7.6 of the American
League Constitution and Article Thirteen of the National League Constitution
and local pay cable revenues pursuant to the Radio and Television
Broadcasting Agreement of the American League Clubs and the National League
Television Agreement. Notwithstanding the foregoing, the League Offices shall
be funded in a substantially equivalent fashion as they have been in the
past.
(b) CENTRAL REVENUE. Except as specifically provided in paragraphs (1) and
(2) of Section C below with respect to a total of $32.4 Million in
superstation payments attributed to 1994 and 1995, nothing in this Article is
intended to alter current agreements among the Clubs pertaining to Central
Revenue, including but not limited to, the Major Leagues Central Fund
("Central Fund"), Major League Baseball Properties, Baseball Television,
Inc., Major League Baseball Enterprises, the Copyright Arbitration Royalty
Panel, Superstation Agreements, the All-Star Game and national marketing and
licensing.
(3) Accounting Rules.
(a) In calculating net payments and net receipts, the Administrator, on
behalf of the Clubs, shall use the definitions contained in the 1995 FIQ,
subject to the provisions of Section D below. Although the intention is to
follow Generally Accepted Accounting Principles ("the GAAP rules") in the
adoption and application of revenue and expense definitions contained in the
FIQ and in the accounting conventions, policies and practices reflected in
the FIQ (and in any changes to any of the foregoing), it is acknowledged that
specific exceptions to the GAAP rules have been and will be warranted to
ensure uniformity, consistency and fair treatment among the Clubs, subject to
the provisions of Section D below.
(b) The Association has received copies of two Reports ("the Reports")
containing the accounting procedures the Clubs desire the Administrator to
utilize in the administration of the revenue sharing plan. The Reports are
entitled: "Revenue Sharing Definitions Labor Policy Committee Recommendations
Draft 11/5/96";
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and "Revenue Sharing Definitions Subcommittee Review of MLB Accounting
Practices August 29, 1996." The Reports recommend that the GAAP rules are an
acceptable basis for reporting most financial transactions and therefore
should be followed as a general rule in the adoption of revenue and expense
definitions contained in the FIQ. The Reports further recommend that the GAAP
rules or, in designated situations, federal tax principles, should be the
"default" standards in the accounting conventions, policies or practices
relating to information contained in the FIQ. The Reports also recommend some
departures from the GAAP rules for certain specified transactions.
Utilization by the Administrator of the recommendations contained in the
Reports is subject to consultation with the Association and the other
procedures set out in Section D below.
(4) Interests of the Association.
The revenue sharing plan may have a significant impact on the industry
globally as well as on individual Clubs. Accordingly, the Parties acknowledge
that the Association has a significant interest in any aspect of the revenue
sharing plan or its operation materially affecting either: (a) the overall
industry-wide net transfer of Net Local Revenue among Participating Clubs; or
(b) the amounts of net payments made by individual Payor Clubs and the
amounts of net receipts received by individual Payee Clubs. The Parties also
acknowledge that the Association has a significant interest in the
administration and distribution of Supplemental Pool Payments. This paragraph
shall not be construed to limit the Association's right to assert that it has
other legitimate interests in the operation of the plan.
(5) Other Undertakings.
(a) A principal objective of the revenue sharing plan is to promote the
growth of the Game and the industry on an individual Club and on an aggregate
basis. Accordingly, net receipts and Supplemental Pool Payments received
under the revenue sharing plan will be used in furtherance of this objective.
(b) The Clubs and the Association recognize that the participation of two
Clubs is necessary for the production of the on-field competition that the
Clubs sell to the public. The net payments and net receipts required by this
Article XXV reflect a continuation of the amounts paid directly to the
visiting Clubs and are in recognition of the fact that visiting Clubs should
share, and traditionally have shared, in the economic benefits jointly
generated by the Game at another Club's home field.
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(c) The Clubs and the Association agree that the amounts paid as
Supplemental Pool Payments are contributions made on behalf of the members of
the Association pursuant to Article XXIV to further the growth and
development of the Game with the view toward advancing the interests of both
the Clubs and the Players. Accordingly, the amounts paid as Supplemental Pool
Payments shall be regarded by the Clubs as if such amounts were net receipts
produced under the revenue sharing plan.
(d) None of the Parties hereto shall enter into any agreement, or engage in
any transaction or other conduct, designed to defeat or circumvent the
intentions of the Parties as reflected in this Article XXV.
C. OPERATION
(1) 1996.
(a) For 1996, the Hybrid Plan will be implemented on a 60% basis:
Participating Clubs will pay or receive (as the case may be) 60% of the net
payment or net receipt produced by the Hybrid Plan at full (100%)
implementation. Any Shortfall produced shall be funded by superstation
payments attributed to 1994 and 1995.
(b) In addition to the net payments or net receipts produced by the Hybrid
Plan in 1996 (as set out in Section C(1)(a)), each of the five (5) American
League Clubs that ranks the lowest in Net Local Revenue for 1996 shall be
paid an additional $1.4 Million on February 1, 1998. Such payments shall be
funded by Luxury Tax proceeds for the 1997 Contract Year pursuant to Article
XXIII, to the extent that sufficient proceeds are available for this purpose
after up to $10 Million of those proceeds have been used as described in
Section C(2) below. If the remaining 1997 Luxury Tax proceeds are
insufficient to fund completely all such payments, then the balance of such
payments shall be funded by any superstation payments attributed to 1994 and
1995 that may remain following the operation of Section C(1)(a) above and
Section C(2) below. If the foregoing sources are insufficient to fund all
such payments, then each such payment shall be reduced proportionately as a
result of the insufficiency.
(c) The five (5) American League Clubs described in subparagraph (b) above
shall, upon the recommendation of the Administrator after consultation with
the Association, be allowed to take advances against the payments described
in subparagraph (b) above (or some portion thereof) in June 1997. In making a
recommendation to allow advances to be taken in June 1997, the
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Administrator shall consider the following: (i) the first 1997 Preliminary
Actual Club Payroll Compilation provided to the Association pursuant to
Article XXIII F(1)(b), (ii) the amount of Luxury Tax likely to result
therefrom, (iii) the amount of superstation payments attributed to 1994 and
1995 remaining after the operation of subparagraph (a) above, and (iv) the
amount of 1997 Luxury Tax proceeds and superstation payments attributed to
1994 and 1995 that are likely to be needed to fund the Shortfall created by
the operation of Section C(2) below. If the Administrator recommends that
advances be allowed in June 1997, those advances shall be funded by
superstation payments attributed to 1994 and 1995; provided, however, that if
it is ultimately determined that there are 1997 Luxury Tax proceeds available
to fund the payments to the five American League Clubs, or any portion
thereof, appropriate amounts will be reimbursed to the Central Fund to
replace the superstation payments attributed to 1994 and 1995 that were used
to fund the advances.
(2) 1997.
For 1997, the Hybrid Plan will be implemented on a 60% basis: Participating
Clubs will pay or receive (as the case may be) 60% of the net payment or net
receipt produced by the Hybrid Plan at full (100%) implementation. Any
Shortfall produced shall be funded, up to no more than $10 Million, by Luxury
Tax proceeds for the 1997 Contract Year pursuant to Article XXIII. Any excess
Shortfall over $10 Million shall be funded only by any superstation payments
attributed to 1994 and 1995 remaining after the operation of Section C(1)(a)
above. If the foregoing sources are insufficient to fund completely the
Shortfall, then those Participating Clubs that benefit from the Straight Pool
Plan as opposed to the Split Pool Plan shall receive only a portion of that
benefit. The portion of the benefit to be received by a Participating Club in
such event shall be calculated by multiplying the total amount available to
fund the Shortfall by a fraction, the numerator of which is the value of the
benefit the Participating Club would have received in 1997 by operation of
the Straight Pool Plan as opposed to the Split Pool Plan and the denominator
of which is the total value of the benefit that would have been received in
1997 by all Participating Clubs that would have achieved a more favorable
result by operation of the Straight Pool Plan as opposed to the Split Pool
Plan.
(3) 1998.
(a) For 1998, the Split Pool Plan will be implemented on an 80% basis:
Participating Clubs will pay or receive (as the case may
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be) 80% of the net payment or net receipt produced by the Split Pool Plan at
full (100%) implementation.
(b) In addition to the net payments or net receipts produced by operation
of subparagraph (a) above, Supplemental Pool Payments shall be payable in
December 1998 to all Participating Clubs that, had the Hybrid Plan been in
effect for 1998 on an 80% basis, would have been assigned the more favorable
result under the Straight Pool Plan, as opposed to the Split Pool Plan (see
Section A(10) above). Supplemental Pool Payments shall be distributed as
follows:
(i) Nine Million Dollars, to be distributed to the Participating Clubs
described above in this subparagraph (b). The amount distributed to each
such Participating Club shall be calculated by multiplying $9 Million by a
fraction, the numerator of which is the value of the benefit the
Participating Club would have received in 1998 by operation of the Straight
Pool Plan as opposed to the Split Pool Plan and the denominator of which is
the total value of the benefit that would have been received in 1998 by all
Participating Clubs that would have achieved a more favorable result by
operation of the Straight Pool Plan as opposed to the Split Pool Plan.
(ii) Four and One-Half Million Dollars, to be distributed among each
Participating Club described above in this sub-paragraph (b) that is
actually a Payor Club for 1998 pursuant to subparagraph (a) above. To
determine the amount due to individual Clubs, the eligible Clubs shall be
ranked, from highest to lowest, based on each Club's percentage increase in
Net Local Revenue, to be calculated by dividing each Club's Net Local
Revenue for 1998 by its Net Local Revenue for 1997. Based on that ranking,
each eligible Club will take the applicable amount of the funds available
under this subparagraph (ii) in accordance with the schedule set out in
Attachment 16.
(iii) Four and One-Half Million Dollars, to be distributed among each
Participating Club described above in this sub-paragraph (b) that is
actually a Payee Club for 1998 pursuant to subparagraph (a) above. To
determine the amount due to individual Clubs, the eligible Clubs shall be
ranked, from highest to lowest, based on each Club's percentage increase in
Net Local Revenue, to be calculated by dividing each Club's Net Local
Revenue for 1998 by its Net Local Revenue for 1997. Based on that ranking,
each eligible Club will take the applicable amount of the funds available
under this subparagraph (iii) in accordance with the schedule set out in
Attachment 16.
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(4) 1999.
(a) For 1999, the Split Pool Plan will be implemented on an 85% basis:
Participating Clubs will pay or receive (as the case may be) 85% of the net
payment or net receipt produced by the Split Pool Plan at full (100%)
implementation.
(b) In addition to the net payments or net receipts produced by operation
of subparagraph (a) above, Supplemental Pool Payments shall be payable in
December 1999 to all Participating Clubs that, had the Hybrid Plan been in
effect for 1999 on an 85% basis, would have been assigned the more favorable
result under the Straight Pool Plan, as opposed to the Split Pool Plan (see
Section A(10) above). Supplemental Pool Payments shall be distributed as
follows:
(i) Nine Million Dollars, to be distributed to the Participating Clubs
described above in this subparagraph (b). The amount distributed to each
such Participating Club shall be calculated by multiplying $9 Million by a
fraction, the numerator of which is the value of the benefit the
Participating Club would have received in 1999 by operation of the Straight
Pool Plan as opposed to the Split Pool Plan and the denominator of which is
the total value of the benefit that would have been received in 1999 by all
Participating Clubs that would have achieved a more favorable result by
operation of the Straight Pool Plan as opposed to the Split Pool Plan.
(ii) Four and One-Half Million Dollars, to be distributed among each
Participating Club described above in this sub-paragraph (b) that is
actually a Payor Club for 1999 pursuant to subparagraph (a) above. To
determine the amount due to individual Clubs, the eligible Clubs shall be
ranked, from highest to lowest, based on each Club's percentage increase in
Net Local Revenue, to be calculated by dividing each Club's Net Local
Revenue for 1999 by its Net Local Revenue for 1998. Based on that ranking,
each eligible Club will take the applicable amount of the funds available
under this subparagraph (ii) in accordance with the schedule set out in
Attachment 16.
(iii) Four and One-Half Million Dollars, to be distributed among each
Participating Club described above in this sub-paragraph (b) that is
actually a Payee Club for 1999 pursuant to subparagraph (a) above. To
determine the amount due to individual Clubs, the eligible Clubs shall be
ranked, from highest to lowest, based on each Club's percentage increase in
Net Local Revenue, to be calculated by dividing each Club's Net
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Local Revenue for 1999 by its Net Local Revenue for 1998. Based on that
ranking, each eligible Club will take the applicable amount of the funds
available under this subparagraph (iii) in accordance with the schedule set
out in Attachment 16.
(5) 2000.
For 2000, the Split Pool Plan will be implemented on a 100% basis:
Participating Clubs will pay or receive (as the case may be) 100% of the net
payment or net receipt produced at full (100%) implementation.
(6) 2001 (If Association Option Exercised).
For 2001, if the Association exercises its option to extend this Agreement
under Article XXVII, the Split Pool Plan will be implemented on a 100% basis:
Participating Clubs will pay or receive (as the case may be) 100% of the net
payment or net receipt produced by the Split Pool Plan at full (100%)
implementation.
D. ADMINISTRATION
(l) Responsibility.
The administration of the revenue sharing plan under this Article XXV shall
be the responsibility of the Administrator in consultation with the
Association. The Administrator shall be a Committee of Clubs and/or
representatives designated by the Major League Baseball Executive Council.
The Administrator shall be designated within 30 days following the execution
of this Agreement.
(2) Duties of Administrator.
The Administrator shall have the following duties and responsibilities, to
be performed in consultation with the Association:
(a) CALCULATIONS AND DETERMINATION OF PAYMENT SCHEDULE. The
Administrator shall calculate and determine the timing of payment and
distribution of net payments and net receipts by (or to) Participating
Clubs. In this regard, the Administrator is authorized to require estimated
partial payments and distributions during the course of a revenue sharing
year and to assess reasonable penalties for intentionally inaccurate
estimates by Clubs. The schedule for retroactive payments relating to 1996
shall be in accordance with Section V of the Strike Settlement. Beginning
with the payments relating to 1997, unless and until
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altered by the Administrator in consultation with the Association, the
Clubs shall make payments to the Administrator in each year of the revenue
sharing plan under the following schedule:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------
REPORTING PAYMENT DISTRIBUTION
DATE DATE DATE AMOUNT OF PAYMENT
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Payment 1 May 15 May 25 June 1 33% of Estimated
Annual Net Payment
- --------------------------------------------------------------------------------------------------
Payment 2 July 15 July 25 August 1 66% of Estimated
Annual Net Payment
Less: Payment 1
- --------------------------------------------------------------------------------------------------
Payment 3 September 25 September 30 October 1 100% of Estimated
Annual Net Payment
Less: Payments 1 and 2
- --------------------------------------------------------------------------------------------------
Payment 4 November 15 November 25 December 1 Post-Season True-Up,
Unaudited
- --------------------------------------------------------------------------------------------------
Payment 5 March 31 June 7 June 15 Final Determination of
Annual Net Payment
Based on Audited
Results
- --------------------------------------------------------------------------------------------------
</TABLE>
(i) The "Reporting Date" shall be the date on which the Clubs
submit their most recent estimate of Net Local Revenues.
(ii) The "Payment Date" shall be the date on which the Payor Clubs
pay estimated amounts to the Administrator based on an updated revenue
sharing calculation provided to the Clubs.
(iii) The "Distribution Date" shall be the date on which the
Administrator distributes estimated amounts to Payee Clubs based on the
updated revenue sharing calculation.
In determining whether to alter the foregoing schedule, the
Administrator shall accord substantial weight to the cash flow needs under
this Agreement of the industry as a whole, as opposed to any specific Club.
The Administrator shall also provide the Association with notice of any
inter-Club disputes relating to the payment and distribution of net
payments and receipts and the resolution of said disputes.
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(b) REVIEW OF ACCOUNTING AND REPORTING PRACTICES. The Administrator
shall review the accounting and reporting practices of the Clubs, as
reflected in Club financial information submitted in connection with the
FIQs, audited financial statements, and any SIQs or supplemental
information required by the Administrator to be submitted by Clubs. The
Administrator shall also conduct regular full independent audits of the
Clubs and of particular significant transactions (E.G., related party
transactions). In this regard, the Reports described in Section B(3)(b)
recommend that all Clubs should undergo a full compliance audit in the
first revenue sharing year and that thereafter, each Club should undergo a
full compliance audit at least every other revenue sharing year.
(Utilization by the Administrator of the recommendations contained in the
Reports is subject to consultation with the Association and the other
procedures set out in this Section D.) The Administrator shall advise the
Association in advance of the scheduling of all such audits. The
Administrator is also authorized to make appropriate changes, in
furtherance of the objectives described below in Section D(2)(c), in the
definitions, accounting conventions, policies or practices reflected in the
FIQ, subject to prior notice to, and consultation with, the Association.
The Administrator is also authorized to require more detailed Club
submission of line items as set out in the FIQ.
(c) OBJECTIVES. In performing functions under this paragraph (2), the
objectives of the Administrator are: (i) to achieve uniformity and
consistency in reporting among Clubs;
(ii) to achieve uniformity and consistency in reporting from
revenue sharing year to revenue sharing year;
(iii) to accord fair treatment in the calculation of net payments
and net receipts;
(iv) to be fair, impartial and objective in assessing and
evaluating new issues that arise in the operation of the plan; and
(v) to remain faithful to the agreement of the Parties reflected in
this Article XXV.
(3) Specific Prohibition.
In performing duties and responsibilities in the administration of the
revenue sharing plan, the Administrator shall not materi-
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ally affect the agreement of the Parties as reflected in this Article,
including, but not limited to:
(a) the industry-wide net transfer of Net Local Revenue among
Participating Clubs; or
(b) the amounts of contributions made by individual Payor Clubs and the
amounts of payments received by individual Payee Clubs; or
(c) the distribution of Supplemental Pool Payments.
E. PARTICIPATION OF THE ASSOCIATION
(1) Consultation.
(a) Within 30 days following execution of this Agreement, the Administrator
shall promptly notify and consult with the Association in advance with regard
to proposed actions the Administrator intends to take pursuant to paragraphs
(1), (2)(a) and (2)(b) of Section D above in connection with the
administration of the revenue sharing plan. The Administrator and the
Association shall thereafter meet regularly on a monthly basis to facilitate
administration of the plan. Further, the Administrator shall regularly notify
and consult with the Association with respect to any proposed changes
described in Section D(2)(b), or as to any other proposed changes in the
administration of the plan, and with respect to preliminary and final
estimated partial payment calculations, and preliminary and final
calculations regarding net payments or net receipts due under the plan.
(b) Failure by the Association to challenge at the consultation stage with
the Administrator or under the Grievance Procedure in Article XI any such
proposed actions, changes, or preliminary estimated partial payment
calculations or preliminary calculations regarding net payments or net
receipts described above in Section E(1)(a) shall not preclude the
Association from challenging under the Grievance Procedure in Article XI any
action taken, changes made, or final estimated partial payment calculations
or final calculations regarding net payments or net receipts made by the
Administrator in connection with the administration of the plan. Further,
nothing in this Article, including, but not limited to, the consultation
rights accorded the Association, is intended to limit either the substantive
rights of the Association under this Article or the application of the
Grievance Procedure in Article XI as to any complaint involving the existence
or interpretation of, or compliance with, this Article or any provision
herein.
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(c) The filing of a Grievance under Article XI by the Association shall not
preclude the Administrator from calculating, collecting or redistributing
estimated partial payments or receipts or final net payments or receipts in
accordance with this Article, unless the Chairman of the Arbitration Panel,
upon application by the Association, provides otherwise. Unless the Chairman
provides otherwise, any adjustments to the calculation, collection or
redistribution of estimated partial payments or receipts or of final net
payments or receipts pursuant to this Article necessitated by the resolution
of an Association Grievance shall be made by the Administrator once the
Grievance is finally resolved.
(2) Right to Information.
The Administrator shall provide to the Association, upon request, any
relevant information necessary to the Association's performance of its
functions under this Article as collective bargaining representative. More
specifically, and not by way of limitation, the Administrator shall promptly
provide to the Association on a regular basis for each revenue sharing year
of this Agreement, copies of the following documents (in hard copy and/or
computer readable form, whichever is available) within 10 days following
preparation by or receipt by the Administrator of such data, except that
copies of documents responsive to subparagraphs (e), (j) and (l) shall be
provided within 30 days following preparation of such data by the Clubs (or
the Administrator), as the case may be:
(a) the form FIQ to be submitted by Clubs, together with any form SIQ
or other forms requiring the submission of supplemental information to the
Administrator by Clubs;
(b) any proposed changes in the form FIQ, SIQ or other forms to be
submitted to the Administrator by the Clubs, together with any explanatory
reports, if any, regarding such proposed changes;
(c) completed FIQs, SIQs or other supplemental information forms
submitted to the Administrator by each Club;
(d) audited financial statements submitted by each Club;
(e) summaries of local media contracts (and/or of any other individual
Club contracts) submitted by each Club to, or maintained under the
supervision of, the Office of the Commissioner (or the Administrator);
(f) any industry-wide compilation of revenue and expense data, whether
broken out by individual Club or groups of Clubs;
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(g) any completed forms submitted by the Clubs to the Administrator in
connection with the preparation of estimates of net payments or net
receipts;
(h) any preliminary estimated partial payment calculations or
preliminary calculations by the Administrator of net payments and net
receipts due under the plan;
(i) any document prepared by or on behalf of the Administrator in
connection with a full or partial independent audit of any Club conducted
by or on behalf of the Administrator as described in Section D(2)(b) and
Section E(3)(a) of this Article;
(j) upon specific request by the Association, any Club document(s)
examined or required to be examined by or on behalf of the Administrator in
connection with a full or partial independent audit of any Club conducted
by or on behalf of the Administrator as described in Section D(2)(b) and
Section E(3)(a) of this Article;
(k) any final calculations by the Administrator of estimated partial
payments, net payments and net receipts due under the plan; and
(l) upon specific request by the Association, a description of the
methodologies, assumptions and procedures used by the Administrator to
calculate and/or to reconcile items reported in Club FIQs and Club audited
financial statements.
(3) Right to Audit.
(a) The Association shall have the right, at any time during this
Agreement, to require the Administrator to conduct a full or partial
independent audit of any Club for a given revenue sharing year or of any
particular transaction, regardless of whether such an audit would have been
required by the Administrator under the procedures referred to in Section
D(2)(b) above. Further, should the Association require such an audit, the
Association shall also have the right to require the Administrator to examine
specified transactions, revenue and/or expense items, and/or to require
reconciliation of the Club's FIQ and audited financial statements in
specified areas. The Association also shall have the right to require the
Administrator to examine specified Club document(s). The Administrator shall
conduct the audit within a reasonable period of time from the date of a
written demand therefor by the Association. To the extent practicable, such
audit will be con-
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ducted under the same procedures and under the same time schedule as other
audits conducted by the Administrator in accordance with Section D(2)(b)
above. All expenses for such audits shall be borne solely by the
Administrator.
(b) Upon a showing of good cause, the Association shall have the right to
conduct its own full or partial independent audit of any such Club or
transaction, upon written notice to the Administrator. The Administrator
shall promptly arrange the date for the Association's audit, to be conducted
within a reasonable period of time from the date of the Association's notice
pursuant to this subparagraph.
(c) Notwithstanding the provisions of Section D(2)(b), Section E(3)(a) and
Section E(3)(b) above, and without regard to whether the Administrator has
conducted an audit pursuant to Section D(2)(b) or Section E(3)(a) of any Club
(or Clubs), the Association, upon written notice to the Administrator, shall
have the right to conduct its own full or partial independent audit of six
(6) Clubs per year for each of the revenue sharing years, 1998, 1999 and
2000. Notwithstanding the foregoing, upon a showing of good cause, the
Association shall have the right to conduct its own full or partial
independent audit of more than six (6) Clubs for each of the revenue sharing
years, 1998, 1999 and 2000. The Administrator shall promptly arrange the date
for the Association's audit, to be conducted within a reasonable period of
time from the date of the Association's notice pursuant to this subparagraph.
(d) Any audits conducted by the Association pursuant to subparagraphs (b)
or (c) above, may be conducted by representatives of the Association's
choice, including accountant(s) employed on the Association's staff, so long
as such representatives are working under the supervision of a Certified
Public Accountant(s) of the Association's choice.
(e) The Association shall utilize the rights set forth in this paragraph
(3) in good faith and only in furtherance of its interest in ensuring
compliance with this Agreement. In no event will the Association conduct an
unreasonable number of its own audits for any revenue sharing year.
(4) Confidentiality.
Any financial information obtained by the Association from the Clubs (or
the Administrator) pursuant to this Article shall be subject to the
Confidentiality Agreement appended hereto in Attachment 17.
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ARTICLE XXVI-THE INDUSTRY GROWTH FUND
A. OBJECTIVE AND PURPOSES
The Parties shall establish the Industry Growth Fund ("IGF") no later than May
1, 1997. The objective of IGF is to promote the growth of baseball in the United
States and Canada, as well as throughout the world. To this end, IGF will be
operated jointly by Players and Clubs in furtherance of the following purposes:
(1) to enhance fan interest in the game;
(2) to increase baseball's popularity; and
(3) to ensure industry growth into the 21st Century.
B. JOINT ACTIVITIES
In furtherance of the purposes described above in Section A, the Parties shall
make funds available to IGF for joint activities supervised by the Association
and the Clubs in the following areas:
(1) licensing, promotional, advertising and marketing projects;
(2) international development, including Player tours, licensing, media
relations and support for baseball federations throughout the world;
(3) development and use of new media technology;
(4) community service activities;
(5) enhancement in popularity and revenue growth among those Clubs that are
or have been Payee Clubs under Article XXV during the term of this Agreement,
with particular attention to the interests of cities and communities in the
retention of Major League Clubs (provided that funds are distributed based on
investment criteria and not as automatic supplements to revenue sharing
pursuant to Article XXV); and
(6) any other joint activities deemed by the Parties to be in furtherance
of the purposes of IGF.
C. ADMINISTRATION
(1) Board of Directors.
(a) Within 30 days of the execution of this Agreement, the Parties shall
appoint a Board of Directors of IGF ("the IGF Board"), consisting of seven
members. The Executive Director of the Asso-
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ciation and the Chief Labor Negotiator of the PRC, or their designees, shall
serve as Co-Chairs of the IGF Board. The Association and the PRC, on behalf
of the Clubs, shall each appoint two additional members ("Association
Members" and "Club Members", respectively). One additional member
("Independent Member") shall be appointed jointly by the PRC, on behalf of
the Clubs, and the Association. The Independent Member shall not be a current
employee, vendor, contractor, partner, member of, or consultant to, any Club,
the PRC, the Association or any other centrally-operated Baseball entity. The
IGF Board shall consist of the two Co-Chairs, the two Association Members,
the two Club Members and the one Independent Member.
(b) It shall be the responsibility of the IGF Board to oversee the
operation and activities of IGF. The IGF Board shall meet in person at least
three times each year. The IGF Board may also hold conference calls and
receive reports and other information about the activities and operation of
IGF.
(2) Co-Operating Officers.
Within 30 days from the date of execution of this Agreement, the
Association and the PRC, on behalf of the Clubs, shall each appoint one
Co-Operating Officer for IGF. The responsibilities of the Co-Operating
Officers shall be:
(a) to work together in the operation and administration of IGF on a
day-to-day basis;
(b) to formulate, plan and agree upon joint activities (including
budgets, contractors and/or vendors therefor) as described in Section B
above;
(c) to consult with the IGF Board regarding joint activities (including
budgets, contractors and/or vendors therefor) as described in Section B
above and as agreed upon by the Co-Operating Officers; and
(d) to otherwise make regular reports to the IGF Board about current
and future IGF activities.
D. DISPUTE RESOLUTION
(1) Disputes Concerning Joint Activities.
Any dispute concerning a decision whether or not to participate in a joint
activity, including disputes over budgets, the selection of
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contractors and/or vendors therefor, shall be resolved by the Co-Chairs of
the IGF Board and, absent resolution by them, such joint activity shall not
be undertaken. Decisions by the Co-Chairs with respect to this type of
dispute shall be final and binding upon the Parties.
(2) Disputes Subject to Resolution by the Independent Member.
Any dispute regarding the day-to-day operations of IGF (other than the
disputes described in paragraph (1) above) shall be subject to resolution by
the Independent Member. Either of the Co-Operating Officers shall have the
right to bring such a dispute to the attention of the Independent Member by
written notice within seven (7) business days from the date such dispute
arises, with a copy simultaneously to the other Co-Operating Officer. The
Independent Member, within five (5) business days from receipt of such
written notice, shall render a decision resolving the dispute. In reaching
the decision, the Independent Member shall accord paramount consideration to
the objective and purposes of IGF, as described in Section A above, as well
as to the funding available to IGF, as described in Section E below. The
Independent Member's decision resolving the dispute shall be in writing with
a brief explanation of the reasons therefor. The decision of the Independent
Member shall be final and binding upon the Parties.
(3) Other Disputes.
Except for disputes subject to paragraph (1) or (2) above, nothing in this
Article XXVI is intended to affect either the substantive rights of the
Parties under this Article XXVI or the application of the Grievance Procedure
in Article XI to any other complaint involving the existence or
interpretation of, or compliance with this Article or any provision herein.
E. FUNDING
(1) Initial Funding.
Until such time as there is adequate funding for IGF activities as a result
of the operation of paragraphs (2) through (4) below, the Clubs and the
Association shall each make available to IGF up to $3 million for use in the
activities described in Section B above. Funding under this paragraph (1)
shall be made available by the Clubs and the Association in equal amounts
based upon a request by the Co-Operating Officers.
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(2) Luxury Tax Proceeds.
All Luxury Tax proceeds remaining after the operation of Article XXV,
paragraphs C(2) and C(1)(b) and Article XXIII(H) (including any interest
collected pursuant to Article XXIII(B)(6)) shall be made available to IGF for
use in the activities described in Section B above.
(3) Payroll Tax Proceeds.
All Payroll Tax proceeds remaining after deduction of the amounts called
for in the Strike Settlement, the operation of Article XXV(C)(3)(b) and
C(4)(b) and the operation of Article XXIV(E) shall be made available to IGF
for use in the activities described in Section B above.
(4) Additional Voluntary Contributions.
In addition to the funding otherwise called for by this Section E, either
the Association, in its discretion, or the Clubs, in their discretion, may
contribute additional amounts to IGF for use in the activities described in
Section B above.
F. OPTION EXERCISE
Notwithstanding any other provision of this Article XXVI, and only if the
Association exercises its option under Article XXVII to extend this Agreement,
the following provisions shall apply with respect to 50 percent of the Luxury
Tax proceeds available in IGF as of the date the Association exercises the
option.
(1) The Club Members, in consultation with the other Members of the IGF
Board, shall select activities of the type described in Section B(5) above
and such activities shall be funded with the Luxury Tax proceeds subject to
this Section F.
(2) The consultation requirement in paragraph (1) above shall not prevent
the funding of any activity selected by the Club Members so long as the
activity is of the type described in Section B(5) above.
G. CONTINUATION OF IGF AFTER THE TERMINATION OF THE BASIC AGREEMENT
Subject to Section F above, if, as of the termination of this Agreement, there
are funds available for use by IGF as a result of the operation of Section E
above, for activities described in Section B above, then notwithstanding
termination of this Agreement and any rights of the Clubs under the National
Labor Relations Act, IGF
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shall remain in existence and in operation as if this Agreement had not
terminated, until such funds are exhausted through use in activities described
in Section B above, or until the Association and the PRC agree to terminate
operation of IGF, whichever is earlier.
ARTICLE XXVII-TERM
A. DURATION OF THE CONTRACT
This Agreement shall terminate on October 31, 2000 or the day following the last
game of the 2000 World Series, whichever is later; provided, however, that if
the legislation described in Article XXVIII is not enacted into law on or before
December 31, 1998, this Agreement shall terminate on December 31, 2000.
B. ASSOCIATION OPTION TO EXTEND THROUGH THE 2001 SEASON
Notwithstanding Section A above, the Association has the unilateral option to
extend this Agreement. If this option is exercised, this Agreement shall
terminate on October 31, 2001 (or the day after the last game of the 2001 World
Series, whichever is later). The Association may exercise the option by giving
the PRC written notice. Such notice shall be given no later than August 31,
2000; except that if the scheduled termination date is December 31, 2000, then
the notice that the option is being exercised shall be given no later than
October 31, 2000 (or the day after the last game of the 2000 World Series,
whichever is later).
C. EVENTS AFFECTED BY THE OPTION TO EXTEND
(1) Division Series Pool.
For the 1997 through 2000 Division Series, the figure arrived at by taking
the difference between the amount that represents 80% of the total gate
receipts from the first 3 games (4 if the Division Series is expanded to the
best of 7 games) of each Division Series and the amount that represents 60%
of such total gate receipts ("the Annual Option Amount") shall be paid to an
account maintained by the Commissioner's Office and redistributed to all
Clubs pro rata on an annual basis.
(2) Creation of the Fictional Option Pool Account.
The Clubs shall maintain a fictional account based on the assumption that,
for each of the years 1997-2000, the Annual Option Amount was placed in an
account within 30 days after the
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end of the World Series and the entire balance in said account earned
interest, compounded annually, at the medium quality corporate bond rate as
published in the Wall Street Journal on the November 30 following each World
Series. The amount that would have been in this fictional account on the
later of the 31st day after the end of the 2000 World Series or December 1,
2000 shall be referred to as the "Option Pool Amount."
(3) Events That Occur if the Association Exercises its Option.
If the Association exercises its option to extend, then the Association
shall make a payment to an account maintained by the Commissioner's Office of
Two Million Dollars ($2,000,000) on or before December 31, 2000 and that
amount shall be distributed to all Clubs pro rata. In addition, the Clubs
will no longer be obligated to maintain the fictional account referred to in
paragraph (2) above.
(4) Events That Occur if the Association Does Not Exercise its Option.
If the Association does not exercise its option to extend, then funds equal
to the Option Pool Amount shall be distributed in accordance with the
Association's instructions, within 50 days after the end of the 2000 World
Series. The Association will provide such instructions within 35 days after
the end of the 2000 World Series.
ARTICLE XXVIII-ANTITRUST
The Clubs and the Association will jointly request and cooperate in lobbying the
Congress to pass a law that will clarify that Major League Baseball Players are
covered under the antitrust laws (I.E., that Major League Players will have the
same rights under the antitrust laws as do other professional athletes, E.G.,
football and basketball players), along with a provision that makes it clear
that the passage of that bill does not change the application of the antitrust
laws in any other context or with respect to any other person or entity. If such
a law is not enacted by December 31, 1998 (the end of the next Congress), then
this Agreement shall terminate on December 31, 2000 (unless the Association
exercises its option to extend this Agreement as set forth in Article XXVII).
ARTICLE XXIX-COMPREHENSIVE AGREEMENT
This Agreement represents a complete, full and final understanding on all
bargainable subjects covering Players during the term of this
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Agreement, except such matters as may become bargainable pursuant to the
reopener provisions of this Agreement or under the terms of the following
agreements:
(a) The Major League Baseball Players Benefit Plan;
(b) The Agreement Re Major League Baseball Players Benefit Plan; and
(c) The Agreement regarding dues check-off.
All rights to bargain with one another concerning any subject whatsoever
regarding Players for the duration of this Agreement are expressly waived by the
Parties, except to the extent permitted in said Agreements and in the reopener
provisions of this Agreement. Should this Agreement be reopened pursuant to the
provisions hereof, each of the Parties shall have the right to take concerted
action in support of its position.
It is further agreed by the Parties that during the term of this Agreement they
will use their best efforts to ensure that all terms and conditions of all
Uniform Player's Contracts signed by individual Players will be carried out in
full.
ARTICLE XXX-EXECUTION OF THIS AGREEMENT
This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original, and such counterparts shall constitute but one and
the same instrument.
This Agreement is executed by the undersigned acting solely in their respective
representative capacities and not in their individual capacities.
IN WITNESS WHEREOF, the Parties have hereunto subscribed their names as of the
day and year first above written.
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MAJOR LEAGUE
BASEBALL PLAYERS
CLUBS ASSOCIATION
ATLANTA NATIONAL LEAGUE Sandy Alomar, Jr.
BASEBALL CLUB, INC. Ricky Bottalico
CHICAGO NATIONAL LEAGUE Brett Butler
BALL CLUB, INC. David Cone
THE CINCINNATI REDS Jim Corsi
COLORADO ROCKIES BASEBALL Mark Dewey
CLUB, LTD. Shawn Green
STERLING DOUBLEDAY Brian Johnson
ENTERPRISES, L.P. Al Leiter
HOUSTON MCLANE CO., INC. Al Martin
LOS ANGELES DODGERS, INC. Dennis Martinez
FLORIDA MARLINS BASEBALL Derrick May
CLUB, LTD. Brian McRae
MONTREAL BASEBALL AND Jeff Montgomery
COMPANY, LTD. Hal Morris
THE PHILLIES Lyle Mouton
PITTSBURGH ASSOCIATES C.J. Nitkowski
ST. LOUIS CARDINALS, L.P. Jim Poole
PADRES, L.P. B.J. Surhoff
SAN FRANCISCO BASEBALL Walt Weiss
ASSOCIATES, L.P. Dan Wilson
AZPB LIMITED PARTNERSHIP
BALTIMORE ORIOLES LIMITED
PARTNERSHIP
THE BOSTON RED SOX
BASEBALL CLUB
CALIFORNIA ANGELS, L.P.
CHICAGO WHITE SOX, LTD.
CLEVELAND INDIANS BASEBALL
COMPANY, LIMITED PARTNERSHIP
DETROIT TIGERS, INC.
KANSAS CITY ROYALS BASEBALL CORP.
MILWAUKEE BREWERS BASEBALL
CLUB, LIMITED PARTNERSHIP MINNESOTA TWINS PARTNERSHIP THE NEW YORK YANKEES
PARTNERSHIP ATHLETICS INVESTMENT GROUP, LLC THE BASEBALL CLUB OF SEATTLE, L.P.
TEXAS RANGERS BASEBALL PARTNERS TORONTO BLUE JAYS BASEBALL CLUB TAMPA BAY DEVIL
RAYS, LTD.
By /s/ Randy L. Levine By /s/ Donald M. Fehr
Major League Baseball Donald M. Fehr,
Player Relations Committee Executive Director
Randy L. Levine, Chief Labor Negotiator and General Counsel
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Exhibit 10.2
LEASE AGREEMENT
By and Between
GATEWAY ECONOMIC DEVELOPMENT
CORPORATION OF GREATER CLEVELAND
and
CLEVELAND INDIANS BASEBALL COMPANY
LIMITED PARTNERSHIP
Dated as of July 3, 1991
<PAGE> 2
TABLE OF CONTENTS
Page
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ARTICLE I ..........................................................DEFINITIONS
1.1 Definitions................................................... 2
1.2 Accounting Terms.............................................. 17
ARTICLE II LEASED PREMISES............................................... 18
ARTICLE III ISSUANCE OF BONDS AND OTHER FINANCING......................... 18
3.1 Approval of Financing......................................... 18
3.2 Nonrecourse Obligations as to the Lessee...................... 18
3.3 Senior Bonds, Subordinated Bonds and Luxury Tax
Receipts...................................................... 18
3.4 Stadium Revenue Bonds......................................... 19
ARTICLE IV CONSTRUCTION OF THE BASEBALL FACILITY......................... 19
4.1 Project Design................................................ 19
4.2 Construction Contracts. ..................................... 20
4.3 Design and Construction Consultants........................... 20
4.4 Design and Construction Documents............................. 20
4.5 Resolution of Objections to Design Documents.................. 22
4.6 Bidding; Revisions............................................ 23
4.7 Cost Savings.................................................. 25
4.8 Deferred Construction Items................................... 25
4.9 Completion Guaranty........................................... 25
4.10 Parking....................................................... 26
ARTICLE V TERM.......................................................... 27
5.1 Term.......................................................... 27
5.2 Completion.................................................... 27
5.3 Gateway Failure to Timely Commence Construction............... 28
5.4 Late Completion Remedies...................................... 29
5.5 Extension Options............................................. 30
ARTICLE VI RENT.......................................................... 31
6.1 Rent.......................................................... 31
6.2 Payments...................................................... 31
6.3 Audit......................................................... 31
ARTICLE VII ALTERATIONS BY THE LESSEE..................................... 32
7.1 Alterations and Additions by the Lessee....................... 32
7.2 Placement of Heavy Equipment.................................. 33
ARTICLE VIII USE OF BALLPARK............................................... 33
8.1 Lessee's Use.................................................. 33
8.2 Gateway's Use................................................. 34
8.3 Operator's Use................................................ 34
8.4 Special Events................................................ 34
8.5 Lessee's Management Approval Rights........................... 35
ARTICLE IX INSURANCE AND SUBROGATION..................................... 36
9.1 Gateway's Insurance........................................... 36
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9.2 Lessee's Insurance............................................ 36
9.3 Insurance Requirements........................................ 37
9.4 Certificates.................................................. 37
9.5 Waiver of Subrogation......................................... 37
ARTICLE X MAINTENANCE OF AND REPAIRS TO THE BASEBALL
FACILITY...................................................... 38
10.1 Gateway Obligations........................................... 38
10.2 Maintenance and Repair Procedures............................. 38
10.3 Capital Repairs Fund.......................................... 39
10.4 Capital Repairs............................................... 40
10.5 Lessee's Self-Help............................................ 40
ARTICLE XI REAL ESTATE AND PERSONAL PROPERTY TAXES............ 40
ARTICLE XII RIGHT OF ENTRY AND INSPECTION................................. 41
12.1 Lessee's Right of Entry and Inspection........................ 41
12.2 Gateway's Right of Entry and Inspection....................... 41
ARTICLE XIII DEFAULT AND REMEDIES.......................................... 42
13.1 Default by the Lessee......................................... 42
13.2 Gateway's Remedies............................................ 43
13.3 Default by Gateway............................................ 44
13.4 Lessee's Remedies............................................. 44
13.5 General Provisions............................................ 45
ARTICLE XIV SURRENDER OF BALLPARK......................................... 46
14.1 General....................................................... 46
14.2 Alterations and Improvements.................................. 46
14.3 Lessee's Property............................................. 46
14.4 Abandoning Premises or Personal Property...................... 47
ARTICLE XV DAMAGE TO BALLPARK............................................ 47
ARTICLE XVI TRANSFER OF FRANCHISE......................................... 48
ARTICLE XVII INDEMNIFICATION............................................... 49
17.1 Lessee Indemnification........................................ 49
17.2 Gateway Indemnification....................................... 49
17.3 Procedure Regarding Indemnification........................... 49
17.4 Limitation.................................................... 51
ARTICLE XVIII ASSIGNMENT................................................... 51
18.1 Assignment by Lessee.......................................... 51
18.2 Subletting.................................................... 51
18.3 Assignment by Lessor.......................................... 51
18.4 Assignees and Subtenants...................................... 51
ARTICLE XIX EMINENT DOMAIN................................................ 52
19.1 Termination for Condemnation.................................. 52
19.2 Allocation of Award........................................... 52
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19.3 Performance of Work........................................... 53
19.4 Temporary Taking.............................................. 53
ARTICLE XX UNTENANTABILITY............................................... 53
ARTICLE XXI NAME OF BASEBALL FACILITY AND FIRST EVENT..................... 54
21.1 Name of Baseball Facility..................................... 54
21.2 First Event at Baseball Facility.............................. 55
ARTICLE XXII CONDITIONS................................................... 55
22.1 Preconditions to Lessee's Obligations......................... 55
22.2 Premium Seating............................................... 55
22.3 Security Commitment........................................... 55
22.4 Financing Arrangements........................................ 55
22.5 New Lease and Management Negotiations
Commitment.................................................... 55
22.6 Condition to Gateway's Obligations............................ 56
ARTICLE XXIII SEASON TICKET GOAL.......................................... 57
ARTICLE XXIV RIGHT OF FIRST REFUSAL...................................... 57
ARTICLE XXV BROADCAST FEES.............................................. 58
ARTICLE XXVI TICKET REVENUE.............................................. 58
ARTICLE XXVII REPRESENTATIONS BY LESSEE................................... 58
27.1 Valid Existence............................................... 58
27.2 Power; No Limitation on Ability to Perform.................... 58
27.3 Valid Execution............................................... 59
27.4 Defaults...................................................... 59
27.5 Good Standing of Baseball Corporation......................... 59
27.6 Power of Baseball Corporation................................. 60
27.7 Valid Execution by Baseball Corporation....................... 60
27.8 Compliance with Laws.......................................... 60
27.9 Maintenance of Good Standing in League........................ 60
ARTICLE XXVIII REPRESENTATIONS BY GATEWAY................................. 60
28.1 Valid Existence............................................... 60
28.2 Power; No Limitation on Ability to Perform.................... 60
28.3 Valid Execution............................................... 61
28.4 Defaults...................................................... 61
28.5 Compliance with Laws.......................................... 61
28.6 Title......................................................... 61
28.7 Three Party Agreement and Central Market
Community Development Plan.................................... 61
ARTICLE XXIX SUBORDINATION, NONDISTURBANCE AND ATTORNMENT................. 62
ARTICLE XXX ESTOPPEL CERTIFICATE BY LESSEE............................... 63
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ARTICLE XXXI MISCELLANEOUS................................................. 63
31.1 Force Majeure................................................. 63
31.2 Amendment; Waiver............................................. 63
31.3 Consent....................................................... 64
31.4 Severability.................................................. 64
31.5 Covenant of Quiet Enjoyment................................... 64
31.6 Recordation of Lease.......................................... 64
31.7 Prorations.................................................... 65
31.8 Terms......................................................... 65
31.9 Captions...................................................... 65
31.10 Binding Effect................................................ 65
31.11 Agreement Contains All Terms.................................. 65
31.12 Only Landlord-Tenant Relationship............................. 65
31.13 Notices....................................................... 65
31.14 Applicable Law................................................ 66
31.15 Cross References.............................................. 66
31.16 Representatives............................................... 67
31.17 Effective Date................................................ 67
31.18 Antidiscrimination Clause..................................... 67
31.19 Accord and Satisfaction....................................... 67
31.20 No Merger..................................................... 67
31.21 Further Assurances............................................ 68
31.22 Joint Promotion of Baseball................................... 68
31.23 Retained Revenues............................................. 68
31.24 No Third Party Beneficiary.................................... 68
31.25 Conforming Amendments......................................... 68
31.26 Community Involvement......................................... 68
31.27 Counterparts.................................................. 68
ARTICLE XXXII GATEWAY COMMON AREA EASEMENT AND MAINTENANCE
AGREEMENT..................................................... 68
ARTICLE XXXIII LEGAL OPINIONS.............................................. 69
33.1 Lessee's Legal Opinion........................................ 69
33.2 Gateway's Legal Opinion....................................... 69
ARTICLE XXXIV LEAGUE APPROVAL.............................................. 69
ARTICLE XXXV THREE PARTY AGREEMENT AND CENTRAL MARKET
COMMUNITY DEVELOPMENT PLAN.................................... 69
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<PAGE> 6
LEASE AGREEMENT
THIS LEASE AGREEMENT (this "Agreement") is made as of this 3rd
day of July, 1991, by and between GATEWAY ECONOMIC DEVELOPMENT CORPORATION OF
GREATER CLEVELAND, a nonprofit corporation organized under the laws of the State
of Ohio (hereinafter referred to as "Gateway"), and CLEVELAND INDIANS BASEBALL
COMPANY LIMITED PARTNERSHIP, an Ohio limited partnership (hereinafter referred
to as the "Lessee").
RECITALS:
A. Gateway intends to construct a baseball park with related
amenities (the "Ballpark") on certain real property located in the City of
Cleveland, Ohio (the "City"), said real property being more fully described on
Exhibit A attached hereto and made a part hereof (the "Ballpark Land").
B. Gateway also intends to construct an arena, which shall be
located near the Ballpark, for appropriate sporting events which may include,
among other events, basketball games involving the Cleveland Cavaliers
basketball team (the "Cavs") and for other family and civic entertainment events
(the "Arena").
C. The Lessee is the holder of the franchise for the City
issued by the American League of Professional Baseball Clubs (the "American
League") and is the owner of the Cleveland Indians professional baseball team
(the "Team").
D. Gateway has issued (i) $78,664,320 Senior Lien Excise Tax
Bonds, 1990 Series A and B (the "Senior Bonds"), (ii) $38,390,000 Subordinated
Excise Tax Bonds (Cuyahoga County Annual Guaranty), Series 1990 (the
"Subordinated Bonds"), and (iii) $31,000,000 Stadium Revenue Bonds, Series 1990
(the "Stadium Revenue Bonds," and together with the Senior Bonds and the
Subordinated Bonds, collectively the "Bonds"), and has obtained other public and
private funding to pay for the costs of land acquisition, demolition, design,
construction, financing and other related costs incurred in connection with the
development INTER ALIA, of the Baseball Facility (as hereinafter defined).
E. Certain of the proceeds of the Bonds have been and will be
deposited into separate escrow or trust accounts (the "Bond Escrow Accounts").
F. Gateway and the Lessee have previously executed a
Memorandum of Intent, dated as of December 8, 1990 (the "Memorandum") that
included the program for the design and construction of the Baseball Facility as
was set forth in the Lessee's original program requirements of October 12, 1990,
whereby Gateway and the Lessee set forth their respective general understandings
with respect to the design, construction, maintenance and operation of the
Baseball Facility. Gateway and the Lessee acknowledge that the Baseball Facility
has been designed
<PAGE> 7
so that expansion to accommodate the playing of professional football by a
National Football League Team is not precluded.
G. Gateway and the Operator shall execute and deliver a
Management Agreement (the "Management Agreement"), pursuant to which the
Operator shall be obligated to perform certain duties and obtain certain rights
with respect to the management, operation and maintenance of the Baseball
Facility.
H. Gateway and the Lessee have executed and delivered a Ground
Lease (the "Ground Lease"), pursuant to which Gateway shall lease to the Lessee
Gateway's fee interest in the playing field area of the Baseball Facility more
fully described on Exhibit B attached hereto and made a part hereof (the
"Field"), together with all of the improvements to be constructed thereon and
all permanent improvements, additions, alterations, fixtures, equipment and
installations constructed, provided or added thereto by Gateway at any time (the
"Field Improvements").
I. Gateway desires to lease to the Lessee, and the Lessee is
desirous of leasing from Gateway, the Ballpark Land together with all
improvements to be constructed thereon, upon the terms and conditions herein set
forth.
J. It is a condition precedent to (i) the release of the
amounts deposited into the Bond Escrow Accounts, and (ii) the issuance of a
letter of credit by the Bank (as hereinafter defined) that Gateway and the
Lessee shall have executed and delivered this Agreement.
NOW, THEREFORE, in consideration of the premises, covenants
and agreements contained herein, the parties do hereby agree as follows:
ARTICLE I
---------
DEFINITIONS
1.1 DEFINITIONS. As used in this Agreement and unless
otherwise expressly indicated, the following terms shall have the following
meanings:
"ACTION" shall mean any demand, assertion, claim, action, or
proceeding, judicial or otherwise.
"ADDITIONAL PARKING" shall have the meaning set forth in
Subsection 4.10(c) hereof.
"AFFILIATE(S)" shall mean as to any named individual or
entity: (a) any individual or entity directly or indirectly owning, controlling
or holding with power to vote, fifty percent (50%) or more of the outstanding
voting interests of such named
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entity; (b) any entity fifty percent (50%) or more of whose outstanding voting
interests are, directly or indirectly, owned, controlled or held with power to
vote by such named individual or entity; (c) any entity or individual directly
or indirectly controlling, controlled by or under common control (using
ownership of fifty percent (50%) or more outstanding voting interests as a test
for determining control with respect to an entity) with such named individual or
entity; (d) any trustee, officer, director or general partner of such named
entity; or (e) if a named individual or entity is an officer, director, general
partner, trustee of an entity, such entity.
"AGREEMENT" shall mean this Lease Agreement.
"AMERICAN LEAGUE" shall have the meaning set forth in
Recital "C" hereof.
"ANNUAL CAPITAL REPAIRS FUND DEPOSIT" shall mean an amount
equal to five-tenths of one percent (.5%) of the final actual costs of
completing construction of and equipping the Baseball Facility in accordance
with the Final Plans, or such other amount as the Bank, the Lessee, and Gateway
shall mutually agree upon.
"APPROVED CONSTRUCTION DOCUMENTS" shall have the meaning set
forth in Section 4.6 hereof.
"ARENA" shall have the meaning set forth in Recital "B"
hereof.
"ARENA LAND" shall have the meaning set forth in Article
XXIV hereof.
"ARENA PARKING" shall have the meaning set forth in the
definition of Lessee's Parking Revenue.
"AUTHORIZED CONSTRUCTION REPRESENTATIVE" shall have the
meaning set forth in Section 4.5 hereof.
"AVERAGE TICKET PRICE" shall mean the product of the following
formula: (A) the sum of (i) the number of Tickets available for sale to the
general public in each price category MULTIPLIED BY (ii) the face Ticket price
of all Tickets available for sale to the general public in such price category,
DIVIDED BY (B) the sum of all Tickets available for sale to the general public.
"BALLPARK" shall have the meaning set forth in Recital
"A" hereof.
"BALLPARK IMPROVEMENTS" shall have the meaning set forth
in Article II hereof.
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"BALLPARK LAND" shall have the meaning set forth in
Recital "A" hereof.
"BANK" shall mean The Fuji Bank, Limited, a Japanese banking
corporation, acting through its San Francisco Agency, its successors and
assigns, or any substitute letter of credit bank under the Bond documents.
"BASEBALL CORPORATION" shall mean Cleveland Baseball
Corporation, an Ohio corporation, the sole general partner of the Lessee.
"BASEBALL FACILITY" shall mean, collectively, the
Ballpark Land, the Field and the Improvements.
"BASEBALL RULES AND REGULATIONS" shall mean the following
governing documents and agreements, as they may be amended from time to time:
(a) Constitution of the American League of Professional
Baseball Clubs;
(b) American League Rules and Regulations;
(c) American League Division of Receipts; and
(d) Major League Agreement.
"BOND ESCROW ACCOUNTS" shall have the meaning set forth in
Recital "E" hereof.
"BONDS" shall have the meaning set forth in Recital "D"
hereof.
"BROADCAST FEES" shall have the meaning set forth in
Article XXV hereof.
"BUDGET" shall have the meaning set forth in Section 4.9
hereof.
"BUSINESS DAY" shall mean any day other than a Saturday, a
Sunday or a public or bank holiday or the equivalent for banks generally under
the laws of the State of Ohio.
"CAPITAL REPAIRS" shall mean any work that is reasonably
required to be performed in and about the Baseball Facility, to repair, restore
or replace Components necessitated by any damage, destruction, ordinary wear and
tear, defects in construction or design, or any other cause; PROVIDED, HOWEVER,
that "Capital Repairs" shall not include (i) any work necessitated by Misuse
(ii) any work related to any Component that was not included in the scope of
Gateway's Work or otherwise required to be completed at Gateway's expense as
provided herein or in the Management
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Agreement, and (iii) Routine Maintenance. Capital Repairs shall include, but
shall not be limited to:
(a) repair or replacement of an HVAC compressor;
(b) replacement of carpeting that wears out as a result
of ordinary wear and tear with carpeting of similar
quality; provided such replacement shall not be
required more frequently than once every four years
other than for defective workmanship or product;
(c) repair or replacement of cracked or disintegrated
concrete, broken pipes or leaking roof or sections
thereof;
(d) manufacturer recommended replacement of scoreboard,
exterior message board and field lighting bulbs,
fuses and circuit breakers;
(e) replacement of all windows and other glass broken
due to settling;
(f) replacement of a seat that wears out or replacement
of a seat standard or the concrete into which the
seat is affixed; or
(g) general re-application of protective materials, such
as paint or weatherproofing.
In addition to the foregoing, "Capital Repairs" shall also
include, but shall not be limited to, the following:
(a) replacing any obsolete Component with more modern
replacements that will most likely be used in at
least seventy-five percent (75%) of major league
baseball parks within five (5) years of such
obsolescence; provided, however, that the parties
agree that the provisions of this Subsection (a)
shall not apply to the Main Scoreboard until after
the end of the tenth (10th) Term Year and that in
the event of a replacement of the Main Scoreboard
for obsolescence only such costs shall be shared
equally by the Operator and Gateway;
(b) changes or improvements required by television
networks having contracts with the Operator, the
Lessee or the American League;
(c) reasonable changes or improvements required of a
majority of American League open-air baseball parks
by the American League, the Commissioner of Baseball
or Baseball Rules and Regulations;
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(d) changes or improvements required or recommended by
any insurance carrier to enable the Lessee to obtain
insurance coverage at commercially reasonable rates,
provided that in lieu of effectuating such change or
improvement, Gateway may agree, in its discretion, to
pay the increased insurance premiums; or
(e) changes or improvements required by any laws,
ordinances, orders, rules, regulations or
requirements of any governmental authority.
"CAPITAL REPAIRS FUND" shall have the meaning set forth in
Section 10.3 hereof.
"CAVS" shall have the meaning set forth in Recital "B"
hereof.
"CAVS OPTION PERIOD" shall have the meaning set forth in
Article XXIV hereof.
"CENTRAL MARKET COMMUNITY DEVELOPMENT PLAN" shall mean the
Central Market Community Development Plan approved by the Council of the City on
September 29, 1986, and amended on November 5, 1990 and June 17, 1991.
"CENTRAL MARKET SQUARE SITE" shall mean the real property
described on Exhibit H attached hereto and made a part hereof.
"CITY" shall have the meaning set forth in Recital "A"
hereof.
"CLUB SEATS" shall mean the seats to be constructed as part of
the Ballpark and designated as club seats in the Final Plans.
"CMS SITE PLAN" shall mean the site plan for the Central
Market site attached hereto as Exhibit G and made a part hereof.
"COMPLETION DATE" shall mean the date of Substantial
Completion, unless otherwise specified herein.
"COMPLETION DEFAULT" shall have the meaning set forth in
Subsections 5.2 and 5.4(a) hereof.
"COMPLETION GUARANTY ACCOUNTS" shall have the meaning set
forth in Section 4.9 hereof.
"COMPONENT" shall mean any item that is incorporated into the
Baseball Facility, including, but not limited to, all structural members, seats,
electronic parts, scoreboards, and Ballpark equipment.
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"CONCESSIONAIRE" shall have the meaning set forth in
Section 2.3 of the Management Agreement.
"CONDEMNATION" shall mean any taking of property by exercise
of the power of eminent domain, whether by formal condemnation proceedings or by
purchase under threat of exercise of the power of eminent domain proceedings.
"CONSTRUCTION DEFAULT" shall have the meaning set forth
in Section 5.3 hereof.
"CONSTRUCTION DOCUMENTS" shall have the meaning set forth
in Subsection 4.4(c) hereof.
"COUNTY" shall mean Cuyahoga County, Ohio.
"CPI" shall mean the Consumer Price Index for the City of
Cleveland, Urban Wage Earners and Clerical Workers, All Items (1982-4=100), as
published by the U.S. Department of Labor, Bureau of Labor Statistics. If the
manner in which the CPI is determined by the Bureau of Labor Statistics shall be
substantially revised, including, without limitation, a change in the base index
year, an adjustment shall be made in such revised index that would produce
results reasonably equivalent to those that would have been obtained if such CPI
had not been so revised. If the CPI shall become unavailable to the public
because its publication is discontinued or otherwise, or if equivalent data are
not readily available to make the adjustment referred to in the preceding
sentence, then a comparable index published by an agency of the United States
government that reflects changes in the cost of living or purchasing power of
the consumer dollar published by any other governmental agency will be
substituted therefor, or, if no such index shall be available, then a comparable
index published by a major bank or other financial institution shall be used.
"DEFAULT OPTION PARCEL" shall have the meaning set forth in
Subsection 5.3(b) hereof.
"DEFERRED ITEMS" shall have the meaning set forth in
Section 4.8 hereof.
"DESIGN ARCHITECT" shall mean the architectural team for the
design of the Baseball Facility which is headed by the architectural firm of
Helmuth, Obata and Kasabaum.
"DESIGN DEVELOPMENT DOCUMENTS" shall have the meaning set
forth in Subsection 4.4(b) hereof.
"EMERGENCY REPAIR" shall mean Capital Repairs that are
necessary to protect public health or safety or that, if performed promptly can,
in the Lessee's reasonable judgment, avoid material cost to the Operator or
Gateway.
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"EXCLUDED OCCURRENCE" shall mean any of the following:
(a) damage or injury occurring at or arising out of or
incidental to Gateway Special Events;
(b) damage or injury arising out of any negligent or
willfully wrongful act or omission of Gateway, its
agents, employees, contractors or subcontractors, or
breach of any of Gateway's obligations hereunder; and
(c) damage or injury arising out of defects in the design
of the Baseball Facility or in the workmanship or
materials employed in the construction of the
Baseball Facility (but only to the extent included in
Gateway's Work, or any Capital Repairs made by any
party other than the Lessee or its agents, employees
or contractors).
"EXCLUDED TICKET" shall mean any Ticket that is either (i)
sold for less than its full face price with each such Ticket expressed as a
fraction equal to the actual discount amount off the sale price divided by the
face price (for example, if a Ticket with a face price of $10.00 is sold for
$7.00, such Ticket would be counted as three tenths (0.3) of an Excluded
Ticket), or (ii) used for trade-out or barter. The total number of Excluded
Tickets shall not exceed 100,000 for any Season.
"EXCLUSIVE USE PERIOD" shall mean each Home Date and the
seventy-two (72) hours (or such greater period of time as may be necessary for
preparation of the Baseball Facility for baseball play, as reasonably determined
by the Lessee) prior to such Home Date and the forty-eight (48) hours after such
Home Date.
"FIELD" shall have the meaning set forth in Recital "H"
hereof.
"FIELD IMPROVEMENTS" shall have the meaning set forth in
Recital "H" hereof.
"FINAL PLANS" shall have the meaning set forth in Section
4.1 hereof.
"FINANCING ARRANGEMENTS" shall mean all of Gateway's financing
plans and arrangements related to the construction of Gateway's Work and the
maintenance and operation of the Baseball Facility or the On-Site Parking.
"FORCE MAJEURE" shall mean acts of God, fire or other
casualty, earthquake, flood, epidemic, landslide, enemy act, war, holocaust,
riot, intervention by civil or military authorities of government, insurrection
or other civil commotion, general unavailability of certain materials, strikes,
boycotts or labor
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disputes beyond the control of either party hereto that cause such party to be
delayed or hindered in, or prevented from, the performance of any covenant or
obligation hereunder, other than one for the payment of money.
"GAAP" shall mean generally accepted accounting principles in
the United States of America in effect from time to time, consistently applied.
"GATEWAY" shall have the meaning set forth in the initial
paragraph hereof.
"GATEWAY CAM AGREEMENT" shall mean the Common Area Easement
and Maintenance Agreement by and among Gateway, the Operator and the Lessee to
be dated of even date herewith, which document shall set forth all the
respective parties' rights, duties and obligations with respect to the use,
revenues, expenses, repair and maintenance of the Gateway Common Areas.
"GATEWAY COMMON AREAS" shall have the meaning set forth in
Section 4.1 hereof.
"GATEWAY DEFAULT" shall have the meaning set forth in
Section 13.3 hereof.
"GATEWAY SITE ARCHITECT" shall mean the architectural team for
the site planning of the Gateway project site which consists of the
architectural firm of Sasaki & Associates, Richard Fleischman Architects and
such other architectural firms selected by Gateway and approved by the Operator
and the Lessee.
"GATEWAY SPECIAL EVENT" shall mean a not-for-profit Special
Event to be staged by Gateway or a Promoter which is civic or charitable in
nature, including, but not limited to, Little League play-off games, Special
Olympics, and other youth activities, and which is subject to certain approval
procedures set forth in this Agreement and the Management Agreement.
"GATEWAY'S REPRESENTATIVE" shall have the meaning set
forth in Section 31.16 hereof.
"GATEWAY'S WORK" shall mean all Program Requirements and Site
and On-site Parking Requirements as reflected in the Final Plans, as the same
shall be amended from time to time as provided herein, and to be reflected in
Gateway's final as-built drawings.
"GOVERNMENT SECURITIES" means (i) any bonds or other
obligations of the United States of America which, as to principal and interest,
constitute direct obligations of or are guaranteed by the United States of
America for the full and timely payment thereof; (ii) any bonds, debentures,
participation certificates, notes or other obligations of any agency or other
corporation which has been or may hereafter be created by or pursuant to an Act
of
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Congress of the United States as an agency or instrumentality thereof, the
bonds, debentures, participation certificates, notes or other obligations of
which are unconditionally guaranteed by the United States of America as to full
and timely payment of the principal of and interest thereon; and (iii) any
certificates or other evidences of a direct ownership interest in obligations of
the character described in clauses (i) and (ii) hereof or in specific portions
thereof, including, without limitation, portions consisting solely of the
principal thereof or solely of the interest thereon, which certificates or other
evidences are maintained in the records of the Federal Reserve and are held by a
custodian, provided that Government Securities shall not include any unit
investment trusts, money market mutual funds, or other mutual funds.
"GROUND LEASE" shall have the meaning set forth in
Recital "H" hereof.
"HOME DATE" shall mean each of the Team's scheduled or
rescheduled home playing dates during the Season at the Baseball Facility; each
date on which an American League Championship Series, World Series game or other
post-season game could potentially be played at the Baseball Facility (except
that any such potential game shall not be deemed to be a Home Date after it is
finally determined that such game will not be played at the Baseball Facility);
the date of any All-Star game scheduled at the Baseball Facility; the seven-day
period immediately preceding the first game of each Season at the Baseball
Facility and the date of any exhibition game, provided the Lessee has given
Gateway written notice of the date for such exhibition game.
"IMPROVEMENTS" shall mean, collectively, the Ballpark
Improvements, the Premium Seating and the Field Improvements.
"INDEMNIFIED PARTY" shall mean any party entitled to
indemnification hereunder.
"INDEMNIFYING PARTY" shall mean the party required by the
terms hereof to provide indemnification.
"INITIAL CAPITAL REPAIRS FUND DEPOSIT" shall mean the
first Annual Capital Repairs Fund Deposit.
"INTEREST RATE" shall mean the interest rate of two percent
(2%) above the rate of interest per annum then charged to large corporate
borrowers of the highest credit standing for short-term unsecured obligations,
but in no event exceeding the maximum legal rate permitted to be charged to the
Lessee or Gateway, whichever is less.
"LEASE YEAR" shall mean each period of twelve (12) consecutive
calendar months during the Term, with the first Lease Year commencing on the
first day of the November next succeeding
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the Completion Date and with successive Lease Years commencing on successive
anniversaries of the first day of the first Lease Year. "Lease Years" means more
than one (1) Lease Year. A "Partial Lease Year" means if the Completion Date is
a date other than November 1, then the period from the Completion Date to the
first day of the first Lease Year. Unless otherwise expressly provided for
herein, all terms and conditions herein shall apply the same to a Partial Lease
Year as to a Lease Year; provided, however, that all payments and other
financial obligations shall be apportioned or prorated pursuant to Section 31.7
hereof.
"LESSEE" shall have the meaning set forth in the initial
paragraph hereof.
"LESSEE DEFAULT" shall have the meaning set forth in
Section 13.1 hereof.
"LESSEE'S OFFICE SPACE" shall mean the Team's and the Lessee's
office/administration facilities to be located within the Baseball Facility, as
designated in the Final Plans.
"LESSEE'S PARKING REVENUE" shall mean (a) all net revenue
actually received from any On-Site Parking, PLUS (b) fifty percent (50%) of all
net revenue generated from all other parking located on the Gateway Common
Areas, PLUS (c) twenty-five percent (25%) of all net revenue received by Gateway
from the Additional Parking. With respect to (b) above, in the event it becomes
necessary to share any of the net revenue referred to in (b) above with any
other sports team, the Lessee's share of the net revenue shall be diluted
equally with Gateway's share, but in no event shall the Lessee's share of such
net revenue be less than twenty-five percent (25%). For purposes of calculating
Lessee's Parking Revenue, "net revenue" shall mean gross revenue LESS all
operating expenses incurred by Gateway or the County, if applicable, and all
debt service payments and reserves required to be made or retained by Gateway
pursuant to any financing arrangements with respect to such parking areas and
facilities. Notwithstanding the above, Gateway anticipates constructing and
providing at least 1700 parking spaces for Arena events ("Arena Parking"). In
the event the Arena Parking is constructed, after one (1) full calendar year of
operations at the Arena subsection (a) above shall be deleted and payments
thereunder shall cease and Lessee shall be entitled to receive, in lieu thereof,
a percentage of the aggregate net revenue from the On-Site Parking and the Arena
Parking, the numerator of which percentage is the actual attendance at all
Baseball Facility events and the denominator of which percentage is the actual
attendance at all Baseball Facility events PLUS the actual attendance at all
Arena events. Estimated payments shall be made based upon the prior calendar
year attendance at the Baseball Facility and the Arena, with a final year end
adjustment as provided for in Subsection 4.10(d) hereof. Actual attendance
tickets shall be calculated in the same manner at both facilities.
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"LESSEE'S REPRESENTATIVE" shall have the meaning set
forth in Section 31.16 hereof.
"LUXURY TAX RECEIPTS" shall mean all revenues received by the
County from the excise taxes levied pursuant to Sections 307.696, 307.697,
4301.421 and 5743.024 of the Ohio Revised Code for the purpose of paying for a
portion of the costs of the Baseball Facility, the Arena and related economic
development
purposes.
"MAJOR CAPITAL REPAIR" shall mean any Capital Repair that
renders the Baseball Facility untenantable in whole or in part by the Lessee or
the Operator as determined by the Lessee or the Operator, in their reasonable
discretion, or will cost in excess of $500,000 to perform.
"MANAGEMENT AGREEMENT" shall have the meaning set forth
in Recital "G" hereof.
"MEDIATOR" shall have the meaning set forth in Section
4.5 hereof.
"MEMORANDUM" shall have the meaning set forth in Recital
"F" hereof.
"MISUSE" shall have the meaning set forth in the
Management Agreement.
"OBLIGATIONS" shall mean and include any and all of either
party's obligations and/or liabilities to the other party of every kind, nature
and description, direct or indirect, secured or unsecured, joint, several, joint
and several, absolute or contingent, due or to become due, now or hereafter
existing or arising, regardless of how such obligations or liabilities arise or
by what agreement or instrument they may be evidenced or whether evidenced by
any agreement or instrument, including, but not limited to, any and all of such
party's obligations and/or liabilities under this Agreement or under any other
agreement between Gateway and the Lessee regardless of whether the obligation is
to perform acts or refrain from taking any action.
"ON-SITE PARKING" shall have the meaning set forth in
Subsection 4.10(a) hereof.
"OPERATOR" shall have the meaning set forth in the
Management Agreement.
"OPERATOR DEFAULT" shall have the meaning set forth in
the Management Agreement.
"OPERATOR'S SPACE" shall mean the space to be located in the
Baseball Facility for the Operator's office facilities and designated as the
Operator's Space in the Final Plans.
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"PAID ATTENDANCE TICKETS" shall mean each and every Ticket
issued for value by Lessee, less (i) Excluded Tickets, and (ii) any Tickets
which are not reported as paid attendance to the American League. Gateway
acknowledges that the attendance reported to the media is not necessarily the
paid attendance reported to the American League.
"PERMITTED ESCROW AGENT" shall mean any one or more of the
following banks: Ameritrust Company, N.A., Bank One Cleveland N.A., Central
Trust Co., The Fifth Third Bank, Huntington National Bank, National City Bank,
Society National Bank or the Bank.
"PERMITTED INVESTMENTS" shall mean (i) Government Securities,
(ii) any investment permitted by the documents for the Bonds, and (iii)
investment agreements with a banking corporation that has (or its parent
corporation has) an unsecured, uninsured and unguaranteed obligation rated in at
least the second highest rating category of either Moody's Investors Services
Inc. or Standard & Poor's Corporation (without regard to increments or
intermediate ratings, e.g., pluses or minuses).
"PERSON" shall mean an individual, partnership, corporation
(including a business trust), joint stock company, trust, unincorporated
association, joint venture or any other entity, the United States, or a federal,
state or political subdivision thereof or any agency or court of such state or
subdivision.
"PREMIUM SEATING LICENSE" shall mean a license agreement, in
form and substance acceptable to the Bank and the Operator (or any permitted
assignee thereof), pursuant to which the Operator shall license to Persons the
right to use certain of the Premium Seating described therein upon the terms and
conditions set forth therein.
"PREMIUM SEATING REVENUE" shall have the meaning set
forth in the Management Agreement.
"PREMIUM SEATING REVENUE ACCOUNT" shall have the meaning set
forth in the Management Agreement.
"PREPAID CLUB SEATS" shall mean those Club Seats licensed
pursuant to long-term Premium Seating Licenses for terms of ten (10) Seasons
which shall provide that the license fees for such Club Seats shall be prepaid
in one (1) lump sum; PROVIDED, HOWEVER, that the actual number of Prepaid Club
Seats shall not exceed five hundred (500).
"PREPAID PREMIUM SEATING" shall mean, collectively, the
Prepaid Private Suites and the Prepaid Club Seats.
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"PREPAID PREMIUM SEATING EXPENSES" shall have the meaning set
forth in the Management Agreement.
"PREPAID PREMIUM SEATING REVENUE" shall have the meaning set
forth in the Management Agreement.
"PREPAID PREMIUM SEATING REVENUE ACCOUNT" shall have the
meaning set forth in the Management Agreement.
"PREPAID PRIVATE SUITES" shall mean those Private Suites
licensed pursuant to long-term Premium Seating Licenses for terms of ten (10)
Seasons which shall provide that the license fees for such Private Suites shall
be prepaid in one (1) lump sum; PROVIDED, HOWEVER, that the actual number of
Prepaid Private Suites shall not exceed twenty-five (25).
"PRIVATE SUITES" shall mean the private viewing boxes to be
constructed as part of the Ballpark and designated as private suites in the
Final Plans.
"PROGRAM REQUIREMENTS" shall mean the program for the design
and construction of the Improvements set forth on Exhibit C attached hereto and
made a part hereof, which program, together with the Site and On-Site Parking
Requirements, shall, in all respects supersede and replace the Lessee's original
program requirements delivered by the Lessee to Gateway dated October 12, 1990,
and attached to the Memorandum.
"PROJECT ARCHITECTS" shall mean, collectively, the Design
Architect and the Gateway Site Architect, and "PROJECT ARCHITECT" shall mean
either the Design Architect or the Gateway Site Architect, as the context may
require.
"PROMOTER" shall have the meaning set forth in the
Management Agreement.
"PROPERTY DAMAGE" shall mean any partial or total damage or
destruction of the Baseball Facility caused by fire or other occurrence and any
other property damage.
"REAL AND PERSONAL PROPERTY TAXES" shall have the meaning set
forth in Article XI hereof.
"RENT" shall have the meaning set forth in Section 6.1
hereof.
"REPORTING PERIOD" shall mean, from and after the date of this
Agreement, each calendar quarter ending on March 31, June 30, September 30 and
December 31.
"ROUTINE MAINTENANCE" shall mean the provision of all labor
and materials which are required to (a) keep the Baseball Facility and the
Components in good order and repair which is of
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a routine, regular and predictable nature, (b) keep the Baseball Facility clean
and free of debris, and (c) repair, maintain or replace Components which are
installed by the Lessee or the Operator unless such installation was performed
hereunder on behalf of Gateway in accordance with Gateway's obligations
hereunder. Routine Maintenance shall not include (i) repair or replacement
required as a result of ordinary wear and tear, unless otherwise expressly
specified herein, or (ii) Capital Repairs. Routine Maintenance shall include,
but shall not be limited to, the following:
(a) performing all preventive or routine maintenance that
is stipulated in operating manuals for the Components
as regular, periodic maintenance procedures;
(b) regular maintenance procedures for the HVAC system,
including periodic cleaning, lubricating and changing
of air filters;
(c) groundskeeping and maintenance of the surface of the
Field, including mowing, seeding, fertilizing,
marking lines, installing and removing bases and the
pitcher's mound and resodding;
(d) changing of standard, isolated light bulbs, fuses and
circuitbreakers as they burn out;
(e) cleaning all portions of the Baseball Facility
immediately after each event (other than Gateway
Special Events unless retained by Gateway to perform
such services) held at the Baseball Facility;
(f) touch-up painting;
(g) readying the playing field each Term Year for the
upcoming Season; and
(h) the labor required to perform a Capital Repair to the
extent that such labor is performed by regular,
on-site personnel acting in accordance with the
standard duties for which such on-site personnel are
regularly employed.
"SCHEDULE" shall have the meaning set forth in Section
4.1 hereof.
"SCHEMATIC DESIGN DOCUMENTS" shall have the meaning set forth
in Subsection 4.4(a) hereof.
"SEASON" shall mean a period of time commencing with the first
day of March in any calendar year and ending with the last home game (including
any postseason home game) played by the Team
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during such calendar year at the Baseball Facility. Seasons are sometimes herein
referred to by the calendar year in which they occur (e.g. "1994 Season").
"SENIOR BONDS" shall have the meaning set forth in
Recital "D" hereof.
"SITE AND ON-SITE PARKING REQUIREMENTS" shall mean the program
for the design and construction of certain required site preparation and
infrastructure improvements and the On-Site Parking set forth on Exhibit D
attached hereto and made a part hereof.
"SPECIAL EVENT" shall mean any event or period of use other
than an event on a Home Date including, but not limited to, concerts, shows,
trade shows, sporting events or other public exhibitions and any Gateway Special
Event.
"SPECIAL EVENT AREAS" shall mean only the playing field,
concourses, seating areas, auxiliary locker room, security and first aid rooms,
day-of-game employee lockers, general elevators, trash compactors, loading
docks, service tunnels, freight elevators, security observation booth and
outside ticket booths (exclusive of automatic ticket dispensing machinery) and
such other areas that may be designated from time to time by the Lessee.
"SPECIAL EVENT PERIOD" shall have the meaning set forth
in the Management Agreement.
"STADIUM REVENUE BONDS" shall have the meaning set forth
Recital "D" hereof.
"SUBORDINATED BONDS" shall have the meaning set forth in
Recital "D" hereof.
"SUBSTANTIAL COMPLETION" or "SUBSTANTIALLY COMPLETED" shall
mean the completion of Gateway's Work to the extent that (a) the Lessee and the
Operator are legally entitled (exclusive of any legal impediments not related to
Gateway's obligations under this Agreement, the Management Agreement, the Ground
Lease or the Gateway CAM Agreement), to occupy the Baseball Facility and the On-
Site Parking in accordance with this Agreement, the Ground Lease, the Management
Agreement and the Gateway CAM Agreement, respectively, and (b) the Project
Architects deliver their certificates to Gateway, the Lessee and the Operator
stating that all of Gateway's Work has been substantially completed subject only
to "punch list" type items which (i) do not materially interfere with the use
and occupancy of the Baseball Facility by the Lessee and the Operator, and (ii)
may be completed within thirty (30) calendar days of the date of such
certificates, or such longer reasonable period of time provided: (A) Gateway
promptly commences and diligently pursues completion of such "punch list" items,
(B) such noncompletion does not materially affect the Lessee's or the Operator's
right to use and occupy the Baseball Facility, as
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determined by the appropriate governing administration or regulatory agencies,
and (C) such items may be completed within such time period as shall be
permitted by applicable law or regulatory authorities so as to preserve the
Lessee's or the Operator's respective rights to use and occupy the Baseball
Facility, but in no event later than the beginning of the Season following the
Completion Date.
"SUBSTANTIALLY UNDER CONSTRUCTION" shall mean that: (a) the
Final Plans have been approved in accordance with this Agreement, (b) all site
preparations necessary to commence construction of the Improvements (as set
forth in the Program Requirements) have been completed, (c) eighty percent 80%
of all footings, caissons and building foundation work for the multi-level
structure portion of the Baseball Facility has been completed and is then
proceeding in accordance with the Schedule, and (d) the Project Architects and
Gateway have delivered to the Lessee their respective current statements
certifying the percentage of completion to such date and Gateway's statement
setting forth Gateway's financial ability to complete Gateway's Work, maintain a
contingency reserve of at least five percent (5%) of the estimated remaining
costs to complete Gateway's Work (which contingency reserve is included in the
Budget), and fund the Capital Repairs Fund all as more fully set forth in
Section 4.9 hereof.
"TEAM" shall have the meaning set forth in Recital "C"
hereof.
"TERM" shall have the meaning set forth in Section 5.1
hereof.
"TERM YEAR" shall have the meaning set forth in the
Management Agreement.
"THREE PARTY AGREEMENT" shall mean that certain Agreement
Relating to Ownership, Financing, Construction and Operation of a Sports
Facility and Related Economic and Redevelopment Projects, dated as of November
7, 1990, by and among the County, the City and Gateway.
"TICKET" shall mean any ticket for a Home Date.
"TICKET REVENUE" shall mean all cash and other property from
time to time actually received by the Lessee, or the Operator on behalf of the
Lessee, in respect of or in exchange for any or all Tickets.
1.2 ACCOUNTING TERMS. Any accounting term used in this
Agreement shall have, unless otherwise specifically provided herein, the meaning
customarily given in accordance with GAAP, and all financial computations
hereunder shall be computed, unless
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otherwise specifically provided herein, in accordance with GAAP,
as consistently applied.
ARTICLE II
----------
LEASED PREMISES
For the Rent and upon the agreements contained in this
Agreement, Gateway hereby leases to the Lessee, and the Lessee hereby leases
from Gateway, the Ballpark Land, together with all the improvements, to be
constructed thereon, including, but not limited to, the Ballpark and related
improvements as more particularly described in Article IV hereof, and all
permanent improvements, additions, alterations, fixtures, equipment and
installations constructed, provided or added thereto by Gateway at any time (the
"Ballpark Improvements"). Ballpark Improvements shall not include the Field
Improvements, which improvements shall be leased to the Lessee, together with
the Field, pursuant to the terms and conditions of the Ground Lease.
ARTICLE III
-----------
ISSUANCE OF BONDS AND OTHER FINANCING
3.1 APPROVAL OF FINANCING. The Lessee shall have the right to
approve, in its reasonable discretion, all Financing Arrangements. Gateway shall
deliver full and complete copies of all proposed Financing Arrangements within a
reasonable time after such proposals and documents are available. Within ten
(10) Business Days after receipt of any proposed Financing Arrangement, the
Lessee shall notify Gateway of any reasonable objections to such Financing
Arrangement. In the event that the Lessee fails to notify Gateway of any such
objections to the proposed Financing Arrangement within such ten (10) Business
Day period, the Financing Arrangement shall be deemed approved by the Lessee.
3.2 NONRECOURSE OBLIGATIONS AS TO THE LESSEE. All obligations
with respect to any Financing Arrangements, except this Agreement and the Ground
Lease, shall be without recourse to the Lessee. None of the Lessee's partners
(general or limited), or their personal or legal representatives, successors or
assigns, shall have personal liability for the payment of any indebtedness
incurred under any Financing Arrangement of Gateway (including, but not limited
to, this Agreement and the Ground Lease), or the performance of the covenants of
any agreements related thereto.
3.3 SENIOR BONDS, SUBORDINATED BONDS AND LUXURY TAX RECEIPTS.
Gateway has issued the Senior Bonds and the Subordinated Bonds for the purpose
of paying for a portion of the design and construction costs of the Baseball
Facility. Certain of the proceeds of the Senior Bonds and all of the
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proceeds of the Subordinated Bonds have been deposited into separate Bond Escrow
Accounts and shall be released therefrom upon the satisfaction of certain
conditions set forth in the Bond documentation. Upon the satisfaction of such
conditions, the proceeds of the Senior Bonds and the Subordinated Bonds shall be
released from the respective Bond Escrow Accounts and shall be used, INTER ALIA,
to pay for a portion of the design and construction costs of the Ballpark
Improvements. The Senior Bonds and the Subordinated Bonds shall be repaid from
the Luxury Tax Receipts. The holders of the Senior Bonds shall have a first, and
the holders of the Subordinated Bonds shall have a second, priority interest in
the Luxury Tax Receipts. None of the proceeds of the Senior Bonds or the
Subordinated Bonds shall be used for the design, construction or repairs of the
Field Improvements or the Premium Seating.
3.4 STADIUM REVENUE BONDS. Gateway has issued the Stadium
Revenue Bonds for the purpose of paying for a portion of the design and
construction costs of the Baseball Facility. The proceeds of the Stadium Revenue
Bonds have been deposited into a Bond Escrow Account and shall be released upon
the satisfaction of certain conditions set forth in the Stadium Revenue Bond
documentation. Upon the satisfaction of such conditions, such proceeds shall be
released from such Bond Escrow Account and shall be used, INTER ALIA, to pay for
the design and construction costs of the Ballpark Improvements. None of the
proceeds of the Stadium Revenue Bonds shall be used for the design, construction
or repairs of the Field Improvements or the Premium Seating.
ARTICLE IV
----------
CONSTRUCTION OF THE BASEBALL FACILITY
4.1 PROJECT DESIGN. Gateway shall cause Gateway's Work to be
completed in accordance with final plans and specifications (the "Final Plans")
to be prepared in accordance with the provisions of this Article IV. Gateway
will prepare and deliver to the Lessee for the Lessee's approval, which approval
shall not be unreasonably withheld, (i) a preliminary, line item estimate for
the completion of Gateway's Work on or before August 15, 1991, and (ii) a
schedule for the design and construction of Gateway's Work (the "Schedule") on
or before September 1, 1991. Gateway shall also deliver on or before August 7,
1991, the Schematic Design Documents. It is the purpose of this Article IV to
cause the Final Plans to comply with the requirements of the Program
Requirements and the Site and On-Site Parking Requirements and to produce a
"first class, state-of-the-art" Baseball Facility, as determined by reference to
the new ballpark facilities for the Chicago White Sox and the Baltimore Orioles.
The design process for Gateway's Work shall be a cooperative mutual endeavor in
which Gateway and the Lessee shall be obligated to work together and participate
actively. Gateway and Lessee agree to make required submissions and to render
approvals or disapprovals in accordance with the
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Schedule and this Agreement. The Lessee shall also participate in the design and
construction process of the entire Gateway project site to the extent such
design and construction process affects traffic patterns, use of common areas of
the Central Market Square Site (the "Gateway Common Areas"), said common areas
being more fully described in the Gateway CAM Agreement, and other operations
related or ancillary to the operation of the Baseball Facility. To the extent
that Gateway obtains rights under any contract related to the design or
construction of Gateway's Work, Gateway will exercise such rights in accordance
with all approval and consent provisions and rights provided for in this
Agreement and the Management Agreement.
4.2 CONSTRUCTION CONTRACTS. Gateway's Work shall be
constructed pursuant to construction contracts that shall endeavor to minimize
construction risk and that are in forms, including all material terms and
conditions, acceptable to Bank and Lessee. All construction contracts shall be
awarded upon compliance with all requirements for minority hiring and
competitive bidding applicable to Gateway. Gateway shall administer such
contracts with the cooperation of the Lessee. The construction contracts will
provide contractor performance requirements acceptable to Bank and Lessee to
Substantially Complete Gateway's Work prior to the Completion Date. Except as
otherwise consented to by the Lessee in writing, the construction contracts will
provide for recovery of damages to the extent permitted by law or equity in the
event of failure of performance by the contractor. Gateway shall use its best
efforts to obtain a "no strike" clause in a project agreement with the labor
unions for the construction of Gateway's Work.
4.3 DESIGN AND CONSTRUCTION CONSULTANTS. Gateway and the
Lessee acknowledge and agree that each has approved the Design Architect and the
Gateway Site Architect. Gateway and the Lessee also acknowledge and agree that
each has approved the contracts between the Design Architect and Gateway, and
the Gateway Site Architect and Gateway. The Design Architect and the Gateway
Site Architect shall not be changed and such contracts shall not be amended or
modified without the prior written approval of the Lessee, which approval shall
not be unreasonably withheld or delayed. Prior to Gateway's execution of a
contract with any consultant, Gateway shall deliver to Lessee, for the Lessee's
approval, a copy of the form of the proposed contract, including all material
terms and conditions. The Lessee's approval of such contracts shall not be
unreasonably withheld or delayed. In addition to the Lessee's right to approve
the form of any consultant's contract, any consultant to Gateway that is not
required by law to be selected pursuant to a competitive bidding process shall
be selected and hired by Gateway, subject to the approval of the Lessee, which
approval shall not be unreasonably withheld or delayed.
4.4 DESIGN AND CONSTRUCTION DOCUMENTS.
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(a) Gateway shall cause the Project Architects to timely
prepare and deliver to the Lessee, but in no event later than the date set forth
in the Schedule unless otherwise agreed to in writing by Lessee, for the
approval of the Lessee, subject to Subsection 4.4(d) below, schematic design
documents for Gateway's Work, including, but not limited to, site plans, floor
plans, elevations, sections and outline specifications (the "Schematic Design
Documents"). The Schematic Design Documents shall be based upon the Program
Requirements and the Site and On-Site Parking Requirements.
(b) Gateway shall cause the Project Architects to timely
prepare and deliver to the Lessee, but in no event later than the date set forth
in the Schedule unless otherwise agreed to in writing by Lessee, for the
approval of the Lessee, subject to Subsection 4.4(d) below, design development
documents for Gateway's Work, including, but not limited to, site plans, floor
plans, elevations, enlarged floor plans, miscellaneous details and updated
outline specifications (the "Design Development Documents"). The Design
Development Documents shall be based upon the approved Schematic Design
Documents, the Program Requirements and the Site and On-Site Parking
Requirements.
(c) Gateway shall cause the Project Architects to timely
prepare and deliver to the Lessee, but in no event later than the date set forth
in the Schedule unless otherwise agreed to in writing by Lessee, for the
approval of the Lessee, subject to Subsection 4.4(d) below, complete
construction documents, including drawings and specifications setting forth in
detail all requirements for the construction of Gateway's Work (the
"Construction Documents"). The Construction Documents shall be based upon the
approved Design Development Documents.
(d) The Lessee may withhold, in its sole discretion, Lessee's
approval of the Schematic Design Documents, the Design Development Documents or
the Construction Documents if such documents make changes to or do not properly
set forth a previously agreed-upon design concept.
(e) No change from a previously approved design concept shall
be permitted unless Gateway and the Lessee mutually agree to the change. Any
change from a previously approved design concept shall be pursuant to a written
agreement between Gateway and the Lessee authorizing such change and specifying
the method for resolving any cost or time impacts associated with such change.
(f) The Lessee shall be permitted to consult with the Project
Architects throughout the design process. The Project Architects shall be
requested by Gateway to submit the Schematic Design Documents, the Design
Development Documents and the Construction Documents to the Lessee for review as
provided herein.
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4.5 RESOLUTION OF OBJECTIONS TO DESIGN DOCUMENTS. If the
Lessee withholds approval of the Schematic Design Documents, the Design
Development Documents or the Construction Documents pursuant to Subsection
4.4(d) above, or if Gateway determines that the Schematic Design Documents, the
Design Development Documents or the Construction Documents do not conform with
the design concept or the Budget previously agreed upon, the Lessee or Gateway,
as the case may be, shall promptly, and in no event later than twenty (20)
calendar days after receipt by such party of the Schematic Design Documents, the
Design Development Documents or the Construction Documents, notify the other
party in writing of the specific objections that such party has thereto. Failure
to so notify the other party within such twenty (20) day period shall be deemed
to constitute approval by such party of the Schematic Design Documents, the
Design Development Documents or the Construction Documents, as the case shall
require. Gateway and the Lessee shall each designate one individual (the
"Authorized Construction Representative" for such party) to make or receive
notice of objections and to resolve such objections as provided in this Section
4.5. If the Authorized Construction Representative for Gateway and the Lessee
agree that an objection is warranted, Gateway shall direct the responsible
Project Architect to make appropriate modifications to the Schematic Design
Documents, the Design Development or the Construction Documents, as the case
shall require, and to resubmit such documents for approval. Such resubmitted
documents shall be subject to the same procedures for making objections as are
set forth in this Subsection 4.5. If the Authorized Construction Representative
for Gateway and the Lessee do not agree within five (5) calendar days after
notice of an objection is made that such objection is warranted, the Authorized
Construction Representative shall meet within five (5) calendar days thereafter
to mutually select a third individual, experienced in the design and/or
construction of structures or elements of structures similar to those involved
in such objection (the "Mediator"), who shall participate in the resolution of
the objection. If the Authorized Construction Representative for Gateway and the
Authorized Construction Representative for the Lessee are unable to agree upon
an individual to serve as the Mediator, the Mediator shall be selected by the
presiding judge of the United States District Court for the Northern District of
Ohio, Eastern Division, from lists of qualified persons prepared by both the
Lessee and Gateway, unless Gateway and Lessee mutually agree to a substitute
process. The Mediator, the Authorized Construction Representative for Gateway
and the Authorized Construction Representative for the Lessee shall comprise the
"Construction Design Committee." The Construction Design Committee, shall meet
as soon as practicable thereafter, and in no event later than ten (10) calendar
days after selection of the Mediator, to consider the objection and determine
whether the objection is warranted. The determination of the Construction Design
Committee, by a two- thirds (2/3) vote, shall be in writing and shall be final
and binding upon Gateway and the Lessee. If the Construction Design Committee
determines that an objection is warranted, Gateway shall
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direct the responsible Project Architect to make appropriate modifications to
the Schematic Design Documents, the Design Development Documents or the
Construction Documents, as the case shall require, and to resubmit such
documents for approval. Such resubmitted documents shall be subject to the same
procedures for making objections as are set forth in this Section 4.5. Gateway
shall cause the Final Plans to be completed and delivered to Lessee no later
than the date set forth in the Schedule unless otherwise agreed to in writing by
Lessee.
4.6 BIDDING; REVISIONS.
(a) Upon approval by Gateway and the Lessee of the
Construction Documents for Gateway's Work or a portion thereof, the Construction
Documents shall be initialed by the parties and shall be submitted by Gateway
for bids (the "Approved Construction Documents"). With respect to Gateway's Work
in the Site and On- site Parking Requirements, Gateway may utilize the bid
process described herein; provided, however, that Gateway shall not be entitled
to terminate this Agreement in the event such bids exceed any estimated budgets
for such portion of Gateway's Work, and, upon completion of the bidding process
the Approved Construction Documents shall be deemed the Final Plans for such
work. With respect to the Improvements in the Program Requirements, upon
completion of bidding, if the lowest and best bid is less than the amount set
forth in the Budget for such work, the Approved Construction Documents shall be
deemed the Final Plans with respect to that portion of Gateway's Work. In the
event that the lowest and best bid exceeds the amount set forth in the Budget
for such work, during the next thirty (30) calendar days, (i) Gateway and the
Lessee shall endeavor to revise the Approved Construction Documents to reduce
the scope of the work or substitute materials or work and solicit revised bids;
provided, however, that Lessee shall have no obligation to agree to any
reduction or substitution that, in the sole discretion of Lessee, would
materially alter the Program Requirements or the Site and On-Site Parking
Requirements, (ii) Gateway and the Lessee shall consider reducing bidding
requirements as permitted by law to obtain additional bidders or reduced bids,
or (iii) Gateway may elect, but shall not be obligated, to increase the Budget.
In the event that after the expiration of such thirty (30) calendar day period,
the cost of such work continues to exceed the Budget, during the next ten (10)
calendar days, (X) the parties may mutually agree to continue the process
provided above, or (Y) Gateway may elect, but shall not be obligated to increase
the Budget. Unless Gateway notifies Lessee of Gateway's intention to terminate
this Agreement pursuant to Section 4.6(b) below within said ten (10) day period
then Gateway shall be deemed to have increased the Budget. Upon completion of
the bidding process for such work the Approved Construction Documents, as may be
revised pursuant to this Subsection 4.6(a), shall be deemed the Final Plans for
such portion of Gateway's Work. In the event the Budget is increased, pursuant
to this Subsection 4.6(a), such increased Budget shall be deemed the new Budget
for
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purposes of this Agreement. Actions taken by Gateway and Lessee with respect to
this Subsection 4.6(a) shall be taken with due consideration to minimize
schedule disruption and to maximize the Project Architects' ability to perform
Project Architect's services in an economical fashion.
(b) In the event that Lessee and Gateway are unable to
mutually agree, after utilizing the procedures set forth in this Article IV,
that the estimated costs to complete the Improvements in the Program
Requirements will not exceed the Budget then either Lessee or Gateway, subject
to the provisions of Subsection 4.6(c) below, which Subsection is hereby
expressly agreed will survive any termination of this Agreement and be binding
on all successors and assigns of Gateway, may terminate this Agreement, the
Management Agreement, Ground Lease and Gateway CAM Agreement upon thirty (30)
days prior written notice to the other party.
(c) In the event Gateway elects to exercise Gateway's right to
terminate this Agreement as provided in Subsection 4.6(b) above, AND, either (i)
uses any Luxury Tax Receipts, proceeds from the Bonds, proceeds from the
$20,000,000 loan from Cleveland Development Partnership I, or any other public
sources, including any funds provided directly or indirectly by the City, County
or the State of Ohio, except as expressly permitted herein, other than to
complete Gateway's Work in accordance with the terms of this Agreement, or (ii)
constructs, finances, improves or otherwise develops any other sports facility
of any kind prior to December 31, 2005, then, within five (5) Business Days from
the date of demand by the Lessee, Gateway shall pay to Lessee the liquidated
damages provided below. In agreeing to the remedy herein, Gateway has
acknowledged that in the event Gateway utilizes Gateway's funds for the purpose
of constructing a development project, including but not limited to, a sports
facility, other than the Baseball Facility, the funds available to Gateway to
complete Gateway's Work will be impaired. Therefore, Lessee shall be entitled to
receive the liquidated damages as compensation, and not as a penalty, for (a)
the loss of ticket, advertising and other revenue, (b) loss of goodwill, (c) the
damages suffered by the Lessee either by (i) remaining in Cleveland Municipal
Stadium (a facility acknowledged by Gateway as being inadequate for the Lessee's
needs), or (ii) relocating the Team to another facility, and (d) other
unforeseen losses, costs and expenses, all or part of the foregoing of which may
be incapable of accurate measurement. Gateway acknowledges that the Lessee's
right to receive liquidated damages was specifically bargained for by Lessee and
Operator and constitutes a material inducement to Lessee and Operator to enter
into this Lease and the Management Agreement, respectively. The liquidated
damages due and payable by Gateway to Lessee as provided herein shall be Twenty
Five Million Dollars ($25,000,000). Such payment shall be deemed to satisfy any
obligations to the Operator resulting from a termination of the Management
Agreement, Ground Lease and Gateway CAM Agreement pursuant to this Section 4.6.
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4.7 COST SAVINGS. In the event the final cost of the
Improvements set forth in the Program Requirements is less than the Budget, the
first Ten Million Dollars ($10,000,000) of such cost savings shall be paid to
Gateway, any remaining cost savings shall be deposited by Gateway into the
Capital Repairs Fund to fund the Initial Capital Repair Fund Deposit required in
Section 10.3 hereof, or, if such Initial Capital Repair Fund Deposit is funded,
to pre-fund the subsequent Annual Capital Repairs Deposits; PROVIDED, HOWEVER,
that in no event shall Gateway be required to demand payment on any guaranty
agreement obtained for the completion of the Baseball Facility in order to fund
the Initial Capital Repairs Fund Deposit.
4.8 DEFERRED CONSTRUCTION ITEMS. Notwithstanding the foregoing
provisions of this Article IV, the Lessee and Gateway may elect, prior to the
completion of such portion of the Gateway's Work, to defer the completion of
certain elements of Gateway's Work ("Deferred Items") to a time after the
Completion Date, in which event Gateway may complete construction after the
Completion Date in accordance with the Final Plans at the sole cost and expense
of Gateway. An amount equal to one hundred and ten percent (110%) of the
projected costs to complete Deferred Items will be retained in the Capital
Repairs Fund after the Completion Date and subsequently may be drawn upon by
Gateway for the purpose of completing the Deferred Items.
4.9 COMPLETION GUARANTY. Gateway hereby agrees that the
completion of Gateway's Work shall have a first priority over any other projects
that Gateway may undertake. Notwithstanding any other provision herein or in any
other agreement to which Gateway is a party, Gateway unconditionally guarantees
the completion of Gateway's Work (including, but not limited to, the Baseball
Facility), and the funding of the Initial Capital Repairs Fund Deposit in
accordance with the terms of this Agreement, the Management Agreement, the
Ground Lease and the Gateway CAM Agreement. For purposes of determining the
amount of funds necessary to satisfy the priority of completing Gateway's Work,
the parties agree that the Budget for the completion of the Improvements set
forth in the Program Requirements shall be One Hundred and Sixty One Million
Dollars ($161,000,000) together with a contingency reserve of Ten Million
Dollars ($10,000,000) (jointly the "Budget"). There shall be no limitation with
respect to Gateway's Work required in the Site and On-Site Parking Requirements
and the parties have not established a budget for the completion of the Site and
On-Site Parking Requirements. Gateway will use its assets, revenues and funds
only for the following purposes: (i) to complete Gateway's Work, (ii) to perform
any other obligations hereunder or under the Management Agreement or Ground
Lease, (iii) to pay debt service and any fees and charges payable pursuant to
the terms of the Bond documents or the Cleveland Development Partnership I loan
documents, and (iv) to pay Gateway's reasonable administrative expenses, costs
and expenses related to the design of the Arena, the negotiation of contracts
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related to the Arena and demolition and site preparation for the Arena to level
grading only; provided, however, that Gateway may use its assets, revenues and
funds for other purposes if: (i) Gateway demonstrates to the reasonable
satisfaction of the Lessee that Gateway has sufficient funds, assets, and
revenue sources acceptable to Lessee and such funds, assets and revenue sources
are irrevocably committed and available or guaranteed to insure completion of
Gateway's Work (taking into account that the costs to complete the Improvements
set forth in the Program Requirements will not exceed the Budget and the amount
of any other obligations for the purposes described above unless the parties
agree that the Budget will be exceeded) and no Gateway Default shall exist and
remain uncured, or (ii) such use is approved, in writing, by Lessee. Gateway
shall deliver to Lessee any financial information reasonably requested by
Lessee, including but not limited to, monthly operating reports setting forth
all revenues received by and expenditures made by Gateway for the preceding
month and a monthly proposed budget for the upcoming month. Any funds intended
to be irrevocably committed to complete Gateway's Work shall be deposited into
designated escrow accounts (collectively "the Completion Guaranty Accounts")
with Permitted Escrow Agents to be invested in Permitted Investments, which
accounts may be Bond Escrow Accounts.
4.10 PARKING.
(a) In addition to its obligation to design and construct the
Improvements, Gateway shall finance and construct, on or before the Completion
Date, within certain alternative designated areas as more fully described in the
Site and On-Site Parking Requirements, not less than one thousand five hundred
(1,500) parking spaces (the "On-Site Parking"). The Lessee and the Operator
shall have the exclusive use, without charge, of (i) the On-Site Parking for all
events held at the Baseball Facility, and (ii) two hundred fifty (250) spaces of
the On-Site Parking, selected by the Lessee and the Operator at all times.
Gateway shall also provide free adequate parking for the part-time employees of
the Lessee, but such parking may be more distant from the Ballpark than that
provided to the full-time employees. The Lessee shall have the option to manage
and operate the On-Site Parking on customary terms and conditions for the
downtown Cleveland area. The Lessee shall notify Gateway of the Lessee's
election to manage and operate the On-Site Parking on or before sixty (60) days
after receipt by the Lessee of Gateway's Final Plans for the On-Site Parking.
(b) In the event Gateway elects to provide the Lessee
temporary surface parking in compliance with the requirements of Subsection
4.10(a) above, the Lessee shall provide to Gateway its prompt written agreement
in a form reasonably acceptable to Gateway (i) authorizing Gateway to substitute
such temporary On-Site Parking with a permanent On-Site Parking facility at a
later date in conformance with the requirements set forth in Subsection
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4.10(a) above (provided that the construction of such permanent On- Site Parking
shall not affect the availability of On-Site Parking at any time for Home Dates
and the Lessee's Special Events) and (ii) acknowledging that up to $1,500,000 of
the annual net revenues from such temporary On-Site Parking may be deposited in
an appropriate parking garage escrow fund to be used for the subsequent
construction of the permanent On-Site Parking facility.
(c) In addition to the On-Site Parking, Gateway shall use its
best efforts to secure, on or before the Completion Date, the availability of an
additional seven thousand (7,000) to ten thousand (10,000) parking spaces within
a two thousand (2,000) foot radius of the Baseball Facility, using the
approximate proposed location of second base as the point of beginning for such
calculation (the "Additional Parking").
(d) Gateway shall make estimated quarterly payments to the
Lessee of Lessee's Parking Revenue on or before the last day of January, April,
July and October of each Lease Year for each preceding quarter in which such
Lessee's Parking Revenue becomes unrestricted and is permitted to be distributed
by Gateway pursuant to any Financing Arrangements that encumber the Baseball
Facility or the parking facility; with a final adjustment to be made at the end
of each Lease Year.
ARTICLE V
---------
TERM
5.1 TERM. The "Term" of the lease portion of this Agreement
shall commence on the Completion Date and shall end on the earlier of: (i)
December 31 of the year in which the twentieth (20th) full Season following the
Completion Date is concluded, or (ii) upon the retirement, defeasance or
discharge (as provided in the Three Party Agreement) of all of the Bonds. Upon
determination of the Completion Date, the parties shall execute a supplement to
this Agreement setting forth the last day of the Term and shall execute and
record an appropriate supplement to the Memorandum of Lease.
5.2 COMPLETION. Gateway hereby agrees that it will use its
best efforts to cause the Completion Date to occur on or before February 1,
1994. On or before September 1, 1993, the Lessee and Gateway shall consult with
the Project Architects and contractors and make a physical inspection of the
state of completion of Gateway's Work. Promptly thereafter, the parties hereto
shall make a determination as to whether or not the Completion Date will occur
on or before February 1, 1994. In making such determination, the parties shall
take into account the implementation of any reasonable construction procedures
and programs suggested by the Lessee which would tend to expedite the completion
of Gateway's Work. If the Lessee and Gateway mutually determine that, or are
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unable to agree that, the Completion Date will not occur on or before February
1, 1994, or the Completion Date has not actually occurred by February 1, 1994,
the Lessee shall have no obligation to occupy and use the Baseball Facility
during the 1994 Season and a "Completion Default" shall be deemed to have
occurred. In the event such a determination is made or Gateway and the Lessee
are unable to agree, or Substantial Completion has not occurred by February 1,
1994, Gateway shall have until February 1, 1995, to cause Substantial Completion
to occur. If Substantial Completion occurs on or before February 1, 1995, such
date shall be deemed the Completion Date and the Lessee shall be obligated to
occupy and use the Baseball Facility in accordance with the terms hereof
commencing on the first day of the 1995 Season. If Substantial Completion has
not occurred on or before February 1, 1995, an additional "Completion Default"
shall be deemed to have occurred. Gateway shall make all necessary arrangements
to permit, at the Lessee's election, the Lessee to have partial occupancy of the
Baseball Facility as phases of Gateway's Work are completed.
5.3 GATEWAY FAILURE TO TIMELY COMMENCE CONSTRUCTION.
(a) In the event Gateway fails to cause the Improvements to be
Substantially Under Construction on or before September 1, 1992, a "Construction
Default" shall be deemed to have occurred and the Lessee shall be entitled to
terminate this Agreement, in the Lessee's sole discretion, by delivering written
notice of such termination to Gateway within forty-five (45) days after the
occurrence of the Construction Default. Notwithstanding the preceding sentence,
a Construction Default shall not be deemed to occur if (i) the Lease Agreement
or the Management Agreement is terminated due to the failure to satisfy the
conditions set forth in Section 22.2 or 22.6 of the Lease Agreement or Section
25.2 or 25.6 of the Management Agreement; (ii) Lessee or Operator unreasonably
withhold consent to any Financing Arrangement with the Bank, (iii) Force
Majeure, (iv) a Lessee Default or an Operator Default, (v) the gross negligence,
or willful misconduct of the Lessee or the Operator, (vi) the institution by the
Lessee or the Operator of any litigation or other proceeding against Gateway
wherein the court shall determine that the Lessee's or the Operator's, as the
case may be, position was frivolous without merit, or (vii) Gateway satisfies
Lessee, in Lessee's sole and absolute discretion that Gateway shall be able to
complete Gateway's Work on or before February 1, 1994.
(b) In the event the Lessee elects to terminate this Agreement
pursuant to Subsection 5.3(a), the Lessee shall have, as its sole and exclusive
remedy, the option to lease all or any part of a 125,000-square-foot parcel of
land (generally being that land commencing on the southerly corner of the Arena
Land, with frontage on Ontario Street for 625 feet with a depth of 200 feet)
(the "Default Option Parcel") located in the area designated as the "Default
Option Parcel Area" to be depicted on the CMS Site Plan from Gateway pursuant to
a long term ground lease at a rental rate
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and on terms which are economically equivalent to the cost that the Lessee would
incur if the Lessee purchased the Default Option Parcel on the terms and
conditions described below and on such other terms and conditions that are
customary for long term ground leases for commercial property in downtown
Cleveland, Ohio. The term of such ground lease would be for such number of years
as required for the Lessee to realize the full use and value of the proposed
development for the Default Option Parcel. The ground lease shall be
economically equivalent to a purchase of all or any part of the Default Option
Parcel at a price of Seven Hundred Fifty Thousand Dollars ($750,000) per acre
exercisable at any time after the termination of this Agreement pursuant to
Subsection 5.3(a) hereof until December 31, 1996. Ten percent (10%) of the
option price would be payable in cash at closing. The balance of the purchase
price would be payable by the delivery of a ten (10) year self-amortizing,
nonrecourse, purchase money mortgage bearing interest at six percent (6%) per
annum, payable monthly. Title would be delivered free and clear except for
generally applicable zoning restrictions, the Central Market Community
Development Plan and real estate taxes not yet due and payable. The mortgage
would provide for reasonable release clauses and for subordination to
construction or permanent financing. The parties agree that the provisions of
this Section 5.3 shall expressly survive any termination of this Agreement.
5.4 LATE COMPLETION REMEDIES.
(a) Unless the Lessee shall have terminated this Agreement
pursuant to Section 5.3 hereof, and otherwise subject only to Subsections 5.4(b)
and (c) below, if the Completion Date has not occurred by: (i) February 1, 1994,
a "Completion Default" shall be deemed to have occurred and Gateway shall be
liable to the Lessee for the Lessee's damages due to such Completion Default,
and (ii) February 1, 1995, an additional "Completion Default" shall be deemed to
have occurred and Gateway shall also be liable to the Lessee for any additional
damages due to such subsequent Completion Default. The amount of any such
damages shall be reduced to the extent that the Operator's negligence
contributed to such Completion Default.
(b) Notwithstanding anything contained in this Agreement to
the contrary, in the event that Gateway's failure to accomplish Substantial
Completion by February 1, 1994 or February 1, 1995, as the case may be, results
from (i) a Lessee Default or an Operator Default, (ii) the gross negligence or
willful misconduct of the Lessee or the Operator, or (iii) the institution by
the Lessee or the Operator of any litigation or other proceeding against Gateway
wherein the court shall determine that the Lessee's or the Operator's, as the
case may be, position was frivolous and without merit, such date shall be
extended to February 1, 1995, or such later date as is necessary to accomplish
Substantial Completion. In such event, the Lessee shall be obligated to occupy
and use the Baseball Facility in accordance with the terms hereof commencing
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on such extended Completion Date, regardless of when such date occurs and the
Lessee shall pay any increase in the cost of the construction of the
Improvements resulting directly from such delay. If Substantial Completion is
delayed as a result of any of the foregoing causes, no Completion Default shall
be deemed to have occurred unless Substantial Completion has not occurred by the
extended Completion Date.
(c) Notwithstanding anything contained in this Agreement to
the contrary, in the event that any Force Majeure prevents or delays the
completion of Gateway's Work, all provisions of this Article V shall
nevertheless apply in accordance with their terms, except that in the case of
any delay resulting from a Force Majeure, Gateway will be excused from payment
of the damages otherwise payable under Subsection 5.4(a), so long as Substantial
Completion occurs on or before a date following the February 1, 1994 or February
1, 1995 date, which is not later than a number of days after said February 1,
1994 or February 1, 1995 date, equal to the number of days of the impact of such
Force Majeure.
(d) Subject to Subsections 5.4(b) and (c) above, if
Substantial Completion has not occurred by February 1, 1995, the Lessee, by
written notice to Gateway delivered not later than February 28, 1995, may either
(i) extend such date or (ii) terminate this Agreement. If the Lessee elects to
terminate this Agreement, each of the parties shall remain liable to the other
for any obligation or liability arising prior to the effective date of
termination and as may be further provided for herein; provided, however, that
the Lessee shall not be entitled to the remedy set forth in Subsection 5.3(b)
upon a termination pursuant to a termination under this Subsection 5.4(d) if
Gateway caused the Improvements to be Substantially Under Construction as
required in Subsection 5.3(b).
5.5 EXTENSION OPTIONS. The Lessee and Gateway hereby
acknowledge that, as a matter of federal tax law, Gateway cannot grant option
rights to the Lessee to extend the Term of this Agreement, the term of the
Management Agreement and the Gateway CAM Agreement. In the event an opinion from
Calfee, Halter & Griswold, or such other nationally recognized bond counsel
selected by Calfee, Halter & Griswold and Gateway, is obtained to the effect
that the existence and exercise of options to renew the Term of this Agreement
and the term of the Management Agreement and the Gateway CAM Agreement will not
result in a loss of the federal tax exempt status of any of the Bonds, then
Gateway and the Lessee shall amend this Agreement, the Management Agreement and
the Gateway CAM Agreement to provide for options to renew on terms that (a) are
commercially reasonable based upon comparable agreements that are competitively
favorable to other teams then leasing and managing publicly owned ballpark
facilities, and (b) do not cause the Lessee's use and control of the Baseball
Facility to be less extensive than its use and control during the Term. Gateway
hereby agrees to lend its full support and cooperation to any effort to
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effectuate any change in the federal tax law that is necessary to obtain the
legal opinion referred to above.
ARTICLE VI
----------
RENT
6.1 RENT. The Lessee shall pay to Gateway each Lease Year rent
("Rent") in an amount equal to (a) seventy-five cents ($.75) for each Paid
Attendance Ticket sold during the applicable Season after one million eight
hundred fifty thousand (1,850,000) Paid Attendance Tickets are sold, up to two
million two hundred fifty thousand (2,250,000) Paid Attendance Tickets, PLUS (b)
one dollar ($1.00) for each Paid Attendance Ticket sold during such Season after
two million two hundred fifty thousand (2,250,000) Paid Attendance Tickets sold
up to two million five hundred thousand (2,500,000) Paid Attendance Tickets,
PLUS (c) one dollar and twenty-five cents ($1.25) for each Paid Attendance
Ticket sold during the applicable Season after two million five hundred thousand
(2,500,000) Paid Attendance Tickets are sold. Rent shall be adjusted for the
eleventh (11th) Season and the sixteenth (16th) Season following the Completion
Date by increasing the dollar amounts set forth in the preceding sentence by a
percentage determined by the following formula: (y) in the case of the eleventh
(11th) Season following the Completion Date, forty percent (40%) of the
percentage increase in the Average Ticket Price for the eleventh (11th) Season
following the Completion Date OVER the Average Ticket Price for the first (1st)
Season after the Completion Date, and (z) in the case of the sixteenth (16th)
Season following the Completion Date, forty percent (40%) of the percentage
increase in the Average Ticket Price for the sixteenth (16th) Season following
the Completion Date OVER the Average Ticket Price for the eleventh (11th)
Season. In the event that the Lessee's percentage of each Paid Attendance Ticket
price retained by the Lessee under American League rules is decreased below
seventy-seven percent (77%), then Rent shall be decreased proportionally to
reflect the amount of Ticket Revenue lost by the Lessee due to such reduction in
the Lessee's percentage of Ticket Revenue.
6.2 PAYMENTS. Rent shall be paid by the Lessee on or before
the last day of each Lease Year for which Rent is due.
6.3 AUDIT. Each payment of Rent shall be accompanied by a
statement certified as true and correct by the Lessee's Chief Financial Officer,
showing with reasonable specificity all computations relating thereto. Gateway
shall have the right, through the use of an independent certified public
accounting firm selected by Gateway, at any time during normal business hours
and at the offices of the Lessee, to review, at Gateway's expense, all records
of the Lessee which relate solely to Paid Attendance Tickets. In the event such
review results in a determination that
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the computations are erroneous, the error shall be promptly corrected by the
parties, and if such error results in a three and one-half percent (3.5%) or
more discrepancy in favor of Gateway in Rent received or paid, the expense of
such review shall be reimbursed to Gateway by the Lessee.
ARTICLE VII
-----------
ALTERATIONS BY THE LESSEE
7.1 ALTERATIONS AND ADDITIONS BY THE LESSEE.
(a) Following the Completion Date, the Lessee, at its sole
cost and expense, may make any alterations of or additions or improvements to
the Ballpark Land or the Ballpark Improvements, which do not (i) materially
affect the aesthetics, sightlines, structure or systems of the Baseball Facility
(unless approved by Gateway), (ii) materially increase the cost of Capital
Repairs to the Baseball Facility or any of its Components, fixtures, equipment
or any other improvements (unless approved by Gateway), or (iii) violate any
laws, ordinances, or regulations. The Lessee hereby agrees to perform or cause
to be performed all such alterations, additions and/or improvements in a good
and workmanlike manner, utilizing personnel with proper building trade
credentials, and to pay for the same. The Lessee agrees to indemnify and defend
Gateway from and against mechanics' liens, claims and any other costs and
attorneys' fees incurred by Gateway and related thereto, or other costs and
expenses arising out of such performance.
(b) Before commencing any alterations, additions, or
improvements pursuant to Subsection 7.1(a) above, the Lessee shall (i) comply
with all legal requirements or improvements, including, but not limited to,
procuring any required governmental permits, and (ii) obtain and furnish to
Gateway a "Builder's Risk" insurance policy (with a waiver of subrogation
endorsement similar to the type referred to in Section 9.5 hereof), from an
insurance carrier acceptable to Gateway and in form and substance acceptable to
Gateway, in its reasonable discretion, covering all liabilities that may be
incurred in connection with any such alterations, additions or improvements
undertaken by the Lessee naming Gateway as an additional insured.
(c) All alterations, additions, or improvements made by the
Lessee pursuant to this Section 7.1 shall be considered the property of the
Lessee for purposes of this Agreement and shall remain upon the premises for the
duration of the Term; PROVIDED, HOWEVER, that upon the termination or expiration
of this Agreement for any reason, such alterations, additions and improvements,
unless personal property or trade fixtures, shall become part of the Baseball
Facility.
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7.2 PLACEMENT OF HEAVY EQUIPMENT. The Lessee shall not place a
load upon any floor or other surface in any part of the Ballpark Land and/or the
Ballpark Improvements that exceeds the maximum weight per square foot that such
floor or other surface area was designed to bear as determined by the Design
Architect. The Lessee shall comply with all such requirements and, where
necessary, shall perform the reinforcing required for such installation at its
cost and expense. The Lessee shall install, place and maintain all items of
personal property, fixtures or leasehold improvements which the Lessee is
required to install, place or maintain in the Baseball Facility pursuant to this
Agreement, in settings that are sufficient, to absorb and prevent vibration in
or damage to the Baseball Facility. In the event such placements or
installations cause such vibration or damage, the Lessee shall, at its expense,
take such steps as the Design Architect may reasonably direct to remedy any such
condition.
ARTICLE VIII
------------
USE OF BALLPARK
8.1 LESSEE'S USE. During the Term, the Lessee and its guests
and invitees shall be entitled to the possession and use of the Ballpark Land
and the Ballpark Improvements for the following purposes:
(a) to play major league baseball games and to conduct
activities related to the playing of major league
baseball games and the maintenance of a professional
baseball team;
(b) to occupy and conduct day-to-day business operations
in the Lessee's Office Space;
(c) to conduct any and all other activities which, from
time to time during the Term, are associated with, or
are conducted in connection with, or are related to,
the conduct of the business of a major league
baseball team;
(d) to use, without payment of rent therefor, the Owner's
Private Suite and the President's Private Suite as
defined in the Program Requirements;
(e) during the times the Lessee is using the Ballpark
Land and the Ballpark Improvements for playing the
Team's home games only, to stage activities attendant
to the game on the playing field, except that the
Lessee shall not stage any activity (i) that is
detrimental to the health, safety and welfare of the
people at the Baseball Facility or
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(ii) that is detrimental to the physical plant and
conditions of the Baseball Facility; and
(f) to use, without charge, the On-Site Parking as set
forth in Section 4.10 hereof;
PROVIDED, HOWEVER, that the Lessee shall not occupy or use any portion of the
Ballpark Land or the Ballpark Improvements (or permit the use or occupancy of
any portion of the Ballpark Land or the Ballpark Improvements) for any purpose
that will violate any federal, state or local law or that will in any way affect
the validity or tax-exempt status of the Bonds.
8.2 GATEWAY'S USE. During the Term, Gateway and its guests and
invitees shall be entitled to the possession and use of the Ballpark Land and
the Ballpark Improvements to conduct and perform all activities in connection
with its rights and duties hereunder or under the Management Agreement.
8.3 OPERATOR'S USE. During the Term of the Management
Agreement, or any successor management agreement, the Operator and its guests,
concessionaires, licensees and invitees shall be entitled to the possession and
use of the Ballpark Land and the Ballpark Improvements for all of the purposes
set forth in the Management Agreement. Without limiting the generality of the
foregoing, the Lessee hereby agrees that the Premium Seating shall be managed
and operated as set forth in the Management Agreement or any successor
management agreement, including the marketing and licensing of Premium Seating
as provided in Section 3.1 thereof and the administration of Premium Seating
licensing and the retention of Premium Seating Revenue to be applied in
accordance with Article VI thereof.
8.4 SPECIAL EVENTS. Notwithstanding the terms and conditions
of the Management Agreement, or any other agreement, neither Gateway, the
Operator nor any other Person may conduct Special Events at the Baseball
Facility without first complying with the following procedure, unless waived, in
writing, by the Lessee.
(a) In no event may all or any part of a Special Event
Period coincide with all or any part of an Exclusive
Use Period;
(b) The Lessee shall have the right to prohibit any
Special Event at the Baseball Facility if the nature
of such Special Event would render the playing field
unsuitable in the Lessee's reasonable judgment for
playing the Team's games thereon (the parties
acknowledge that Special Events during the Spring
season may not be allowed in order to protect Spring
turf growth and field conditions); and the Lessee
may require that a protective covering of Trivera
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Spunbound (or other material approved by the Lessee),
which shall be paid for by Gateway, and maintained
over the playing field; and
(c) The Lessee shall have received at least forty-five
(45) days prior written notice of any Special Event
proposed to be conducted at the Baseball Facility,
which notice shall identify the nature of the event,
the sponsor, the Promoter, if any, the areas of the
Baseball Facility to be utilized, the Special Event
Period and any other relevant information reasonably
necessary for the Lessee to exercise its approval
rights pursuant to this Section 8.4.
Notwithstanding the approval rights provided for above, Gateway shall not be
obligated to obtain such required approvals so long as the Operator is an
Affiliate of the Lessee.
8.5 LESSEE'S MANAGEMENT APPROVAL RIGHTS. Gateway shall cause
the Baseball Facility to be managed and operated as a first-class,
state-of-the-art, open air Major League baseball park and in a professional,
businesslike and efficient manner if the Operator is no longer an Affiliate of
the Lessee. Without in any way limiting the Lessee's approval rights provided
herein, in the Ground Lease or the Management Agreement, Gateway shall not, or
in the event Gateway subcontracts, licenses or otherwise assigns its rights to
any other Person, permit such other Person to, take any of the following actions
without the prior written consent of the Lessee, which consent shall not be
unreasonably withheld:
(a) Permit the Operator to assign its interest in the
Management Agreement;
(b) Amend, supplement, modify, or terminate the
Management Agreement or any other subsequent
management agreement for the operation of the
Baseball Facility;
(c) Enter into, or permit the Operator to enter into, any
concession agreement with any concessionaire without
the prior written approval, or thereafter amend,
supplement, modify or terminate such concession
agreement without Lessee's approval;
(d) Sell, rent, or furnish any merchandise, articles or
services at the Baseball Facility, that, in Lessee's
reasonable judgment, is of a poor quality,
unsatisfactory in nature, or harmful or dangerous to
the health or safety of the public;
(e) Establish the prices charged for all merchandise,
articles and services sold, rented or furnished at
the Baseball Facility; provided, however, that the
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Lessee's approval of the proposed price of any item
shall not be withheld if such price does not exceed
the price charged for the same or a comparable item
or service sold, rented or furnished in any other
major league baseball park.
(f) Operate the scoreboards at the Baseball Facility for
all Home Dates in any manner inconsistent with the
procedures approved by the Lessee;
(g) Enter into any contracts for advertising in and on
the interior and exterior of the Baseball Facility,
including, but not limited to, scoreboard
advertising, advertising on the concourses or video
advertising in the Baseball Facility; and
(h) Deviate from the security procedures approved by the
Lessee for the security and crowd control personnel
and night watchmen for the Baseball Facility.
Notwithstanding the approval rights provided for above, Gateway shall not be
obligated to obtain such required approvals so long as the Operator is an
Affiliate of the Lessee.
ARTICLE IX
----------
INSURANCE AND SUBROGATION
9.1 GATEWAY'S INSURANCE. (a) Gateway shall, during the
construction period, maintain in full force and effect, at Gateway's expense:
(i) insurance against damage or destruction to the Improvements for the full
value thereof, including all materials, equipment, machinery and supplies for
use in construction or installation of Gateway's Work on an "all risk" peril
basis, including coverage against flood, sewer backup and earthquake coverage,
in the form of builder's risk coverage, and (ii) cause its professionals to
carry professional liability insurance providing coverage for errors and
omissions relating to workmanship and design.
(b) From and after the Completion Date, Gateway shall maintain
in full force and effect, in its name, insurance against damage or destruction
to the Baseball Facility and Gateway's equipment and other personal property,
improvements and betterments to the Baseball Facility owned by Gateway by
providing "all risk" peril coverage in the amount of at least ninety percent
(90%) of replacement cost, subject to deductible limits not to exceed $25,000.
Such insurance shall have an agreed amount endorsement.
9.2 LESSEE'S INSURANCE. The Lessee shall, from and after the
Completion Date, maintain in full force and effect, at
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its expense, "occurrence type" general liability insurance against bodily injury
and property damage arising from occurrences in and about the Baseball Facility
and covering the Lessee's contractual liability for indemnification under this
Agreement. Such insurance shall be written on a commercial general liability
policy form to include premises operations, products and completed operations,
personal injury/advertising injury, independent contractors and broad form
property damage. The policy shall also contain a general aggregate per location
of not less than Two Million Dollars ($2,000,000) and a products/completed
operations aggregate of not less than One Million Dollars ($1,000,000). The
foregoing insurance shall name as additional insured Gateway, its members, its
Executive Director and such other Affiliates as Gateway shall reasonably
request. Notwithstanding the above, the Lessee shall not be required to maintain
the insurance provided for in this Section 9.2 provided such insurance coverages
are included in the Operator's insurance provided for in the Management
Agreement.
9.3 INSURANCE REQUIREMENTS.
(a) All policies of insurance required hereunder shall be
written by carriers which are members of the Ohio Guaranty Fund and possess an
A- policyholder's rating or better and a minimum Class VII financial size
category as listed at the time of issuance by A.M. BEST INSURANCE REPORTS ("Best
Reports") (the aforesaid rating classifications to be adjusted if and to the
extent that BEST REPORTS adjusts its rating categories).
(b) All policies shall provide that they may not be canceled,
renewed or reduced unless at least thirty (30) days' notice thereof has been
provided to the additional insureds. In no event shall any party be required to
insure for liability limits in excess of coverage which is available at
commercially reasonable rates. In the event that tort liability reform is
adopted which makes the limits of liability hereinabove provided in excess of
commercially reasonable and prudent limits of liability, such limits will be
equitably reduced. The insurance policies required hereunder shall be reviewed
on an annual basis to determine the adequacy of the coverage amounts.
9.4 CERTIFICATES. Not later than the date on which coverage is
to be provided hereunder, the party required to provide same shall furnish to
the other party a certificate evidencing the required coverage.
9.5 WAIVER OF SUBROGATION. Gateway and the Lessee agree that
all insurance policies against loss or damage to property and business
interruption or rent loss, and all liability insurance policies required
hereunder, shall be endorsed to provide that any release from liability of, or
waiver of claim for, recovery from the other party entered into in writing by
the insured thereunder prior to any loss or damage shall not affect the validity
of said policy or the right of the insured to recover thereunder. Such
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insurance policies shall further provide that the insurer waives all rights of
subrogation which such insurer might have against the other party. Without
limiting any release or waiver of liability or recovery contained in any other
section of this Agreement, but rather in confirmation and furtherance thereof,
each of the parties hereto waives all claims for recovery from the other party
for any loss or damage to any of its property or damages as a result of business
interruption, rent loss or liability of the types covered in Section 9.2 above,
insured under valid and collectible insurance policies to the extent of any
recovery collectible under such insurance policies.
ARTICLE X
---------
MAINTENANCE OF AND REPAIRS TO THE BASEBALL FACILITY
10.1 GATEWAY OBLIGATIONS. Gateway shall be responsible for all
Routine Maintenance and Capital Repairs for the Baseball Facility. The Lessee
acknowledges that Gateway will assign its obligations as to Routine Maintenance
to the Operator pursuant to the terms of the Management Agreement.
10.2 MAINTENANCE AND REPAIR PROCEDURES.
(a) On or before February 1 of each Lease Year, and from time
to time during the Term as the Operator, the Lessee or Gateway may reasonably
request, not more often than once each Reporting Period, representatives of the
Operator, the Lessee and Gateway shall meet to:
(i) review a list of, and the proposed
procedures for completing, any anticipated
work constituting Routine Maintenance and
Capital Repairs (which list shall be
prepared by the Operator and delivered to
the Lessee and Gateway prior to any such
meeting);
(ii) allocate any such anticipated work between
Routine Maintenance and Capital Repairs;
(iii) establish budgets and timetables for
required Routine Maintenance and Capital
Repairs; and
(iv) establish necessary programs to generally
effectuate the administration of the
provisions of this Section.
(b) Gateway hereby agrees that Gateway shall use its best
efforts to advise the Lessee of its views as early as possible regarding the
Operator's performance of Routine Maintenance and Gateway's performance of
Capital Repairs. All Routine Maintenance and Capital Repairs requested by the
Lessee shall be conducted and
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completed subject to the reasonable and prompt approval of the
Operator.
10.3 CAPITAL REPAIRS FUND. Gateway shall establish and
maintain an account (the "Capital Repairs Fund"), the purpose of which shall be
to accumulate funds for the payment of the cost of Capital Repairs for which
Gateway is financially responsible hereunder. The Capital Repairs Fund shall be
established with a Permitted Escrow Agent and the funds therein invested in
Permitted Investments. On or before the Completion Date Gateway shall deposit
into the Capital Repairs Fund the Initial Capital Repairs Fund Deposit. In
addition, on or before the first day of each and every Lease Year after the
first Lease Year, Gateway shall deposit the Annual Capital Repairs Fund Deposit
into the Capital Repairs Fund. All funds in the Capital Repairs Fund shall be
the property of Gateway. The Capital Repairs Fund may be drawn only upon the
signature of the designated signatory or signatories of Gateway and the funds
deposited therein may be used only to pay for Capital Repairs for which Gateway
is financially responsible hereunder, other than those arising out of damage
which is caused by a risk then covered by the property insurance policy referred
to in Subsection 9.1(b) (except that the Capital Repairs Fund may be used for
covered losses pending receipt of insurance proceeds, but such proceeds shall
thereafter be deposited in the Capital Repairs Fund). Notwithstanding anything
in this Agreement to the contrary, Gateway's financial responsibility with
respect to Capital Repairs shall not be limited to the funds in the Capital
Repairs Fund; provided, however, that on or before the Completion Date, the
parties will establish a separate sub-account within the Capital Repairs Fund
for the following categories of property: Administrative office furniture
(FF&E), all kitchen equipment, concession stand/central commissary equipment,
clubhouse exercise equipment, club and restaurant furniture and equipment, and
such other categories of property that the parties shall mutually agree upon.
The parties agree that reasonable and appropriate percentages will be
established based on the useful life of such property and a proportional amount
of the Initial Capital Repairs Fund Deposit and the Annual Capital Repairs Fund
Deposit will be placed into such sub-account. Gateway's obligation to pay for
Capital Repairs for the above designated property shall be limited to the amount
of the special sub-account for such items. In the event Gateway must use any
funds deposited in the Construction Fund (established in accordance with the
Bond documents), to pay for any Capital Repair, in whole or in part, Gateway
shall withdraw the amount necessary from such Construction Fund and pay for such
Capital Repair with the funds withdrawn; PROVIDED, HOWEVER, that in no event
shall any funds withdrawn from the Construction Fund be used by Gateway to pay
for any Capital Repairs performed on the Field or the Field Improvements, and
PROVIDED FURTHER, that in no event shall any funds withdrawn from the
Construction Fund by Gateway be deposited into the Capital Repairs Fund. In the
event funds on deposit in the Capital Repairs Fund are insufficient to pay for
the cost of a Capital Repair at any time, Gateway shall be
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obligated to pay for such Capital Repair using other sources and shall be
reimbursed from the Capital Repairs Fund for the amount so paid from the next
moneys deposited therein until Gateway shall have been fully reimbursed. At the
end of the Term or upon the termination of this Agreement, Gateway shall
transfer and assign to the Person or Persons that succeeds Gateway in the
ownership of the Baseball Facility all sums in the Capital Repairs Fund and all
of such funds shall continue to be held in a separate escrow account for the
benefit of the Baseball Facility.
10.4 CAPITAL REPAIRS. During the Term, the Lessee shall not,
subject to ordinary wear and tear, do or suffer any waste or damage,
disfigurement or injury to the Baseball Facility. Except as otherwise provided
herein, Gateway shall perform or cause to be performed all Capital Repairs
required during the Term, at Gateway's expense. All work related to any Capital
Repair shall be done in a good workmanlike manner. Gateway hereby agrees to
indemnify, defend and hold the Lessee harmless from and against all costs and
expenses (including attorneys' fees) arising out of Gateway's failure to perform
such Capital Repairs.
10.5 LESSEE'S SELF-HELP. If Gateway or the Operator fails to
perform any required Routine Maintenance or Capital Repair, the Lessee may
perform such Routine Maintenance or Capital Repairs and shall be entitled to
reimbursement, including, but not limited to, payment from the Capital Repairs
Fund. When feasible, Lessee shall give Gateway prompt notice thereof; PROVIDED,
HOWEVER, in the case of a Capital Repair or Routine Maintenance which in the
Lessee's good faith determination will cost more than Five Thousand Dollars
($5,000) to complete, the Lessee will give Gateway not less than twenty-four
(24) hours' notice prior to commencement of such work unless such delay could
affect public health or safety.
ARTICLE XI
----------
REAL ESTATE AND PERSONAL PROPERTY TAXES
During the Term, Gateway shall pay when due all real estate
taxes, personal property taxes (other than for tangible personal property owned
or installed by the Lessee), assessments and other governmental levies and
charges, general and special, ordinary and extraordinary, of any kind or nature,
lawfully levied or assessed by federal, state, county or municipal government,
upon or with respect to the Baseball Facility and any and all other improvements
(other than with respect to personal property owned by the Operator or the
Lessee or improvements made by or on behalf of the Lessee pursuant to Section
7.1 hereof or Section 9.1 of the Management Agreement, respectively) hereafter
constituting a part of the Baseball Facility, any tax on the Lessee's rights
hereunder in the nature of a leasehold tax, or any taxes in lieu thereof
(collectively, "Real and Personal Property Taxes"); PROVIDED,
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HOWEVER, that if, because of any change in the method of taxation of real estate
or personal property, any other or additional tax or assessment is imposed upon
the Baseball Facility as or in substitution for, or in lieu of, any tax or
assessment which would otherwise be included in Real and Personal Property
Taxes, such other tax or assessment shall also be Gateway's responsibility.
Gateway hereby agrees to indemnify, defend and hold the Lessee harmless from and
against all Real and Personal Property Taxes. In the event the Operator's or the
Lessee's interest in the Management Agreement, the Ground Lease or the Gateway
CAM Agreement is terminated as a result of a failure to pay Real and Personal
Property Taxes, including, without limitation, a sale of the Baseball Facility
by a foreclosure sale, and within sixty (60) days after such termination are not
reinstated for the balance of the then remaining terms thereof on the same terms
and conditions, the Lessee shall be entitled to terminate this Agreement upon
thirty (30) days prior written notice to Gateway. Without in any way limiting
the Lessee's rights and remedies provided for in Article XIII hereof, in the
event Gateway fails to pay any Real and Personal Property Taxes when the same
shall be due and payable, the Lessee shall have the right, but shall have no
obligation to pay the same or any of them, and upon such payment by the Lessee,
Gateway shall, immediately after proof of such payment shall have been submitted
to Gateway by Lessee, and on demand therefor, pay the Lessee the amount of any
such payment so made by Lessee, with interest thereon at the Interest Rate.
Gateway shall cause the Ballpark Land and the Ballpark Improvements to be
included in a tax parcel separate and distinct from the balance of the CMS Site.
ARTICLE XII
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RIGHT OF ENTRY AND INSPECTION
12.1 LESSEE'S RIGHT OF ENTRY AND INSPECTION. Prior to the
Completion Date, the Lessee and the Lessee's agents, representatives, invitees
and contractors shall have the right at all times during normal business hours
of Gateway or of Gateway's general contractor, prime contractor or construction
manager, as the case may be, and at such other times as the Lessee may
reasonably request, to review the Final Plans for Gateway's Work and to inspect
the progress of the construction of Gateway's Work. The provisions of this
Section 12.1 shall in no way limit or otherwise relieve Gateway from Gateway's
obligation to complete Gateway's Work in conformance with this Agreement and the
Management Agreement, unless the Lessee's inspections or tours unreasonably
interfere with Gateway's construction of the Baseball Facility.
12.2 GATEWAY'S RIGHT OF ENTRY AND INSPECTION. In addition to
its rights to use the Ballpark Land and the Ballpark Improvements as provided in
this Agreement and in the Management
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Agreement and the Ground Lease, Gateway and its agents and representatives
(including representatives of the City and the County) shall have the right, at
all times during usual business hours or at any other time in case of an
emergency, to enter into and upon any and all parts of the Ballpark Land and the
Ballpark Improvements for the purpose of inspecting the same, carrying out any
of its obligations under this Agreement, the Management Agreement or the Ground
Lease (including, without limitation, to make any Capital Repairs required to be
made by Gateway), or for any other legitimate reason related to the obligations
of the parties hereto or the rights of Gateway under this Agreement or under the
Management Agreement or the Ground Lease. In the event Gateway enters the
Ballpark Land and the Ballpark Improvements for the purpose of making any
Capital Repair, during the progress of such work Gateway and/or its agents and
representatives shall be entitled to keep and store in areas mutually agreed
upon by the Lessee and Gateway in and upon the Ballpark Land and the Ballpark
Improvements all necessary materials, tools and equipment.
ARTICLE XIII
------------
DEFAULT AND REMEDIES
13.1 DEFAULT BY THE LESSEE. The occurrence of any one or more
of the following events constitutes a default by the Lessee under this Agreement
("Lessee Default"):
(a) Failure by the Lessee at any time to pay, when due, any
sums payable by the Lessee to Gateway hereunder within five (5) Business Days
after notice of such failure is given to the Lessee by Gateway;
(b) Failure by the Lessee to observe or perform any other
covenant, agreement, condition or provision of this Agreement, if such failure
shall continue for more than thirty (30) days; PROVIDED, HOWEVER, that the
Lessee shall not be in default with respect to matters that cannot be reasonably
cured within thirty (30) days, so long as the Lessee has promptly commenced such
cure and diligently proceeds in a reasonable manner to complete the same
thereafter;
(c) The Lessee admits in writing its inability to pay its
debts as they mature, or makes an assignment for the benefit of creditors, or
applies for or consents to the appointment of a trustee or receiver for the
Lessee or for a major part of its property;
(d) A trustee or receiver is appointed for the Lessee or for a
major part of its property and is not discharged within thirty (30) days after
such appointment; or
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(e) Bankruptcy, reorganization, receivership, arrangement,
insolvency or liquidation proceedings, or other proceedings for relief under any
federal or state bankruptcy law, or similar law for the relief of debtors, are
instituted by or against the Lessee, and, if instituted against the Lessee, are
allowed against it or are consented to by it or are not dismissed within ninety
(90) days after such institution.
13.2 GATEWAY'S REMEDIES. If a Lessee Default occurs, in
addition to any other rights or remedies Gateway may have at law or in equity,
Gateway shall have the following rights:
(a) Gateway may enforce the provisions of this Agreement and
may enforce and protect the rights of Gateway hereunder by a suit or suits in
equity or at law for the specific performance of any covenant or agreement
contained herein, or for the enforcement of any other appropriate legal or
equitable remedy, including recovery of monetary damages and all moneys due or
to become due from the Lessee under any of the provisions of this Agreement, or
any other relief or remedies to the extent permitted by law, by filing a cause
of action or actions for such damages, equitable relief, or other appropriate
remedies or relief from the Lessee in any court of competent jurisdiction in the
State of Ohio.
(b) After the time when Gateway has given notice and any
applicable grace period provided has expired, if any sums payable by the Lessee
shall remain due and payable, or after the time for performance by the Lessee of
any other term, covenant, provision or condition of this Agreement, or before
the expiration of that time in the event of a bona fide emergency (in which case
Gateway shall only be required to give such notice as is reasonable and
practical under the circumstances), Gateway may, at Gateway's election (but
without obligation), make any payment required of the Lessee under this
Agreement, or perform or comply with any covenant or condition imposed on the
Lessee under this Agreement, as Gateway deems available. The amount so paid plus
the cost of such performance or compliance, plus interest on such sums at the
Interest Rate, shall be deemed to be additional rent payable by the Lessee
immediately upon demand. No such payment, performance or observance by Gateway
shall constitute a waiver of default or of any remedy for default or render
Gateway liable for any loss or damage resulting from any such act. Gateway may,
with notice to the Lessee and at any time or from time to time, charge, set off
and otherwise apply all or any part of any of Gateway's Obligations against the
Lessee's Obligations now or in the future.
(c) No termination of this Agreement shall deprive Gateway of
any of its remedies or actions against the Lessee for past or future rent or
other sums due from the Lessee hereunder, nor shall the bringing of any action
for rent or other sums or other Lessee Default be construed as a waiver of the
right to obtain possession of the Baseball Facility.
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13.3 DEFAULT BY GATEWAY. The occurrence of any one or more of
the following events constitutes a default by Gateway under this Agreement
("Gateway Default"):
(a) Failure by Gateway at any time to pay, when due, any sums
payable by Gateway to the Lessee hereunder within five (5) Business Days after
notice of such failure is given to Gateway by the Lessee;
(b) A Completion Default shall have occurred as provided in
Article V hereof;
(c) Failure by Gateway to observe or perform any other
covenant, agreement, condition or provision of this Agreement, if such failure
shall continue for more than thirty (30) days; PROVIDED, HOWEVER, that Gateway
shall not be in default with respect to matters that cannot be reasonably cured
within thirty (30) days, so long as Gateway has promptly commenced such cure and
diligently proceeds in a reasonable manner to complete the same thereafter;
(d) Gateway admits in writing its inability to pay its debts
as they mature, or makes an assignment for the benefit of creditors, or applies
for or consents to the appointment of a trustee or receiver for Gateway or for a
major part of its property;
(e) A trustee or receiver is appointed for Gateway or for a
major part of its property and is not discharged within thirty (30) days after
such appointment; or
(f) Bankruptcy, reorganization, receivership, arrangement,
insolvency or liquidation proceedings, or other proceedings for relief under any
federal or state bankruptcy law, or similar law for the relief of debtors, are
instituted by or against the Lessee, and, if instituted against the Lessee, are
allowed against it or are consented to by it or are not dismissed within ninety
(90) days after such institution.
13.4 LESSEE'S REMEDIES. If a Gateway Default occurs, in
addition to any other rights or remedies the Lessee may have at law or in
equity, the Lessee shall have the following rights:
(a) The Lessee may enforce the provisions of this Agreement
and may enforce and protect the rights of the Lessee hereunder by a suit or
suits in equity or at law for the specific performance of any covenant or
agreement contained herein, or for the enforcement of any other appropriate
legal or equitable remedy, including recovery of monetary damages and all moneys
due or to become due from the Lessee under any of the provisions of this
Agreement, or any other relief or remedies to the extent permitted by law, by
filing a cause of action or actions for such damages, equitable relief, or other
appropriate remedies or relief from
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Gateway in any court of competent jurisdiction in the State of Ohio.
(b) After the time when the Lessee has given notice and any
applicable grace period provided has expired, if any sums payable by Gateway
shall remain due and payable, or after the time for performance by Gateway of
any other term, covenant, provision or condition of this Agreement, or before
the expiration of that time in the event of a bona fide emergency (in which case
the Lessee shall only be required to give such notice as is reasonable and
practical under the circumstances), the Lessee may, at the Lessee's election
(but without obligation), make any payment required of Gateway under this
Agreement, or perform or comply with any covenant or condition imposed on the
Lessee under this Agreement, as the Lessee deems available. The amount so paid
plus the cost of such performance or compliance, plus interest on such sums at
the Interest Rate, shall be payable by Gateway immediately upon demand. No such
payment, performance or observance by the Lessee shall constitute a waiver of
default or of any remedy for default or render the Lessee liable for any loss or
damage resulting from any such act. The Lessee may, with notice to Gateway and
at any time or from time to time, charge, set off and otherwise apply all or any
part of any of Lessee's Obligations against Gateway's Obligations now or in the
future.
(c) No termination of this Agreement shall deprive the Lessee
of any of its remedies or actions against Gateway for past or future sums due to
the Lessee from Gateway hereunder.
13.5 GENERAL PROVISIONS.
(a) No right or remedy herein conferred upon, or reserved to,
Gateway or the Lessee is intended to be exclusive of any other right or remedy,
but each shall be cumulative and in addition to every other right or remedy
given herein or now or hereafter existing at law, or in equity or by statute;
PROVIDED, HOWEVER, that neither Gateway nor the Lessee shall have any right to
cancel, rescind or otherwise terminate this Agreement due to a breach of this
Agreement by the other party except as otherwise specifically set forth in this
Agreement.
(b) No waiver by either party of any breach of obligations,
agreements or covenants herein shall be a waiver of any subsequent breach of any
obligation, agreement or covenant, nor shall any forbearance by either party to
seek a remedy for any breach by the other party be a waiver by such party of any
rights or remedies with respect to such or any subsequent breach, nor shall any
express waiver by either party be deemed to apply to any other existing or
subsequent right to remedy any default by the other party, nor shall any waiver
be either party of any default or breach by the other party in the performance
of any of the covenants or obligations of such other party under this Agreement
be deemed to have been made by the party against which the waiver
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is sought to be charged unless contained in a writing executed by such party.
(c) In the event that either party fails to pay any payment
required hereunder when due, then, without limiting any other rights of the
non-defaulting party, the defaulting party shall be liable for interest thereon
at the Interest Rate from the date that such installment was due until the date
paid in full.
ARTICLE XIV
-----------
SURRENDER OF BALLPARK
14.1 GENERAL. Upon the expiration or termination of this
Agreement (by lapse of time or otherwise) the Lessee shall peaceably deliver up
and surrender the Ballpark Land and the Ballpark Improvements to Gateway in good
order and repair and in the same condition as upon the Completion Date, ordinary
wear and tear excepted; PROVIDED, HOWEVER, that nothing contained herein shall
be construed as an obligation by the Lessee to repair the Ballpark Improvements
prior to such surrender except to the extent that such obligations are
specifically imposed upon the Lessee hereunder. The Lessee shall surrender to
Gateway all keys for the Ballpark Improvements at the place then fixed for the
receipt of notices by Gateway, and shall notify Gateway in writing of all
combinations of locks, safes and vaults, if any. The Lessee's obligations to
observe and perform the covenants set forth in this Article XIV shall survive
the expiration or earlier termination of this Agreement (by lapse of time or
otherwise).
14.2 ALTERATIONS AND IMPROVEMENTS. At the expiration or
termination of this Agreement (by lapse of time or otherwise), all permanent
alterations, installations, changes, replacements, additions or improvements
made by the Lessee to the Ballpark Land and the Ballpark Improvements shall be
deemed a part of the Ballpark Land and the Ballpark Improvements and the same
shall not be removed.
14.3 LESSEE'S PROPERTY. Upon the expiration or termination of
this Agreement (by lapse of time or otherwise), the Lessee may remove all
property which is owned by the Lessee and which the Lessee is permitted to
remove from the Ballpark Land and the Ballpark Improvements under the provisions
of this Agreement and, in such event, repair any damage caused to the Baseball
Facility due to the removal of such property at the Lessee's expense. If the
Lessee fails to remove such property, such property shall be deemed abandoned by
the Operator. Gateway may, at its option, (a) cause that property to be removed
at no expense to the Lessee, (b) sell all or any part of such property at public
or private sale, without notice to the Lessee; or (c) declare that title to such
property shall be deemed to have passed to Gateway.
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14.4 ABANDONING PREMISES OR PERSONAL PROPERTY. The Lessee
shall not vacate or abandon the Ballpark Land and the Ballpark Improvements at
any time during the Term, but if the Lessee vacates or abandons the Baseball
Facility or is dispossessed by process of law, in breach of this Agreement, any
personal property owned by the Lessee which may be left on the Ballpark Land and
within the Ballpark Improvements following such abandonment or dispossession
shall be deemed to have been abandoned by the Lessee, and in that event such
property shall be disposed of by Gateway in accordance with the provisions of
Section 14.3 hereof. Gateway agrees that Lessee shall not be deemed to have
abandoned or vacated the Ballpark Improvements during any period of non-use
between Seasons.
ARTICLE XV
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DAMAGE TO BALLPARK
If any Property Damage shall occur:
(a) All proceeds from property insurance required to be
obtained hereunder paid on account of such damage shall be paid to Gateway to be
held in escrow accounts with Permitted Escrow Agents and invested in Permitted
Investments, including the Bond Escrow Accounts, and applied in the following
manner:
(i) there shall be paid from said insurance proceeds such part
thereof as shall equal the cost of making such temporary
repairs or doing such other work as in the reasonable opinion
of the Project Architect (or such other architect selected by
Gateway and approved by the Lessee) may be necessary in order
to protect the Baseball Facility pending the adjustment of the
insurance loss or the making of permanent repairs, restoration
or reconstruction of the Baseball Facility;
(ii) there shall be paid from said insurance proceeds such
part thereof as shall equal the cost of repairing, restoring
or reconstructing the Baseball Facility or of any part thereof
or of erecting a new building or structure or improvement or
part thereof so that upon completion of such repairs,
restoration, reconstruction, or erection the building or
structure or improvement shall be equal to the value of the
replacement value of the building or structure or improvement;
(iii) payments pursuant to paragraphs (i) or (ii) of this
Subsection (a) from such insurance proceeds shall be made by
Gateway from time to time as the work progresses in amounts
equal to the cost of labor and materials incorporated into and
used in such work and
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builders', architects' and engineers' fees and other charges
in connection with such work upon delivery to Gateway of a
certificate of an authorized architect in charge of such work
certifying that the amounts so to be paid are payable in
accordance with the provisions of this Article XV and that
such amounts are then due and payable and have not theretofore
been paid.
(b) All insurance proceeds paid to the Lessee on account of
such Property Damage shall be held in trust by the Lessee for the benefit of
Gateway and shall be paid immediately by the Lessee to Gateway.
(c) In the event that any of the insurance proceeds paid by
the insurance companies shall remain after the completion of such repairs,
restoration, reconstruction or erection, the excess shall be deposited in the
Capital Repairs Fund and used for the purposes set forth therein.
(d) In the event that the insurance proceeds paid, as
hereinabove provided, together with the funds available in the Capital Repairs
Fund are insufficient for making such permanent repairs, restoration or
reconstruction or erection and no party is willing to provide the additional
funds needed therefor, Gateway or the Lessee shall notify the other party of
such determination in writing and thereupon this Agreement shall cease and
terminate and all future Rent and other amounts due by the Lessee hereunder
shall cease as of the date of such written notice and the total insurance
proceeds so paid shall be used first, to pay the principal, interest and
redemption premiums, if any, on the Bonds and any remaining proceeds shall be
allocated equitably between Gateway, Lessee and the Operator.
ARTICLE XVI
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TRANSFER OF FRANCHISE
Notwithstanding any other provision of this Agreement, the
Lessee agrees as follows:
(a) The Lessee shall not enter into any contract or agreement
of any kind to transfer the Lessee's baseball franchise to a location other than
the Baseball Facility.
(b) The Lessee shall not make any application to the American
League for approval to transfer, or vote to approve transfer of the Lessee's
franchise to a location other than the Baseball Facility.
(c) Subject only to the provisions of Articles XIX and XX and,
if applicable, Gateway's obligation to manage and operate the Baseball Facility
as required under Article XXV of the
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Management Agreement, the Lessee shall cause the Team, from and after the
Completion Date and until the expiration of the Term of this Agreement (by lapse
of time or otherwise), to play all of its American League home games, home
play-off games, American League Championship home games and World Series home
games at the Baseball Facility.
(d) The Lessee agrees that Gateway does not have an adequate
remedy at law for breach of this Article XVI. The Lessee further agrees that in
the event of a violation of this Article XVI, Gateway shall be entitled to seek
and obtain an injunction from a court of competent jurisdiction to enjoin any
violation of this Article XVI.
ARTICLE XVII
------------
INDEMNIFICATION
17.1 LESSEE INDEMNIFICATION. Subject to the limitations
hereinafter set forth, the Lessee hereby agrees to indemnify and hold harmless
Gateway, its officers, members, employees and agents from and against all loss,
cost and expense in connection with proceedings, judicial or otherwise, and
claims, demands and judgments, together with costs and expenses including
attorneys' fees relating thereto, arising out of damage or injury to person or
property occurring in or about the Baseball Facility which occurs after the
Completion Date and while the Agreement is in effect. Notwithstanding the
foregoing, in no event shall the foregoing indemnification obligation be
applicable to any loss, cost or expense arising out of any Excluded Occurrences.
17.2 GATEWAY INDEMNIFICATION. Gateway hereby agrees to
indemnify, defend and hold the Lessee employees and agents harmless from and
against all loss, cost and expense in connection with proceedings, judicial or
otherwise, and claims, demands and judgments, together with costs and expenses
including attorneys' fees, arising solely out of any Excluded Occurrence which
occur while this Agreement is in effect.
17.3 PROCEDURE REGARDING INDEMNIFICATION.
(a) If the Indemnified Party shall discover or have actual
notice of facts giving rise or which may give rise to a claim for
indemnification under this Article XVII, or shall receive notice of any Action,
with respect to any matter for which indemnification may be claimed, the
Indemnified Party shall, within twenty (20) days following service of process
(or within such shorter time as may be necessary to give the Indemnifying Party
a reasonable opportunity to respond to such service of process) or within twenty
(20) days after any other such notice, notify the Indemnifying Party in writing
thereof together with a statement of such information respecting such matter as
the Indemnified Party
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then has; it being understood and agreed that any failure or delay of the
Indemnified Party to so notify the Indemnifying Party shall not relieve the
Indemnifying Party from liability hereunder except and solely to the extent that
such failure or delay shall have materially adversely affected the Indemnifying
Party's ability to defend against, settle, or satisfy any such Action. Following
such notice, the Indemnifying Party shall have the right, at its sole cost and
expense, to contest or defend such Action through attorneys, accountants, and
others of its own choosing (the choice of such attorneys, accountants, and
others being subject to the approval of the Indemnified Party, such approval not
to be unreasonably withheld) and in the event it elects to do so, it shall
promptly notify the Indemnified Party of such intent to contest or defend such
Action. If within twenty (20) days following such notice from the Indemnified
Party (or within such shorter time as may be necessary to give the Indemnified
Party a reasonable opportunity to respond to service of process or other
judicial or administrative action), the Indemnified Party has not received
notice from the Indemnifying Party that such Action will be contested or
defended by the Indemnifying Party, the Indemnified Party shall have the right
to (i) authorize attorneys satisfactory to it to represent it in connection
therewith or (ii) at any time settle, compromise, or pay such action, in either
of which events the Indemnified Party shall be entitled to indemnification
therefor subject to this Section 17.3.
(b) In the event and so long as the Indemnifying Party is
actively contesting or defending against an Action as hereinabove provided, the
Indemnified Party shall cooperate with the Indemnifying Party and its counsel in
such contest or defense, shall join in making any appropriate counterclaim or
cross-claim in connection with the Actions, and shall provide such access to the
books and records of the Indemnified Party as shall be necessary in connection
with such defense or contest, all at the sole cost and expense of the
Indemnifying Party. Notwithstanding that an Indemnifying Party is actively
conducting such defense or contest, any Action may be settled, compromised or
paid by the Indemnified Party without the consent of the Indemnifying Party;
PROVIDED, HOWEVER, that if such action is taken without the Indemnifying Party's
consent, its indemnification obligations in respect of such claim shall thereby
be nullified. Any such Action may be settled, compromised, or paid by the
Indemnifying Party without the Indemnified Party's consent, so long as such
settlement or compromise does not cause the Indemnified Party to incur any
present or future material cost, expense, obligation or liability of any kind or
nature.
(c) In the event any Action involves matters partly within or
partly outside the scope of the indemnification by the Indemnifying Party
hereunder, then the attorneys' fees, costs, and expenses of contesting or
defending such Action shall be equitably allocated between the Indemnified Party
and the Indemnifying Party.
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17.4 LIMITATION. Indemnification under this Article XVII does
not include indemnification against loss or liability due to Force Majeure.
ARTICLE XVIII
-------------
ASSIGNMENT
18.1 ASSIGNMENT BY LESSEE. The Lessee shall not assign or
transfer this Agreement, in whole or in part, with or without consideration, to
any Person, without the prior written consent of Gateway which consent shall not
be unreasonably withheld. Notwithstanding the foregoing, Gateway's consent shall
be granted automatically if (a) the proposed assignee shall have acquired the
Major League Baseball franchise now held by the Lessee in accordance with all
applicable Major League rules and regulations, (b) the American League and the
Office of the Commissioner of Baseball shall have approved the assignment, and
(c) such assignee assumes all of the Lessee's obligations under this Agreement
and agrees to be bound by this Agreement. Upon the assignment of the Agreement
by the Lessee with the consent of Gateway, or to another party where consent is
not required, the liability of the Lessee shall cease with respect to
liabilities accruing from and after the effective date of such assignment.
18.2 SUBLETTING. The Lessee shall not sublease all or any part
of the Ballpark Land and the Ballpark Improvements, nor permit other persons to
occupy or conduct business in the Baseball Facility or any part thereof, except
as expressly permitted by this Agreement or with the prior written consent of
Gateway, which consent shall not be unreasonably withheld.
18.3 ASSIGNMENT BY LESSOR. Gateway shall have the right to
assign and transfer its rights under and interest in this Agreement, and pledge
any Rent or other sums to which Gateway is entitled under this Agreement or any
other interest Gateway has in this Agreement, in whole or in part, as security
for the repayment of the Bonds, or other financing approved by the Lessee for
the costs of the design and construction of the Improvements (including, without
limitation, any letter of credit issued to secure the Bonds). All costs incurred
in connection with any such pledge shall be the sole responsibility of Gateway.
Gateway shall also have the right to assign and transfer its right, title and
interest in and to this Agreement, in whole or in part, to the City or the
County subject to the Three Party Agreement.
18.4 ASSIGNEES AND SUBTENANTS. If Gateway consents at any time
to any assignment or sublease as defined in this Article XVIII, the Lessee and
any such assignee or sublessee, in addition to any other consideration that may
pass between them in connection therewith, shall be deemed to have covenanted
not to make any further assignment or sublease contrary to the provisions of
this
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Article XVIII. Such covenant shall be deemed to have been made as of the date of
such consent by Gateway, and shall take effect prospectively from the date
thereof. In addition, if any assignee of this Agreement is not a limited
partnership, the covenants and warranties by the Lessee set forth in Article
XXVII hereof shall be appropriately modified to take into account the nature of
the assignee.
ARTICLE XIX
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EMINENT DOMAIN
19.1 TERMINATION FOR CONDEMNATION. In the event that a
Condemnation with respect to any material part of the Ballpark Land and the
Ballpark Improvements shall occur at any time during the Term, this Agreement
shall terminate (except as hereinafter provided below), on the date on which
possession is required to be delivered to the condemning authority. As used
herein, "material part" shall mean any of the following:
(a) Any part of the Ballpark Land and the Ballpark
Improvements that, in the reasonable determination of the Lessee, would cause
the Lessee to become unable to make use of the Ballpark Land and the Ballpark
Improvements for its intended operations or to experience a material loss of
revenue (specifically including, without limitation, a reduction by twenty
percent (20%) or more in the number of seats available in the Ballpark or loss
of any material portion of the concourse areas);
(b) Any part of the area between the Ballpark Improvements and
a public street or highway, Condemnation of which would cause the Lessee to
become unable to provide sufficient access to the Ballpark Land and the Ballpark
Improvements; or
(c) Any portion of the Gateway Common Areas the loss of which
results in fewer than 1,500 parking spaces being available on the same terms and
conditions as the On-Site Parking to the Lessee and the Operator of equal
quality and no greater distance from the Baseball Facility than the On-Site
Parking;
PROVIDED, HOWEVER, that the Lessee may elect in its sole discretion not to treat
any of the foregoing as a "material part" of the Ballpark Land and the Ballpark
Improvements, in which event this Agreement shall not terminate. If this
Agreement terminates pursuant to the provisions of this Section 19.1, all
rights, obligations and liabilities of the parties hereto shall end as of the
effective date of such termination, without prejudice to any rights which have
accrued prior to such termination.
19.2 ALLOCATION OF AWARD. The amount of any award for or on
account of any Condemnation shall be first used to pay the principal, interest
and redemption premiums, if any, on the Stadium
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Revenue Bonds and the remaining proceeds shall be shared equitably between
Gateway and the Lessee. The Lessee shall have the right to be represented by
counsel of its choosing in any Condemnation proceedings.
19.3 PERFORMANCE OF WORK. If there shall be a Condemnation and
this Agreement shall not terminate as a result thereof, Gateway shall be
required to perform any and all work necessary to restore the Ballpark Land and
the Ballpark Improvements to a complete architectural unit suitable for the
Lessee's use in as expeditious a manner as possible.
19.4 TEMPORARY TAKING. This Agreement shall not terminate by
reason of a temporary taking of the Ballpark Land and the Ballpark Improvements
or any portion thereof for public use, except as provided in this Section 19.4.
In the event of such a temporary taking, the rights and obligations of the
parties under this Agreement shall continue in full force and effect, except
that:
(a) any award for such temporary taking shall be governed by
the provisions of Section 19.2 hereof;
(b) upon the termination of such temporary taking, Gateway
shall use its reasonable efforts to restore the Ballpark Land and the Ballpark
Improvements to a state equivalent to that which the Ballpark Land and the
Ballpark Improvements were in immediately prior to such temporary taking;
(c) during any period of a temporary taking (or such longer
period as is reasonably necessary to allow the Lessee to make suitable alternate
arrangements), the Lessee shall be entitled to make arrangements for an
alternate site for the Team's home baseball games, on the same terms and
conditions as provided in Article XX hereof.
(d) notwithstanding the foregoing, the Lessee shall have the
right to terminate this Agreement as of the end of any Season if the remaining
period of such temporary taking will be for a period of more than two (2)
Seasons following the date of the termination, as evidenced by the issuance of
any written statement by a duly authorized official of the condemning authority
to the effect that such temporary taking will be for such period of time.
ARTICLE XX
----------
UNTENANTABILITY
If the Ballpark Land and the Ballpark Improvements are
untenantable in whole or in any material part as a result of (a) Gateway's
inability to cause Substantial Completion as provided herein, or (b) any Major
Capital Repair or the event or events
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which gave rise thereto (including any Major Capital Repair necessitated by any
of the events set forth in Article XIX hereof), then the Lessee shall (y) comply
with the terms set forth in Article V hereof, in the case of any untenantability
resulting from (a) above, or (z) make arrangements for an alternate site for its
Home Dates during the period of such untenantability (or such longer period as
is reasonably necessary to allow the Lessee to make suitable alternate
arrangements), in the case of any untenantability resulting from (b) above.
During the period in which the Lessee is playing its games at an alternate site,
the Lessee will not be responsible for any obligations accruing under this
Agreement. In the event that untenantability caused by a Major Capital Repair or
the event or events which gave rise thereto (other than a Major Capital Repair
necessitated by the events set forth in Article XIX hereof) continues for a
period of two (2) Seasons, or totals a number of days equal to two (2) Seasons
in any three (3) year period, the Lessee may at its option, exercised in its
reasonable discretion, terminate this Agreement upon thirty (30) days' prior
written notice to Gateway. If untenantability is caused by any Major Capital
Repair necessitated by the events set forth in Article XIX hereof, the Lessee's
right to terminate this Agreement shall be governed by Article XIX. If
untenantability is caused by Gateway's inability to cause Substantial
Completion, the Lessee's right to terminate shall be governed by Article V
hereof.
ARTICLE XXI
-----------
NAME OF BASEBALL FACILITY AND FIRST EVENT
21.1 NAME OF BASEBALL FACILITY. The Baseball Facility shall be
named the "Cleveland Indians Baseball Park"; PROVIDED, HOWEVER, that in the
event Gateway receives a bona fide proposal from a reputable and responsible
business entity or civic group to purchase naming rights on terms mutually
satisfactory to Gateway and the Lessee, Gateway may sell such rights and retain
the proceeds thereof consistent with the provisions hereof and of the Management
Agreement. Gateway shall use its best efforts to cause any formal use of the
Baseball Facility name to be followed with the phrase "Home of the Indians."
Such formal use shall include, but not be limited to, any signs used in or on
the Baseball Facility or on the Gateway Common Areas. Any logo or similar mark
developed to represent the Baseball Facility or the name thereof shall
incorporate the logo of the Team in a manner acceptable to the Lessee.
Notwithstanding any provision provided for in this Section 21.1, all use of the
Team's name, logo or similar mark shall be limited to uses permitted by Major
League Baseball and its affiliated Persons that have consent and approval rights
with respect to such items, including, but not limited to, Major League
Properties.
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21.2 FIRST EVENT AT BASEBALL FACILITY. The first event at the
Baseball Facility shall be a Cleveland Indians baseball game, unless otherwise
agreed to in writing by the Lessee.
ARTICLE XXII
------------
CONDITIONS
22.1 PRECONDITIONS TO LESSEE'S OBLIGATIONS. The Lessee's
obligations to take possession of the Baseball Facility and to make any payments
to Gateway or assume any other obligations pursuant to the terms of this
Agreement are expressly conditioned upon the satisfaction of each of the
conditions precedent on or before the dates set forth in Sections 22.2 through
22.5, inclusive (the "Deadline Dates"), unless waived in writing by the Lessee.
In the event any of the conditions precedent set forth in Sections 22.2 through
22.5, inclusive is not satisfied by the applicable Deadline Date, the Lessee may
elect to (i) waive the condition, (ii) extend the Deadline Date on which such
condition must be satisfied, or (iii) terminate this Agreement upon thirty (30)
days' prior written notice to Gateway. The Lessee shall notify Gateway of the
Lessee's election within thirty (30) days after the applicable Deadline Date.
Failure of the Lessee to notify Gateway shall be deemed to be an election by the
Lessee to waive such condition.
22.2 PREMIUM SEATING. On or before January 15, 1992, there
shall be sufficient Premium Seating licensed or firmly committed to be licensed
to satisfy the requirements of the Financing Arrangements for the design and
construction of the Improvements and to satisfy the requirements of the Lessee.
22.3 SECURITY COMMITMENT. On or before July 31, 1991, the City
shall have committed to provide the police protection and traffic control
personnel for all events at the Baseball Facility as provided for in Section
14.1 of the Management Agreement.
22.4 FINANCING ARRANGEMENTS. On or before January 15, 1992,
all of the Financing Arrangements necessary for the design and construction of
Gateway's Work and the operation of the Baseball Facility shall be in place and
all conditions precedent to release the escrow of all proceeds of the Bonds
shall have been satisfied.
22.5 NEW LEASE AND MANAGEMENT NEGOTIATIONS COMMITMENT. On or
before July 31, 1991, the Lessee and the Operator shall have received assurances
satisfactory to the Lessee and the Operator from the City and the County that
such entities shall, at least two (2) years prior to the expiration of this
Agreement and the Management Agreement, commence discussions with the Lessee
regarding the terms on which those entities would be prepared to enter into new
agreements provided in Section 4.2 of the Ground Lease; PROVIDED, HOWEVER, that
no such renewal shall be executed
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or effective prior to the date following the date on which the Bonds are
discharged at their maturity, or in the event of a defeasance of the Bonds by
the City prior to the ninety-first day after such defeasance.
22.6 CONDITION TO GATEWAY'S OBLIGATIONS.
(a) Gateway's obligation to continue to perform its duties and
obligations hereunder is expressly conditioned upon the receipt of commitments
for Premium Seating Licenses for Prepaid Premium Seating sufficient to yield on
February 1, 1994, taking into account all investment earnings projected to be
earned thereon, Prepaid Premium Seating Revenue of at least $20,000,000.
(b) Gateway's obligation to continue its duties and
obligations hereunder is expressly conditioned upon the receipt of a commitment
for or an agreement to issue a post escrow letter of credit or other substitute
Financing Arrangement relative to the Stadium Revenue Bonds on terms and
conditions consistent with the terms of the Management Agreement, including but
not limited to Article VI thereof, and this Agreement; provided that Gateway
shall accept any commitment acceptable to Operator and Lessee if the terms and
conditions of such commitment do not impose additional material obligations of a
nature not otherwise contemplated hereunder, the Management Agreement or the
Gateway CAM Agreement.
(c) In the event either or both of the preceding conditions
have not been satisfied by January 15, 1992, Gateway may elect to (i) waive the
condition, (ii) extend such date on which such condition must be satisfied, or
(iii) terminate this Agreement. Gateway shall notify the Lessee of Gateway's
election on or before February 15, 1992. Failure of Gateway to notify the Lessee
shall be deemed to be an election by Gateway to waive such condition. In the
event Gateway elects to terminate this Agreement as provided in this Section
22.6, Gateway shall reimburse to Lessee and Operator, on or before five (5)
Business Days after Gateway's election to terminate as provided herein, all of
Lessee's and Operator's reasonable expenses and costs, including attorney's fees
and outside consultants, incurred in connection with the negotiation and
execution of this Agreement, the Management Agreement, and related agreements,
and the performance of the Lessee's and Operator's duties under the Management
Agreement and the Lease Agreement, including, but not limited to, the Prepaid
Premium Seating Expenses, without regard to the $1,000,000 maximum amount
included therein, and the planning and design of the Baseball Facility;
provided, however, that the maximum amount payable for such expenses and costs
shall be Two Million Dollars ($2,000,000). The provisions of this Section
22.6(c) shall expressly survive the termination of this Agreement.
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ARTICLE XXIII
-------------
SEASON TICKET GOAL
Gateway and the Lessee hereby acknowledge that to make the
Baseball Facility a more viable economic enterprise, the full support of the
Cleveland community is needed. Therefore, Gateway and the Lessee have
established as a project goal for Gateway and the Lessee the obtaining of
commitments (or guarantees of such commitments) for the purchase of five
thousand (5,000) season ticket equivalents for the 1994 through 1999 baseball
seasons in excess of the six thousand one hundred ninety (6,190) season ticket
equivalents sold by the Lessee for the 1990 baseball season. Gateway and the
Lessee agree to use their best efforts to obtain such goal on or before December
31, 1993.
ARTICLE XXIV
------------
RIGHT OF FIRST REFUSAL
Gateway has expressed an intention to grant to the Cavs a
right (the "Cavs' Option") to be the developer of all land comprising the land
upon which the Arena is proposed to be built (presently estimated to be
approximately eight (8) acres), such land being designated on the CMS Site Plan
and more fully described on Exhibit I attached hereto and made a part hereof
(the "Arena Land"), in the event that it is not possible for Gateway to secure
the funds needed to construct both the Arena and the Improvements to be
exercised at any time up to December 31, 1996 ("Cavs Option Period"). In
consideration for and as a material inducement to the Lessee to enter into this
Agreement, Gateway covenants to provide to Lessee development, option or similar
rights in the event that the Cavs are awarded the Cavs Option or any other
development rights by Gateway, for land (other than the Arena Land) then owned,
or which shall be acquired, by Gateway adjacent to or in close proximity to the
Central Market Square Site on terms and conditions equal to any development or
option rights granted by Gateway to the Cavs or any other operator or lessee of
a sports facility, including the Arena. The parties expressly agree that the
terms and conditions of this Article XXIV will survive any termination of this
Agreement and be binding on any successors or assigns.
Notwithstanding anything in this Article XXIV, the Lessee
agrees that it is its desire that the Arena be built as part of the Gateway
project and that it is committed to support the Arena's development from the
date of this Agreement until December 31, 1996. In the event the Arena is
constructed, the Lessee will have equal, preferential rights with the operator
thereof to develop Gateway project area property owned by or to be acquired by
Gateway. Gateway shall use its best efforts to obtain an agreement from the Cavs
on behalf of and with terms acceptable to the Lessee
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prior to finalizing the Cavs' Option, for a right of "first look" in the event
that the Cavs exercise the Cavs' Option and thereafter attempt to dispose of the
Arena Land prior to development.
ARTICLE XXV
-----------
BROADCAST FEES
All rights and other fees and arrangements relating to the
production and distribution of the Team's baseball games for commercial
television, noncommercial television (by over-the-air, cable or otherwise),
including direct sales of advertising by the Lessee, radio broadcast or any
other media fees and revenues, and any income attributable to such broadcasts
(whether in or out of the local market) ("Broadcast Fees") shall be retained and
exclusively controlled by the Lessee.
ARTICLE XXVI
------------
TICKET REVENUE
Subject to the Lessee's obligation to pay Rent, the Lessee
shall retain all Ticket Revenue. The Lessee shall have the right to select the
ticket computer company for the Baseball Facility.
ARTICLE XXVII
-------------
REPRESENTATIONS BY LESSEE
The Lessee represents and warrants as follows, as of the date
hereof and at all times from and after the date hereof until the expiration or
termination of this Agreement:
27.1 VALID EXISTENCE. The Lessee is a limited partnership duly
organized and validly existing under the laws of the State of Ohio. The Lessee
has full partnership power to own its property and conduct its business as
presently conducted.
27.2 POWER; NO LIMITATION ON ABILITY TO PERFORM. The Lessee
has full partnership power and authority to execute and deliver this Agreement
and to carry out and perform all of the terms and provisions of this Agreement,
and all transactions contemplated hereby, to the extent required to be carried
out or performed by the Lessee. Subject to satisfaction of the requirements of
Article XXXIV hereof, (a) neither the Lessee's partnership agreement or
certificate of limited partnership or Baseball Corporation's articles of
incorporation or code of regulations, nor any rule, policy, constitution, by-law
or agreement of the American League or Major League Baseball, nor any
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other agreement, law or other rule in any way prohibits, limits or otherwise
affects the right or power of the Lessee or Baseball Corporation to enter into
and perform all of the terms and provisions of this Agreement and each document,
agreement and instrument executed and to be executed by the Lessee or Baseball
Corporation in connection herewith, and all transactions contemplated hereby and
thereby, and (b) neither the Lessee nor any of its partners (general or limited,
including, without limitation, Baseball Corporation), or stockholders of any
corporate partner, officers, directors or any of their personal or legal
representatives are party to or bound by any contract, agreement, indenture,
trust agreement, note, obligation or other instrument which could prohibit,
limit or otherwise affect the same. Except for the approval required by Article
XXXIV hereof, no consent, authorization or approval of, or other action by, and
no notice to or filing with, any governmental authority, regulatory body or any
other Person is required for the due execution, delivery and performance by the
Lessee and Baseball Corporation of this Agreement or any other agreement,
document or instrument executed and delivered by the Lessee or Baseball
Corporation in connection herewith, or any of the transactions contemplated
hereby or thereby.
27.3 VALID EXECUTION. The execution and delivery of this
Agreement by the Lessee has been duly and validly authorized by all necessary
action. This Agreement and all other agreements, documents and instruments
executed and delivered by the Lessee in connection herewith are, and each other
agreement, document or instrument to be executed and delivered by Lessee in
connection herewith when executed and delivered will be, legal, valid and
binding obligations of the Lessee, enforceable against the Lessee in accordance
with their respective terms.
27.4 DEFAULTS. The execution, delivery and performance of this
Agreement and each agreement, document and instrument executed and to be
executed and delivered by the Lessee or Baseball Corporation in connection
herewith (a) do not and will not violate or result in a violation of, contravene
or conflict with, or constitute a default under (i) any agreement, document or
instrument to which the Lessee or Baseball Corporation is a party or by which
the Lessee's or Baseball Corporation's assets may be bound or affected, (ii) any
law, statute, ordinance or regulation applicable to the Lessee or Baseball
Corporation, or (iii) the articles of incorporation or code of regulations of
Baseball Corporation, or the partnership agreement or certificate of limited
partnership of the Lessee, and (b) do not and will not result in the creation or
imposition of any lien or other encumbrance upon the assets of Lessee or
Baseball Corporation.
27.5 GOOD STANDING OF BASEBALL CORPORATION. Baseball
Corporation is the Lessee's sole general partner, and is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Ohio.
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27.6 POWER OF BASEBALL CORPORATION. Baseball Corporation has
full corporate power and authority to execute and deliver this Agreement on
behalf of the Lessee as the Lessee's sole general partner, and to carry out the
terms and provisions of this Agreement, and all transactions contemplated
hereby.
27.7 VALID EXECUTION BY BASEBALL CORPORATION. The execution
and delivery of this Agreement by Baseball Corporation on behalf of the Lessee
as the Lessee's sole general partner has been duly and validly authorized by all
necessary action.
27.8 COMPLIANCE WITH LAWS. The Lessee shall comply, at all
times, with all laws and regulations applicable to its use of the Baseball
Facility in accordance with the terms of this Agreement, and shall obtain
licenses and permits (other than building permits and certificates of occupancy
in connection with the construction thereof), necessary in connection therewith
at its sole cost and expense.
27.9 MAINTENANCE OF GOOD STANDING IN LEAGUE. The Lessee and
Baseball Corporation shall maintain the Team as an American League baseball team
in good standing.
ARTICLE XXVIII
--------------
REPRESENTATIONS BY GATEWAY
Gateway represents and warrants as follows, as of the date
hereof and at all times from and after the date hereof until the expiration or
termination of this Agreement:
28.1 VALID EXISTENCE. Gateway is a nonprofit corporation, duly
organized, validly existing and in good standing under the laws of the State of
Ohio. Gateway has full corporate power to own its property and conduct its
business as presently conducted.
28.2 POWER; NO LIMITATION ON ABILITY TO PERFORM. Gateway has
the power and authority to execute and deliver this Agreement and to carry out
and perform all of the terms and provisions of this Agreement, and all
transactions contemplated hereby, to the extent required to be carried out or
performed by Gateway. Neither Gateway's articles of incorporation or code of
regulations, nor any other agreement, law or other rule in any way prohibits,
limits or otherwise affects the right or power of Gateway to enter into and
perform all of the terms and provisions of this Agreement and each document,
agreement and instrument executed and to be executed by Gateway in connection
herewith, and all transactions contemplated hereby and thereby, and neither
Gateway nor any of its officers, directors or any of their personal or legal
representatives are party to or bound by any contract, agreement, indenture,
trust
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agreement, note, obligation or other instrument which could prohibit, limit or
otherwise affect the same. No consent, authorization or approval of, or other
action by, and no notice to or filing with, any governmental authority,
regulatory body or any other person is required for the due execution, delivery
and performance by Gateway of this Agreement or any other agreement, document or
instrument executed and delivered by Gateway in connection herewith, or any of
the transactions contemplated hereby or thereby.
28.3 VALID EXECUTION. The execution and delivery of this
Agreement by Gateway has been duly and validly authorized by all necessary
action. This Agreement and all other agreements, documents and instruments
executed and delivered by Gateway in connection herewith are, and each other
agreement, document or instrument to be executed and delivered by Gateway in
connection herewith when executed and delivered will be, legal, valid and
binding obligations of Gateway, enforceable against Gateway in accordance with
their respective terms.
28.4 DEFAULTS. The execution, delivery and performance of this
Agreement and each agreement, document and instrument executed and delivered and
to be executed and delivered by Gateway in connection herewith (a) do not and
will not violate or result in a violation of, contravene or conflict with, or
constitute a default under: (i) any agreement, document or instrument to which
Gateway is a party or by which Gateway's assets may be bound or affected, (ii)
any law, statute, ordinance or regulation applicable to Gateway, or (iii) the
articles of incorporation or code of regulations of Gateway, and (b) do not and
will not result in the creation or imposition of any lien or other encumbrance
upon the assets of Gateway.
28.5 COMPLIANCE WITH LAWS. Gateway shall comply at all times
with all laws and regulations applicable to its construction and use of the
Baseball Facility in accordance with the terms of this Agreement, and shall
obtain licenses and permits, including, but not limited to, all building permits
and certificates of occupancy in connection with the construction thereof,
necessary in connection therewith at its sole cost and expense.
28.6 TITLE. Gateway owns fee simple title to the Central
Market Square Site free and clear of all liens and encumbrances thereon except
(i) as set forth in that certain title policy issued on December 28, 1990, by
Midland Title Security, Inc. as agent for First American Title Insurance
Company, Policy No. 052032, (ii) real estate taxes that are not yet due and
payable, or (iii) immaterial liens.
28.7 THREE PARTY AGREEMENT AND CENTRAL MARKET COMMUNITY
DEVELOPMENT PLAN. The foregoing warranties and representations are subject to
the necessary amendments to the Three Party Agreement and the Central Market
Community Development Plan required to
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conform those documents to this Agreement, the Management Agreement, the Ground
Lease and the Common Area Maintenance Agreement.
ARTICLE XXIX
------------
SUBORDINATION, NONDISTURBANCE AND ATTORNMENT
Subject to Gateway furnishing the Lessee nondisturbance
agreements reasonably satisfactory in form and substance to the Lessee, this
Agreement, and all rights of the Lessee hereunder shall be subject and
subordinate to the mortgages which may encumber the within leasehold estate that
are granted in connection with any approved Financing Arrangement.
Notwithstanding anything to the contrary contained in this Article, with respect
to any mortgage to which this Agreement is subordinate, such subordination shall
be contingent upon Gateway's securing the agreement or acknowledgment of the
mortgagee (which shall be obtained pursuant to a separate written agreement with
the Lessee) that this Agreement, the Lessee's rights hereunder and the Lessee's
right to continue occupancy of the within leasehold estate shall not be affected
or disturbed in the event of a default by Gateway (or any successor) under any
mortgage and subsequent foreclosure or eviction. Such subordination shall also
provide to the Lessee the right to elect to cure defaults under the mortgage.
Such agreements of nondisturbance may be conditional upon the securing of the
Lessee's written agreement in favor of the mortgagee to attorn to and perform
under this Agreement. If any mortgagee shall succeed to the rights of Gateway
hereunder, whether through possession, foreclosure action or delivery of a new
lease or deed, or otherwise, then, at the request of such party ("Successor
Landlord"), the Lessee shall attorn to, and recognize, each Successor Landlord
as the Lessee's landlord under this Agreement and shall execute and deliver any
reasonable instrument such Successor Landlord may reasonably request to further
evidence such attornment; provided, however, that the Lessee's attornment shall
be subject to the condition that the Successor Landlord agrees to recognize the
Lessee as the owner of the within leasehold estate and the possessory rights
thereto, on and subject to all of the terms, conditions, obligations and
benefits of this Agreement. If a mortgagee shall so elect by notice to the
Lessee, this Agreement and the Lessee's rights hereunder shall be superior and
prior in right to the mortgage of which such mortgagee has the benefit with the
same force and effect as if this Agreement had been executed, delivered and
recorded prior to the execution, delivery and recording of such mortgage. The
parties agree that that certain mortgage from Gateway to Cleveland Development
Partnership I for $20,000,000, filed for record December 21, 1990, Volume
90-7904, Page 6 of Cuyahoga County Records shall be subordinated pursuant to a
subordination, nondisturbance and attornment agreement, satisfactory to Lessee
and the Operator with respect to the Ground Lease, Lease Agreement, Management
Agreement, Gateway CAM
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Agreement, and that all of the appropriate actions, recordings and filings will
be made promptly to cause the subordination.
ARTICLE XXX
-----------
ESTOPPEL CERTIFICATE BY LESSEE
The Lessee agrees that at any time and from time to time upon
not less than ten (10) Business Days' prior request by Gateway, the Lessee will
execute, acknowledge and deliver to Gateway 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 are in full force and effect as modified
and identifying the modifications), (b) the dates to which the Rent and other
charges have been paid, (c) that, so far as the Lessee knows, Gateway is not in
default under any provisions of this Lease or, if there has been a default, the
nature of said default, and (d) any other matter that Gateway or such
prospective mortgagee or other lender shall reasonably request. It is intended
that any such statement may be relied upon by any person proposing to acquire
Gateway's interest in this Agreement or any prospective mortgagee of, or
assignee of any mortgage upon, such interest.
ARTICLE XXXI
------------
MISCELLANEOUS
31.1 FORCE MAJEURE. Except as otherwise herein expressly
provided, if either party shall be delayed or hindered in, or prevented from,
the performance of any covenant or obligation hereunder, other than one for the
payment of money, as a result of any Force Majeure, and, provided, that the
party delayed, hindered or prevented from performing notifies the other party
not later than ten (10) Business Days after a Reporting Period of any such
delay, hindrance or prevention occurring during the Reporting Period at issue,
then the performance of such covenant or obligation, other than one for the
payment of money, shall be excused for the period of such delay, hindrance or
prevention and the period for the performance of such covenant or obligation
shall be extended by the number of days equivalent to the number of days of the
impact of such delay, hindrance or prevention. Failure to so provide the
Reporting Period notice as to a delay commencing during the Reporting Period at
issue will result in waivers of both excuse in performance and extension of time
to perform under this Section 31.1 with respect to any delay within that
Reporting Period.
31.2 AMENDMENT; WAIVER. No alteration, amendment or
modification hereof shall be valid unless executed by an instrument in writing
by the parties hereto with the same formality as this
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Agreement. The failure of the Lessee or Gateway to insist in any one or more
instances upon the strict performance of any of the covenants, agreements,
terms, provisions or conditions of this Agreement or to exercise any election
herein contained shall not be construed as a waiver or relinquishment for the
future of such covenant, agreement, term, provision, condition, election or
option, but the same shall continue and remain in full force and effect. No
waiver by the Lessee or Gateway of any covenant, agreement, term, provision or
condition of this Agreement shall be deemed to have been made unless expressed
in writing and signed by an appropriate official on behalf of Gateway or the
Lessee. The payment by either party of sums due and payable hereunder, with
knowledge of the breach of any covenant, agreement, term, provisions or
condition herein contained, shall not be deemed a waiver of such breach.
31.3 CONSENT. Unless otherwise specifically provided herein,
no consent or approval by the Lessee or Gateway permitted or required under the
terms of this Agreement shall be valid or be of any validity whatsoever unless
the same shall be in writing, signed by the party by or on whose behalf such
consent is given.
31.4 SEVERABILITY. If any article, section, subsection, term
or provision of this Agreement or the application thereof to any party or
circumstance shall, to any extent, be invalid or unenforceable, the remainder of
the article, section, subsection, term or provision of this Agreement or the
application of same to parties or circumstances other than those to which it is
held invalid or unenforceable shall not be affected thereby and each remaining
article, section, subsection, term or provision of this Agreement shall be valid
and enforceable to the fullest extent permitted by law.
31.5 COVENANT OF QUIET ENJOYMENT. Gateway covenants that if,
and so long as, the Lessee keeps and performs each and every covenant,
agreement, term, provision and condition of this Agreement on the part and on
behalf of the Lessee to be kept and performed, the Lessee shall quietly enjoy
its rights under this Agreement without hindrance or molestation by Gateway or
by any other person lawfully claiming the same by, through or under Gateway,
subject to the covenants, agreements, terms, provisions and conditions of this
Agreement.
31.6 RECORDATION OF LEASE. Neither party shall record this
Agreement, whether in the public records of Cuyahoga County or elsewhere.
However, at the request of either party, the parties shall promptly execute,
acknowledge and deliver to each other a Memorandum of Lease in the form of
Exhibit F (and a Memorandum of Modification of Lease in respect of any
modification of this Agreement) sufficient for recording. Such memoranda shall
not be deemed to change or otherwise affect any of the obligations or provisions
of this Agreement.
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31.7 PRORATIONS. Any apportionment or prorations related to
the use of the Baseball Facility during a Season including but not limited to,
the Annual Capital Repair Fund Deposit, shall be computed on the basis of the
length of the Season, otherwise any apportionment or prorations to be made under
this Agreement shall be computed on the basis of a year containing three hundred
sixty-five (365) days, consisting of twelve (12) months of the actual number of
days in each.
31.8 TERMS. Unless the context clearly requires otherwise, the
singular includes the plural, and vice versa, and the masculine, feminine and
neuter adjectives and pronouns include one another.
31.9 CAPTIONS. The captions of articles and sections are for
convenient reference only and shall not be deemed to limit, construe, affect,
modify or alter the meaning of such articles or sections.
31.10 BINDING EFFECT. Each of the provisions of this Agreement
shall extend to and shall, as the case may require, bind or inure to the benefit
not only of Gateway and of the Lessee, but also of their respective permitted
successors and assigns pursuant to Article XVIII.
31.11 AGREEMENT CONTAINS ALL TERMS. All of the
representations, agreements, understandings and obligations of the parties are
contained herein and in the Exhibits attached hereto. This Agreement shall be
deemed to supersede the Memorandum and all other documents, writings, letters
and agreements executed in connection therewith.
31.12 ONLY LANDLORD-TENANT RELATIONSHIP. Nothing contained in
this Agreement shall be deemed or construed by the parties hereto or by any
third party to create the relationship of principal and agent, partnership,
joint venture or any association between Gateway and the Lessee, it being
expressly understood and agreed that neither the method of computation of Rent
nor any act of the parties hereto shall be deemed to create any relationship
between Gateway and the Lessee other than the relationship of landlord and
tenant. No mechanics', materialmen's or laborers' liens or other liens of any
character whatsoever created or suffered by the Lessee shall in any way, or to
any extent, affect, attach or apply to the interest or rights of Gateway
hereunder or its rights or interest in any of the Baseball Facility or attach to
its title to or rights in the Baseball Facility unless such lien is related to
work, services or goods either: (i) requested by Gateway, or (ii) required to be
performed or provided by Gateway pursuant to this Agreement.
31.13 NOTICES. All notices, demands, consents, approvals,
statements, requests and invoices to be given under this Agreement shall be in
writing, signed by the party or officer,
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agent or attorney of the party giving the notice, and shall be deemed to have
been effective upon delivery if served personally, or upon the third day from
and including the day of posting if deposited in the United States mail, postage
prepaid, registered or certified mail, return receipt requested, addressed as
follows:
For Gateway Gateway Economic Development
Corporation of Greater
402 Terminal Tower
Cleveland, Ohio 44113
Attention: Executive Director
With a copy to: Climaco, Climaco, Seminatore,
Lefkowitz & Garofoli Co. L.P.A.
The Halle Building, Suite 900
1228 Euclid Avenue
Cleveland, Ohio 44115
Attention: Anthony J. Garofoli, Esq.
With a copy to: Calfee, Halter & Griswold
1800 Society Building
Cleveland, Ohio 44114
Attention: Thomas E. Wagner, Esq.
For the Lessee: Cleveland Indians Baseball Company
Limited Partnership
Cleveland Stadium
Cleveland, Ohio 44114
Attention: General Manager
With a copy to: Richard E. Jacobs, President
25425 Center Ridge Road
Westlake, Ohio 44145
With a copy to: Baker & Hostetler
3200 National City Center
Cleveland, Ohio 44114
Attention: Gary L. Bryenton, Esq.
Either party may from time to time by written notice given to the other pursuant
to the terms of this Section 31.13 change the address to which notices shall be
sent.
31.14 APPLICABLE LAW. This Agreement has been prepared in the
State of Ohio and shall be governed in all respects by the laws of the State of
Ohio.
31.15 CROSS REFERENCES. Any reference in this Agreement to a
Section, Subsection, Article or Exhibit is a reference to a Section, Subsection,
Article or Exhibit, as appropriate, of this Agreement, unless otherwise
expressly indicated.
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31.16 REPRESENTATIVES. The Lessee's representative for
implementation of the terms of this Agreement shall be Richard E. Jacobs, or
such individual or individuals designated, in writing, by Richard E. Jacobs to
act for the Lessee on certain specified matters ("Lessee's Representative").
Gateway's representative for implementation of the terms of this Agreement shall
be the Executive Director ("Gateway's Representative"). Either party may
substitute representatives by notice to the other party delivered in accordance
with Section 31.13.
31.17 EFFECTIVE DATE. Notwithstanding that the Term shall
commence on the Completion Date, this Agreement shall be a legally binding
agreement, in full force and effect, as of the date set forth in the first
paragraph of this Agreement.
31.18 ANTIDISCRIMINATION CLAUSE. The Lessee shall not
discriminate on the basis of race, color, political or religious opinion or
affiliation, creed, age, physical or mental handicap, sex, marital status,
ancestry, national origin or sexual preference/orientation. This shall apply to
all organizations which receive permission for the use of all or any portion of
the Baseball Facility, either in writing or verbally, from the Lessee and
Gateway or by applying for a permit or receiving permission in any other way
from the Lessee and Gateway. Gateway and the Lessee shall comply with all
applicable state, local and federal laws, rules, regulations, executive orders
and agreements pertaining to discrimination in employment, unlawful employment
practices and affirmative action. The Lessee shall use reasonable efforts to
encourage and promote opportunities for minorities and women in the operation of
the Ballpark. The Lessee shall be an equal opportunity employer.
31.19 ACCORD AND SATISFACTION. Payment by any party, or
receipt or acceptance by a receiving party, of any payment due hereunder in an
amount less than the amount required to be paid hereunder shall not be deemed an
accord and satisfaction, or a waiver by the receiving party of its right to
receive and recover the full amount of such payment due hereunder,
notwithstanding any statement to the contrary on any check or payment or on any
letter accompanying such check or payment. The receiving party may accept such
check or payment without prejudice to the receiving party's right to recover the
balance of such payment due hereunder or to pursue any other legal or equitable
remedy provided in this Agreement.
31.20 NO MERGER. There shall be no merger of this Agreement or
of the leasehold estate hereby created with the fee estate in the Ballpark Land
and the Ballpark Improvements or any part thereof by reason of the fact that the
same person, firm, corporation or other legal entity may acquire or hold,
directly or indirectly, this Agreement or the leasehold estate and the fee
estate in the Ballpark Land and the Ballpark Improvements or any
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interest in such fee estate, without the prior written consent of Gateway's
mortgagee(s), if any.
31.21 FURTHER ASSURANCES. The Lessee and Gateway shall
execute, acknowledge and deliver, after the date hereof, without additional
consideration, such further assurances, instruments and documents, and shall
take such further actions, as Gateway or the Lessee shall reasonably request of
the other in order to fulfill the intent of this Agreement and the transactions
contemplated thereby.
31.22 JOINT PROMOTION OF BASEBALL. During the Term of this
Agreement, Gateway and the Lessee shall at all times use their best efforts to
promote public attendance at the Team's home baseball games at the Baseball
Facility.
31.23 RETAINED REVENUES. Unless otherwise expressly provided
for herein or in the Management Agreement, the Lessee shall be entitled to
receive and retain all revenues generated by the operations of the Team or
derived from the ownership of the franchise rights to the Team.
31.24 NO THIRD PARTY BENEFICIARY. The provision of this
Agreement are for the exclusive benefit of the parties hereto and not for the
benefit of any third person, nor shall this Agreement be deemed to have
conferred any rights, express or implied, upon any third person unless otherwise
expressly provided for herein.
31.25 CONFORMING AMENDMENTS. The parties acknowledge that this
Agreement will be amended to conform to any approved Financing Arrangements
entered into from and after the date of this Agreement with the Bank, which
amendments shall be subject to the approval of the parties hereto, which
approval shall not be unreasonably withheld.
31.26 COMMUNITY INVOLVEMENT. The Lessee shall endeavor to
provide appropriate senior citizen discounts for certain games played at the
Baseball Facility and the Lessee shall also endeavor to provide other
appropriate discounts for other Special Events.
31.27 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
ARTICLE XXXII
-------------
GATEWAY COMMON AREA EASEMENT AND MAINTENANCE AGREEMENT
Gateway, the Lessee, and the Operator shall enter into the
Gateway CAM Agreement. Gateway shall use its best efforts to cause Gateway's
other lessees and all other operators or managers
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to enter into the Gateway CAM Agreement. The proposed Site Plan of the Central
Market Square Site (the "CMS Site Plan") is attached hereto as Exhibit G and
made a part hereof, and no amendment or modification shall be made to the CMS
Site Plan without the written approval of the Lessee, which approval shall not
be unreasonably withheld. This Agreement provides for the legal descriptions of
the Ballpark Land, Field and the Arena Land to be attached as Exhibits A, B and
I, respectively. The parties agree to attach, by amendment to this Agreement,
the legal descriptions prepared by Gateway's surveyor based upon the general
locations indicated on the CMS Site Plan, unless otherwise mutually agreed, upon
completion of Gateway's Work.
ARTICLE XXXIII
--------------
LEGAL OPINIONS
33.1 LESSEE'S LEGAL OPINION. Upon execution of this Agreement,
the Lessee shall deliver to Gateway the favorable opinion of the Lessee's
counsel in the form attached hereto as Exhibit J and made a part hereof.
33.2 GATEWAY'S LEGAL OPINION. Upon execution of this
Agreement, Gateway shall deliver to the Lessee the favorable opinion of
Gateway's counsel in the form attached hereto as Exhibit K and made a part
hereof.
ARTICLE XXXIV
-------------
LEAGUE APPROVAL
This Agreement shall be null and void, and of no further force
or effect if, within sixty (60) days after execution by Gateway and the Lessee,
this Agreement has not been approved by the Commissioner of Baseball and the
President of the American League. After execution hereof by Gateway and the
Lessee, the Lessee shall immediately request such approval.
ARTICLE XXXV
------------
THREE PARTY AGREEMENT AND CENTRAL MARKET
COMMUNITY DEVELOPMENT PLAN
Gateway shall not approve any amendment to the Three Party
Agreement as provided in Section 5.05 thereof or the Central Market Community
Development Plan as provided in Section III.D. thereof without the prior written
consent of Lessee, which consent may be withheld in the Lessee's sole discretion
if such amendment
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would materially affect the Lessee's rights provided for in this Agreement, the
Lease Agreement, the Management Agreement or the Gateway CAM Agreement.
IN WITNESS WHEREOF, the parties hereto have entered into this
Agreement as of the day and year first above written.
Witnesses as to Gateway: GATEWAY ECONOMIC DEVELOPMENT
CORPORATION OF GREATER CLEVELAND,
an Ohio nonprofit corporation
/s/ illegible By: /s/ Pat Parker
- ------------------------- -------------------------------
/s/ Janice Field Its: Chairman
- ------------------------- -------------------------------
Witnesses as to Lessee: CLEVELAND INDIANS BASEBALL COMPANY
LIMITED PARTNERSHIP, an Ohio Limited
Partnership
By: Cleveland Baseball Corporation,
an Ohio corporation, its sole
general partner
/s/ illegible By: /s/ Martin J. Cleary
- ------------------------- -------------------------------
Martin J. Cleary
/s/ Janice Field Its: Vice President
- -------------------------
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<PAGE> 1
Exhibit 10.3
GROUND LEASE AGREEMENT
BY AND BETWEEN
GATEWAY ECONOMIC DEVELOPMENT
CORPORATION OF GREATER CLEVELAND
AND
CLEVELAND INDIANS BASEBALL COMPANY
LIMITED PARTNERSHIP
DATED AS OF JULY 3, 1991
<PAGE> 2
TABLE OF CONTENTS
ARTICLE I DEFINITIONS................................................. 2
ARTICLE II LEASED PREMISES............................................. 11
ARTICLE III GATEWAY'S CONSTRUCTION OBLIGATIONS.......................... 11
ARTICLE IV TERM........................................................ 11
4.1 Term................................................... 11
4.2 Termination............................................ 11
ARTICLE V RENT........................................................ 12
ARTICLE VI ALTERATIONS BY THE LESSEE................................... 12
ARTICLE VII USE OF THE FIELD............................................ 13
7.1 Lessee's Use........................................... 13
7.2 Gateway's Use.......................................... 14
7.3 Operator's Use......................................... 14
7.4 Special Events......................................... 14
7.5 Lessee's Management Approval Rights.................... 15
ARTICLE VIII INSURANCE AND SUBROGATION................................... 16
8.1 Gateway's Insurance.................................... 16
8.2 Lessee's Insurance..................................... 16
8.3 Insurance Requirements................................. 17
8.4 Certificates........................................... 17
8.5 Waiver of Subrogation.................................. 17
ARTICLE IX MAINTENANCE OF AND REPAIRS TO THE BASEBALL FACILITY......... 18
9.1 Gateway Obligations.................................... 18
9.2 Maintenance and Repair Procedures...................... 18
9.3 Capital Repairs Fund................................... 18
9.4 Capital Repairs........................................ 19
9.5 Lessee's Self-Help..................................... 20
ARTICLE X REAL ESTATE AND PERSONAL PROPERTY TAXES..................... 20
ARTICLE XI RIGHT OF ENTRY AND INSPECTION............................... 21
ARTICLE XII DEFAULT AND REMEDIES........................................ 21
12.1 Default by Lessee...................................... 21
12.2 Gateway's Remedies..................................... 22
12.3 Default by Gateway..................................... 23
12.4 Lessee's Remedies...................................... 24
12.5 General Provisions..................................... 24
ARTICLE XIII SURRENDER OF THE FIELD...................................... 25
13.1 General................................................ 25
13.2 Alterations and Improvements........................... 25
13.3 Lessee's Property...................................... 26
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Page
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13.4 Abandoning Premises or Personal Property............... 26
ARTICLE XIV DAMAGE TO THE FIELD......................................... 26
ARTICLE XV INDEMNIFICATION............................................. 27
15.1 Lessee Indemnification................................. 27
15.2 Gateway Indemnification................................ 28
15.3 Procedure Regarding Indemnification.................... 28
15.4 Limitation............................................. 29
ARTICLE XVI ASSIGNMENT.................................................. 29
16.1 Assignment by Lessee................................... 29
16.2 Subletting............................................. 30
16.3 Assignment by Lessor................................... 30
16.4 Assignees and Subtenants............................... 30
ARTICLE XVII EMINENT DOMAIN.............................................. 30
17.1 Termination for Condemnation........................... 30
17.2 Allocation of Award.................................... 31
17.3 Performance of Work.................................... 31
17.4 Temporary Taking....................................... 31
ARTICLE XVIII UNTENANTABILITY............................................. 32
ARTICLE XIX CONDITIONS.................................................. 32
ARTICLE XX REPRESENTATIONS BY LESSEE................................... 33
20.1 Valid Existence........................................ 33
20.2 Power; No Limitation on Ability to Perform............. 33
20.3 Valid Execution........................................ 34
20.4 Defaults............................................... 34
20.5 Good Standing of Baseball Corporation.................. 34
20.6 Power of Baseball Corporation.......................... 34
20.7 Valid Execution by Baseball Corporation................ 34
20.8 Compliance with Laws................................... 35
20.9 Maintenance of Good Standing in League................. 35
ARTICLE XXI REPRESENTATIONS BY GATEWAY.................................. 35
21.1 Valid Existence........................................ 35
21.2 Power; No Limitation on Ability to Perform.............35
21.3 Valid Execution........................................ 35
21.4 Defaults............................................... 36
21.5 Compliance with Laws................................... 36
21.6 Title.................................................. 36
21.7 Three Party Agreement and Central Market Community
Development Plan....................................... 36
ARTICLE XXII SUBORDINATION, NONDISTURBANCE AND ATTORNMENT................ 36
ARTICLE XXIII ESTOPPEL CERTIFICATE BY LESSEE.............................. 37
<PAGE> 4
Page
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ARTICLE XXIV MISCELLANEOUS............................................... 38
24.1 Force Majeure......................................... 38
24.2 Amendment; Waiver..................................... 38
24.3 Consent............................................... 38
24.4 Severability.......................................... 39
24.5 Covenant of Quiet Enjoyment........................... 39
24.6 Recordation of Lease.................................. 39
24.7 Prorations............................................ 39
24.8 Terms................................................. 39
24.9 Captions.............................................. 39
24.10 Binding Effect........................................ 40
24.11 Agreement Contains All Terms.......................... 40
24.12 Only Landlord-Tenant Relationship..................... 40
24.13 Notices............................................... 40
24.14 Applicable Law........................................ 41
24.15 Cross References...................................... 41
24.16 Representatives....................................... 41
24.17 Effective Date........................................ 41
24.18 Antidiscrimination Clause............................. 42
24.19 Accord and Satisfaction............................... 42
24.20 No Merger............................................. 42
24.21 Further Assurances.................................... 42
24.22 Joint Promotion of Baseball........................... 42
24.23 Retained Revenues..................................... 43
24.24 No Third Party Beneficiary............................ 43
24.25 Conforming Amendments................................. 43
24.26 Counterparts.......................................... 43
ARTICLE XXV LEGAL OPINIONS.............................................. 43
25.1 Lessee's Legal Opinion................................ 43
25.2 Gateway's Legal Opinion............................... 43
ARTICLE XXVI LEAGUE APPROVAL............................................. 43
ARTICLE XXVII THREE PARTY AGREEMENT AND CENTRAL MARKET COMMUNITY
DEVELOPMENT PLAN............................................ 44
<PAGE> 5
GROUND LEASE AGREEMENT
THIS GROUND LEASE AGREEMENT (this "Agreement") is made as of
this 3rd day of July, 1991, by and between GATEWAY ECONOMIC DEVELOPMENT
CORPORATION OF GREATER CLEVELAND, a nonprofit corporation organized under the
laws of the State of Ohio (hereinafter referred to as "Gateway"), and CLEVELAND
INDIANS BASEBALL COMPANY LIMITED PARTNERSHIP, an Ohio limited partnership
(hereinafter referred to as the "Lessee").
RECITALS:
A. Gateway intends to construct a baseball park with related
amenities (the "Ballpark") on a portion of the Central Market Square Site
located in the City of Cleveland, Ohio (the "City"), being more fully described
in the Lease Agreement (hereinafter defined).
B. The Lessee is the holder of the franchise for the City
issued by the American League of Professional Baseball Clubs (the "American
League") and is the owner of the Cleveland Indians professional baseball team
(the "Team").
C. Gateway and the Operator (hereinafter defined), shall
execute and deliver a Management Agreement (the "Management Agreement"),
pursuant to which the Operator shall be obligated to perform certain duties and
obtain certain rights with respect to the management, operation and maintenance
of the Baseball Facility.
D. Gateway and the Lessee shall execute and deliver a Lease
Agreement (the "Lease Agreement"), pursuant to which Gateway shall lease to the
Lessee Gateway's interest in the Ballpark Land and the Ballpark Improvements
(both as hereinafter defined).
E. Gateway desires to lease to the Lessee, and the Lessee is
desirous of leasing from Gateway, Gateway's fee interest in all of the real
property constituting the baseball playing field area of the Central Market
Square Site more fully described on Exhibit A attached hereto and made a part
hereof (the "Field"), together with all of the improvements to be constructed
thereon and all permanent improvements, additions, alterations, fixtures,
equipment and installations constructed, provided or added thereto by Gateway or
the Lessee at any time (the "Field Improvements").
NOW, THEREFORE, in consideration of the premises, the rents
reserved and the covenants and agreements contained herein, the parties do
hereby agree as follows:
<PAGE> 6
ARTICLE I
---------
DEFINITIONS
As used in this Agreement and unless otherwise expressly
indicated, the following terms shall have the following meanings:
"ACTION" shall mean any demand, assertion, claim, action, or
proceeding, judicial or otherwise.
"AFFILIATE(S)" shall mean as to any named individual or
entity: (a) any individual or entity directly or indirectly owning, controlling
or holding with power to vote, fifty percent (50%) or more of the outstanding
voting interests of such named entity; (b) any entity fifty percent (50%) or
more of whose outstanding voting interests are, directly or indirectly, owned,
controlled or held with power to vote by such named individual or entity; (c)
any entity or individual directly or indirectly controlling, controlled by or
under common control (using ownership of fifty percent (50%) or more of the
outstanding voting interests as a test for determining control with respect to
an entity) with such named individual or entity; (d) any trustee, officer,
director or general partner of such named entity; or (e) if a named individual
or entity is an officer, director, general partner, trustee of an entity, such
entity.
"AGREEMENT" shall mean this Ground Lease Agreement.
"AMERICAN LEAGUE" shall have the meaning set forth in
Recital "B" hereof.
"ANNUAL CAPITAL REPAIRS FUND DEPOSIT" shall mean an amount
equal to five-tenths of one percent (.5%) of the final actual costs of
completing construction of and equipping the Field Improvements in accordance
with the Final Plans, or such other amount as the Bank, the Lessee and Gateway
shall mutually agree to a lesser amount.
"BALLPARK" shall have the meaning set forth in Recital
"A" hereof.
"BALLPARK IMPROVEMENTS" shall have the meaning set forth
in the Lease Agreement.
"BALLPARK LAND" shall have the meaning set forth in the
Lease Agreement.
"BANK" shall mean The Fuji Bank, Limited, a Japanese banking
corporation, acting through its San Francisco Agency, its successors and
assigns, or any substitute letter of credit bank under the Bond documents.
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<PAGE> 7
"BASEBALL CORPORATION" shall mean Cleveland Baseball
Corporation, an Ohio corporation, the sole general partner of the Lessee.
"BASEBALL FACILITY" shall mean, collectively, the
Ballpark Land, the Field and the Improvements.
"BASEBALL RULES AND REGULATIONS" shall mean the following
governing documents and agreements, as they may be amended from time to time:
(a) Constitution of the American League of Professional
Baseball Clubs;
(b) American League Rules and Regulations;
(c) American League Division of Receipts; and
(d) Major League Agreement.
"BONDS" shall have the meaning set forth in the Lease
Agreement.
"BUSINESS DAY" shall mean any day other than a Saturday, a
Sunday or a public or bank holiday or the equivalent for banks generally under
the laws of the State of Ohio.
"CAPITAL REPAIRS" shall mean any work that is reasonably
required to be performed in and about the Baseball Facility, to repair, restore
or replace Components necessitated by any damage, destruction, ordinary wear and
tear, defects in construction or design, or any other cause; PROVIDED, HOWEVER,
that "Capital Repairs" shall not include (i) any work necessitated by Misuse,
(ii) any work related to any Component that was not included in the scope of
Gateway's Work or otherwise required to be completed at Gateway's expense as
provided herein or in the Management Agreement, and (iii) Routine Maintenance.
Capital Repairs shall include but shall not be limited to:
(a) repair or replacement of an HVAC compressor;
(b) replacement of carpeting that wears out as a result
of ordinary wear and tear with carpeting of similar
quality; provided such replacement shall not be
required more frequently than once every four years
other than for defective workmanship or product;
(c) repair or replacement of cracked or disintegrated
concrete, broken pipes or leaking roof or sections
thereof;
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<PAGE> 8
(d) manufacturer recommended replacement of scoreboard,
exterior message board and field lighting bulbs,
fuses and circuit breakers;
(e) replacement of all windows and other glass broken
due to settling;
(f) replacement of a seat that wears out or replacement
of a seat standard or the concrete into which the
seat is affixed; or
(g) general reapplication of protective materials, such
as paint or weatherproofing.
In addition to the foregoing, "Capital Repairs" shall also include, but shall
not be limited to, the following:
(a) replacing any obsolete Component with more modern
replacements that will most likely be used in at
least seventy-five percent (75%) of major league
baseball parks within five (5) years of such
obsolescence;
(b) changes or improvements required by television
networks having contracts with the Operator, the
Lessee or the American League;
(c) reasonable changes or improvements required of a
majority of American League open-air baseball parks
by the American League, the Commissioner of Baseball
or Baseball Rules and Regulations;
(d) changes or improvements required or recommended by
any insurance carrier to enable the Lessee to obtain
insurance coverage at commercially reasonable rates,
provided that in lieu of effectuating such change or
improvement, Gateway may agree, in its discretion, to
pay the increased insurance premiums; or
(e) changes or improvements required by any laws,
ordinances, orders, rules, regulations or
requirements of any governmental authority.
"CAPITAL REPAIRS FUND" shall have the meaning set forth in
Section 9.3 hereof.
"CENTRAL MARKET COMMUNITY DEVELOPMENT PLAN" shall mean the
Central Market Community Development Plan approved by the Council of the City on
September 29, 1986, and amended on November 5, 1990 and June 17, 1991.
"CENTRAL MARKET SQUARE SITE" shall have the meaning set forth
in the Lease Agreement.
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<PAGE> 9
"CITY" shall have the meaning set forth in Recital "A"
hereof.
"COMPLETION DATE" shall mean the date of Substantial
Completion, unless otherwise specified herein.
"COMPONENT" shall mean any item that is incorporated into the
Baseball Facility, including, but not limited to, all structural members, seats,
electronic parts, scoreboards, and Ballpark equipment.
"CONDEMNATION" shall mean any taking of property by exercise
of the power of eminent domain, whether by formal condemnation proceedings or by
purchase under threat of exercise of the power of eminent domain proceedings.
"CONCESSIONAIRE" shall have the meaning set forth in
Section 2.3 of the Management Agreement.
"COUNTY" shall mean Cuyahoga County, Ohio.
"DESIGN ARCHITECT" shall mean the architectural team for the
design of the Baseball Facility which is headed by the architectural firm of
Helmuth, Obata and Kasabaum.
"EMERGENCY REPAIR" shall mean Capital Repairs that are
necessary to protect public health or safety or that, if performed promptly can,
in the Lessee's reasonable judgment, avoid material cost to the Operator or
Gateway.
"EXCLUDED OCCURRENCE" shall mean any of the following:
(a) damage or injury occurring at or arising out of or
incidental to Gateway Special Events;
(b) damage or injury arising out of any negligent or
willfully wrongful act or omission of Gateway, its
agents, employees, contractors or subcontractors, or
breach of any of Gateway's obligations hereunder; and
(c) damage or injury arising out of defects in the design
of the Baseball Facility or in the workmanship or
materials employed in the construction of the
Baseball Facility (but only to the extent included in
Gateway's Work, or any Capital Repairs made by any
party other than the Lessee or its agents, employees
or contractors).
"EXCLUSIVE USE PERIOD" shall mean each Home Date and the
seventy-two (72) hours (or such greater period of time as may be necessary for
preparation of the Baseball Facility for baseball
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<PAGE> 10
play, as reasonably determined by the Lessee) prior to such Home Date and the
forty-eight (48) hours after such Home Date.
"FIELD" shall have the meaning set forth in Recital "E"
hereof. A legal description of the Field shall be attached hereto as Exhibit A
upon preparation of the same by Gateway's surveyor upon completion of Gateway's
Work.
"FIELD IMPROVEMENTS" shall have the meaning set forth in
Article II hereof.
"FINAL PLANS" shall have the meaning set forth in the
Lease Agreement.
"FINANCING ARRANGEMENTS" shall have the meaning set forth
in the Lease Agreement.
"FORCE MAJEURE" shall mean acts of God, fire or other
casualty, earthquake, flood, epidemic, landslide, enemy act, war, holocaust,
riot, intervention by civil or military authorities of government, insurrection
or other civil commotion, general unavailability of certain materials, strikes,
boycotts or labor disputes beyond the control of either party hereto that cause
such party to be delayed or hindered in, or prevented from, the performance of
any covenant or obligation hereunder, other than one for the payment of money.
"GATEWAY" shall have the meaning set forth in the initial
paragraph hereof.
"GATEWAY CAM AGREEMENT" shall mean the Common Area Easement
and Maintenance Agreement by and among Gateway, the Lessee and the Operator and
dated of even date herewith, which document sets forth the respective parties'
rights, duties and obligations with respect to the use, revenues, expenses,
repairs and maintenance of the Gateway Common Areas.
"GATEWAY COMMON AREAS" shall have the meaning set forth
in the Lease Agreement.
"GATEWAY DEFAULT" shall have the meaning set forth in
Section 12.3 hereof.
"GATEWAY SPECIAL EVENT" shall mean a not-for-profit Special
Event to be staged by Gateway or a Promoter which is civic or charitable in
nature, including, but not limited to, Little League play-off games, Special
Olympics, and other youth activities, and which is subject to certain approval
procedures set forth in this Agreement and the Management Agreement.
"GATEWAY'S REPRESENTATIVE" shall have the meaning set
forth in Section 24.16 hereof.
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<PAGE> 11
"GATEWAY'S WORK" shall have the meaning set forth in the
Lease Agreement.
"HOME DATE" shall mean each of the Team's scheduled or
rescheduled home playing dates during the Season at the Baseball Facility; each
date on which an American League Championship Series, World Series game or other
post-season game could potentially be played at the Baseball Facility (except
that any such potential game shall not be deemed to be a Home Date after it is
finally determined that such game will not be played at the Baseball Facility);
the date of any All-Star game scheduled at the Baseball Facility; the seven-day
period immediately preceding the first game of each Season at the Baseball
Facility and the date of any exhibition game provided the Lessee has given
Gateway written notice of the date for such exhibition game.
"IMPROVEMENTS" shall mean, collectively, the Ballpark
Improvements, the Premium Seating and the Field Improvements.
"INDEMNIFIED PARTY" shall mean any party entitled to
indemnification hereunder.
"INDEMNIFYING PARTY" shall mean the party required by the
terms hereof to provide indemnification.
"INITIAL CAPITAL REPAIRS FUND DEPOSIT" shall mean the
first Annual Capital Repairs Fund Deposit.
"INTEREST RATE" shall mean the interest rate of two percent
(2%) above the rate of interest per annum then charged to large corporate
borrowers of the highest credit standing for short-term unsecured obligations,
but in no event exceeding the maximum legal rate permitted to be charged to the
Lessee or Gateway, whichever is less.
"LEASE AGREEMENT" shall have the meaning set forth in
Recital "D" hereof.
"LEASE YEAR" shall mean each period of twelve (12) consecutive
calendar months during the Term, with the first Lease Year commencing on the
first day of the November next succeeding the Completion Date and with
successive Lease Years commencing on successive anniversaries of the first day
of the first Lease Year. "Lease Years" means more than one (1) Lease Year. A
"Partial Lease Year" means if the Completion Date is a date other than November
1, then the period from the Completion Date to the first day of the first Lease
Year. Unless otherwise expressly provided for herein, all terms and conditions
herein shall apply the same to a Partial Lease Year as to a Lease Year;
provided, however, that all payments and other financial obligations shall be
apportioned or prorated pursuant to Section 24.7 hereof.
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<PAGE> 12
"LESSEE" shall have the meaning set forth in the initial
paragraph hereof.
"LESSEE DEFAULT" shall have the meaning set forth in
Section 12.1 hereof.
"LESSEE'S REPRESENTATIVE" shall have the meaning set
forth in Section 24.16 hereof.
"MAJOR CAPITAL REPAIR" shall mean any Capital Repair that
renders the Baseball Facility untenantable in whole or in part by the Lessee or
the Operator as determined by the Lessee or the Operator, in their reasonable
discretion, or will cost in excess of $500,000 to perform.
"MANAGEMENT AGREEMENT" shall have the meaning set forth
in Recital "C" hereof.
"MISUSE" shall have the meaning set forth in the
Management Agreement.
"OBLIGATIONS" shall mean and include any and all of either
party's obligations and/or liabilities to the other party of every kind, nature
and description, direct or indirect, secured or unsecured, joint, several, joint
and several, absolute or contingent, due or to become due, now or hereafter
existing or arising, regardless of how such obligations or liabilities arise or
by what agreement or instrument they may be evidenced or whether evidenced by
any agreement or instrument, including, but not limited to, any and all of such
party's obligations and/or liabilities under this Agreement or under any other
agreement between Gateway and the Lessee regardless of whether the obligation is
to perform acts or refrain from taking any action.
"ON-SITE PARKING" shall have the meaning set forth in the
Lease Agreement.
"OPERATOR" shall have the meaning set forth in the
Management Agreement.
"OPERATOR DEFAULT" shall have the meaning set forth in
the Management Agreement.
"PERMITTED ESCROW AGENT" shall have the meaning set forth
in the Lease Agreement.
"PERMITTED INVESTMENT" shall have the meaning set forth
in the Lease Agreement.
"PERSON" shall mean an individual, partnership, corporation
(including a business trust), joint stock company, trust, unincorporated
association, joint venture or any other entity, the United States, or a federal,
state or political
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subdivision thereof or any agency or court of such state or subdivision.
"PREMIUM SEATING" shall have the meaning set forth in the
Management Agreement.
"PROGRAM REQUIREMENTS" shall have the meaning set forth
in the Lease Agreement.
"PROMOTOR" shall have the meaning set forth in the
Management Agreement.
"PROPERTY DAMAGE" shall mean any partial or total damage or
destruction of the Baseball Facility caused by fire or other occurrence and any
other property damage.
"REAL AND PERSONAL PROPERTY TAXES" shall have the meaning set
forth in Article X hereof.
"RENT" shall have the meaning set forth in Article V
hereof.
"REPORTING PERIOD" shall have the meaning set forth in
the Lease Agreement.
"ROUTINE MAINTENANCE" shall mean the provision of all labor
and materials which are required to (a) keep the Baseball Facility and the
Components in good order and repair which is of a routine, regular and
predictable nature, (b) keep the Baseball Facility clean and free of debris, and
(c) repair, maintain or replace Components which are installed by the Lessee or
the Operator unless such installation was performed hereunder on behalf of
Gateway in accordance with Gateway's obligations hereunder. Except as otherwise
specified herein, Routine Maintenance shall not include (i) repair or
replacement required as a result of ordinary wear and tear, unless otherwise
expressly provided herein, or (ii) Capital Repairs. Routine Maintenance shall
include, but shall not be limited to, the following:
(a) performing all preventive or routine maintenance that
is stipulated in operating manuals for the Components
as regular, periodic maintenance procedures;
(b) regular maintenance procedures for the HVAC system,
including periodic cleaning, lubricating and changing
of air filters;
(c) groundskeeping and maintenance of the surface of the
Field, including mowing, seeding, fertilizing,
walking lines, installing and removing bases and the
pitcher's mound and resodding;
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(d) changing of standard, isolated light bulbs, fuses and
circuitbreakers as they burn out;
(e) cleaning all portions of the Baseball Facility
immediately after each event (other than Gateway
Special Events unless retained by Gateway to perform
such services) held at the Baseball Facility;
(f) touch-up painting;
(g) readying the playing field each Lease Year for the
upcoming Season; and
(h) the labor required to perform a Capital Repair to the
extent that such labor is performed by regular,
on-site personnel acting in accordance with the
standard duties for which such on-site personnel are
regularly employed.
"SEASON" shall mean a period of time commencing with the first
day of March in any calendar year and ending with the last home game (including
any postseason home game) played by the Team during such calendar year at the
Baseball Facility. Seasons are sometimes herein referred to by the calendar year
in which they occur (e.g. "1994 Season").
"SPECIAL EVENT" shall mean any event or period of use other
than an event on a Home Date including, but not limited to, concerts, shows,
trade shows, sporting events or other public exhibitions and any Gateway Special
Event.
"SPECIAL EVENT PERIOD" shall have the meaning set forth in the
Management Agreement.
"SUBSTANTIAL COMPLETION" or "SUBSTANTIALLY COMPLETED" shall
have the meaning set forth in the Lease Agreement.
"TEAM" shall have the meaning set forth in Recital "B" hereof.
"TERM" shall have the meaning set forth in Section 4.1 hereof.
"THREE PARTY AGREEMENT" shall mean that certain Agreement
Relating to Ownership, Financing, Construction and Operation of a Sports
Facility and Related Economic and Redevelopment Projects, dated as of November
7, 1990, by and among the County, the City and Gateway.
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<PAGE> 15
ARTICLE II
----------
LEASED PREMISES
For the Rent and upon the agreements contained in this
Agreement, Gateway hereby leases to the Lessee, and the Lessee hereby leases
from Gateway, Gateway's fee interest in the Field, together with all the
improvements to be constructed thereon, including, but not limited to, all
permanent improvements, additions, alterations, fixtures, equipment and
installations constructed, provided or added thereto by Gateway or the Lessee at
any time (the "Field Improvements").
ARTICLE III
-----------
GATEWAY'S CONSTRUCTION OBLIGATIONS
The Lessee shall have no responsibility to provide or pay for
any part of the construction, furnishing or the equipping of Gateway's Work.
Gateway's obligations with respect to the Field Improvements shall include
supplying of all equipment and other personal property included in the Program
Requirements, all of such work being part of Gateway's Work to be completed in
accordance with the terms and conditions set forth in the Lease Agreement.
ARTICLE IV
----------
TERM
4.1 TERM. The "Term" of the lease portion of this Agreement
shall commence on the Completion Date and, unless terminated earlier pursuant to
the terms of this Agreement, shall end on December 31 of the year in which the
fortieth (40th) full Season following the Completion Date is concluded. Upon
determination of the Completion Date, the parties shall execute a supplement to
this Agreement setting forth the last day of the Term and shall execute and
record an appropriate supplement to the Memorandum of Lease.
4.2 TERMINATION. This Agreement will be subject to
termination as follows:
(a) After title to the Baseball Facility shall have
transferred to the City or the County if (i) the City
or the County shall have offered the Lessee and the
Operator the right to lease the Baseball Facility and
to manage the Baseball Facility (i.e., to continue to
have rights of use and control no less extensive than
the Lessee and the Operator had during the initial
terms of the Lease Agreement, the Management
Agreement and the Gateway CAM Agreement,
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<PAGE> 16
and on terms that are commercially reasonable based
upon comparable agreements that are competitively
favorable to other teams then leasing and managing
publicly owned baseball facilities, and if the Lessee
and the Operator decline after reasonable
negotiations to agree to such a lease, management
agreement and common area agreement, or (ii) the
Lessee and the Operator obviate the need for any such
offer and negotiations of such lease and management
terms by unilaterally deciding to cease to have the
Baseball Facility be the home of the Team, then this
Agreement shall terminate.
(b) If the Lessee ceases to use the Baseball Facility as
the home of the Team for any other reason, then this
Agreement shall terminate one year from the date on
which the Team plays the first official home game
elsewhere outside of the County.
ARTICLE V
---------
RENT
The Lessee shall pay to Gateway each Lease Year rent ("Rent")
in an amount equal to one dollar ($1.00). Rent shall be paid by the Lessee on or
before the last day of each Lease Year for which Rent is due, or, in the
election of Lessee, in advance upon the execution of this Agreement.
ARTICLE VI
----------
ALTERATIONS BY THE LESSEE
(a) Following the Completion Date, the Lessee, at its sole
cost and expense, may make any alterations of or additions or improvements to
the Field or the Field Improvements which do not (i) materially affect the
aesthetics, sight lines, structure or systems of the Baseball Facility (unless
approved by Gateway), (ii) materially increase the cost of Capital Repairs to
the Baseball Facility or any of its Components, fixtures, equipment or any other
improvements (unless approved by Gateway), or (iii) violate any laws,
ordinances, or regulations. The Lessee hereby agrees to perform or cause to be
performed all such alterations, additions and/or improvements in a good and
workmanlike manner, utilizing personnel with proper building trade credentials,
and to pay for the same. The Lessee agrees to indemnify and defend Gateway from
and against mechanics' liens, claims and any other costs and attorneys' fees
incurred by Gateway and related thereto, or other costs and expenses arising out
of such performance.
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<PAGE> 17
(b) Before commencing any alterations, additions, or
improvements pursuant to Subsection (a) above, the Lessee shall (i) comply with
all legal requirements or improvements, including, but not limited to, procuring
any required governmental permits, and (ii) obtain and furnish to Gateway a
"Builder's Risk" insurance policy (with a waiver of subrogation endorsement
similar to the type referred to in Section 8.5 hereof), from an insurance
carrier acceptable to Gateway and in form and substance acceptable to Gateway,
in its reasonable discretion, covering all liabilities that may be incurred in
connection with any such alterations, additions or improvements undertaken by
the Lessee and naming Gateway as an additional insured.
(c) All alterations, additions, or improvements made by the
Lessee pursuant to this Article shall be considered the property of the Lessee
for purposes of this Agreement and shall remain upon the premises for the
duration of the Term; PROVIDED, HOWEVER, that upon the termination or expiration
of this Agreement for any reason, such alterations, additions and improvements,
unless personal property or trade fixtures, shall become part of the Baseball
Facility.
ARTICLE VII
-----------
USE OF THE FIELD
7.1 LESSEE'S USE. During the Term, the Lessee and its guests
and invitees shall be entitled to the possession and use of the Field and the
Field Improvements for the following purposes:
(a) to play major league baseball games and to conduct
activities related to the playing of major league
baseball games and the maintenance of a professional
baseball team;
(b) to conduct any and all other activities which, from
time to time during the Term, are associated with, or
are conducted in connection with, or are related to,
the conduct of the business of a major league
baseball team; and
(c) during the times the Lessee is using the Field and
the Field Improvements for playing the Team's home
games only, to stage activities attendant to the game
on the Field, except that the Lessee shall not stage
any activity (i) that is detrimental to the health,
safety and welfare of the people at the Baseball
Facility or (ii) that is detrimental to the physical
plant and condition of the Baseball Facility;
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<PAGE> 18
PROVIDED, HOWEVER, that the Lessee shall not occupy or use any portion of the
Field or the Field Improvements (or permit the use or occupancy of any portion
of the Field or the Field Improvements) for any purpose that will violate any
federal, state or local law or that will in any way affect the validity, payment
or the tax exempt status of the Bonds.
7.2 GATEWAY'S USE. During the Term, Gateway and its guests and
invitees shall be entitled to the possession and use of the Field and the Field
Improvements to conduct and perform all activities in connection with its rights
and duties hereunder or under the Management Agreement and the Lease Agreement.
7.3 OPERATOR'S USE. During the Term of the Management
Agreement, the Operator and its guests, concessionaires, licensees and invitees
shall be entitled to the possession and use of the Field and the Field
Improvements for all of the purposes set forth in the Management Agreement.
7.4 SPECIAL EVENTS. Notwithstanding the terms and conditions
of the Management Agreement or the Lease Agreement, or any other agreement,
neither Gateway, the Operator nor any other Person may conduct Special Events at
the Baseball Facility without first complying with the following procedure,
unless waived, in writing, by the Lessee.
(a) In no event may all or any part of a Special Event
Period coincide with all or any part of an
Exclusive Use Period;
(b) The Lessee shall have the right to prohibit any
Special Event at the Baseball Facility if the
nature of such Special Event would render the
playing field unsuitable in the Lessee's reasonable
judgment for playing the Team's games thereon (the
parties acknowledge that Special Events during the
Spring season may not be allowed in order to
protect Spring turf growth and field conditions);
and Lessee may require that a protective covering
of Trivera Spunbound (or other material approved by
the Lessee), which shall be paid for by Gateway,
and maintained over the Field; and
(c) The Lessee shall have received at least forty-five
(45) days prior written notice of any Special Event
proposed to be conducted at the Baseball Facility,
which notice shall identify the nature of the event,
the sponsor, the promoter, if any, the areas of the
Baseball Facility to be utilized, the Special Event
Period and any other relevant information reasonably
necessary for the Lessee to exercise its approval
rights pursuant to this Section 7.4.
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<PAGE> 19
Notwithstanding the approval rights provided for above, Gateway shall not be
obligated to obtain such required approvals so long as the Operator is an
Affiliate of the Lessee.
7.5 LESSEE'S MANAGEMENT APPROVAL RIGHTS. Gateway shall cause
the Baseball Facility to be managed and operated as a first-class,
state-of-the-art, open-air Major League baseball park and in a professional,
businesslike and efficient manner if the Operator is no longer an Affiliate of
the Lessee. Without in any way limiting the Lessee's approval rights provided
herein, in the Lease Agreement or the Management Agreement, Gateway shall not,
or in the event Gateway subcontracts, licenses or otherwise assigns its rights
to any other Person, permit such other Person to, take any of the following
actions without the prior written consent of the Lessee, which consent shall not
be unreasonably withheld:
(a) Permit the Operator to assign its interest in the
Management Agreement;
(b) Amend, supplement, modify, or terminate the
Management Agreement or any other subsequent
management agreement for the operation of the
Baseball Facility;
(c) Enter into, or permit the Operator to enter into, any
concession agreement with any concessionaire without
the prior written approval, or thereafter amend,
supplement, modify or terminate such concession
agreement without the Lessee's approval;
(d) Sell, rent, or furnish any merchandise, articles or
services at the Baseball Facility that, in the
Lessee's reasonable judgment, is of poor quality,
unsatisfactory in nature, or harmful or dangerous to
the health or safety of the public;
(e) Establish the prices charged for all merchandise,
articles and services sold, rented or furnished at
the Baseball Facility; provided, however, that the
Lessee's approval of the proposed price of any item
shall not be withheld if such price does not exceed
the price charged for the same or a comparable item
or service sold, rented or furnished in any other
Major League baseball park;
(f) Operate the scoreboards at the Baseball Facility for
all Home Dates in any manner inconsistent with the
procedures approved by the Lessee;
(g) Enter into any contracts for advertising in and on
the interior and exterior of the Ballpark (including
advertising on all permanent or fixed advertising
panels and signs, advertising on the scoreboard or
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<PAGE> 20
video boards, and all nonpermanent or nonfixed spot
advertising); and
(h) Deviate from the security procedures approved by the
Lessee for the security and crowd control personnel
and night watchmen for the Baseball Facility.
Notwithstanding the approval rights provided for above, Gateway shall not be
obligated to obtain such required approvals so long as the Operator is an
Affiliate of the Lessee.
ARTICLE VIII
------------
INSURANCE AND SUBROGATION
8.1 GATEWAY'S INSURANCE.
(a) Gateway shall, during the construction period, maintain in
full force and effect, at Gateway's expense: (i) insurance against damage or
destruction to the Field Improvements for the full value thereof, including all
materials, equipment, machinery and supplies for use in construction or
installation of Gateway's Work on an "all risk" peril basis, including coverage
against flood, sewer backup and earthquake coverage, in the form of builder's
risk coverage; and (ii) cause its professionals to carry professional liability
insurance providing coverage for errors and omissions relating to workmanship
and design.
(b) From and after the Completion Date, Gateway shall maintain
in full force and effect, in its name, insurance against damage or destruction
to the Baseball Facility and Gateway's equipment and other personal property,
improvements and betterments to the Baseball Facility owned by Gateway by
providing "all risk" peril coverage in the amount of at least ninety percent
(90%) of replacement cost, subject to deductible limits not to exceed $25,000.
8.2 LESSEE'S INSURANCE. The Lessee shall, from and after the
Completion Date, maintain in full force and effect, at its expense, "occurrence
type" general liability insurance against bodily injury and property damage
arising from occurrences in and about the Baseball Facility and covering the
Lessee's contractual liability for indemnification under this Agreement. Such
insurance shall be written on a commercial general liability policy form to
include premises operations, products and completed operations, personal
injury/advertising injury, independent contractors and broad form property
damage. The policy shall also contain a general aggregate per location of not
less than $2,000,000 and a products/completed operations aggregate of not less
than $1,000,000. The foregoing insurance shall name as additional
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<PAGE> 21
insureds Gateway, its members, its Executive Director and such other Affiliates
as Gateway shall reasonably request. Notwithstanding the above, the Lessee shall
not be required to maintain the insurance set forth in this Section 8.2 provided
such insurance coverages are included in the Operator's insurance provided for
in the Management Agreement.
8.3 INSURANCE REQUIREMENTS.
(a) All policies of insurance required hereunder shall be
written by carriers which are members of the Ohio Guaranty Fund and possess an
A- policyholder's rating or better and a minimum Class VII financial size
category as listed at the time of issuance by A.M. BEST INSURANCE REPORTS ("Best
Reports") (the aforesaid rating classifications to be adjusted if and to the
extent that BEST REPORTS adjusts its rating categories).
(b) All policies shall provide that they may not be canceled,
renewed or reduced unless at least thirty (30) days' notice thereof has been
provided to the additional insureds. In no event shall any party be required to
insure for liability limits in excess of coverage which is available at
commercially reasonable rates. In the event that tort liability reform is
adopted which makes the limits of liability hereinabove provided in excess of
commercially reasonable and prudent limits of liability, such limits will be
equitably reduced. The insurance policies required hereunder shall be reviewed
on an annual basis to determine the adequacy of the coverage amounts.
8.4 CERTIFICATES. Not later than the date on which coverage is
to be provided hereunder, the party required to provide same shall furnish to
the other party a certificate evidencing the required coverage.
8.5 WAIVER OF SUBROGATION. Gateway and the Lessee agree that
all insurance policies against loss or damage to property and business
interruption or rent loss, and all liability insurance policies required
hereunder, shall be endorsed to provide that any release from liability of, or
waiver of claim for, recovery from the other party entered into in writing by
the insured thereunder prior to any loss or damage shall not affect the validity
of said policy or the right of the insured to recover thereunder. Such insurance
policies shall further provide that the insurer waives all rights of subrogation
which such insurer might have against the other party. Without limiting any
release or waiver of liability or recovery contained in any other section of
this Agreement, but rather in confirmation and furtherance thereof, each of the
parties hereto waives all claims for recovery from the other party for any loss
or damage to any of its property or damages as a result of business
interruption, rent loss or liability of the type covered in Section 8.2 above,
insured under valid and collectible insurance policies to the extent of any
recovery collectible under such insurance policies.
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ARTICLE IX
----------
MAINTENANCE OF AND REPAIRS TO THE BASEBALL FACILITY
9.1 GATEWAY OBLIGATIONS. Gateway shall be responsible for all
Routine Maintenance and Capital Repairs for the Baseball Facility. The Lessee
acknowledges that Gateway will assign its obligations as to Routine Maintenance
to the Operator pursuant to the terms of the Management Agreement.
9.2 MAINTENANCE AND REPAIR PROCEDURES.
(a) On or before February 1 of each Lease Year, and from time
to time during the Term as the Operator, not more frequently than once each
Reporting Period, the Lessee or Gateway may reasonably request, representatives
of the Operator, the Lessee and Gateway shall meet to:
(i) review a list of, and the proposed
procedures for completing, any anticipated
work constituting Routine Maintenance and
Capital Repairs (which shall be prepared by
the Operator and delivered to the Lessee and
Gateway prior to any such meeting);
(ii) allocate any such anticipated work between
Routine Maintenance and Capital Repairs;
(iii) establish budgets and timetables for
required Routine Maintenance and Capital
Repairs; and
(iv) establish necessary programs to generally
effectuate the administration of the
provisions of this Section.
(b) The Lessee, Gateway and the Operator shall meet to discuss
all of the proposed maintenance and repair items suggested by the Operator.
Gateway hereby agrees that Gateway shall use its best efforts to advise the
Lessee of its views as early as possible regarding the Operator's performance of
Routine Maintenance and Gateway's performance of Capital Repairs. All Routine
Maintenance, based on routine maintenance conducted at other Major League
baseball stadiums operated in a first-class manner, and Capital Repairs and
improvements, based on sound engineering and construction practices, requested
by the Lessee, shall be conducted and completed, subject to the reasonable and
prompt approval of Gateway and the Operator.
9.3 CAPITAL REPAIRS FUND. In addition to the Capital Repairs
Fund referred to in the Lease Agreement and the Management Agreement, Gateway
shall establish and maintain an account (the
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"Capital Repairs Fund"), the purpose of which shall be to accumulate funds for
the payment of the cost of Capital Repairs for which Gateway is financially
responsible hereunder. The Capital Repairs Fund shall be established with a
Permitted Escrow Agent and the funds therein invested in Permitted Investments.
On or before the Completion Date, Gateway shall deposit into the Capital Repairs
Fund the Initial Capital Repairs Fund Deposit. In addition, on or before the
first day of each and every Lease Year after the first Lease Year, Gateway shall
deposit the Annual Capital Repairs Fund Deposit into the Capital Repairs Fund.
All funds in the Capital Repairs Fund shall be the property of Gateway. The
Capital Repairs Fund may be drawn only upon the signature of the designated
signatory or signatories of Gateway and the funds deposited therein may be used
only to pay for Capital Repairs for which Gateway is financially responsible
hereunder, other than those arising out of damage which is caused by a risk then
covered by the property insurance policy referred to in Subsection 8.1(b)
(except that the Capital Repairs Fund may be used for covered losses pending
receipt of insurance proceeds, but such proceeds shall thereafter be deposited
in the Capital Repairs Fund). Notwithstanding anything in this Agreement to the
contrary, Gateway's financial responsibility with respect to Capital Repairs
shall not be limited to the funds in the Capital Repairs Fund. In the event
Gateway must use any funds deposited in the Construction Fund (established in
accordance with the Bond documents), to pay for any Capital Repair, in whole or
in part, Gateway shall withdraw the amount necessary from such Construction Fund
and pay for such Capital Repair with the funds withdrawn; PROVIDED, HOWEVER,
that in no event shall any funds withdrawn from the Construction Fund be used by
Gateway to pay for any Capital Repairs performed on the Field or the Field
Improvements; and PROVIDED, FURTHER, that in no event shall any funds withdrawn
from the Construction Fund by Gateway be deposited into the Capital Repairs
Fund. In the event funds on deposit in the Capital Repairs Fund are insufficient
to pay for the cost of a Capital Repair at any time, Gateway shall be obligated
to pay for such Capital Repair using other sources and shall be reimbursed from
the Capital Repairs Fund for the amount so paid from the next moneys deposited
therein until Gateway shall have been fully reimbursed. At the end of the Term
or upon the termination of this Agreement, all sums in the Capital Repairs Fund
shall be paid to Gateway; provided, however, that Gateway shall continue to hold
all sums previously held in the Capital Repairs Fund in a separate escrow
account for the benefit of the Baseball Facility and Gateway shall transfer and
assign all of such funds to the Person or Persons that succeed Gateway in the
ownership of the Baseball Facility.
9.4 CAPITAL REPAIRS. During the Term, the Lessee shall not,
subject to ordinary wear and tear, do or suffer any waste or damage,
disfigurement or injury to the Baseball Facility. Except
as otherwise provided herein, Gateway shall perform or cause to be performed all
Capital Repairs required during the Term, at Gateway's expense. All work related
to any Capital Repair shall
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be done in a good workmanlike manner. Gateway hereby agrees to indemnify, defend
and hold the Lessee harmless from and against all costs and expenses (including
attorneys' fees) arising out of Gateway's failure to perform such Capital
Repairs.
9.5 LESSEE'S SELF-HELP. If Gateway or the Operator fails to
perform any required Routine Maintenance or Capital Repair, the Lessee may
perform such Routine Maintenance or Capital Repairs and shall be entitled to
reimbursement, including, but not limited to, payment from the Capital Repairs
Fund. When feasible, Lessee shall give Gateway prompt notice thereof; PROVIDED,
HOWEVER, in the case of a Capital Repair or Routine Maintenance which in the
Lessee's good faith determination will cost more than $5,000 to complete, the
Lessee will give Gateway not less than twenty-four (24) hours' notice prior to
commencement of such work unless such delay could affect public health or
safety.
ARTICLE X
---------
REAL ESTATE AND PERSONAL PROPERTY TAXES
During the Term, Gateway shall pay when due all real estate
taxes, personal property taxes (other than for tangible personal property owned
or installed by the Lessee), assessments and other governmental levies and
charges, general and special, ordinary and extraordinary, of any kind or nature,
lawfully levied or assessed by federal, state, county or municipal government,
upon the Field and Field Improvements and any and all other improvements (other
than with respect to personal property owned by the Operator or the Lessee
improvements made by or on behalf of the Lessee pursuant to Article VI hereof or
Section 7.1 of the Lease, respectively, hereafter constituting a part of the
Field and Field Improvements, any tax on the Lessee's rights hereunder in the
nature of a leasehold tax, or any taxes in lieu thereof (collectively, "Real and
Personal Property Taxes"); PROVIDED, HOWEVER, that if, because of any change in
the method of taxation of real estate or personal property, any other or
additional tax or assessment is imposed upon the Field and Field Improvements as
or in substitution for, or in lieu of, any tax or assessment which would
otherwise be included in Real and Personal Property Taxes, such other tax or
assessment shall also be Gateway's responsibility. Gateway hereby agrees to
indemnify, defend and hold the Lessee harmless from and against all Real and
Personal Property Taxes. In the event the Operator's or the Lessee's interest in
the Management Agreement, the Lease Agreement or the Gateway CAM Agreement is
terminated as a result of a failure to pay Real and Personal Property Taxes,
including, without limitation, a sale of the Baseball Facility by a foreclosure
sale, and within sixty (60) days after such termination are not reinstated for
the balance of the then remaining terms thereof on the same terms and
conditions, the Lessee shall be entitled to terminate this Agreement upon thirty
(30) days prior written notice to Gateway.
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Without in anyway limiting the Lessee's rights and remedies provided for in
Article XII hereof, in the event Gateway fails to pay any Real and Personal
Property Taxes when the same shall be due and payable, the Lessee shall have the
right, but shall have no obligation to pay the same or any of them, and upon
such payment by the Lessee, Gateway shall, immediately after proof of such
payment shall have been submitted to Gateway by the Lessee, and on demand
therefor, pay the Lessee the amount of any such payment so made by the Lessee,
with interest thereon at the Interest Rate. Gateway shall cause a separate tax
parcel to be created for the Field and the Field Improvements.
ARTICLE XI
----------
RIGHT OF ENTRY AND INSPECTION
In addition to its rights to use the Field and the Field
Improvements as provided in this Agreement, the Management Agreement and the
Lease Agreement, Gateway and its agents and representatives (including
representatives of the City and the County), shall have the right, at all times
during usual business hours or at any other time in case of an emergency, to
enter into and upon any and all parts of the Field and the Field Improvements
for the purpose of inspecting Gateway's Work, carrying out any of its
obligations under this Agreement, the Management Agreement or the Lease
Agreement (including, without limitation, to make any Capital Repairs required
to be made by Gateway), or for any other legitimate reason related to the
obligations of the parties hereto or the rights of Gateway under this Agreement,
the Management Agreement or the Lease Agreement. In the event Gateway enters the
Field and the Field Improvements for the purpose of making any Capital Repair,
during the progress of such work, Gateway and/or its agents and representatives
shall be entitled to keep and store in areas mutually agreed upon by the Lessee
and Gateway in and upon the Field and the Field Improvements all necessary
materials, tools and equipment.
ARTICLE XII
-----------
DEFAULT AND REMEDIES
12.1 DEFAULT BY LESSEE. The occurrence of any one or more of
the following events constitutes a default by the Lessee under this Agreement
("Lessee Default"):
(a) Failure by the Lessee at any time to pay, when due, any
Rent or other sums payable by the Lessee to Gateway hereunder within five (5)
Business Days after notice of such failure is given to the Lessee by Gateway;
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(b) Failure by the Lessee to observe or perform any other
covenant, agreement, condition or provision of this Agreement, if such failure
shall continue for more than thirty (30) days; PROVIDED, HOWEVER, that the
Lessee shall not be in default with respect to matters that cannot be reasonably
cured within thirty (30) days, so long as the Lessee has promptly commenced such
cure and diligently proceeds in a reasonable manner to complete the same
thereafter;
(c) The Lessee admits in writing its inability to pay its
debts as they mature, or makes an assignment for the benefit of creditors, or
applies for or consents to the appointment of a trustee or receiver for the
Lessee or for a major part of its property;
(d) A trustee or receiver is appointed for the Lessee or for a
major part of its property and is not discharged within thirty (30) days after
such appointment; or
(e) Bankruptcy, reorganization, receivership, arrangement,
insolvency or liquidation proceedings, or other proceedings for relief under any
federal or state bankruptcy law, or similar law for the relief of debtors, are
instituted by or against the Lessee and, if instituted against the Lessee, are
allowed against it or are consented to by it or are not dismissed within ninety
(90) days after such institution.
12.2 GATEWAY'S REMEDIES. If a Lessee Default occurs, in
addition to any other rights or remedies Gateway may have at law or in equity,
Gateway shall have the following rights:
(a) Gateway may enforce the provisions of this Agreement and
may enforce and protect the rights of Gateway hereunder by a suit or suits in
equity or at law for the specific performance of any covenant or agreement
contained herein, or for the enforcement of any other appropriate legal or
equitable remedy, including recovery of monetary damages and all moneys due or
to become due from the Lessee under any of the provisions of this Agreement, or
any other relief or remedies to the extent permitted by law, by filing a cause
of action or actions for such damages, equitable relief, or other appropriate
remedies or relief from the Lessee in any court of competent jurisdiction in the
State of Ohio.
(b) After the time when Gateway has given notice and any
applicable grace period provided has expired, if any sums payable by the Lessee
shall remain due and payable, or after the time for performance by the Lessee of
any other term, covenant, provision or condition of this Agreement, or before
the expiration of that time in the event of a bona fide emergency (in which case
Gateway shall only be required to give such notice as is reasonable and
practical under the circumstances), Gateway may, at Gateway's election (but
without obligation), make any payment required of the Lessee under this
Agreement, or perform or comply with any covenant
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or condition imposed on the Lessee under this Agreement, as Gateway deems
available. The amount so paid plus the cost of such performance or compliance,
plus interest on such sums at the Interest Rate, shall be deemed to be
additional rent payable by the Lessee immediately upon demand. No such payment,
performance or observance by Gateway shall constitute a waiver of default or of
any remedy for default or render Gateway liable for any loss or damage resulting
from any such act. Gateway may, with notice to the Lessee and at any time or
from time to time, charge, set off and otherwise apply all or any part of any of
Gateway's Obligations against Lessee's Obligations now or in the future.
(c) No termination of this Agreement shall deprive Gateway of
any of its remedies or actions against the Lessee for past or future rent or
other sums due from the Lessee hereunder, nor shall the bringing of any action
for rent or other sums or other Lessee Default be construed as a waiver of the
right to obtain possession of the Baseball Facility.
12.3 DEFAULT BY GATEWAY. The occurrence of any one or more of
the following events constitutes a default by Gateway under this Agreement
("Gateway Default"):
(a) Failure by Gateway at any time to pay, when due, any sums
payable by Gateway to the Lessee hereunder within five (5) Business Days after
notice of such failure is given to Gateway by the Lessee;
(b) Failure by Gateway to observe or perform any other
covenant, agreement, condition or provision of this Agreement, if such failure
shall continue for more than thirty (30) days; PROVIDED, HOWEVER, that Gateway
shall not be in default with respect to matters that cannot be reasonably cured
within thirty (30) days, so long as Gateway has promptly commenced such cure and
diligently proceeds in a reasonable manner to complete the same thereafter;
(c) Gateway admits in writing its inability to pay its debts
as they mature, or makes an assignment for the benefit of creditors, or applies
for or consents to the appointment of a trustee or receiver for Gateway or for a
major part of its property;
(d) A trustee or receiver is appointed for Gateway or for a
major part of its property and is not discharged within thirty (30) days after
such appointment; or
(e) Bankruptcy, reorganization, receivership, arrangement,
insolvency or liquidation proceedings, or other proceedings for relief under any
federal or state bankruptcy law, or similar law for the relief of debtors, are
instituted by or against Gateway, and, if instituted against Gateway, are
allowed
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against it or are consented to by it or are not dismissed within ninety (90)
days after such institution.
12.4 LESSEE'S REMEDIES. If a Gateway Default occurs, in
addition to any other rights or remedies the Lessee may have at law or in
equity, the Lessee shall have the following rights:
(a) The Lessee may enforce the provisions of this Agreement
and may enforce and protect the rights of the Lessee hereunder by a suit or
suits in equity or at law for the specific performance of any covenant or
agreement contained herein, or for the enforcement of any other appropriate
legal or equitable remedy, including recovery of monetary damages and all moneys
due or to become due from Gateway under any of the provisions of this Agreement,
or any other relief or remedies to the extent permitted by law, by filing a
cause of action or actions for such damages, equitable relief, or other
appropriate remedies or relief from Gateway in any court of competent
jurisdiction in the State of Ohio.
(b) After the time when the Lessee has given notice and any
applicable grace period provided has expired, if any sums payable by Gateway
shall remain due and payable, or after the time for performance by Gateway of
any other term, covenant, provision or condition of this Agreement, or before
the expiration of that time in the event of a bona fide emergency (in which case
the Lessee shall only be required to give such notice as is reasonable and
practical under the circumstances), the Lessee may, at the Lessee's election
(but without obligation), make any payment required of Gateway under this
Agreement, or perform or comply with any covenant or condition imposed on
Gateway under this Agreement, as the Lessee deems available. The amount so paid
plus the cost of such performance or compliance, plus interest on such sums at
the Interest Rate, shall be payable by Gateway immediately upon demand. No such
payment, performance or observance by the Lessee shall constitute a waiver of
default or of any remedy for default or render the Lessee liable for any loss or
damage resulting from any such act. The Lessee may, with notice to Gateway and
at any time or from time to time, charge, set off and otherwise apply all or any
part of any of Lessee's Obligations against Gateway's Obligations now or in the
future.
(c) No termination of this Agreement shall deprive the Lessee
of any of its remedies or actions against Gateway for past or future sums due to
the Lessee from Gateway hereunder.
12.5 GENERAL PROVISIONS.
(a) No right or remedy herein conferred upon, or reserved to,
Gateway or the Lessee is intended to be exclusive of any other right or remedy,
but each shall be cumulative and in addition to every other right or remedy
given herein or now or
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hereafter existing at law, or in equity or by statute; PROVIDED, HOWEVER, that
neither Gateway nor the Lessee shall have any right to cancel, rescind or
otherwise terminate this Agreement due to a breach of this Agreement by the
other party except as otherwise specifically set forth in this Agreement.
(b) No waiver by either party of any breach of obligations,
agreements or covenants herein shall be a waiver of any subsequent breach of any
obligation, agreement or covenant, nor shall any forbearance by either party to
seek a remedy for any breach by the other party be a waiver by such party of any
rights or remedies with respect to such or any subsequent breach, nor shall any
express waiver by either party be deemed to apply to any other existing or
subsequent right to remedy any default by the other party, nor shall any waiver
by either party of any default or breach by the other party in the performance
of any of the covenants or obligations of such other party under this Agreement
be deemed to have been made by the party against which the waiver is sought to
be charged unless contained in a writing executed by such party.
(c) In the event that either party fails to pay any payment
required hereunder when due, then, without limiting any other rights of the
nondefaulting party, the defaulting party shall be liable for interest thereon
at the Interest Rate from the date that such installment was due until the date
paid in full.
ARTICLE XIII
------------
SURRENDER OF THE FIELD
13.1 GENERAL. Upon the expiration or termination of this
Agreement (by lapse of time or otherwise), the Lessee shall peaceably deliver up
and surrender the Field and the Field Improvements to Gateway in good order and
repair and in the same condition as upon the Completion Date, ordinary wear and
tear excepted; PROVIDED, HOWEVER, that nothing contained herein shall be
construed as an obligation by the Lessee to repair the Field Improvements prior
to such surrender except to the extent that such obligations are specifically
imposed upon the Lessee hereunder. The Lessee shall surrender to Gateway all
keys for the Field Improvements at the place then fixed for the receipt of
notices by Gateway, and shall notify Gateway in writing of all combinations of
locks, safes and vaults, if any. The Lessee's obligations to observe and perform
the covenants set forth in this Article XIII shall survive the expiration or
earlier termination of this Agreement (by lapse of time or otherwise).
13.2 ALTERATIONS AND IMPROVEMENTS. At the expiration or
termination of this Agreement (by lapse of time or otherwise), all permanent
alterations, installations, changes, replacements, additions or improvements
made by the Lessee to the Field and the
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Field Improvements shall be deemed a part of the Field and the Field
Improvements and the same shall not be removed.
13.3 LESSEE'S PROPERTY. Upon the expiration or termination of
this Agreement (by lapse of time or otherwise), the Lessee may remove all
property which is owned by the Lessee and which the Lessee is permitted to
remove from the Field and the Field Improvements under the provisions of this
Agreement and, in such event, repair any damage caused to the Baseball Facility
due to the removal of such property at the Lessee's expense. If the Lessee fails
to remove such property, such property shall be deemed abandoned by the
Operator. Gateway may, at its option, (a) cause that property to be removed at
no expense to the Lessee; (b) sell all or any part of such property at public or
private sale, without notice to the Lessee; or (c) declare that title to such
property shall be deemed to have passed to Gateway.
13.4 ABANDONING PREMISES OR PERSONAL PROPERTY. The Lessee
shall not vacate or abandon the Field and the Field Improvements at any time
during the Term, but if the Lessee vacates or abandons the Baseball Facility or
is dispossessed by process of law, in breach of this Agreement, any personal
property owned by the Lessee which may be left on the Field and within the Field
Improvements following such abandonment or dispossession shall be deemed to have
been abandoned by the Lessee, and in that event such property shall be disposed
of by Gateway in accordance with the provisions of Section 13.3 hereof. Gateway
agrees that Lessee shall not be deemed to have abandoned or vacated the Field or
Field Improvements unless Lessee has expressly stated Lessee's desire to abandon
or vacate in writing to Gateway.
ARTICLE XIV
-----------
DAMAGE TO THE FIELD
If any Property Damage shall occur:
(a) All property insurance proceeds from policies required to
be obtained hereunder paid on account of such damage shall be paid to Gateway to
be held in escrow accounts with Permitted Escrow Agents and invested in
Permitted Investments and applied in the following manner:
(i) there shall be paid from said insurance proceeds
such part thereof as shall equal the cost of making such
temporary repairs or doing such other work as in the
reasonable opinion of the Design Architect (or such other
architect selected by Gateway and approved by the Lessee) may
be necessary in order to protect the Field Improvements
pending the adjustment of the insurance loss or the making of
permanent repairs, restoration or reconstruction of the Field
Improvements;
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(ii) there shall be paid from said insurance proceeds such
part thereof as shall equal the cost of repairing, restoring
or reconstructing the Field or of any part thereof so that
upon completion of such repairs, restoration, reconstruction,
or erection of the Field Improvements shall be equal to the
replacement value of the Field Improvements;
(iii) payments pursuant to paragraphs (i) or (ii) of this
Subsection (a) from such insurance proceeds shall be made by
Gateway from time to time as the work progresses in amounts
equal to the cost of labor and materials incorporated into and
used in such work, and builders', architects' and engineers'
fees and other charges in connection with such work upon
delivery to Gateway of a certificate of an authorized
architect in charge of such work certifying that the amounts
so to be paid are payable in accordance with the provisions of
this Article and that such amounts are then due and payable
and have not theretofore been paid.
(b) All insurance proceeds paid to the Lessee on account of
such Property Damage shall be held in trust by the Lessee for the benefit of
Gateway and shall be paid immediately by the Lessee to Gateway.
(c) In the event that any of the insurance proceeds paid by
the insurance companies shall remain after the completion of such repairs,
restoration, reconstruction or erection, the excess shall be deposited in the
Capital Repairs Fund and used for the purposes set forth therein.
(d) In the event that the insurance proceeds paid, as
hereinabove provided, together with the funds available in the Capital Repairs
Fund are insufficient for making such permanent repairs, restoration or
reconstruction or erection and no party is willing to provide the additional
funds needed therefor, Gateway or the Lessee shall notify the other party of
such determination in writing and thereupon this Agreement shall cease and
terminate and all future Rent and other amounts due by the Lessee hereunder
shall cease as of the date of such written notice and the total insurance
proceeds so paid shall be allocated equitably between Gateway and Lessee.
ARTICLE XV
----------
INDEMNIFICATION
15.1 LESSEE INDEMNIFICATION. Subject to the limitations
hereinafter set forth, the Lessee hereby agrees to indemnify and hold harmless
Gateway, its officers, members, employees and agents
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from and against all loss, cost and expense in connection with proceedings,
judicial or otherwise, and claims, demands and judgments, together with costs
and expenses including attorneys' fees relating thereto, arising out of damage
or injury to person or property occurring on or about the Field which occurs
after the Completion Date and while the Agreement is in effect. Notwithstanding
the foregoing, in no event shall the foregoing indemnification obligation be
applicable to any loss, cost or expense arising out of any Excluded Occurrences.
15.2 GATEWAY INDEMNIFICATION. Gateway hereby agrees to
indemnify, defend and hold the Lessee, its partners, officers, directors,
employees and agents harmless from and against all loss, cost and expense in
connection with proceedings, judicial or otherwise, and claims, demands and
judgments, together with costs and expenses including attorneys' fees, arising
solely out of any Excluded Occurrence which occur while this Agreement is in
effect.
15.3 PROCEDURE REGARDING INDEMNIFICATION.
(a) If the Indemnified Party shall discover or have actual
notice of facts giving rise or which may give rise to a claim for
indemnification under this Article XV, or shall receive notice of any Action,
with respect to any matter for which indemnification may be claimed, the
Indemnified Party shall, within twenty (20) days following service of process
(or within such shorter time as may be necessary to give the Indemnifying Party
a reasonable opportunity to respond to such service of process) or within twenty
(20) days after any other such notice, notify the Indemnifying Party in writing
thereof together with a statement of such information respecting such matter as
the Indemnified Party then has; it being understood and agreed that any failure
or delay of the Indemnified Party to so notify the Indemnifying Party shall not
relieve the Indemnifying Party from liability hereunder except and solely to the
extent that such failure or delay shall have materially adversely affected the
Indemnifying Party's ability to defend against, settle, or satisfy any such
Action. Following such notice, the Indemnifying Party shall have the right, at
its sole cost and expense, to contest or defend such Action through attorneys,
accountants, and others of its own choosing (the choice of such attorneys,
accountants, and others being subject to the approval of the Indemnified Party,
such approval not to be unreasonably withheld) and in the event it elects to do
so, it shall promptly notify the Indemnified Party of such intent to contest or
defend such Action. If within twenty (20) days following such notice from the
Indemnified Party (or within such shorter time as may be necessary to give the
Indemnified Party a reasonable opportunity to respond to service of process or
other judicial or administrative action), the Indemnified Party has not received
notice from the Indemnifying Party that such Action will be contested or
defended by the Indemnifying Party, the Indemnified Party shall have the right
to (i) authorize attorneys satisfactory to it to represent it in connection
therewith or (ii) at any time
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<PAGE> 33
settle, compromise, or pay such action, in either of which events the
Indemnified Party shall be entitled to indemnification therefor subject to this
Section 15.3.
(b) In the event and so long as the Indemnifying Party is
actively contesting or defending against an Action as hereinabove provided, the
Indemnified Party shall cooperate with the Indemnifying Party and its counsel in
such contest or defense, shall join in making any appropriate counterclaim or
cross-claim in connection with the Actions, and shall provide such access to the
books and records of the Indemnified Party as shall be necessary in connection
with such defense or contest, all at the sole cost and expense of the
Indemnifying Party. Notwithstanding that an Indemnifying Party is actively
conducting such defense or contest, any Action may be settled, compromised or
paid by the Indemnified Party without the consent of the Indemnifying Party;
PROVIDED, HOWEVER, that if such action is taken without the Indemnifying Party's
consent, its indemnification obligations in respect of such claim shall thereby
be nullified. Any such Action may be settled, compromised, or paid by the
Indemnifying Party without the Indemnified Party's consent, so long as such
settlement or compromise does not cause the Indemnified Party to incur any
present or future material cost, expense, obligation or liability of any kind or
nature.
(c) In the event any Action involves matters partly within or
partly outside the scope of the indemnification by the Indemnifying Party
hereunder, then the attorneys' fees, costs, and expenses of contesting or
defending such Action shall be equitably allocated between the Indemnified Party
and the Indemnifying Party.
15.4 LIMITATION. Indemnification under this Article XV does
not include indemnification against loss or liability due to Force Majeure.
ARTICLE XVI
-----------
ASSIGNMENT
16.1 ASSIGNMENT BY LESSEE. The Lessee shall not assign or
transfer this Agreement, in whole or in part, with or without consideration, to
any Person without the prior written consent of Gateway which consent shall not
be unreasonably withheld. Notwithstanding the foregoing, Gateway's consent shall
be granted automatically if (a) the proposed assignee shall have acquired the
Major League Baseball franchise now held by the Lessee in accordance with all
applicable Major League rules and regulations, (b) the American League and the
Office of the Commissioner of Baseball shall have approved the assignment, and
(c) such assignee assumes all of the Lessee's obligations under this Agreement
and agrees to be bound by this Agreement. Upon the assignment of this Agreement
by the Lessee with the consent of Gateway, or to another party where consent is
not required, the liability of the Lessee
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<PAGE> 34
shall cease with respect to liabilities accruing from and after the effective
date of such assignment.
16.2 SUBLETTING. The Lessee shall not sublease all or any part
of the Field and the Field Improvements, nor permit other persons to occupy or
conduct business in the Baseball Facility or any part thereof, except as
expressly permitted by this Agreement or with the prior written consent of
Gateway, which consent shall not be unreasonably withheld.
16.3 ASSIGNMENT BY LESSOR. Gateway shall have the right to
assign and transfer its rights under and interest in this Agreement, and pledge
any Rent or other sums to which Gateway is entitled under this Agreement or any
other interest Gateway has in this Agreement, in whole or in part, as security
for the repayment of the Bonds, or other financing approved by the Lessee for
the costs of the design and construction of the Improvements (including, without
limitation, any letter of credit issued to secure the Bonds). All costs incurred
in connection with any such pledge shall be the sole responsibility of Gateway.
Gateway shall also have the right to assign and transfer its right, title and
interest in and to this Agreement, in whole or in part, to the City or the
County pursuant to and subject to the Three Party Agreement.
16.4 ASSIGNEES AND SUBTENANTS. If Gateway consents at any time
to any assignment or sublease as defined in this Article XVI, the Lessee and any
such assignee or sublessee, in addition to any other consideration that may pass
between them in connection therewith, shall be deemed to have covenanted not to
make any further assignment or sublease contrary to the provisions of this
Article XVI. Such covenant shall be deemed to have been made as of the date of
such consent by Gateway, and shall take effect prospectively from the date
thereof. In addition, if any assignee of this Agreement is not a limited
partnership, the covenants and warranties by the Lessee set forth in Article XX
hereof shall be appropriately modified to take into account the nature of the
assignee.
ARTICLE XVII
------------
EMINENT DOMAIN
17.1 TERMINATION FOR CONDEMNATION. In the event that a
Condemnation with respect to any material part of the Field and the Field
Improvements shall occur at any time during the Term, this Agreement shall
terminate (except as hereinafter provided below), on the date on which
possession is required to be delivered to the condemning authority. As used
herein, "material part" shall mean any of the following:
(a) Any part of the Field and the Field Improvements that, in
the reasonable determination of the Lessee, would cause
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<PAGE> 35
the Lessee to become unable to make use of the Field and the Field Improvements
for its intended operations or to experience a material loss of revenue;
(b) Any part of the area between the Ballpark Improvements and
a public street or highway, Condemnation of which would cause the Lessee to
become unable to provide reasonable access to the Field and the Field
Improvements; or
(c) Any portion of the Gateway Common Areas the loss of which
results in fewer than 1,500 parking spaces being available on the same terms and
conditions as the On-Site Parking to the Lessee and the Operator of equal
quality and no greater distance from the Baseball Facility than the On-Site
Parking; PROVIDED, HOWEVER, that Lessee may elect, in its sole discretion, not
to treat any of the foregoing as a "material part" of the Field and the Field
Improvements, in which event this Agreement shall not terminate. If this
Agreement terminates pursuant to the provisions of this Section 17.1, all
rights, obligations and liabilities of the parties hereto shall end as of the
effective date of such termination, without prejudice to any rights which have
accrued prior to such termination.
17.2 ALLOCATION OF AWARD. The amount of any award for or on
account of any Condemnation shall be paid directly to the Lessee. The Lessee
shall have the right to be represented by counsel of its choosing in any
Condemnation proceedings.
17.3 PERFORMANCE OF WORK. If there shall be a Condemnation and
this Agreement shall not terminate as a result thereof, Gateway shall be
required to perform any and all work necessary to restore the Field and the
Field Improvements for the Lessee's use in as expeditious a manner as possible.
17.4 TEMPORARY TAKING. This Agreement shall not terminate by
reason of a temporary taking of the Field and the Field Improvements or any
portion thereof for public use, except as provided in this Section 17.4. In the
event of such a temporary taking, the rights and obligations of the parties
under this Agreement shall continue in full force and effect, except that:
(a) any award for such temporary taking shall be governed by
the provisions of Section 17.2 hereof;
(b) upon the termination of such temporary taking, Gateway
shall use its reasonable efforts to restore the Field and the Field Improvements
to a state equivalent to that which the Field and the Field Improvements were in
immediately prior to such temporary taking;
(c) during any period of a temporary taking (or such longer
period as is reasonably necessary to allow the Lessee to make suitable alternate
arrangements), the Lessee shall be entitled
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<PAGE> 36
to make arrangements for an alternate site for the Team's home baseball games,
on the same terms and conditions as provided in Article XVIII hereof; and
(d) notwithstanding the foregoing, the Lessee shall have the
right to terminate this Agreement as of the end of any Season if the remaining
period of such temporary taking will be for a period of more than two (2)
Seasons following the date of the termination, as evidenced by the issuance of
any written statement by a duly authorized official of the condemning authority
to the effect that such temporary taking will be for such period of time.
ARTICLE XVIII
-------------
UNTENANTABILITY
If the Field and the Field Improvements are untenantable in
whole or in any material part as a result of (a) Gateway's inability to cause
Substantial Completion as provided herein, or (b) any Major Capital Repair or
the event or events which gave rise thereto (including any Major Capital Repair
necessitated by any of the events set forth in Article XVII hereof), then the
Lessee shall (y) comply with the terms set forth in Article IV hereof, in the
case of any untenantability resulting from (a) above, or (z) make arrangements
for an alternate site for its Home Dates during the period of such
untenantability (or such longer period as is reasonably necessary to allow the
Lessee to make suitable alternate arrangements), in the case of any
untenantability resulting from (b) above. During the period in which the Lessee
is playing its games at an alternate site, the Lessee will not be responsible
for any obligations accruing under this Agreement. In the event that
untenantability caused by a Major Capital Repair or the event or events which
gave rise thereto (other than a Major Capital Repair necessitated by the events
set forth in Article XVII hereof) continues for a period of two (2) Seasons or
totals a number of days equal to two (2) Seasons in any three (3) year period,
the Lessee may at its option, exercised in its reasonable discretion, terminate
this Agreement upon thirty (30) days' prior written notice to Gateway. If
untenantability is caused by any Major Capital Repair necessitated by the events
set forth in Article XVII hereof, the Lessee's right to terminate this Agreement
shall be governed by Article XVII.
ARTICLE XIX
-----------
CONDITIONS
The Lessee's obligations to take possession of the Field and
the Field Improvements and to make any payments to Gateway or assume any other
obligations pursuant to the terms of this Agreement are expressly conditioned
upon the satisfaction of each
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<PAGE> 37
of the conditions precedent on or before the dates set forth in Article XXII of
the Lease Agreement (the "Deadline Dates"), unless waived in writing by the
Lessee. In the event any of the conditions precedent set forth in Article XXII
of the Lease Agreement is not satisfied by the applicable Deadline Date, the
Lessee may elect to (i) waive the condition, (ii) extend the Deadline date on
which such condition must be satisfied provided, however, that the Deadline Date
set forth in Section 25.4 of the Management Agreement shall not be extended
without the prior written approval of such extensions by Gateway, or (iii)
terminate this Agreement upon thirty (30) days' prior written notice to Gateway.
The Lessee shall notify Gateway of the Lessee's election within thirty (30) days
after the Deadline Date. Failure of the Lessee to notify Gateway shall be deemed
to be an election by the Lessee to waive such condition.
ARTICLE XX
----------
REPRESENTATIONS BY LESSEE
The Lessee represents and warrants as follows, as of the date
hereof and at all times from and after the date hereof until the expiration or
termination of this Agreement:
20.1 VALID EXISTENCE. The Lessee is a limited partnership duly
organized and validly existing under the laws of the State of Ohio. The Lessee
has full partnership power to own its property and conduct its business as
presently conducted.
20.2 POWER; NO LIMITATION ON ABILITY TO PERFORM. The Lessee
has full partnership power and authority to execute and deliver this Agreement
and to carry out and perform all of the terms and provisions of this Agreement,
and all transactions contemplated hereby, to the extent required to be carried
out or performed by the Lessee. Subject to satisfaction of the requirements of
Article XXVI hereof, (a) neither the Lessee's partnership agreement or
certificate of limited partnership or Baseball Corporation's articles of
incorporation or code of regulations, nor any rule, policy, constitution, by-law
or agreement of the American League or Major League Baseball, nor any other
agreement, law or other rule in any way prohibits, limits or otherwise affects
the right or power of the Lessee or Baseball Corporation to enter into and
perform all of the terms and provisions of this Agreement and each document,
agreement and instrument executed and to be executed by the Lessee or Baseball
Corporation in connection herewith, and all transactions contemplated hereby and
thereby, and (b) neither the Lessee nor any of its partners (general or limited,
including, without limitation, Baseball Corporation), or stockholders of any
corporate partner, officers, directors or any of their personal or legal
representatives are party to or bound by any contract, agreement, indenture,
trust agreement, note, obligation or other instrument
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<PAGE> 38
which could prohibit, limit or otherwise affect the same. Except for the
approval required by Article XXVI hereof, no consent, authorization or approval
of, or other action by, and no notice to or filing with, any governmental
authority, regulatory body or any other Person is required for the due
execution, delivery and performance by the Lessee and Baseball Corporation of
this Agreement or any other agreement, document or instrument executed and
delivered by the Lessee or Baseball Corporation in connection herewith, or any
of the transactions contemplated hereby or thereby.
20.3 VALID EXECUTION. The execution and delivery of this
Agreement by the Lessee has been duly and validly authorized by all necessary
action. This Agreement and all other agreements, documents and instruments
executed and delivered by the Lessee in connection herewith are, and each other
agreement, document or instrument to be executed and delivered by the Lessee in
connection herewith when executed and delivered will be, legal, valid and
binding obligations of the Lessee, enforceable against the Lessee in accordance
with their respective terms.
20.4 DEFAULTS. The execution, delivery and performance of this
Agreement and each agreement, document and instrument executed and to be
executed and delivered by the Lessee or Baseball Corporation in connection
herewith (a) do not and will not violate or result in a violation of, contravene
or conflict with, or constitute a default under (i) any agreement, document or
instrument to which the Lessee or Baseball Corporation is a party or by which
the Lessee's or Baseball Corporation's assets may be bound or affected, (ii) any
law, statute, ordinance or regulation applicable to the Lessee or Baseball
Corporation, or (iii) the articles of incorporation or code of regulations of
Baseball Corporation, or the partnership agreement or certificate of limited
partnership of the Lessee, and (b) do not and will not result in the creation or
imposition of any lien or other encumbrance upon the assets of the Lessee or
Baseball Corporation.
20.5 GOOD STANDING OF BASEBALL CORPORATION. Baseball
Corporation is the Lessee's sole general partner, and is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Ohio.
20.6 POWER OF BASEBALL CORPORATION. Baseball Corporation has
full corporate power and authority to execute and deliver this Agreement on
behalf of the Lessee as the Lessee's sole general partner, and to carry out the
terms and provisions of this Agreement, and all transactions contemplated
hereby.
20.7 VALID EXECUTION BY BASEBALL CORPORATION. The execution
and delivery of this Agreement by Baseball Corporation on behalf of the Lessee
as the Lessee's sole general partner has been duly and validly authorized by all
necessary action.
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20.8 COMPLIANCE WITH LAWS. The Lessee shall comply, at all
times, with all laws and regulations applicable to its use of the Baseball
Facility in accordance with the terms of this Agreement, and shall obtain
licenses and permits (other than building permits and certificates of occupancy
in connection with the construction thereof), necessary in connection therewith
at its sole cost and expense.
20.9 MAINTENANCE OF GOOD STANDING IN LEAGUE. The Lessee and
Baseball Corporation shall maintain the Team as an American League baseball team
in good standing.
ARTICLE XXI
-----------
REPRESENTATIONS BY GATEWAY
Gateway represents and warrants as follows, as of the date
hereof and at all times from and after the date hereof until the expiration or
termination of this Agreement:
21.1 VALID EXISTENCE. Gateway is a nonprofit corporation, duly
organized, validly existing and in good standing under the laws of the State of
Ohio. Gateway has full corporate power to own its property and conduct its
business as presently conducted.
21.2 POWER; NO LIMITATION ON ABILITY TO PERFORM. Gateway has
the power and authority to execute and deliver this Agreement and to carry out
and perform all of the terms and provisions of this Agreement, and all
transactions contemplated hereby, to the extent required to be carried out or
performed by Gateway. Neither Gateway's articles of incorporation or code of
regulations, nor any other agreement, law or other rule in any way prohibits,
limits or otherwise affects the right or power of Gateway to enter into and
perform all of the terms and provisions of this Agreement and each document,
agreement and instrument executed and to be executed by Gateway in connection
herewith, and all transactions contemplated hereby and thereby, and neither
Gateway nor any of its officers, directors or any of their personal or legal
representatives are party to or bound by any contract, agreement, indenture,
trust agreement, note, obligation or other instrument which could prohibit,
limit or otherwise affect the same. No consent, authorization or approval of, or
other action by, and no notice to or filing with, any governmental authority,
regulatory body or any other person is required for the due execution, delivery
and performance by Gateway of this Agreement or any other agreement, document or
instrument executed and delivered by Gateway in connection herewith, or any of
the transactions contemplated hereby or thereby.
21.3 VALID EXECUTION. The execution and delivery of this
Agreement by Gateway has been duly and validly authorized by all
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necessary action. This Agreement and all other agreements, documents and
instruments executed and delivered by Gateway in connection herewith are, and
each other agreement, document or instrument to be executed and delivered by
Gateway in connection herewith when executed and delivered will be, legal, valid
and binding obligations of Gateway, enforceable against Gateway in accordance
with their respective terms.
21.4 DEFAULTS. The execution, delivery and performance of this
Agreement and each agreement, document and instrument executed and delivered and
to be executed and delivered by Gateway in connection herewith (a) do not and
will not violate or result in a violation of, contravene or conflict with, or
constitute a default under: (i) any agreement, document or instrument to which
Gateway is a party or by which Gateway's assets may be bound or affected, (ii)
any law, statute, ordinance or regulation applicable to Gateway, or (iii) the
articles of incorporation or code of regulations of Gateway; and (b) do not and
will not result in the creation or imposition of any lien or other encumbrance
upon the assets of Gateway.
21.5 COMPLIANCE WITH LAWS. Gateway shall comply, at all times,
with all laws and regulations applicable to its construction and use of the
Baseball Facility in accordance with the terms of this Agreement, and shall
obtain licenses and permits, including, but not limited to, all building permits
and certificates of occupancy in connection with the construction thereof,
necessary in connection therewith at its sole cost and expense.
21.6 TITLE. Gateway owns fee simple title to the Central
Market Square Site free and clear of all liens and encumbrances thereon except
(i) as set forth in that certain title policy issued on December 28, 1990, by
Midland Title Security, Inc. as agent for First American Title Insurance
Company, Policy No. 052032, (ii) real estate taxes that are not yet due and
payable, or (iii) immaterial liens.
21.7 THREE PARTY AGREEMENT AND CENTRAL MARKET COMMUNITY
DEVELOPMENT PLAN. The foregoing warranties and representations are subject to
the necessary amendments to the Three Party Agreement and the Central Market
Community Development Plan required to conform those documents to this
Agreement, the Management Agreement, the Ground Lease and the Common Area
Maintenance Agreement.
ARTICLE XXII
------------
SUBORDINATION, NONDISTURBANCE AND ATTORNMENT
Subject to Gateway furnishing the Lessee nondisturbance
agreements reasonably satisfactory in form and substance to the Lessee, this
Agreement, and all rights of the Lessee hereunder
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shall be subject and subordinate to the mortgages which may encumber the within
leasehold estate that are granted in connection with any approved Financing
Arrangement. Notwithstanding anything to the contrary contained in this Article
XXII, with respect to any mortgage to which this Agreement is subordinate, such
subordination shall be contingent upon Gateway's securing the agreement or
acknowledgment of the mortgagee (which shall be obtained pursuant to a separate
written agreement with the Lessee) that this Agreement, the Lessee's rights
hereunder and the Lessee's right to continue occupancy of the within leasehold
estate shall not be affected or disturbed in the event of a default by Gateway
(or any successor) under any mortgage and subsequent foreclosure or eviction.
Such subordination shall also provide to the Lessee the right to elect to cure
defaults under the mortgage. Such agreements of nondisturbance may be
conditional upon the securing of the Lessee's written agreement in favor of the
mortgagee to attorn to and perform under this Agreement. If any mortgagee shall
succeed to the rights of Gateway hereunder, whether through possession,
foreclosure action or delivery of a new lease or deed, or otherwise, then, at
the request of such party ("Successor Landlord"), the Lessee shall attorn to,
and recognize, each Successor Landlord as the Lessee's landlord under this
Agreement and shall execute and deliver any reasonable instrument such Successor
Landlord may reasonably request to further evidence such attornment; provided,
however, that the Lessee's attornment shall be subject to the condition that the
Successor Landlord agrees to recognize the Lessee as the owner of the within
leasehold estate and the possessory rights thereto, on and subject to all of the
terms, conditions, obligations and benefits of this Agreement. If a mortgagee
shall so elect by notice to the Lessee, this Agreement and the Lessee's rights
hereunder shall be superior and prior in right to the mortgage of which such
mortgagee has the benefit, with the same force and effect as if this Agreement
had been executed, delivered and recorded prior to the execution, delivery and
recording of such mortgage.
ARTICLE XXIII
-------------
ESTOPPEL CERTIFICATE BY LESSEE
The Lessee agrees that at any time and from time to time upon
not less than ten (10) Business Days' prior request by Gateway, the Lessee will
execute, acknowledge and deliver to Gateway 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 dates to which the Rent and other
charges have been paid, (c) that, so far as the Lessee knows, Gateway is not in
default under any provisions of this Lease or, if there has been a default, the
nature of said default, and (d) any other matter that Gateway or such
prospective mortgagee or
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other lender shall reasonably request. It is intended that any such statement
may be relied upon by any person proposing to acquire Gateway's interest in this
Agreement or any prospective mortgagee of, or assignee of any mortgage upon,
such interest.
ARTICLE XXIV
------------
MISCELLANEOUS
24.1 FORCE MAJEURE. Except as otherwise herein expressly
provided, if either party shall be delayed or hindered in, or prevented from,
the performance of any covenant or obligation hereunder, other than one for the
payment of money, as a result of any Force Majeure and, provided that the party
delayed, hindered or prevented from performing notifies the other party not
later than ten (10) Business Days after a Reporting Period of any such delay,
hindrance or prevention occurring during the Reporting Period at issue, then the
performance of such covenant or obligation, other than one for the payment of
money, shall be excused for the impact of such delay, hindrance or prevention
and the period for the performance of such covenant or obligation shall be
extended by the number of days equivalent to the number of days of the impact of
such delay, hindrance or prevention. Failure to so provide the Reporting Period
notice as to a delay commencing during the Reporting Period at issue will result
in waivers of both excuse in performance and extension of time to perform under
this Section 24.1 with respect to any delay within that Reporting Period.
24.2 AMENDMENT; WAIVER. No alteration, amendment or
modification hereof shall be valid unless executed by an instrument in writing
by the parties hereto with the same formality as this Agreement. The failure of
the Lessee or Gateway to insist in any one or more instances upon the strict
performance of any of the covenants, agreements, terms, provisions or conditions
of this Agreement or to exercise any election herein contained shall not be
construed as a waiver or relinquishment for the future of such covenant,
agreement, term, provision, condition, election or option, but the same shall
continue and remain in full force and effect. No waiver by the Lessee or Gateway
of any covenant, agreement, term, provision or condition of this Agreement shall
be deemed to have been made unless expressed in writing and signed by an
appropriate official on behalf of Gateway or the Lessee. The payment by either
party of sums due and payable hereunder, with knowledge of the breach of any
covenant, agreement, term, provision or condition herein contained, shall not be
deemed a waiver of such breach.
24.3 CONSENT. Unless otherwise specifically provided herein,
no consent or approval by the Lessee or Gateway permitted or required under the
terms of this Agreement shall be valid or be
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of any validity whatsoever unless the same shall be in writing, signed by the
party by or on whose behalf such consent is given.
24.4 SEVERABILITY. If any Article, Section, Subsection, term
or provision of this Agreement or the application thereof to any party or
circumstance shall, to any extent, be invalid or unenforceable, the remainder of
the Article, Section, Subsection, term or provision of this Agreement or the
application of same to parties or circumstances other than those to which it is
held invalid or unenforceable shall not be affected thereby and each remaining
Article, Section, Subsection, term or provision of this Agreement shall be valid
and enforceable to the fullest extent permitted by law.
24.5 COVENANT OF QUIET ENJOYMENT. Gateway covenants that if,
and so long as, the Lessee keeps and performs each and every covenant,
agreement, term, provision and condition of this Agreement on the part and on
behalf of the Lessee to be kept and performed, the Lessee shall quietly enjoy
its rights under this Agreement without hindrance or molestation by Gateway or
by any other person lawfully claiming the same by, through or under Gateway,
subject to the covenants, agreements, terms, provisions and conditions of this
Agreement.
24.6 RECORDATION OF LEASE. Neither party shall record this
Agreement, whether in the public records of Cuyahoga County or elsewhere.
However, at the request of either party, the parties shall promptly execute,
acknowledge and deliver to each other a Memorandum of Lease in the form of
Exhibit B (and a Memorandum of Modification of Lease in respect of any
modification of this Agreement) sufficient for recording. Such memoranda shall
not be deemed to change or otherwise affect any of the obligations or provisions
of this Agreement.
24.7 PRORATIONS. Any apportionment or prorations related to
the use of the Baseball Facility during a Season including but not limited to,
the Annual Capital Repair Fund Deposit, shall be computed on the basis of the
length of the Season, otherwise any apportionment or prorations to be made under
this Agreement shall be computed on the basis of a year containing three hundred
sixty-five (365) days, consisting of twelve (12) months of the actual number of
days in each.
24.8 TERMS. Unless the context clearly requires otherwise, the
singular includes the plural, and vice versa, and the masculine, feminine and
neuter adjectives and pronouns include one another.
24.9 CAPTIONS. The captions of Articles and Sections are for
convenient reference only and shall not be deemed to limit, construe, affect,
modify or alter the meaning of such Articles or Sections.
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24.10 BINDING EFFECT. Each of the provisions of this Agreement
shall extend to and shall, as the case may require, bind or inure to the benefit
not only of Gateway and of the Lessee, but also of their respective permitted
successors and assigns pursuant to Article XVI.
24.11 AGREEMENT CONTAINS ALL TERMS. All of the
representations, agreements, understandings and obligations of the parties are
contained herein and in the Exhibits attached hereto. This Agreement shall be
deemed to supersede the Memorandum and all other documents, writings, letters
and agreements executed in connection therewith.
24.12 ONLY LANDLORD-TENANT RELATIONSHIP. Nothing contained in
this Agreement shall be deemed or construed by the parties hereto or by any
third party to create the relationship of principal and agent, partnership,
joint venture or any association between Gateway and the Lessee, it being
expressly understood and agreed that neither the method of computation of Rent
nor any act of the parties hereto shall be deemed to create any relationship
between Gateway and the Lessee other than the relationship of landlord and
tenant. No mechanics', materialmen's or laborers' liens or other liens of any
character whatsoever created or suffered by the Lessee shall in any way, or to
any extent, affect, attach or apply to the interest or rights of Gateway
hereunder or its rights or interest in any of the Baseball Facility or attach to
its title to or rights in the Baseball Facility unless such lien is related to
work, services or goods either: (i) requested by Gateway, or (ii) required to be
performed or provided by Gateway pursuant to this Agreement.
24.13 NOTICES. All notices, demands, consents, approvals,
statements, requests and invoices to be given under this Agreement shall be in
writing, signed by the party or officer, agent or attorney of the party giving
the notice, and shall be deemed to have been effective upon delivery if served
personally, or upon the third day from and including the day of posting if
deposited in the United States mail, postage prepaid, registered or certified
mail, return receipt requested, addressed as follows:
For Gateway: Gateway Economic Development
Corporation of Greater Cleveland
402 Terminal Tower
Cleveland, Ohio 44113
Attention: Executive Director
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With a copy to: Climaco, Climaco, Seminatore,
Lefkowitz & Garafoli Co., L.P.A.
Halle Building, Suite 900
1228 Euclid Avenue
Cleveland, Ohio 44115
Attention: Anthony J. Garofoli, Esq.
With a copy to: Calfee, Halter & Griswold
1800 Society Building
Cleveland, Ohio 44114
Attention: Thomas E. Wagner, Esq.
For Lessee: Cleveland Indians Baseball Company
Limited Partnership
Cleveland Stadium
Cleveland, Ohio 44114
Attention: General Manager
With a copy to: Richard E. Jacobs
25425 Center Ridge Road
Westlake, Ohio 44145
With a copy to: Baker & Hostetler
3200 National City Center
Cleveland, Ohio 44115
Attention: Gary L. Bryenton, Esq.
Either party may from time to time by written notice given to the other pursuant
to the terms of this Section 24.13 change the address to which notices shall be
sent.
24.14 APPLICABLE LAW. This Agreement has been prepared in the
State of Ohio and shall be governed in all respects by the laws of the State of
Ohio.
24.15 CROSS REFERENCES. Any reference in this Agreement to a
Section, Subsection, Article or Exhibit is a reference to a Section, Subsection,
Article or Exhibit, as appropriate, of this Agreement, unless otherwise
expressly indicated.
24.16 REPRESENTATIVES. The Lessee's representative for
implementation of the terms of this Agreement shall be Richard E. Jacobs, or
such individual or individuals designated, in writing, by Richard E. Jacobs to
act for the Lessee on certain specified matters ("Lessee's Representative").
Gateway's representative for implementation of the terms of this Agreement shall
be the Executive Director ("Gateway's Representative"). Either party may
substitute representatives by notice to the other party delivered in accordance
with Section 24.13.
24.17 EFFECTIVE DATE. This Agreement shall be a legally
binding agreement, in full force and effect, as of the date set forth in the
first paragraph of this Agreement.
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24.18 ANTIDISCRIMINATION CLAUSE. The Lessee shall not
discriminate on the basis of race, color, political or religious opinion or
affiliation, creed, age, physical or mental handicap, sex, marital status,
ancestry, national origin or sexual preference/orientation. This shall apply to
all organizations which receive permission for the use of all or any portion of
the Baseball Facility, either in writing or verbally, from the Lessee and
Gateway or by applying for a permit or receiving permission in any other way
from the Lessee and Gateway. Gateway and the Lessee shall comply with all
applicable state, local and federal laws, rules, regulations, executive orders
and agreements pertaining to discrimination in employment, unlawful employment
practices and affirmative action. The Lessee shall use reasonable efforts to
encourage and promote opportunities for minorities and women in the operation of
the Ballpark. The Lessee shall be an equal opportunity employer.
24.19 ACCORD AND SATISFACTION. Payment by any party, or
receipt or acceptance by a receiving party, of any payment due hereunder in an
amount less than the amount required to be paid hereunder shall not be deemed an
accord and satisfaction, or a waiver by the receiving party of its right to
receive and recover the full amount of such payment due hereunder,
notwithstanding any statement to the contrary on any check or payment or on any
letter accompanying such check or payment. The receiving party may accept such
check or payment without prejudice to the receiving party's right to recover the
balance of such payment due hereunder or to pursue any other legal or equitable
remedy provided in this Agreement.
24.20 NO MERGER. There shall be no merger of this Agreement or
of the leasehold estate hereby created with the fee estate in the Field and the
Field Improvements or any part thereof by reason of the fact that the same
person, firm, corporation or other legal entity may acquire or hold, directly or
indirectly, this Agreement or the leasehold estate and the fee estate in the
Field and the Field Improvements or any interest in such fee estate, without the
prior written consent of Gateway's mortgagee(s), if any.
24.21 FURTHER ASSURANCES. The Lessee and Gateway shall
execute, acknowledge and deliver, after the date hereof, without additional
consideration, such further assurances, instruments and documents, and shall
take such further actions as Gateway or the Lessee shall reasonably request of
the other in order to fulfill the intent of this Agreement and the transactions
contemplated thereby.
24.22 JOINT PROMOTION OF BASEBALL. During the Term of this
Agreement, Gateway and the Lessee shall at all times use their best efforts to
promote public attendance at the Team's home baseball games at the Baseball
Facility.
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24.23 RETAINED REVENUES. Unless otherwise expressly provided
for in the Lease Agreement or the Management Agreement, the Lessee shall be
entitled to receive and retain all revenues generated by the operations of the
Team or derived from the ownership of the franchise rights to the Team.
24.24 NO THIRD PARTY BENEFICIARY. The provisions of this
Agreement are for the exclusive benefit of the parties hereto and not for the
benefit of any third person, nor shall this Agreement be deemed to have
conferred any rights, express or implied, upon any third person unless otherwise
expressly provided for herein.
24.25 CONFORMING AMENDMENTS. The parties acknowledge that this
Agreement will be amended to conform to any approved Financing Arrangements
entered into from and after the date of this Agreement with the Bank, which
amendments shall be subject to the approval of the parties hereto, which
approval shall not be unreasonably withheld.
24.26 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
ARTICLE XXV
-----------
LEGAL OPINIONS
25.1 LESSEE'S LEGAL OPINION. Upon execution of this Agreement,
the Lessee shall deliver to Gateway the favorable opinion of the Lessee's
counsel in the form attached as Exhibit J of the Lease Agreement and made a part
hereof.
25.2 GATEWAY'S LEGAL OPINION. Upon execution of this
Agreement, Gateway shall deliver to the Lessee the favorable opinion of
Gateway's counsel in the form attached as Exhibit K of the Lease Agreement and
made a part hereof.
ARTICLE XXVI
------------
LEAGUE APPROVAL
This Agreement shall be null and void, and of no further force
or effect, if within sixty (60) days after execution by Gateway and the Lessee,
this Agreement has not been approved by the Commissioner of Baseball and the
President of the American League. After execution hereof by Gateway and the
Lessee, the Lessee shall immediately request such approval.
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ARTICLE XXVII
-------------
THREE PARTY AGREEMENT
AND CENTRAL MARKET COMMUNITY DEVELOPMENT PLAN
Gateway covenants to Lessee that no proceeds from the sale of
Bonds or any other use of funds that would subject the Field or the Field
Improvements to the terms and conditions of Sections 2.08 or 2.10(A) of the
Three Party Agreement shall be used to acquire the Field or construct the Field
Improvements. This Agreement shall not be subject to the terms and conditions of
Sections 2.08 or 2.10(A) of the Three Party Agreement or any agreements or
provisions that would, in any way, limit the Term of this Agreement or Lessee's
rights to use the Field or Field Improvements as provided herein. Gateway shall
not approve any amendment to the Three Party Agreement as provided in Section
5.05 thereof or the Central Market Community Development Plan as provided in
Section III.D. thereof without the prior written consent of Lessee, which
consent may be withheld in Lessee's sole discretion if such amendment would
materially affect Lessee's rights provided for in this Agreement, the Lease
Agreement, the Management Agreement or the Gateway CAM Agreement.
IN WITNESS WHEREOF, the parties hereto have entered into this
Agreement as of the day and year first above written.
Witnesses as to Gateway: GATEWAY ECONOMIC DEVELOPMENT
CORPORATION OF GREATER CLEVELAND,
an Ohio nonprofit corporation
/s/ illegible By: /s/ Pat Parker
- ------------------------- --------------------------------
/s/ Janice Field Its: /s/ Chairman
- ------------------------- --------------------------------
Witnesses as to Lessee: CLEVELAND INDIANS BASEBALL COMPANY
LIMITED PARTNERSHIP, an Ohio limited
partnership
By: Cleveland Baseball Corporation,
an Ohio corporation, its sole
general partner
/s/ illegible By: /s/ M Cleary
- ------------------------- --------------------------------
/s/ Janice Field Martin J. Cleary
- ------------------------- Its: Vice President
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Exhibit 10.4
MANAGEMENT AGREEMENT
By and Between
GATEWAY ECONOMIC DEVELOPMENT
CORPORATION OF GREATER CLEVELAND
and
BALLPARK MANAGEMENT COMPANY
Dated as of July 3, 1991
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I DEFINITIONS.............................................................................. 2
1.1 Definitions................................................................. 2
1.2 Accounting Terms............................................................ 18
ARTICLE II CONSTRUCTION............................................................................ 19
2.1 Operator's Involvement in Design............................................ 19
2.2 Gateway's Construction Obligations.......................................... 19
2.3 Concessionaire Participation................................................ 19
ARTICLE III MANAGEMENT AND OPERATION BY THE OPERATOR............................................... 19
3.1 Grant of Management and Operation Rights.................................... 19
3.2 Personnel................................................................... 20
3.3 Supplies.................................................................... 20
3.4 Contracts................................................................... 20
3.5 Excuse...................................................................... 21
ARTICLE IV TERM.................................................................................... 21
4.1 Term........................................................................ 21
4.2 Completion.................................................................. 21
4.3 Late Completion Remedies.................................................... 22
4.4 Extension Options........................................................... 23
ARTICLE V FEES TO GATEWAY.......................................................................... 23
5.1 Payment of Fees............................................................. 23
5.2 Audit....................................................................... 23
ARTICLE VI PREMIUM SEATING REVENUE ACCOUNT......................................................... 24
6.1 Premium Seating Revenue Account............................................. 24
6.2 Application of Funds........................................................ 24
ARTICLE VII USE OF BASEBALL FACILITY; SPECIAL EVENTS............................................... 25
7.1 Operator's Use.............................................................. 25
7.2 Gateway's Use............................................................... 26
7.3 Lessee's Use................................................................ 26
7.4 Special Events.............................................................. 26
ARTICLE VIII INSURANCE AND SUBROGATION............................................................. 28
8.1 Gateway's Insurance......................................................... 28
8.2 Operator's Insurance........................................................ 29
8.3 Insurance Requirements...................................................... 30
8.4 Certificates................................................................ 30
8.5 Waiver of Subrogation....................................................... 31
ARTICLE IX ALTERATIONS BY THE OPERATOR............................................................. 31
9.1 Alterations and Additions by the Operator................................... 31
9.2 Placement of Heavy Equipment................................................ 32
</TABLE>
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<TABLE>
<CAPTION>
PAGE
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<S> <C>
ARTICLE X MAINTENANCE OF AND REPAIRS TO THE BASEBALL
FACILITY....................................................................... 32
10.1 Allocation of Responsibilities.............................................. 32
10.2 Operator's Routine Maintenance
Obligations................................................................. 32
10.3 Maintenance and Repair Procedures........................................... 33
10.4 Capital Repairs Fund........................................................ 33
10.5 Operator Capital Repairs.................................................... 34
10.6 Gateway Capital Repairs..................................................... 35
10.7 Capital Repairs Procedures.................................................. 35
10.8 Major Capital Repairs Procedure............................................. 37
ARTICLE XI CONCESSIONS............................................................................. 37
11.1 Concession Rights........................................................... 37
11.2 Merchandise and Services.................................................... 38
11.3 Prices...................................................................... 38
11.4 Assignment of Rights........................................................ 38
11.5 Concession Revenue.......................................................... 39
ARTICLE XII SCOREBOARDS............................................................................ 39
12.1 Duties...................................................................... 39
12.2 Advertising................................................................. 39
ARTICLE XIII ADVERTISING........................................................................... 40
13.1 Advertising Rights.......................................................... 40
13.2 Other Advertising........................................................... 40
13.3 Additional Signs............................................................ 40
ARTICLE XIV BASEBALL FACILITY SECURITY............................................................. 40
14.1 Event Security.............................................................. 40
14.2 Twenty-Four (24) Hour Security.............................................. 41
ARTICLE XV REAL ESTATE AND PERSONAL PROPERTY TAXES................................................. 41
ARTICLE XVI UTILITIES.............................................................................. 42
ARTICLE XVII RIGHT OF ENTRY AND INSPECTION......................................................... 42
17.1 Operator's Right of Entry and Inspection.................................... 42
17.2 Gateway's Right of Entry and Inspection..................................... 43
ARTICLE XVIII DEFAULT AND REMEDIES................................................................. 43
18.1 Default by Operator......................................................... 43
18.2 Gateway's Remedies.......................................................... 44
18.3 Default by Gateway.......................................................... 45
18.4 Operator's Remedies......................................................... 45
18.5 General Provisions.......................................................... 46
ARTICLE XIX SURRENDER OF USE RIGHTS................................................................ 47
19.1 General..................................................................... 47
19.2 Alterations and Improvements................................................ 47
19.3 Operator's Property......................................................... 47
</TABLE>
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<PAGE> 4
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
19.4 Abandoning Premises or Personal Property.................................... 48
ARTICLE XX DAMAGE TO BASEBALL FACILITY............................................................. 48
20.1 Property Damage............................................................. 48
20.2 Inability to Operate........................................................ 49
ARTICLE XXI INDEMNIFICATION........................................................................ 50
21.1 Operator Indemnification.................................................... 50
21.2 Gateway Indemnification..................................................... 50
21.3 Procedure Regarding Indemnification......................................... 50
21.4 Limitation.................................................................. 51
ARTICLE XXII ASSIGNMENT............................................................................ 51
22.1 Assignment by Operator...................................................... 51
22.2 Assignment by Gateway....................................................... 52
22.3 Assignees................................................................... 52
ARTICLE XXIII EMINENT DOMAIN....................................................................... 52
23.1 Termination for Condemnation................................................ 52
23.2 Allocation of Award......................................................... 53
23.3 Performance of Work......................................................... 53
23.4 Temporary Taking............................................................ 53
ARTICLE XXIV TERMINATION BY OPERATOR OR GATEWAY.................................................... 54
ARTICLE XXV CONDITIONS............................................................................. 55
25.1 Preconditions to Operator's Obligations..................................... 55
25.2 Premium Seating............................................................. 55
25.3 Security Commitment......................................................... 55
25.4 Financing Arrangements...................................................... 55
25.5 New Lease and Management Negotiations Commitment............................ 55
25.6 Condition to Gateway's Obligations.......................................... 56
ARTICLE XXVI REPRESENTATIONS BY OPERATOR........................................................... 56
26.1 Valid Existence............................................................. 56
26.2 Power; No Limitation on Ability to Perform.................................. 56
26.3 Valid Execution............................................................. 57
26.4 Defaults.................................................................... 57
26.5 Compliance with Laws........................................................ 57
ARTICLE XXVII REPRESENTATIONS BY GATEWAY........................................................... 58
27.1 Valid Existence............................................................. 58
27.2 Power; No Limitation on Ability to Perform.................................. 58
27.3 Valid Execution............................................................. 58
27.4 Defaults.................................................................... 58
27.5 Compliance with Laws........................................................ 59
</TABLE>
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<PAGE> 5
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE XXVIII MISCELLANEOUS....................................................................... 59
28.1 Force Majeure............................................................... 59
28.2 Amendment; Waiver........................................................... 59
28.3 Consent..................................................................... 60
28.4 Severability................................................................ 60
28.5 Covenant of Quiet Enjoyment................................................. 60
28.6 Prorations.................................................................. 60
28.7 Terms....................................................................... 60
28.8 Captions.................................................................... 60
28.9 Binding Effect.............................................................. 61
28.10 Agreement Contains All Terms................................................ 61
28.11 Notices..................................................................... 61
28.12 Applicable Law.............................................................. 62
28.13 Cross References............................................................ 62
28.14 Representatives............................................................. 62
28.15 Effective Date.............................................................. 62
28.16 Antidiscrimination Clause................................................... 62
28.17 Accord and Satisfaction..................................................... 62
28.18 Further Assurances.......................................................... 63
28.19 Joint Promotion of Baseball................................................. 63
28.20 Independent Contractor Relationship......................................... 63
28.21 No Third Party Beneficiary.................................................. 63
28.22 Conforming Amendments....................................................... 63
28.23 Counterparts................................................................ 64
ARTICLE XXIX GATEWAY COMMON AREA EASEMENT AND
MAINTENANCE AGREEMENT................................................................. 64
ARTICLE XXX LEGAL OPINIONS......................................................................... 64
30.1 Operator's Legal Opinion.................................................... 64
30.2 Gateway's Legal Opinion..................................................... 64
ARTICLE XXXI LEAGUE APPROVAL....................................................................... 64
ACKNOWLEDGMENT BY LESSEE........................................................................... 66
EXHIBITS .......................................................................................... 67
</TABLE>
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<PAGE> 6
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT (this "Agreement") is made as of
this 3rd day of July, 1991, by and between GATEWAY ECONOMIC DEVELOPMENT
CORPORATION OF GREATER CLEVELAND, a nonprofit corporation organized under the
laws of the State of Ohio (hereinafter referred to as "Gateway"), and BALLPARK
MANAGEMENT COMPANY, an Ohio corporation (hereinafter referred to as the
"Operator").
RECITALS:
A. Gateway intends to construct a baseball park with related
amenities (the "Ballpark") on certain real property located in the City of
Cleveland, Ohio (the "City"), for the purpose of staging home games for the
Cleveland Indians professional baseball team (the "Team") and other special
events, including civic and charitable events.
B. Gateway has issued (i) $78,664,320 Senior Lien Excise Tax
Bonds, 1990 Series A and B (the "Senior Bonds"), (ii) $38,390,000 Subordinated
Excise Tax Bonds (Cuyahoga County Annual Guaranty), Series 1990 (the
"Subordinated Bonds"), and (iii) $31,000,000 Stadium Revenue Bonds, Series 1990
(the "Stadium Revenue Bonds," and together with the Senior Bonds and the
Subordinated Bonds, collectively the "Bonds"), and has obtained other public and
private funding to pay for the costs of land acquisition, demolition, design,
construction, financing and other related costs incurred in connection with the
development, INTER ALIA, of the Baseball Facility (as hereinafter defined).
C. Certain of the proceeds of the Bonds have been and will be
deposited into separate escrow or trust accounts (the "Bond Escrow Accounts").
D. Gateway and the Lessee have previously executed a
Memorandum of Intent, dated as of December 8, 1990 (the "Memorandum"), that
included the program for the design and construction of the Baseball Facility as
was set forth in original program requirements of October 12, 1990, whereby
Gateway and the Lessee set forth their respective general understandings with
respect to the design, construction, maintenance and operation of the Baseball
Facility. Gateway and the Operator acknowledge that the Baseball Facility has
been designed so that expansion to accommodate the playing of professional
football by a National Football League Team is not precluded.
E. Gateway and the Lessee have executed and delivered a Lease
Agreement (the "Lease Agreement"), pursuant to which Gateway shall lease to the
Lessee Gateway's interest in the Ballpark Land and the Ballpark Improvements
(both as hereinafter defined).
<PAGE> 7
F. Gateway and the Lessee have executed and delivered a Ground
Lease (the "Ground Lease"), pursuant to which Gateway shall lease to the Lessee
Gateway's fee interest in the Field and the Field Improvements (both as
hereinafter defined).
G. Gateway desires to grant to the Operator, and the Operator
is desirous of accepting from Gateway, certain rights and responsibilities with
respect to the Baseball Facility, all upon the terms and conditions herein set
forth.
H. It is a condition precedent to (a) the release of the
amounts deposited into the Bond Escrow Accounts, and (b) the issuance of a
letter of credit by the Bank (as hereinafter defined) that Gateway and the
Operator shall have executed and delivered this Agreement.
NOW, THEREFORE, in consideration of the premises and the
covenants and agreements contained herein, the parties do hereby agree as
follows:
ARTICLE I
---------
DEFINITIONS
1.1 DEFINITIONS. As used in this Agreement and unless
otherwise expressly indicated herein, the following terms shall have the
following meanings:
"ACTION" shall mean any demand, assertion, claim, action, or
proceeding, judicial or otherwise.
"ADDITIONAL PARKING" shall have the meaning set forth in
the Lease Agreement.
"AFFILIATE(S)" shall mean as to any named individual or
entity: (a) any individual or entity directly or indirectly owning, controlling
or holding with power to vote, fifty percent (50%) or more of the outstanding
voting interests of such named entity; (b) any entity fifty percent (50%) or
more of whose outstanding voting interests are, directly or indirectly, owned,
controlled or held with power to vote by such named individual or entity; (c)
any entity or individual directly or indirectly controlling, controlled by or
under common control (using ownership of fifty percent (50%) or more of the
outstanding voting interests as a test for determining control with respect to
an entity) with such named individual or entity; (d) any trustee, officer,
director or general partner of such named entity; or (e) if a named individual
or entity is an officer, director, general partner, trustee of an entity, such
entity.
"AGREEMENT" shall mean this Management Agreement.
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<PAGE> 8
"AMERICAN LEAGUE" shall have the meaning set forth in
the Lease Agreement.
"ANNUAL CAPITAL REPAIRS FUND DEPOSIT" shall mean an amount
equal to five-tenths of one percent (.5%) of the final actual costs of
completing construction of and equipping the Baseball Facility in accordance
with the Final Plans, or such other amount as the Bank, the Lessee and Gateway
shall mutually agree to a lesser amount.
"ARENA" shall have the meaning set forth in the Lease
Agreement.
"ARENA LAND" shall have the meaning set forth in the
Lease Agreement.
"BALLPARK" shall have the meaning set forth in Recital
"A" hereof.
"BALLPARK EXPENSES" shall mean all expenses incurred by the
Operator (or the Lessee, in the event the Lessee elects to pay any of such
expenses), in connection with the management and the operation of the Baseball
Facility and the performance of its duties hereunder, determined on an accrual
basis in accordance with GAAP, including, but not limited to, the following:
(a) all operating expenses at the Baseball Facility that
are the responsibility of the Operator in accordance
with the terms of this Agreement;
(b) all salaries and benefits of personnel hired by the
Operator to carry out the Operator's responsibilities
hereunder to the extent such salaries and benefits
are not excessive;
(c) all out-of-pocket expenditures and all reasonable
overhead and administrative costs incurred by the
Operator in connection with its responsibilities
hereunder;
(d) all utility costs incurred by the Operator;
(e) all professional fees incurred in connection with
carrying out of the Operator's obligations under this
Agreement;
(f) to the extent not covered in (b) above, all expenses
incurred by the Operator for hiring and paying all
personnel necessary for the staging of baseball games
and any other events held at the Baseball Facility,
including, but not limited to, the day-of-game
personnel and a maintenance crew;
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<PAGE> 9
(g) all federal, state and local taxes on the Operator's
operations to the extent paid by the Operator,
including any admission taxes payable with respect to
events held at the Ballpark (other than federal and
state income tax);
(h) all expenses incurred by the Operator in connection
with operating the scoreboards and the exterior
message board;
(i) all expenses incurred by the Operator in connection
with the sale of advertising in or on the Baseball
Facility, including, without limitation, scoreboard
advertising, advertising in concourses and video
advertising;
(j) all expenses incurred by the Operator in connection
with obtaining or maintaining the insurance coverage
described in Article VIII of this Agreement;
(k) all commissions, fees and any other expenditures
which, consistent with GAAP, are allocable to the
Operator's obligations hereunder;
(l) all Ballpark club and restaurant expenses; and
(m) all Premium Seating Expenses;
PROVIDED, HOWEVER, that Ballpark Expenses shall not include (i) Real and
Personal Property Taxes (unless otherwise paid by the Operator or the Lessee),
(ii) costs and expenses related to Capital Repairs (unless otherwise paid by the
Operator or the Lessee), (iii) insurance for the construction of the Baseball
Facility (unless otherwise paid by the Operator or the Lessee), (iv) any
interest expenses and any other costs or expenses payable as a result of or in
connection with any financing obtained by the Operator other than financing
incurred in the ordinary course of operating the Baseball Facility, (v) any
expenses that have been reimbursed to the Operator, (vi) advertising and
promotion costs and expenses related to Ticket sales, or (vii) costs and
expenses incurred in connection with Broadcast Fees.
"BALLPARK IMPROVEMENTS" shall have the meaning set forth
in the Lease Agreement.
"BALLPARK LAND" shall have the meaning set forth in the
Lease Agreement.
"BALLPARK REVENUES" shall mean, collectively, Premium
Seating Revenue and Operating Revenues.
"BANK" shall mean The Fuji Bank, Limited, a Japanese banking
corporation, acting through its San Francisco Agency, its
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<PAGE> 10
successors and assigns, or any substitute letter of credit bank
under the Bond documents.
"BASEBALL FACILITY" shall mean, collectively, the
Ballpark Land, the Field and the Improvements.
"BASEBALL RULES AND REGULATIONS" shall mean the following
governing documents and agreements, as they may be amended from time to time:
(a) Constitution of the American League of Professional
Baseball Clubs;
(b) American League Rules and Regulations;
(c) American League Division of Receipts; and
(d) Major League Agreement.
"BEST REPORTS" shall have the meaning set forth in
Subsection 8.3(a) hereof.
"BOND ESCROW ACCOUNTS" shall have the meaning set forth in
Recital "C" hereof.
"BONDS" shall have the meaning set forth in Recital "B"
hereof.
"BROADCAST FEES" shall have the meaning set forth in the
Lease Agreement.
"BUSINESS DAY" shall mean any day other than a Saturday, a
Sunday or a public or bank holiday or the equivalent for banks generally under
the laws of the State of Ohio.
"CAPITAL REPAIRS" shall mean any work that is reasonably
required to be performed in and about the Baseball Facility to repair, restore
or replace Components necessitated by any damage, destruction, ordinary wear and
tear, defects in construction or design, or any other cause; PROVIDED, HOWEVER,
that "Capital Repairs" shall not include (i) any work necessitated by Misuse,
(ii) any work related to any Component that was not included in the scope of
Gateway's Work or otherwise required to be completed at Gateway's expense as
provided herein or in the Lease Agreement, and (iii) Routine Maintenance.
Capital Repairs shall include, but shall not be limited to:
(a) repair or replacement of an HVAC compressor;
(b) replacement of carpeting that wears out as a result
of ordinary wear and tear with carpeting of similar
quality; provided such replacement shall not be
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<PAGE> 11
required more frequently than once every four years
other than for defective workmanship or product;
(c) repair or replacement of cracked or disintegrated
concrete, broken pipes or leaking roof or sections
thereof;
(d) manufacturer-recommended replacement of scoreboard,
exterior message board and field lighting bulbs,
fuses and circuit breakers;
(e) replacement of all windows and other glass broken
due to settling;
(f) replacement of a seat that wears out or replacement
of a seat standard or the concrete into which the
seat is affixed; or
(g) general reapplication of protective materials, such
as paint or weatherproofing.
In addition to the foregoing, "Capital Repair" shall also include, but shall not
be limited to, the following:
(a) replacing any obsolete Component with more modern
replacements that will most likely be used in at
least seventy-five percent (75%) of major league
baseball parks within five (5) years of such
obsolescence; provided, however, that the parties
agree that the provisions of this subsection (a)
shall not apply to the Main Scoreboard until after
the end of the tenth (10th) Term Year and that in
the event of a replacement of the Main Scoreboard
for obsolescence only such costs shall be shared
equally by the Operator and Gateway;
(b) changes or improvements required by television
networks having contracts with the Operator, the
Lessee or the American League;
(c) reasonable changes or improvements required of a
majority of American League open-air baseball parks
by the American League, the Commissioner of Baseball
or Baseball Rules and Regulations;
(d) changes or improvements required or recommended by
any insurance carrier to enable the Operator to
obtain insurance coverage at commercially reasonable
rates, provided that in lieu of effectuating such
change or improvement, Gateway may agree, in its
discretion, to pay the increased insurance premiums;
or
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<PAGE> 12
(e) changes or improvements required by any laws,
ordinances, orders, rules, regulations or
requirements of any governmental authority.
"CAPITAL REPAIRS FUND" shall have the meaning set forth in
Section 10.4 hereof.
"CENTRAL MARKET COMMUNITY DEVELOPMENT PLAN" shall have the
meaning set forth in the Lease Agreement.
"CENTRAL MARKET SQUARE SITE" shall have the meaning set forth
in the Lease Agreement.
"CITY" shall have the meaning set forth in Recital "A"
hereof.
"CLUB SEATS" shall mean the seats to be constructed as part of
the Ballpark and designated as club seats in the Final Plans.
"COMPLETION DATE" shall mean the date of Substantial
Completion of the Improvements, unless otherwise specified herein.
"COMPLETION DEFAULT" shall have the meaning set forth in
Subsections 4.2 and 4.3(a) hereof.
"COMPLETION GUARANTY ACCOUNTS" shall have the meaning set
forth in the Lease Agreement.
"COMPONENT" shall mean any item that is incorporated into the
Baseball Facility, including, but not limited to, all structural members, seats,
electronic parts, scoreboards, and Ballpark equipment.
"CONDEMNATION" shall mean any taking of property by exercise
of the power of eminent domain, whether by formal condemnation proceedings or by
purchase under threat of exercise of the power of eminent domain proceedings.
"CONCESSIONAIRE" shall have the meaning set forth in
Section 2.3 hereof.
"COUNTY" shall mean Cuyahoga County, Ohio.
"CPI" shall mean the Consumer Price Index for the City of
Cleveland, Urban Wage Earners and Clerical Workers, All Items (1982-4=100), as
published by the U.S. Department of Labor, Bureau of Labor Statistics. If the
manner in which the CPI is determined by the Bureau of Labor Statistics shall be
substantially revised, including, without limitation, a change in the base index
year, an adjustment shall be made in such revised index that would produce
results reasonably equivalent to those that would have been obtained if such CPI
had not been so revised. If the CPI shall
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<PAGE> 13
become unavailable to the public because its publication is discontinued or
otherwise, or if equivalent data are not readily available to make the
adjustment referred to in the preceding sentence, then a comparable index
published by an agency of the United States government that reflects changes in
the cost of living or purchasing power of the consumer dollar published by any
other governmental agency will be substituted therefor, or, if no such index
shall be available, then a comparable index published by a major bank or other
financial institution shall be used.
"DESIGN ARCHITECT" shall mean the architectural team for the
design of the Baseball Facility which is headed by the architectural firm of
Helmuth, Obata and Kasabaum.
"DIRECT PERSONNEL EXPENSE" shall mean with respect to any work
being performed by the Operator's own employees (whether paid on an hourly basis
or otherwise), the cost, determined on an hourly basis, of all wages and
benefits paid to such employees.
"EMERGENCY REPAIR" shall mean Capital Repairs that are
necessary to protect public health or safety or that, if performed promptly can,
in the Operator's reasonable judgment, avoid material cost to the Operator or
Gateway.
"EXCLUDED OCCURRENCE" shall mean any of the following:
(a) damage or injury occurring at or arising out of or
incidental to Gateway Special Events;
(b) damage or injury arising out of any negligent or
willfully wrongful act or omission of Gateway, its
agents, employees, contractors or subcontractors, or
breach of any of Gateway's obligations hereunder; and
(c) damage or injury arising out of defects in the design
of the Baseball Facility or in the workmanship or
materials employed in the construction of the
Baseball Facility (but only to the extent included in
Gateway's Work, or any Capital Repairs made by any
party other than the Operator or its agents,
employees or contractors).
"EXCLUSIVE USE PERIOD" shall mean each Home Date and the
seventy-two (72) hours (or such greater period of time as may be necessary for
preparation of the Baseball Facility for baseball play, as reasonably determined
by the Lessee) prior to such Home Date and the forty-eight (48) hours after such
Home Date.
"FEES" shall have the meaning set forth in Section 5.1
hereof.
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<PAGE> 14
"FIELD" shall have the meaning set forth in the Lease
Agreement.
"FIELD IMPROVEMENTS" shall have the meaning set forth in
the Lease Agreement.
"FINAL PLANS" shall have the meaning set forth in the
Lease Agreement.
"FINANCING ARRANGEMENTS" shall mean all of Gateway's financing
plans and arrangements related to the construction of Gateway's Work and the
maintenance and operation of the Baseball Facility or the On-Site Parking.
"FORCE MAJEURE" shall mean acts of God, fire or other
casualty, earthquake, flood, epidemic, landslide, enemy act, war, holocaust,
riot, intervention by civil or military authorities of government, insurrection
or other civil commotion, general unavailability of certain materials, strikes,
boycotts or labor disputes beyond the control of either party hereto that cause
such party to be delayed or hindered in, or prevented from, the performance of
any covenant or obligation hereunder, other than one for the payment of money.
"GAAP" shall mean generally accepted accounting principles in
the United States of America in effect from time to time, consistently applied.
"GATEWAY" shall have the meaning set forth in the initial
paragraph hereof.
"GATEWAY CAM AGREEMENT" shall mean the Common Area Easement
and Maintenance Agreement by and among Gateway, the Operator and the Lessee and
dated of even date herewith, which document sets forth the respective parties'
rights, duties and obligations with respect to the use, revenues, expenses,
repairs and maintenance of the Gateway Common Areas.
"GATEWAY COMMON AREAS" shall have the meaning set forth
in the Lease Agreement.
"GATEWAY DEFAULT" shall have the meaning set forth in
Section 18.3 hereof.
"GATEWAY SITE ARCHITECT" shall mean the architectural team for
the site planning of the Gateway project site which consists of the
architectural firm of Sasaki & Associates, Richard Fleischman Architects and
such other architectural firms selected by Gateway and approved by the Operator
and the Lessee.
"GATEWAY SPECIAL EVENT" shall mean a not-for-profit Special
Event to be staged by Gateway or a Promoter which is civic or charitable in
nature, including, but not limited to, Little
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<PAGE> 15
League play-off games, Special Olympics, and other youth activities, and which
is subject to certain approval procedures set forth in this Agreement and the
Lease Agreement.
"GATEWAY'S REPRESENTATIVE" shall have the meaning set
forth in Section 28.14 hereof.
"GATEWAY'S SCOREBOARD ADVERTISING SHARE" shall mean one-third
(1/3) of any Net Scoreboard Advertising Revenue in excess of One Million Five
Hundred Thousand Dollars ($1,500,000) for each Term Year until April 1, 1996.
Thereafter the sum "$1,500,000" shall increase on April 1 of each Term Year to
an amount equal to (a) $1,500,000, PLUS (b) a percentage of $1,500,000 equal to
the percentage increase in the CPI for the period commencing on April 1, 1996,
and ending on the day before such adjustment. Any prorations required in
connection with this computation shall be based upon the length of a Season.
"GATEWAY'S WORK" shall have the meaning set forth in the
Lease Agreement.
"GOVERNMENT SECURITIES" means (i) any bonds or other
obligations of the United States of America which, as to principal and interest,
constitute direct obligations of or are guaranteed by the United States of
America for the full and timely payment thereof; (ii) any bonds, debentures,
participation certificates, notes or other obligations of any agency or other
corporation which has been or may hereafter be created by or pursuant to an Act
of Congress of the United States as an agency or instrumentality thereof, the
bonds, debentures, participation certificates, notes or other obligations of
which are unconditionally guaranteed by the United States of America as to full
and timely payment of the principal of and interest thereon; and (iii) any
certificates or other evidences of a direct ownership interest in obligations of
the character described in clauses (i) and (ii) hereof or in specific portions
thereof, including, without limitation, portions consisting solely of the
principal thereof or solely of the interest thereon, which certificates or other
evidences are maintained in the records of the Federal Reserve and are held by a
custodian, provided that Government Securities shall not include any unit
investment trusts, money market mutual funds, or other mutual funds.
"GROUND LEASE" shall have the meaning set forth in
Recital "F" hereof.
"HOME DATE" shall mean each of the Team's scheduled or
rescheduled home playing dates during the Season at the Baseball Facility; each
date on which an American League Championship Series, World Series game or other
post-season game could potentially be played at the Baseball Facility (except
that any such potential game shall not be deemed to be a Home Date after it is
finally determined that such game will not be played at the
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Baseball Facility); the date of any All-Star game scheduled at the Baseball
Facility; the seven-day period immediately preceding the first game of each
Season at the Baseball Facility and the date of any exhibition game, provided
the Lessee has given Gateway written notice of the date for such exhibition
game.
"IMPROVEMENTS" shall mean, collectively, the Ballpark
Improvements, the Premium Seating and the Field Improvements.
"INDEMNIFIED PARTY" shall mean any party entitled to
indemnification hereunder.
"INDEMNIFYING PARTY" shall mean the party required by the
terms hereof to give indemnification.
"INITIAL CAPITAL REPAIRS FUND DEPOSIT" shall mean the
first Annual Capital Repairs Fund Deposit.
"INTEREST RATE" shall mean the interest rate of two percent
(2%) above the rate of interest per annum then charged to large corporate
borrowers of the highest credit standing for short-term unsecured obligations,
but in no event exceeding the maximum legal rate permitted to be charged to the
Operator or Gateway, whichever is less.
"LEASE AGREEMENT" shall have the meaning set forth in
Recital "E" hereof.
"LESSEE" shall mean Cleveland Indians Baseball Company
Limited Partnership, an Ohio limited partnership.
"LESSEE DEFAULT" shall have the meaning set forth in the
Lease Agreement.
"LESSEE MISUSE" shall mean any event which causes damage to
the Baseball Facility arising out of uses by the Lessee not permitted under this
Agreement, the Lease Agreement or the Ground Lease or any grossly negligent or
willfully wrongful acts of the Lessee or the Lessee's patrons, licensees,
concessionaires, guests and invitees.
"LESSEE'S OFFICE SPACE" shall have the meaning set forth
in the Lease Agreement.
"LESSEE'S PARKING REVENUE" shall have the meaning set
forth in the Lease Agreement.
"LUXURY TAX RECEIPTS" shall have the meaning set forth
in the Lease Agreement.
"MAIN SCOREBOARD" shall mean the full color instant
replay main scoreboard and any advertising panels located in the
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immediate proximity of such scoreboard as described in the Program
Requirements.
"MAJOR CAPITAL REPAIR" shall mean any Capital Repair that
renders the Baseball Facility untenantable in whole or in part by the Lessee or
the Operator as determined by the Lessee or the Operator, in their reasonable
discretion, or will cost in excess of $500,000 to perform.
"MEMORANDUM" shall have the meaning set forth in Recital
"D" hereof.
"MISUSE" shall mean, collectively, Lessee Misuse and
Operator Misuse.
"NET DEBT SERVICE ON STADIUM REVENUE BONDS" shall mean the
debt service and other charges due and payable on the Stadium Revenue Bonds in
any Term Year MINUS all interest earned on reserve funds held in accounts as
required by the Stadium Revenue Bond documentation during such Term Year.
"NET SCOREBOARD ADVERTISING REVENUE" shall mean Scoreboard
Advertising Revenue MINUS any Ballpark Expenses reasonably related or reasonably
allocated to the Operator's scoreboard advertising and which are incurred by the
Operator during the Term Year in question.
"NET SPECIAL EVENT REVENUE" shall mean Special Event Revenue
MINUS any expenses reasonably related or reasonably allocated to the Operator's
Special Events (other than any Gateway Special Events) and which are incurred by
the Operator during the Term Year in question.
"OBLIGATIONS" shall mean and include any and all of either
party's obligations and/or liabilities to the other party of every kind, nature
and description, direct or indirect, secured or unsecured, joint, several, joint
and several, absolute or contingent, due or to become due, now or hereafter
existing or arising, regardless of how such obligations or liabilities arise or
by what agreement or instrument they may be evidenced or whether evidenced by
any agreement or instrument, including, but not limited to, any and all of such
party's obligations and/or liabilities under this Agreement or under any other
agreement between Gateway and the Operator regardless of whether the obligation
is to perform acts or refrain from taking any action.
"ON-SITE PARKING" shall have the meaning set forth in
the Lease Agreement.
"OPERATING DEFICIT" shall have the meaning set forth in
Article XXIV hereof.
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"OPERATING REVENUES" shall mean any and all revenues (whether
cash or property) received in connection with the operation and management of
the Baseball Facility including, but not limited to, Scoreboard Advertising
Revenue, Lessee's Parking Revenue and Special Event Revenues. Operating Revenues
shall also include, but shall not be limited to, all cash and other property
from time to time actually received by the Operator or the Lessee, in respect of
or in exchange for any of the following:
(a) concession sales at each event held at the Baseball
Facility, including, but not limited to, concession
sales in Premium Seating areas;
(b) vending machines located within the Baseball
Facility;
(c) the sale at the Baseball Facility of food, beverages
(including alcoholic beverages), souvenirs,
novelties, written, audio or video materials
(including, but not limited to, yearbooks, programs,
audiotapes, videotapes, media guides and scorecards)
to the extent not otherwise covered in (a) above;
(d) the sale of advertising of any nature in or on the
Baseball Facility, including, but not limited to,
scoreboard advertising, advertising on concourses and
video advertising in or on the Baseball Facility;
(e) promotion and merchandising programs sold at the
Baseball Facility;
(f) catering services performed at the Baseball
Facility; and
(g) the sale of Ballpark Club memberships;
PROVIDED, HOWEVER, that Operating Revenues shall not include (i) Premium Seating
Revenue, (ii) Ticket Revenue or (iii) Broadcast
Fees.
"OPERATOR" shall have the meaning set forth in the
initial paragraph hereof.
"OPERATOR MISUSE" shall mean any event which causes damage to
the Baseball Facility arising out of uses by the Operator not permitted under
this Agreement or any grossly negligent or willfully wrongful acts of the
Operator or the Operator's patrons, licensees, concessionaires, guests or
invitees.
"OPERATOR'S SPACE" shall mean the space to be located in the
Ballpark for the Operator's office facilities and designated as the Operator's
Space in the Final Plans.
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"PAID ATTENDANCE TICKET" shall have the meaning set forth
in the Lease Agreement.
"PERMITTED ESCROW AGENT" shall mean any one or more of the
following banks: Ameritrust Company, N.A., Bank One Cleveland N.A., Central
Trust Co., The Fifth Third Bank, Huntington National Bank, National City Bank,
Society National Bank or the Bank.
"PERMITTED INVESTMENTS" shall mean (i) Government Securities,
(ii) any investment permitted by the documents for the Bonds, and (iii)
investment agreements with a banking corporation that has (or its parent
corporation has) an unsecured, uninsured and unguaranteed obligation rated in at
least the second highest rating category of either Moody's Investors Services
Inc. or Standard & Poor's Corporation (without regard to increments or
intermediate ratings, e.g., pluses or minuses).
"PERSON" shall mean an individual, partnership, corporation
(including a business trust), joint stock company, trust, unincorporated
association, joint venture or any other entity, the United States, or a federal,
state or political subdivision thereof or any agency or court of such state or
subdivision.
"PREMIUM SEATING" shall mean all Private Suites and Club
Seats including the Prepaid Premium Seating.
"PREMIUM SEATING DEPOSITARY" shall have the meaning set forth
in Section 6.2 hereof.
"PREMIUM SEATING DEBT SERVICE CONTRIBUTIONS" shall mean the
lesser of: (a) the sum of (i) the proceeds for any Term Year from the sale of a
number of Private Suites, said number being seventy-six (76) minus the number of
Prepaid Private Suites, and (ii) all of the proceeds of the sale of Club Seats
(other than Prepaid Club Seats), in both cases applicable to such Term Year and
exclusive of security deposits, (b) the Net Debt Service on the Stadium Revenue
Bonds due and payable during such Term Year, or (c) $2,950,000.
"PREMIUM SEATING LICENSE" shall mean a license agreement, in
form and substance acceptable to the Bank and the Operator (or any permitted
assignee thereof), pursuant to which the Operator shall license to Persons the
right to use certain of the Premium Seating described therein upon the terms and
conditions set forth therein.
"PREMIUM SEATING REVENUE" shall mean all cash and other
property from time to time actually received by the Operator in respect of or in
exchange for any or all of the Premium Seating (excluding Prepaid Premium
Seating) or Premium Seating Licenses (other than Ticket Revenue related
thereto).
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"PREMIUM SEATING REVENUE ACCOUNT" shall mean an escrow account
established with a Permitted Escrow Agent into which all Premium Seating Revenue
(excluding all Prepaid Premium Seating Revenue) shall be deposited and invested
in Permitted Investments.
"PREPAID CLUB SEATS" shall mean those Club Seats licensed
pursuant to Premium Seating Licenses for terms of ten (10) Seasons which shall
provide that the license fees for such Club Seats shall be prepaid in one (1)
lump sum; PROVIDED, HOWEVER, that the actual number of Prepaid Club Seats shall
not exceed five hundred (500).
"PREPAID PREMIUM SEATING" shall mean, collectively, the
Prepaid Private Suites and the Prepaid Club Seats.
"PREPAID PREMIUM SEATING EXPENSES" shall mean any reasonable
expenses incurred by the Operator in connection with the licensing of Premium
Seating, including, but not limited to, reasonable salaries and benefits of
personnel whose functions are reasonably allocated to the licensing of Premium
Seating, out-of-pocket expenditures, commissions, fees, marketing expenses,
model suite costs and all reasonable overhead and administrative costs related
thereto; PROVIDED, HOWEVER, that Prepaid Premium Seating Expenses shall not
exceed, in the aggregate, One Million Dollars ($1,000,000), or such other amount
as may be mutually agreed upon by Gateway, the Operator and the Bank.
"PREPAID PREMIUM SEATING REVENUE" shall mean the Premium
Seating Revenue actually received by the Operator from the Prepaid Premium
Seating on or before the Completion Date MINUS Prepaid Premium Seating Expenses.
"PREPAID PREMIUM SEATING REVENUE ACCOUNT" shall mean an escrow
account established with a Permitted Escrow Agent into which all Prepaid Premium
Seating Revenue will be deposited and invested in Permitted Investments.
"PREPAID PRIVATE SUITES" shall mean those Private Suites
licensed pursuant to Premium Seating Licenses for terms of ten (10) Seasons
which shall provide that the license fees for such Private Suites shall be
prepaid in one (1) lump sum; PROVIDED, HOWEVER, that the actual number of
Prepaid Private Suites shall not exceed twenty-five (25).
"PRIVATE SUITES" shall mean the private viewing boxes to be
constructed as part of the Ballpark and designated as private suites in the
Final Plans.
"PROGRAM REQUIREMENTS" shall have the meaning set forth
in the Lease Agreement.
"PROJECT ARCHITECTS" shall mean, collectively, the Design
Architect and the Gateway Site Architect, and "PROJECT ARCHITECT"
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shall mean either the Design Architect or the Gateway Site Architect, as the
context may require.
"PROMOTER" shall have the meaning set forth in Subsection
7.4(a) hereof.
"PROMOTER AGREEMENT" shall have the meaning set forth in
Subsection 7.4(b) hereof.
"PROPERTY DAMAGE" shall mean any partial or total damage or
destruction of the Baseball Facility caused by fire or other occurrence and any
other property damage.
"REAL AND PERSONAL PROPERTY TAXES" shall have the meaning set
forth in Article XV hereof.
"REPAIR PLANS" shall have the meaning set forth in
Subsection 10.8(a) hereof.
"REPORTING PERIOD" shall mean, from and after the date of this
Agreement, each calendar quarter ending on March 31, June 30, September 30 and
December 31.
"ROUTINE MAINTENANCE" shall mean the provision of all labor
and materials which are required to (a) keep the Baseball Facility and the
Components in good order and repair which is of a routine, regular and
predictable nature, (b) keep the Baseball Facility clean and free of debris, and
(c) repair, maintain or replace Components which are installed by the Lessee or
the Operator unless such installation was performed hereunder on behalf of
Gateway in accordance with Gateway's obligations hereunder. Routine Maintenance
shall not include (i) repair or replacement required as a result of ordinary
wear and tear, unless otherwise expressly provided herein, or (ii) Capital
Repairs. Routine Maintenance shall include, but shall not be limited to, the
following:
(a) performing all preventive or routine maintenance that
is stipulated in operating manuals for the Components
as regular, periodic maintenance procedures;
(b) regular maintenance procedures for the HVAC system,
including periodic cleaning, lubricating and changing
of air filters;
(c) groundskeeping and maintenance of the surface of the
Field, including mowing, seeding, fertilizing,
marking lines, installing and removing bases and the
pitcher's mound and resodding;
(d) changing of standard, isolated light bulbs, fuses and
circuitbreakers as they burn out;
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(e) cleaning all portions of the Baseball Facility
immediately after each event (other than Gateway
Special Events unless retained by Gateway to perform
such services) held at the Baseball Facility;
(f) touch-up painting;
(g) readying the playing field each Term Year for the
upcoming Season, and
(h) the labor required to perform a Capital Repair to the
extent that such labor is performed by regular,
on-site personnel acting in accordance with the
standard duties for which on-site personnel are
regularly employed.
"SCOREBOARD ADVERTISING REVENUE" shall mean, for any Season,
any and all cash and other property received in respect of or in exchange for
advertising of any nature affixed on the Main Scoreboard or any non-fixed or
non-permanent advertising displayed on the Main Scoreboard. All receipts shall
be properly allocated to the Season to which the advertising is related and
actual bad debts shall be allocated on a pro rata basis.
"SEASON" shall mean a period of time commencing with the first
day of March in any calendar year and ending with the last home game (including
any postseason home game) played by the Team during such calendar year at the
Baseball Facility. Seasons are sometimes herein referred to by the calendar year
in which they occur (e.g. "1994 Season").
"SENIOR BONDS" shall have the meaning set forth in
Recital "B" hereof.
"SPECIAL EVENT" shall mean any event or period of use other
than an event on a Home Date including, but not limited to, concerts, shows,
trade shows, sporting events or other public exhibitions and any Gateway Special
Event.
"SPECIAL EVENT AREAS" shall mean only the playing field,
concourses, seating areas, auxiliary locker room, security and first aid rooms,
day-of-game employee lockers, general elevators, trash compactors, loading
docks, service tunnels, freight elevators, security observation booth and
outside ticket booths (exclusive of automatic ticket dispensing machinery) and
such other areas that may be designated from time to time by the Lessee.
"SPECIAL EVENT PERIOD" shall have the meaning set forth in
Subsection 7.4(a) hereof.
"SPECIAL EVENT REVENUE" shall mean, for any Term Year,
any and all cash and other property received in respect of or in
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exchange for any Special Event (other than a Gateway Special Event) including,
without limitation, all revenue generated from the sale of tickets for any such
Special Event. All receipts with respect to a Special Event shall be allocated
properly to the Term Year in which the Special Event occurs.
"STADIUM REVENUE BONDS" shall have the meaning set forth in
Recital "B" hereof.
"SUBORDINATED BONDS" shall have the meaning set forth in
Recital "B" hereof.
"SUBSTANTIAL COMPLETION" or "SUBSTANTIALLY COMPLETED" shall
have the meaning set forth in the Lease Agreement.
"TEAM" shall have the meaning set forth in Recital "A"
hereof.
"TERM" shall have the meaning set forth in Section 4.1
hereof.
"TERM YEAR" shall mean each period of twelve (12) consecutive
calendar months during the Term, with the first Term Year commencing on the
first day of the November next succeeding the Completion Date and with
successive Term Years commencing on successive anniversaries of the first day of
the first Term Year. "Term Years" means more than one (1) Term Year. A "Partial
Term Year" means if the Completion Date is a date other than November 1, then
the period from the Completion Date to the first day of the first Term Year.
Unless otherwise expressly provided for herein, all terms and conditions herein
shall apply the same to a Partial Term Year as to a Term Year; PROVIDED,
HOWEVER, that all payments and other financial obligations shall be apportioned
or prorated pursuant to Section 28.6 hereof.
"THREE PARTY AGREEMENT" shall mean that certain Agreement
Relating to Ownership, Financing, Construction and Operation of a Sports
Facility and Related Economic and Redevelopment Projects, dated as of November
7, 1990, by and among the County, the City and Gateway.
"TICKET" shall have the meaning set forth in the Lease
Agreement.
"TICKET REVENUE" shall have the meaning set forth in the
Lease Agreement.
1.2 ACCOUNTING TERMS. Any accounting term used in this
Agreement shall have, unless otherwise specifically provided herein, the meaning
customarily given in accordance with GAAP, and all financial computations
hereunder shall be computed, unless otherwise specifically provided herein, in
accordance with GAAP as consistently applied.
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ARTICLE II
----------
CONSTRUCTION
2.1 OPERATOR'S INVOLVEMENT IN DESIGN. The Operator shall have
the same rights and obligations with respect to the design of the Gateway's Work
as the Lessee has under the Lease Agreement.
2.2 GATEWAY'S CONSTRUCTION OBLIGATIONS. The Operator shall
have no responsibility to provide or pay for any part of the construction,
furnishing or the equipping of Gateway's Work. Gateway's Work shall be completed
in accordance with Article IV hereof and the terms and conditions set forth in
the Lease Agreement. Gateway's obligations with respect to the Operator's Space
shall include supplying of all furniture, equipment and other personal property
included in the Program Requirements. Gateway shall give the Operator reasonable
access to the Operator's Space prior to the Completion Date, to enable the
Operator to move in personal property and arrange the Operator's Space for the
Operator's use.
2.3 CONCESSIONAIRE PARTICIPATION. In the event the Operator
hires a concessionaire to handle concessions at the Baseball Facility (the
"Concessionaire"), the Concessionaire shall have the right to participate in the
design and construction of the concession areas to the extent neither the Lessee
nor the Operator has previously approved the design pursuant to Article IV of
the Lease Agreement or pursuant hereto, as the case may be.
ARTICLE III
-----------
MANAGEMENT AND OPERATION BY THE OPERATOR
3.1 GRANT OF MANAGEMENT AND OPERATION RIGHTS. For and in
consideration of the Fees and the agreements and covenants contained in this
Agreement and subject to, in all respects, the Lease Agreement, the Ground Lease
and the Gateway CAM Agreement, including, but not limited to, the Lessee's
rights to conduct Lessee's baseball games and related activities at the Baseball
Facility, Gateway hereby grants to the Operator the sole and exclusive right and
obligation to manage and operate the Baseball Facility and to market and license
all Premium Seating in accordance with the terms of this Agreement and the
Operator hereby agrees that it shall be obligated to manage and operate the
Baseball Facility and to market and license all Premium Seating during the Term
in accordance with the terms of this Agreement. Gateway will cooperate with and
support all efforts in licensing the Premium Seating. The Operator shall operate
and manage the Baseball Facility as a first-class, state-of-the-art, open-air
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Major League baseball park and in a professional, businesslike and efficient
manner, including, but not limited to, concessions. Subject only to the
requirement to pay the Fees, the Operator shall be entitled to receive all
Ballpark Revenues (other than Lessee's Parking Revenue which shall be paid to
Lessee) and shall be obligated to pay all Ballpark Expenses.
3.2 PERSONNEL. The Operator shall have the sole and exclusive
right and obligation to hire, discharge, promote and supervise all personnel
necessary for the operation and management of the Baseball Facility and to
otherwise perform the Operator's duties hereunder. Such personnel shall not be
considered Gateway's employees. The Operator shall be responsible for the direct
remuneration of such personnel. Such personnel may include, but shall not be
limited to, gatemen, cashiers, ticket takers, ticket sellers, ushers, toilet
attendants, scoreboard operators, electricians, first-aid attendants,
groundskeepers and grounds crew, and maintenance personnel. The cost of all such
personnel (including, without limitation, reasonable salaries, fringe benefits
and bonuses) shall be considered a Ballpark Expense. Subject to the provisions
of Section 7.4 hereof, the Operator shall make available, at Gateway's expense,
for each Gateway Special Event, the required complement of its regular
personnel, including, as needed, but not limited to, gatemen, cashiers, ticket
takers, ticket sellers, ushers, toilet attendants, scoreboard operators,
electricians, first-aid attendants, groundskeepers and grounds crew,
concessionaires, vendors, maintenance personnel and supervisors.
3.3 SUPPLIES. Except as otherwise specifically set forth
herein, the Operator shall provide, or cause to be provided at its expense, all
supplies necessary to perform its duties hereunder; PROVIDED, HOWEVER, that (a)
the Concessionaire, if any, may provide all supplies used by such Concessionaire
and (b) the Lessee shall provide all supplies used by the Lessee for training
and conditioning its athletes, conducting its business, and maintaining (and
cleaning) the Lessee's Office Space.
3.4 CONTRACTS. The Operator shall have the right to enter into
lawful contracts with any Persons relating to any of the duties and obligations
to be performed by the Operator hereunder upon terms and conditions deemed
acceptable by the Operator and the Lessee, including with affiliated Persons,
provided that no such Contract shall impose any contractual liability on Gateway
or the Lessee. All contracts with affiliated Persons shall be on terms and
conditions comparable to similar contracts available from unrelated third
Persons. Operator shall cause all such contracts to be either assignable to or
terminable by any subsequent operator of the Baseball Facility, unless otherwise
approved in writing by Gateway, which approval shall not be unreasonably
withheld.
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3.5 EXCUSE. Unless otherwise specified herein, the Operator
shall be excused from its obligation to manage and operate the Baseball Facility
as a first-class, state-of-the-art open-air Major League baseball park and in a
professional, businesslike and efficient manner to the extent that the Operator
shall be prevented from compliance with such standard by any (a) Force Majeure,
(b) Gateway Default, or (c) the termination of this Agreement.
ARTICLE IV
----------
TERM
4.1 TERM. The "Term" of this Agreement shall commence on the
Completion Date and shall end on the earlier of (i) December 31 of the year in
which the twentieth (20th) full Season following the Completion Date is
concluded, or (ii) upon the retirement, defeasance or discharge (as provided in
the Three Party Agreement) of all of the Bonds. Upon determination of the
Completion Date, the parties shall execute a supplement to this Agreement
setting forth the last day of the Term. Subject to Section 3.5 hereof, the
Operator shall be obligated to perform its duties with respect to the marketing
and licensing of Premium Seating as set forth herein commencing on the date
hereof and continuing until this Agreement is terminated (whether by lapse of
time or otherwise).
4.2 COMPLETION. Gateway hereby agrees that it will use its
best efforts to cause the Completion Date to occur on or before February 1,
1994. On or before September 1, 1993, the Operator and Gateway shall consult
with the Project Architects and contractors and make a physical inspection of
the state of the completion of the construction of Improvements. Promptly
thereafter, the parties hereto shall make a determination as to whether or not
the Completion Date will occur on or before February 1, 1994. In making such
determination, the parties shall take into account the implementation of any
reasonable construction procedures and programs suggested by the Operator which
would tend to expedite the completion of Gateway's Work. If the Operator and
Gateway mutually determine that, or are unable to agree that, the Completion
Date will not occur on or before February 1, 1994, or the Completion Date has
not actually occurred by February 1, 1994, the Operator shall have no obligation
to perform its duties hereunder at the Baseball Facility during the 1994 Season
and a "Completion Default" shall be deemed to have occurred. In the event such a
determination is made or Gateway and the Operator are unable to agree, or
Substantial Completion has not occurred by February 1, 1994, Gateway shall have
until February 1, 1995, to cause Substantial Completion of Gateway's Work to
occur. If Substantial Completion of Gateway's Work occurs on or before February
1, 1995, such date shall be deemed the Completion Date, and the Operator shall
be obligated to perform its duties hereunder at the Baseball Facility commencing
on the first day of the 1995 Season. If Substantial Completion has not occurred
on or before February 1,
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1995, an additional "Completion Default" shall be deemed to have occurred.
Gateway shall make all necessary arrangements to permit, at Operator's election,
Operator to have partial occupancy of the Baseball Facility as phases of
Gateway's Work are completed.
4.3 LATE COMPLETION REMEDIES.
(a) Unless Lessee shall have terminated the Lease Agreement
pursuant to Section 5.3 of the Lease Agreement and otherwise subject only to
Subsections 4.3(b) and (c) below, if the Completion Date has not occurred by (i)
February 1, 1994, a "Completion Default" shall be deemed to have occurred and
Gateway shall be liable to the Operator for the Operator's damages due to such
Completion Default, and (ii) February 1, 1995, an additional "Completion
Default" shall be deemed to have occurred and Gateway shall also be liable to
the Operator for any additional damages due to such subsequent Completion
Default. The amount of any such damages shall be reduced to the extent that the
Operator's negligence contributed to such Completion Default.
(b) Notwithstanding anything contained in this Agreement to
the contrary, in the event that Gateway's failure to accomplish Substantial
Completion by February 1, 1994, or February 1, 1995, as the case may be, results
from (i) an Operator Default or a Lessee Default, (ii) the gross negligence or
willful misconduct of the Operator or the Lessee or (iii) the institution by the
Operator or the Lessee of any litigation or other proceeding against Gateway
wherein the court shall determine that the Operator's or the Lessee's, as the
case may be, position was frivolous and without merit, such date shall be
extended to February 1, 1995, or such later date as is necessary to accomplish
Substantial Completion. In such event, the Operator shall be obligated to
perform its duties hereunder at the Baseball Facility commencing on such
extended Completion Date, regardless of when such date occurs, and the Operator
shall pay any increase in the cost of the construction of the Improvements
resulting directly from such delay. If Substantial Completion is delayed as a
result of any of the foregoing causes, no Completion Default shall be deemed to
have occurred unless Substantial Completion has not occurred by the extended
Completion Date.
(c) Notwithstanding anything contained in this Agreement to
the contrary, in the event that any Force Majeure prevents or delays the
completion of the Improvements, all provisions of this Article IV shall
nevertheless apply in accordance with their terms, except that in the case of
any delay resulting from a Force Majeure, Gateway will be excused from payment
of damages otherwise payable under Subsection 4.3(a), so long as Substantial
Completion occurs on or before a date following the February 1, 1994, or
February 1, 1995, date, which is not later than the number of days after said
February 1, 1994, or February 1, 1995, date, equal to the number of days of the
impact of such Force Majeure.
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(d) Subject to Subsections 4.3(b) and (c) above, if
Substantial Completion has not occurred by February 1, 1995, the Operator, by
written notice to Gateway delivered not later than February 28, 1995, may either
(i) extend such date or (ii) terminate this Agreement. If the Operator elects to
terminate this Agreement, each of the parties shall remain liable to the other
for any obligation or liability arising prior to the effective date of
termination and as may be further provided for herein.
4.4 EXTENSION OPTIONS. The Operator and Gateway hereby
acknowledge that, as a matter of federal tax law, Gateway cannot grant option
rights to the Operator to extend the Term of this Agreement. In the event an
opinion from Calfee, Halter & Griswold, or such other nationally recognized bond
counsel selected by Calfee, Halter & Griswold and Gateway, is obtained to the
effect that the existence and exercise of options to renew the Term of this
Agreement will not result in a loss of the federal tax exempt status of any of
the Bonds, then Gateway and the Operator hereby agree to amend this Agreement to
provide for options to renew on terms that (a) are commercially reasonable based
upon comparable agreements that are competitively favorable to other Persons
then managing publicly owned ballpark facilities, and (b) do not cause the
Operator's use and control of the Baseball Facility to be less extensive than
its use and control during the Term. Gateway hereby agrees to lend its full
support and cooperation to any effort to effectuate a change in the federal tax
law that is necessary to obtain the legal opinion referred to above.
ARTICLE V
---------
FEES TO GATEWAY
5.1 PAYMENT OF FEES. The Operator shall pay to Gateway each
Term Year, as a fee (the "Fees") an amount equal to (a) Gateway's Scoreboard
Advertising Share, PLUS (b) twenty-five percent (25%) of Net Special Event
Revenue. The Fees shall be payable on or before December 15 following the end of
each Term Year for which such Fees are due and shall be payable by Operator only
to the extent the revenue relating to such Fees is actually received by the
Operator during the Term Year in question.
5.2 AUDIT. Payments of Fees shall be accompanied by a
statement certified as true and correct by the Operator's Chief Financial
Officer showing with reasonable specificity all computations relating thereto.
Gateway shall have the right, through the use of an independent certified public
accounting firm selected by Gateway, at any time during normal business hours
and at the offices of the Operator, to review, at Gateway's expense, all books
and records of the Operator which relate solely to computations of Prepaid
Premium Seating Revenue, Net Scoreboard Advertising Revenue, and Net Special
Event Revenue for a period of ninety (90) days after delivery by the Chief
Financial Officer of
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the Operator to Gateway of the certificate on which such computation is based.
In the event such review results in a determination that the computations are
erroneous, the error shall be promptly corrected by the parties, and if such
error results in a three and one-half percent (3.5%) or more discrepancy in the
favor of Gateway in Prepaid Premium Seating Revenue and Fees the expense of such
review shall be reimbursed to Gateway by the Operator.
ARTICLE VI
----------
PREMIUM SEATING REVENUE ACCOUNT
6.1 PREMIUM SEATING REVENUE ACCOUNT. The Operator agrees and
covenants that (i) all Prepaid Premium Seating Revenue shall be deposited into
the Prepaid Premium Seating Revenue Account; and (ii) all Premium Seating
Revenue (other than Prepaid Premium Seating Revenue) shall be deposited in the
Premium Seating Revenue Account, and the foregoing obligations shall not be
subject to the Operator's right of setoff as set forth in Section 18.4 hereof.
In addition, in the event the Operator collects any security deposits for
Premium Seating and adequate assurances and security, satisfactory to the
Operator and the Lessee, are provided by Gateway to guarantee the return of such
security deposits, the Operator will also deposit such security deposits in the
Prepaid Premium Seating Revenue Account. The Operator shall establish with a
Permitted Escrow Agent selected by the Operator and approved by the Bank (the
"Premium Seating Depositary") the Premium Seating Revenue Account in the joint
names of the Operator and Gateway. The Operator also shall establish with the
Premium Seating Depositary the Prepaid Premium Seating Revenue Account in the
joint names of Gateway and the Operator. The Premium Seating Depositary shall be
a Permitted Escrow Agent. All deposits in the Prepaid Premium Seating Revenue
Account and the Premium Seating Revenue Account shall be invested in Permitted
Investments and shall accumulate until applied as set forth in Section 6.2
hereof.
6.2 APPLICATION OF FUNDS.
(a) On or after the Completion Date, the Premium Seating
Depositary shall distribute to Gateway Prepaid Premium Seating Revenue an amount
equal to the greater of (a) Twenty Million Dollars ($20,000,000), or (b) ten
(10) times the weighted mean listed annual sale price for Club Seats, multiplied
by the actual number of Prepaid Club Seats sold on or before the Completion Date
plus ten (10) times the weighted mean listed annual sale price for Private
Suites (excluding, for purposes of computing this weighted mean, any Private
Suite with a listed annual sale price of less than $30,000) multiplied by the
actual number of Prepaid Private Suites sold on or before the Completion Date
plus the proportionate share of investment income earned thereon. Thereafter,
the Premium Seating Depositary shall deposit any remaining Prepaid Premium
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Seating Revenue and investment income into the Premium Seating Revenue Account
in Subsection 6.2(b) hereof. Any amounts distributable to Gateway in this
Subsection 6.2(a) shall either be deposited directly into the Completion
Guaranty Accounts for the purposes described in Section 4.9 of the Lease
Agreement or used by the Premium Seating Depositary to make any debt service
payments on any Financing Arrangement of which the proceeds were used or will be
used for the completion of Gateway's Work.
(b) The Premium Seating Debt Service Contribution for such
Term Year shall be used to reimburse the Bank for payments made with respect to
the Stadium Revenue Bonds. Upon the written request of Gateway, the Premium
Seating Depositary shall distribute such funds to the appropriate Person for
deposit into the appropriate account for this purpose.
(c) In addition to the rights of withdrawal provided for in
(a) and (b) above, Gateway shall be entitled to make additional withdrawals from
the Premium Seating Revenue Account, and the Operator shall make corresponding
additional deposits to the Premium Seating Revenue Account solely from Ballpark
Revenues not otherwise needed to pay Ballpark Expenses so as to avoid an
Operating Deficit, for the sole purpose and only to the extent required after
using all other revenue available to Gateway, from whatever source, after
payment of Gateway's reasonable administrative expenses, to allow Gateway to
prevent a debt service payment default on the Stadium Revenue Bonds.
(d) Except for the permitted withdrawals as provided above in
this Section 6.2, all funds remaining in the Premium Seating Revenue Account
shall be paid by the Premium Seating Depositary to the Operator. The Operator
shall be permitted to withdraw funds from the Premium Seating Revenue Account,
upon written request to the Premium Seating Depositary, provided (i) there
remains on deposit in the Premium Seating Revenue Account funds equal to the
estimated Premium Seating Debt Service Contribution anticipated to be required
for the remainder of the Term Year then in affect; and (ii) there shall not then
be a debt service payment default on the Stadium Revenue Bonds. In the event the
Operator and Gateway are unable to agree on the estimated Premium Seating Debt
Service Contribution for any Term Year, then the Premium Seating Debt Service
Contribution for the immediately preceding Term Year shall be used for such
estimate.
ARTICLE VII
-----------
USE OF BASEBALL FACILITY; SPECIAL EVENTS
7.1 OPERATOR'S USE. During the Term, the Operator and its
guests, invitees and concessionaires shall be entitled to the possession and use
of the Baseball Facility for the following purposes:
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(a) to conduct and perform all necessary activities in
connection with its rights and duties hereunder;
(b) the operation of any club/restaurant facilities and
the Lessee's private dining facilities as described
in the Program Requirements;
(c) to occupy and conduct day-to-day business operations
in the Operator's Space;
(d) the sale of food and alcoholic and nonalcoholic
beverages, souvenirs and other items normally
considered "concessions" by Major League baseball
organizations;
(e) the sale of space on or for advertising signs and
billboards of all kinds located on the Baseball
Facility; or
(f) to conduct any Special Event and participate in the
conducting of any Gateway Special Event as
contemplated by Section 7.4 hereof.
PROVIDED, HOWEVER, that the Operator shall not occupy or use any portion of the
Baseball Facility (or permit the use or occupancy of any portion of the Baseball
Facility) for (i) the staging of any activity that is detrimental to (A) the
health, safety and welfare of the people at the Baseball Facility or (B) the
physical plant of the Baseball Facility, or (ii) any purpose that will violate
any federal, state or local law or that will in any way affect the validity or
tax exempt status of the Bonds.
7.2 GATEWAY'S USE. During the Term, Gateway and its guests and
invitees shall be entitled to the possession and use of the Baseball Facility to
conduct and perform all activities in connection with its rights and duties
hereunder and for the purposes otherwise set forth in the Lease Agreement and
the Ground Lease.
7.3 LESSEE'S USE. During the term of the Lease Agreement, the
Lessee and its guests and invitees shall be entitled to the possession and use
of the Baseball Facility to conduct and perform all necessary activities in
connection with its rights and duties hereunder and under the Lease Agreement
and the Ground Lease.
7.4 SPECIAL EVENTS. Subject to the terms and conditions of the
Lease and the Ground Lease, the Operator shall have the exclusive right to
promote, sponsor and control all Special Events (other than Gateway Special
Events) at the Baseball Facility. Subject to the Operator's obligation to pay
Fees pursuant to Section 5.1 hereof, the Operator shall be entitled to receive
all Special Event Revenue. Gateway may request to conduct Gateway
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Special Events in the Special Event Areas by complying with the following
procedure:
(a) Gateway may notify the Operator at any time not less than
forty-five (45) days prior to the date thereof that it desires to schedule a
Gateway Special Event on a particular date or dates and concurrently therewith
shall notify the Operator as to the name of the sponsoring organization, if any
(the "Promoter"), the nature of the Gateway Special Event, the facilities
required for such Gateway Special Event and the time before and after such dates
which will be required for setting up and removing all equipment and other
facilities required for such Gateway Special Event (the entire period so
required is hereinafter referred to as the "Gateway Special Event Period"). In
no event may all or any part of a Gateway Special Event Period coincide with all
or any part of an Exclusive Use Period or any period for a Special Event
previously scheduled for the Baseball Facility by the Operator or the Lessee.
The Operator shall notify Gateway within ten (10) Business Days after any
request for a Gateway Special Event if the Gateway Special Event Period would
violate the foregoing provision. Unless Gateway has previously been notified
that the requested Gateway Special Event coincides with all or any part of an
Exclusive Use Period or a Special Event previously scheduled by the Operator or
the Lessee, failure by the Operator to give such notice may be relied on by
Gateway as confirming that no such violation would occur. In no event shall the
Operator be obligated to consider a request by Gateway for a Gateway Special
Event more than one (1) year in advance of the Gateway Special Event Period for
such Gateway Special Event.
(b) Upon receipt of the foregoing notice, Gateway, the
Operator and the Promoter, if any, shall enter into an agreement, in the form
mutually approved by the Operator and Gateway (the "Promoter Agreement").
Gateway agrees that Gateway will be responsible for the obligations of the
Promoter, unless, after being requested by Gateway, the Operator elects, in its
sole discretion, to act as the Promoter for such event. In the event of any
inconsistency between the provisions of any arrangement with a Promoter (or
Gateway or the Operator if there is no Promoter) and this Agreement, the
provisions of this Agreement shall control. In addition, the following
arrangements shall be required in connection with any Special Event, unless
Gateway, the Operator and the Lessee agree otherwise:
(i) For any Gateway Special Event, Gateway or the Promoter, if
any, shall be required to hire the Operator's personnel or independent
contractors normally servicing the Baseball Facility in accordance with
the terms hereof, including, but not limited to, security and crowd
control supervision personnel, concessions personnel, cleaning
personnel, Premium Seating personnel and to the extent applicable,
scoreboard operations personnel. Gateway's, the Operator's or the
Promoter's personnel or designees, as
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applicable, may be employed to perform setup and removal of Gateway
Special Event items and equipment. All of the Operator's expenses
related to any Gateway Special Event shall be reimbursed to the
Operator by Gateway or the Promoter;
(ii) All concession and advertising arrangements entered into by
the Operator in connection with its rights and duties hereunder, and
all other duties of the Operator hereunder with respect to the
operation and management of the Baseball Facility and all rights and
privileges of the licensees of Premium Seating, under the terms and
conditions of their respective Premium Seating Licenses (provided that
all such Premium Seating holders entering the Baseball Facility shall
purchase admission tickets at a price not to exceed the highest price
ticket being sold to the general public) shall be honored and performed
during any Gateway Special Event. Other than revenue generated by
ticket sales for Gateway Special Events, all Premium Seating Revenue
generated from Gateway Special Events shall be deposited into and
released from the Premium Seating Revenue Account in accordance with
the terms of Article VI hereof. The Operator shall arrange for its
concessionaires to provide concessions for Gateway Special Events,
consistent with the anticipated attendance at such Gateway Special
Events;
(iii) The Operator may, but shall not be obligated to, furnish the
use of any club/restaurant facility or private dining facility, or any
other area of the Baseball Facility not constituting a Special Event
Area, for any Special Event; and
(iv) The Lessee shall have the right to prohibit any Special Event
at the Baseball Facility if the nature of such Special Event would
render the playing field unsuitable in the Lessee's reasonable judgment
for playing the Team's games thereon (the parties acknowledge that
Special Events during the Spring season may not be allowed in order to
protect Spring turf growth and field conditions). The Lessee may
require that a protective covering of Trivera Spunbond (or other
material approved by the Lessee), which shall be paid for by Gateway,
be maintained over the playing field.
ARTICLE VIII
------------
INSURANCE AND SUBROGATION
8.1 GATEWAY'S INSURANCE. (a) Gateway shall, during the
construction period, maintain in full force and effect, at Gateway's expense:
(i) insurance against damage or destruction to the Improvements for the full
value thereof, including all materials, equipment, machinery and supplies for
use in construction or installation of Gateway's Work on an "all risk"
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peril basis, including coverage against flood, sewer backup and earthquake
coverage, in the form of builder's risk coverage, and (ii) cause its
professionals to maintain professional liability insurance providing coverage
for errors and omissions relating to workmanship and design.
(b) From and after the Completion Date, Gateway shall maintain
in full force and effect, in its name, insurance against damage or destruction
to the Baseball Facility and Gateway's equipment and other personal property,
improvements and betterments to the Baseball Facility owned by Gateway by
providing "all risk" peril coverage in the amount of at least ninety percent
(90%) of replacement cost, subject to deductible limits not to exceed $25,000.
Such insurance shall have an agreed amount endorsement. The Operator may elect
to place, and pay directly to such insurance provider the premium for, the
insurance required by this Subsection 8.1(b) (except for any of the premiums
related to Gateway's election not to make a Capital Repair as set forth in the
definition of Capital Repairs). In the event the Operator does not elect to
place such insurance, the Operator shall reimburse Gateway for the cost of such
postconstruction property insurance. All of the foregoing insurance shall name
as additional insureds the Operator and the Lessee and such other Affiliates as
the Operator shall request to the extent of their insurable interest.
8.2 OPERATOR'S INSURANCE. The Operator shall, from and after
the Completion Date, maintain in full force and effect (or cause to be
maintained in force by the Operator's subcontractors, concessionaires or
permitted subtenants), at its expense, the following insurance:
(a) statutory workers' compensation coverage through the
State of Ohio, and Ohio Stop Gap liability coverage
in the amount of $1,000,000 per occurrence, or such
lesser amount as may satisfy carriers of the
Operator's umbrella or excess liability coverage;
(b) automobile liability coverage for bodily injury and
property damage with a combined single limit per
accident of $1,000,000;
(c) "occurrence type" general liability insurance
against bodily injury and property damage arising
from occurrences in and about the Baseball Facility
and covering the Operator's contractual liability
for indemnification under this Agreement. Such
insurance shall be written on a commercial general
liability policy form to include premises
operations, products and completed operations,
personal injury/advertising injury, independent
contractors and broad form property damage. The
policy shall also contain a general aggregate per
location of not less than $2,000,000 and a general
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occurrence and a products/completed operations
aggregate of not less than $1,000,000;
(d) umbrella or excess liability coverage (in form no
less broad than underlying coverage) to apply excess
of automobile, liquor, general, contractual and
employer's liability limits, in an amount necessary
to increase overall coverage to $50,000,000 per
occurrence; provided, however, that such required
coverage shall be $10,000,000 for any concessionaire
and $20,000,000 for any other subcontractor; and
(e) "occurrence form" (as opposed to "claims made form")
liquor liability insurance in the amount of
$1,000,000 per occurrence.
The insurance provided for in Subsections (b), (c), (d) and (e) above shall name
as additional insured Gateway, its members, its Executive Director and such
other Affiliates as Gateway shall reasonably request and the Lessee and such
other Affiliates as the Lessee shall request. In addition, the Operator shall
obtain a "Primary and Non-Contribution" endorsement on the policies for the
insurance referred to in Subsections (b), (c), (d) and (e) above, if available
at no additional cost.
8.3 INSURANCE REQUIREMENTS.
(a) All policies of insurance required hereunder shall be
written by carriers which are members of the Ohio Guaranty Fund and possess an
A- policyholder's rating or better and a minimum Class VII financial size
category as listed at the time of issuance by A.M. BEST INSURANCE REPORTS ("Best
Reports") (the aforesaid rating classifications to be adjusted if and to the
extent that BEST REPORTS adjusts its rating categories).
(b) All policies shall provide that they may not be canceled,
renewed or reduced unless at least thirty (30) days' notice thereof has been
provided to the additional insureds. In no event shall any party be required to
insure for liability limits in excess of coverage which is available at
commercially reasonable rates. In the event that tort liability reform is
adopted which makes the limits of liability hereinabove provided in excess of
commercially reasonable and prudent limits of liability, such limits will be
equitably reduced. The insurance policies required hereunder shall be reviewed
on an annual basis to determine the adequacy of the coverage amounts.
8.4 CERTIFICATES. Not later than the date on which coverage is
to be provided hereunder, the party required to provide same shall furnish to
the other party a certificate evidencing the required coverage.
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8.5 WAIVER OF SUBROGATION. Gateway and the Operator agree that
all insurance policies against loss or damage to property and business
interruption or rent/revenue loss, and all liability insurance policies required
hereunder shall be endorsed to provide that any release from liability of, or
waiver of claim for, recovery from the other party entered into in writing by
the insured thereunder prior to any loss or damage shall not affect the validity
of said policy or the right of the insured to recover thereunder. Such insurance
policies shall further provide that the insurer waives all rights of subrogation
which such insurer might have against the other party. Without limiting any
release or waiver of liability or recovery contained in any other section of
this Agreement, but rather in confirmation and furtherance thereof, each of the
parties hereto waives all claims for recovery from the other party for any loss
or damage to any of its property or damages as a result of business
interruption, rent loss or liability of the types covered in Subsections 8.2
(b), (c), (d) and (e) above, insured under valid and collectible insurance
policies to the extent of any recovery collectible under such insurance
policies.
ARTICLE IX
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ALTERATIONS BY THE OPERATOR
9.1 ALTERATIONS AND ADDITIONS BY THE OPERATOR.
(a) Following the Completion Date, the Operator, at its sole
cost and expense, with the prior written consent of the Lessee, may make any
alterations of or additions or improvements to the Baseball Facility, subject to
the rights of the Lessee under the Lease Agreement and the Ground Lease, which
do not (i) materially affect the aesthetics, sight lines, structure or systems
of the Baseball Facility (unless approved by Gateway and the Lessee), (ii)
materially increase the cost of Capital Repairs to the Baseball Facility or any
of its Components, fixtures, equipment or any other improvements (unless
approved by Gateway and the Lessee), or (iii) violate any laws, ordinances, or
regulations. The Operator hereby agrees to perform or cause to be performed all
such alterations, additions and/or improvements in a good and workmanlike
manner, utilizing personnel with proper building trade credentials, and to pay
for the same. The Operator agrees to indemnify and defend Gateway from and
against mechanics' liens, claims and any other costs and attorneys' fees
incurred by Gateway and related thereto, or other costs and expenses arising out
of such performance.
(b) Before commencing any alterations, additions, or
improvements pursuant to Subsection 9.1 (a) above, the Operator shall (i) comply
with all legal requirements or improvements, including, but not limited to,
procuring any required governmental permits, and (ii) obtain and furnish to
Gateway a "Builder's Risk"
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insurance policy, from an insurance carrier acceptable to Gateway and in form
and substance acceptable to Gateway, in its reasonable discretion, covering all
liabilities that may be incurred in connection with any such alterations,
additions or improvements undertaken by the Operator, naming Gateway as an
additional insured.
(c) All alterations, additions or improvements made by the
Operator pursuant to this Section 9.1 shall be considered the property of the
Operator for purposes of this Agreement and shall remain upon the premises for
the duration of the Term; PROVIDED, HOWEVER, that upon the termination or
expiration of this Agreement for any reason, such alterations, additions and
improvements, unless personal property or trade fixtures, shall become part of
the Baseball Facility.
9.2 PLACEMENT OF HEAVY EQUIPMENT. The Operator shall not place
a load upon any floor or other surface in any part of the Baseball Facility that
exceeds the maximum weight per square foot that such floor or other surface area
was designed to bear as determined by the Design Architect. The Operator and any
concessionaire shall comply with all such requirements and, where necessary,
shall perform the reinforcing required for such installation at its cost and
expense. The Operator shall install, place and maintain all items of personal
property, fixtures or improvements which the Operator is required to install,
place or maintain in the Baseball Facility pursuant to this Agreement, in
settings that are sufficient, as determined by the Design Architect, to absorb
and prevent vibration in or damage to the Baseball Facility. In the event such
placements or installations cause such vibration or damage, the Operator shall,
at its expense, take such steps as the Design Architect may reasonably direct to
remedy any such condition.
ARTICLE X
---------
MAINTENANCE OF AND REPAIRS TO THE BASEBALL FACILITY
10.1 ALLOCATION OF RESPONSIBILITIES. It is the purpose of this
Article to allocate the responsibilities between the Operator and Gateway for
the cost of making repairs, restorations, and replacements of and to the
Baseball Facility which are necessary during the Term. The general overriding
principle of such allocation is (but subject in all events to specific
provisions hereof) that the Operator is to be responsible for the costs of
performing Routine Maintenance, and Gateway is to be responsible for the costs
of all Capital Repairs.
10.2 OPERATOR'S ROUTINE MAINTENANCE OBLIGATIONS. Gateway
hereby assigns to the Operator the rights and the Operator hereby
assumes the obligations to perform Routine Maintenance of the
Baseball Facility. The Operator shall be responsible for the
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performance of and payment of all costs and expenses related to all
Routine Maintenance.
10.3 MAINTENANCE AND REPAIR PROCEDURES.
(a) On or before February 1 of each Term Year, and from time
to time during the Term as the Operator, the Lessee or Gateway may reasonably
request, not more often than once each Reporting Period, representatives of the
Operator, the Lessee and Gateway shall meet to:
(i) review a list of, and the proposed
procedures for completing, any anticipated
work constituting Routine Maintenance and
Capital Repairs (which list shall be
prepared by the Operator and delivered to
the Lessee and Gateway prior to any such
meeting);
(ii) allocate any such anticipated work between
Routine Maintenance and Capital Repairs;
(iii) establish budgets and timetables for
required Routine Maintenance and Capital
Repairs; and
(iv) establish necessary programs to generally
effectuate the administration of the
provisions of this Article X.
(b) Gateway hereby agrees that Gateway shall use its best
efforts to advise the Operator and the Lessee of its views as early as possible
regarding Gateway's performance of Capital Repairs. All Capital Repairs
requested by the Lessee and the Operator shall be conducted and completed,
subject to the reasonable and prompt approval of Gateway.
10.4 CAPITAL REPAIRS FUND. Gateway shall establish and
maintain an account (the "Capital Repairs Fund"), the purpose of which shall be
to accumulate funds for the payment of the cost of Capital Repairs for which
Gateway is financially responsible hereunder. The Capital Repairs Fund shall be
established with a Permitted Escrow Agent and the funds therein invested in
Permitted Investments. On or before the Completion Date, Gateway shall deposit
into the Capital Repairs Fund the Initial Capital Repairs Fund Deposit. In
addition, on or before the first day of each and every Term Year after the first
Term Year, Gateway shall deposit the Annual Capital Repairs Fund Deposit into
the Capital Repairs Fund. All funds in the Capital Repairs Fund shall be the
property of Gateway. The Capital Repairs Fund may be drawn only upon the
signature of the designated signatory or signatories of Gateway and the funds
deposited therein may be used only to pay for Capital Repairs for which Gateway
is financially responsible hereunder, other than those arising out of damage
which is caused by a risk then covered by the property insurance policy referred
to in
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Subsection 8.1(b) (except that the Capital Repairs Fund may be used for covered
losses pending receipt of insurance proceeds, such proceeds shall thereafter be
deposited in the Capital Repairs Fund). Notwithstanding anything in this
Agreement to the contrary, Gateway's financial responsibility with respect to
Capital Repairs shall not be limited to the funds in the Capital Repairs Fund;
provided, however, that on or before the Completion Date, the parties will
establish a separate sub-account within the Capital Repairs Fund for the
following categories of property: administrative office furniture (FF&E), all
kitchen equipment, concession stand/central commissary equipment, clubhouse
exercise equipment, club and restaurant furniture and equipment, and such other
categories of property that the parties shall mutually agree upon. The parties
agree that reasonable and appropriate percentages will be established based on
the useful life of such property and a proportional amount of the Initial
Capital Repairs Fund Deposit and the Annual Capital Repairs Fund Deposit will be
placed into such sub-account. Gateway's obligation to pay for Capital Repairs
for the above designated property shall be limited to the amount of the special
sub-account for such items. In the event Gateway must use any funds deposited in
the Construction Fund (established in accordance with the Bond documents), to
pay for any Capital Repair, in whole or in part, Gateway shall withdraw the
amount necessary from such Construction Fund and pay for such Capital Repair
with the funds withdrawn; PROVIDED, HOWEVER, that in no event shall any funds
withdrawn from the Construction Fund be used by Gateway to pay for any Capital
Repairs performed on the Field or the Field Improvements; and PROVIDED, FURTHER,
that in no event shall any funds withdrawn from the Construction Fund by Gateway
be deposited into the Capital Repairs Fund. In the event funds on deposit in the
Capital Repairs Fund are insufficient to pay for the cost of a Capital Repair at
any time, Gateway shall be obligated to pay for such Capital Repair using other
sources and shall be reimbursed from the Capital Repairs Fund for the amount so
paid from the next moneys deposited therein until Gateway shall have been fully
reimbursed. At the end of the Term or upon the termination of this Agreement,
Gateway shall transfer and assign to the Person or Persons that succeed Gateway
in the ownership of the Baseball Facility all sums in the Capital Repairs Fund
and all of such funds shall continue to be held in a separate escrow account for
the benefit of the Baseball Facility.
10.5 OPERATOR CAPITAL REPAIRS. During the Term, the Operator
shall keep and maintain the Baseball Facility in good condition, and shall not,
subject to ordinary wear and tear, do or suffer any waste or damage,
disfigurement or injury to the Baseball Facility. Except as otherwise provided
herein, Gateway shall perform or cause to be performed all Capital Repairs
required during the Term, at Gateway's expense; provided, however, that during
the Term, the Operator shall perform or cause to be performed, and pay for the
costs of all work (a) necessitated by Misuse, and (b) related to any Component
that was added to the Baseball Facility as the Operator's alteration or
addition, and the
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Operator hereby agrees to indemnify, defend and hold Gateway harmless from and
against all costs and expenses (including attorneys' fees) arising out of the
Operator's failure to perform or pay for such repairs referred to in (a) and (b)
above. All work related to any Capital Repair shall be completed in a good,
workmanlike manner.
10.6 GATEWAY CAPITAL REPAIRS. Except as otherwise provided in
Section 10.5 hereof, Gateway shall perform or cause to be performed, and shall
pay for the costs of, all Capital Repairs and, unless the Operator shall be
performing such Capital Repairs, Gateway hereby agrees to indemnify, defend and
hold the Operator harmless from and against all costs and expenses (including
attorneys' fees) arising out of Gateway's failure to perform such Capital
Repairs in accordance with the provisions of Section 10.7. Gateway shall provide
replacement stock for Components as more fully set forth in the Program
Requirements and shall, as part of Gateway's responsibilities to perform Capital
Repairs, replenish, in a reasonable manner, such stock as such stock is
depleted. Notwithstanding the foregoing, the Operator may, at the Operator's
sole election, perform or cause to be performed such Capital Repair, at
Gateway's expense. In such event, (i) the Operator (or any Person with whom the
Operator contracts to perform such Capital Repair) shall act in accordance with
Gateway's responsibilities under Section 10.7, (ii) Gateway shall have the same
reasonable rights of approval the Operator would have if Gateway were
effectuating such Capital Repairs, and (iii) the Operator shall obtain a
one-year warranty for the benefit of Gateway from any person who contracts to
perform any Major Capital Repair and shall enforce such warranty on Gateway's
behalf. If the Operator itself performs such Major Capital Repair, the Operator
will provide Gateway with such one-year warranty. In the event the Operator
effectuates any Capital Repair during the Term, Gateway, within payment terms
agreed upon by the parties, shall either pay directly or reimburse the Operator,
as the case may be, for the costs of such Capital Repair. All work related to
any Capital Repair shall be done in a good, workmanlike manner.
10.7 CAPITAL REPAIRS PROCEDURES. The Operator and
Gateway shall comply with the following procedures in making
Capital Repairs:
(a) If any Capital Repair is an Emergency Repair, or if the
cost thereof does not exceed $2,000 in any instance and $5,000 in one or more
instances in any calendar month, the Operator may perform such Capital Repairs
and shall be entitled to reimbursement without compliance with this Section
10.7, but shall, when feasible, give Gateway prompt notice thereof; PROVIDED,
HOWEVER, in the case of a Capital Repair which is an Emergency Repair and which
in the Operator's good faith determination will cost more than $5,000 to
complete, the Operator will give Gateway not less than twenty-four (24) hours'
notice prior to commencement of such work unless such delay could affect public
health or safety.
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(b) If Subsection (a) is not applicable and the work will
cost, in the Operator's good faith determination, less than $50,000, the
Operator may, but shall not be obligated to, elect to perform such work. In the
event the Operator elects to perform such work, then the Operator shall submit
to Gateway a proposal to perform such work for a fixed sum or an estimate of the
cost of such repair, such estimate to be prepared on a "time and materials"
basis with the hourly rates of such contractor's charges for such work to be set
forth therein, in each case from a reputable contractor. If Gateway, within ten
(10) Business Days after receipt of such proposal or estimate, fails to object
thereto in writing, the Operator may proceed to perform such work or to contract
with the party which submitted the proposal or estimate (either on a time and
materials basis or on a firm fixed sum basis or guaranteed maximum price basis
not to exceed, in each of the foregoing instances, $50,000) to cause such
Capital Repair to be made. If Gateway objects, Gateway shall have ten (10)
Business Days after receipt by the Operator of Gateway's notice of rejection to
secure a proposal for such work from a reputable contractor reasonably
acceptable to the Operator and Gateway for a fixed sum or guaranteed maximum
price, or a "time and materials" estimate, which is in either case not more than
ninety percent (90%) of the amount estimated by the Operator's contractor, in
which event Gateway shall be entitled to contract with such contractor for
completion of such Capital Repair. If Gateway fails to secure such a proposal,
the Operator may proceed thereafter as if Gateway had failed to object.
(c) If Subsection 10.7(a) is not applicable and the work will
cost, in the Operator's good faith determination, more than $50,000, and if the
Operator elects to perform such work the procedures under Subsection 10.7 (b)
shall be applicable except that the Operator shall in all events submit a
proposal to perform such work for a fixed sum or guaranteed maximum price and
may not submit an estimate.
(d) The sums "$2,000" and "$5,000" in Subsection 10.7(a), the
sum of $50,000 in Subsections 10.7(b) and (c) and the sum "$500,000" in the
definition of Major Capital Repair, shall be applicable until the end of the
fifth (5th) Term Year. Thereafter each such sum shall increase on January 1 of
each of the sixth (6th), eleventh (11th) and sixteenth (16th) Term Years to an
amount equal to such sum plus a percentage of such sum equal to the percentage
increase in the CPI from December of the fifth (5th) Term Year or any subsequent
adjustment year, as appropriate, to the December immediately preceding such date
of increase.
(e) At the Operator's election, any Capital Repairs under
Subsection 10.7(a) may be performed in whole or in part by the Operator's own
employees on a "time and materials" basis, with the charges for the time of such
employees to be equal to Direct Personnel Expense plus ten percent (10%)
thereof. In addition to
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the charges for such employees, the Operator shall be reimbursed by Gateway for
the cost of all materials and all services performed by outside contractors,
architects or engineers.
10.8 MAJOR CAPITAL REPAIRS PROCEDURE. If the work required to
be performed is a Major Capital Repair, Gateway shall promptly cause such work
to be performed and paid for in full.
Gateway shall comply with the following:
(a) Within thirty (30) days after Gateway has knowledge of a
Major Capital Repair, Gateway shall retain the Design Architect (or such other
architect as may be approved by the Operator and the Lessee in the Operator's
and the Lessee's reasonable discretion) to determine the work required to
effectuate the Major Capital Repair. Such architect shall consult with the
Operator and the Lessee in making such determination and shall retain any and
all structural or other engineers it deems necessary to aid in making such
determination. The work necessary to complete Major Capital Repairs shall be
incorporated in plans and specifications therefor ("Repair Plans") which shall
be submitted to the Operator and the Lessee for their respective approvals,
which approvals shall not be unreasonably withheld or unduly delayed. Failure to
disapprove Repair Plans within thirty (30) days after receipt thereof shall be
deemed an approval thereof by the Operator and the Lessee.
(b) Prior to commencement of the Major Capital Repair, Gateway
shall be required, at Gateway's expense, to cause to be taken any and all
reasonable temporary measures, if any, reasonably recommended by the Operator or
the Lessee which will enable the Operator and the Lessee to utilize the Baseball
Facility during the pendency of a Major Capital Repair, such as the erection of
barricades, the construction of temporary construction facilities or other
similar measures.
(c) Gateway shall contract for and cause to be completed as
promptly as possible all work reflected in the Repair Plans in a good,
workmanlike manner, and shall cause to be corrected all defects in workmanship
and materials in such work.
ARTICLE XI
----------
CONCESSIONS
11.1 CONCESSION RIGHTS. During the Term, the Operator shall
have the exclusive right and obligation to operate all concessions in or about
the Baseball Facility in a first-class, professional, businesslike and efficient
manner, subject to the ensuing provisions of this Article and any other rights
or limitations granted to or placed on concessions elsewhere in this Agreement
or the Lease Agreement. In connection with such
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concession rights, the Operator shall have the following rights and
obligations:
(a) to operate and conduct all concessions for all Home
Dates and Special Events;
(b) to operate a restaurant or stadium club, any other eating
facilities, and any concessions or eating facilities with respect to Premium
Seating;
(c) to sell, rent or furnish merchandise or articles in any
part of the Baseball Facility (i) by means of portable or mobile vending
devices, by vendors carrying merchandise or articles, by automatic vending
machines, and/or (ii) at stands or booths.
11.2 MERCHANDISE AND SERVICES. The Operator shall have the
right to select all merchandise, articles and services sold, rented or furnished
pursuant to the rights granted by this Article XI. Such items and services shall
conform and comply, in all respects, with all federal, state and local laws and
regulations. The Lessee shall have the right to require the Operator to stop
selling, renting or furnishing any such item or service which the Lessee
decides, in its reasonable judgment, is of poor quality, unsatisfactory in
nature, or harmful or dangerous to the health or safety of the public or
contrary to Baseball Rules and Regulations.
11.3 PRICES. The Operator shall have the right to determine
the prices charged for all merchandise, articles and services sold, rented or
furnished pursuant to the rights granted by this Article XI, subject to the
prior written approval of the Lessee, which approval shall not be unreasonably
withheld or delayed. The Lessee's approval of the proposed price of any item
shall not be withheld if such price does not exceed the price charged for the
same or a comparable item or service sold, rented or furnished in any other
major league baseball park.
11.4 ASSIGNMENT OF RIGHTS. The Operator shall have the right
to grant, assign or sell to any Person or Persons or to license or authorize any
Person or Persons to exercise any or all of the rights granted to and perform
the duties of the Operator under this Article XI; PROVIDED, HOWEVER, that prior
to such assignment, the Operator shall secure the approval of the Bank, if
required, and the Lessee, which approval may not be withheld if the proposed
assignee is a concessionaire in any other Major League stadium and has a
superior reputation. Any approved assignee may exercise any or all of the rights
and shall perform any or all of the duties or obligations of the Operator under
this Article XI and under any other provision of this Agreement relating to
concessions (including, without limitation, concessions for Premium Seating),
and the term "Operator" when used in any of said provisions shall be deemed to
mean and include the Operator and/or its assignee, irrespective of whether such
assignee is expressly
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mentioned. Neither any such grant, assignment, sale, license or authorization
to, nor any such exercise of rights or performance of duties or obligations by,
any such assignee, however, shall relieve the Operator of any of its duties or
obligations to Gateway under this Agreement or from any liability to Gateway for
any breach hereof unless otherwise agreed to by Gateway in writing. The Operator
shall cause each such assignee to use reasonable efforts to encourage and
promote opportunities for minorities and women in connection with the
performance of the duties assigned pursuant hereto.
11.5 CONCESSION REVENUE. The Operator shall be entitled to
receive all revenues from the operation of all concessions, including, without
limitation, any membership or other fees charged for the right to use any dining
facilities or Ballpark club memberships. The Operator may limit admission to the
Ballpark restaurant to purchasers of season tickets for any Season, Premium
Seating licensees, and their respective guests. The Operator may require payment
of a fee for each privilege granted to a purchaser of a season ticket or Premium
Seating licensee to use the Ballpark restaurant.
ARTICLE XII
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SCOREBOARDS
12.1 DUTIES. Subject to procedures approved by the Lessee, the
Operator shall be entitled to and obligated to operate, in a first-class,
professional, businesslike and efficient manner, all scoreboards at the Baseball
Facility for all Home Dates and Special Events, and shall perform Routine
Maintenance on all such scoreboards throughout the Term. Such Routine
Maintenance shall not include painting (other than touch-up painting) or
revamping. The Operator shall also be obligated to hire all personnel necessary
for the operation and Routine Maintenance of the scoreboards, including, without
limitation, electricians and operators, before, during and after any Home Date
or Special Event.
12.2 ADVERTISING. In accordance with Article XIII hereof, the
Operator shall have the right to (a) place advertising signs on the front and
back of all scoreboards, and (b) sell video screen ads during all Home Dates and
Special Events, if applicable, to the extent such scoreboards and video screen
ads are located in or on the interior or exterior of the Ballpark. Subject to
the Operator's obligation to pay Fees to Gateway pursuant to Section 5.1 hereof,
the Operator shall be entitled to receive all Scoreboard Advertising Revenue.
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ARTICLE XIII
------------
ADVERTISING
13.1 ADVERTISING RIGHTS. Subject to the terms and conditions
of the Lease Agreement, during the Term, the Operator shall have the exclusive
right to control, select or enter into contracts for all advertising in and on
the interior and exterior of the Ballpark (including advertising on all
permanent or fixed advertising panels and signs, advertising on the scoreboard
and video boards, and all nonpermanent or nonfixed spot advertising). The
Operator shall have the exclusive right to sell or lease such advertising
panels, signs, or other space in and on the interior and exterior of the
Ballpark, and to receive all revenue therefrom (subject to its obligation to pay
Fees as a result thereof).
13.2 OTHER ADVERTISING. The Operator may conduct, or permit to
be conducted, within the perimeter walls of the Ballpark, any and all other
forms of advertising not affixed to the structure of the Baseball Facility which
the Operator deems appropriate, including, but not limited to, any advertising
in Ballpark concourses, restrooms, any advertising to be worn or carried by the
Operator's or the concessionaires' personnel within the perimeter walls of the
Ballpark, promotional events sponsored by advertisers, logos or other forms of
advertising to be affixed to or included with cups, hats, T-shirts and other
concession items or giveaways, and any and all other forms of such advertising
or promotion within the perimeter walls of the Ballpark. The Operator shall be
entitled to receive all revenues from such advertising, subject to its
obligation to pay Fees pursuant to Section 5.1 hereof.
13.3 ADDITIONAL SIGNS. The Operator may, at its expense, erect
additional advertising signs in and on the interior and exterior of the
Ballpark, including that certain free-standing sign described in Article IV of
the Gateway CAM Agreement. The Operator may also erect additional informational
and directional signs of a nonadvertising nature, at the Operator's expense,
from time to time.
ARTICLE XIV
-----------
BASEBALL FACILITY SECURITY
14.1 EVENT SECURITY. During the Term, the Operator shall be
obligated to provide, at the Operator's expense, such security and crowd control
personnel for the Baseball Facility as shall be required in the Operator's
discretion for such purposes, consistent with procedures submitted to and
approved by the Lessee. In addition, at all Special Events, the Operator will
provide the Operator's security and crowd control personnel, and Gateway shall
be required to utilize such personnel for supervision of security at Gateway
Special Events. Gateway represents and covenants to the
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Operator that Gateway shall use its best efforts to obtain the commitment of the
City to provide police protection and traffic control personnel for all events
at the Baseball Facility as follows:
<TABLE>
<CAPTION>
Expected Police/Traffic
NUMBER OF FANS CONTROL OFFICERS
-------------- ----------------
<S> <C>
Less than 25,000 20
25,000-35,000 41
35,000 to capacity 50
</TABLE>
Gateway acknowledges that the Operator's obligations hereunder are expressly
conditioned upon Gateway obtaining the City's commitment described above, as
more fully set forth in Section 25.3 hereof.
14.2 TWENTY-FOUR (24) HOUR SECURITY. Consistent with the
security procedures submitted to and approved by the Lessee, the Operator, at
its expense, will provide such security guards and night watchmen as may be
necessary in order to provide twenty-four (24) hour per day, year-round,
protection and security of the Baseball Facility.
ARTICLE XV
----------
REAL ESTATE AND PERSONAL PROPERTY TAXES
During the Term, Gateway shall pay when due all real estate
taxes, personal property taxes (other than for tangible personal property owned
or installed by the Operator, any concessionaires or the Lessee), assessments
and other governmental levies and charges, general and special, ordinary and
extraordinary, of any kind or nature, lawfully levied or assessed by federal,
state, county or municipal government, upon or with respect to the Baseball
Facility and any and all other improvements (other than with respect to personal
property owned by the Operator or the Lessee or improvements made by or on
behalf of the Operator or the Lessee pursuant to Section 9.1 hereof or Section
7.1 of the Lease, respectively) hereafter constituting a part of the Baseball
Facility, or any taxes in lieu thereof (collectively, "Real and Personal
Property Taxes"); PROVIDED, HOWEVER, that if, because of any change in the
method of taxation of real estate or personal property, any other or additional
tax or assessment is imposed upon the Baseball Facility as or in substitution
for, or in lieu of, any tax or assessment which would otherwise be included in
Real and Personal Property Taxes, such other tax or assessment shall also be
Gateway's responsibility. Gateway hereby agrees to indemnify, defend and hold
the Operator harmless from and against all Real and Personal Property Taxes. In
the event the Lessee's interest in the Lease Agreement, the Ground Lease or the
Gateway CAM Agreement is terminated as a result of a failure to pay Real and
Personal Property Taxes, including, without limitation, a sale of the
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Baseball Facility by a foreclosure sale, and within sixty (60) days after such
termination is not reinstated for the balance of the then remaining terms
thereof on the same terms and conditions, the Operator shall be entitled to
terminate this Agreement upon thirty (30) days prior written notice to Gateway.
Without in any way limiting the Operator's rights and remedies provided for in
Article XVIII hereof, in the event Gateway fails to pay any Real and Personal
Property Taxes when the same shall be due and payable, the Operator shall have
the right, but shall have no obligation to pay the same or any of them, and upon
such payment by the Operator, Gateway shall, immediately after proof of such
payment shall have been submitted to Gateway by the Operator, and on demand
therefor, pay the Operator the amount of any such payment so made by the
Operator, with interest thereon at the Interest Rate.
ARTICLE XVI
-----------
UTILITIES
During the Term, the Operator shall bear the cost of all
utilities consumed at the Baseball Facility (such as gas, electricity and
water), including those necessary for the Lessee's Office Space. The Operator
shall select all providers of all such utilities; provided, however, that the
Operator will select providers that provide services related to the site
preparation and infrastructure improvements for the Baseball Facility, such as
removal and relocation of existing underground utility lines at reduced or no
costs to Gateway, so long as the services provided do not result in any increase
in the rate charged for furnishing utilities to the Baseball Facility above the
rate that is available from the provider selected to any other downtown
Cleveland user of similar usage of such utilities. The Operator and Gateway
shall use their reasonable efforts to avoid waste in their use of such
utilities, in the interest of conserving resources. In the event that there is
any interruption in utility services affecting the Baseball Facility, the
Operator shall use reasonable efforts to arrange with the appropriate providers
of such utilities for the prompt and complete restoration of such service.
ARTICLE XVII
------------
RIGHT OF ENTRY AND INSPECTION
17.1 OPERATOR'S RIGHT OF ENTRY AND INSPECTION. Prior to the
Completion Date, the Operator and the Operator's agents, representatives,
invitees, concessionaires and contractors shall have the right at all times
during normal business hours of Gateway or of Gateway's general contractor,
prime contractor or construction manager, as the case may be, and at such other
times as the Operator may reasonably request, to review the Final Plans for
Gateway's Work and to inspect the progress of the construction
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of Gateway's Work and provide tours of the entire Baseball Facility. The
provisions of this Section 17.1 shall in no way limit or otherwise relieve
Gateway from Gateway's obligation to complete Gateway's Work in conformance with
this Agreement or the Lease Agreement, unless the Operator's inspections or
tours unreasonably interfere with Gateway's construction of the Baseball
Facility.
17.2 GATEWAY'S RIGHT OF ENTRY AND INSPECTION. In addition to
its rights to use the Baseball Facility as provided in this Agreement and in the
Lease Agreement and the Ground Lease, Gateway and its agents and representatives
(including representatives of the City and the County), shall have the right, at
all times during usual business hours or at any other time in case of an
emergency, to enter into and upon any and all parts of the Baseball Facility for
the purpose of inspecting the same, carrying out any of its obligations under
this Agreement, the Lease Agreement or the Ground Lease (including, without
limitation, to make any Capital Repairs required to be made by Gateway
hereunder), or for any other legitimate reason related to the obligations of the
parties hereto or the rights of Gateway under this Agreement or under the Lease
Agreement or the Ground Lease. In the event Gateway enters the Baseball Facility
for the purpose of making any Capital Repair, during the progress of such work,
Gateway and/or its agents and representatives shall be entitled to keep and
store, in areas mutually agreed upon by the Operator and Gateway in and upon the
Baseball Facility, all necessary materials, tools and equipment.
ARTICLE XVIII
-------------
DEFAULT AND REMEDIES
18.1 DEFAULT BY OPERATOR. The occurrence of any one or more of
the following events constitutes a default by the Operator under this Agreement
("Operator Default"):
(a) Failure by the Operator at any time to pay, when due, any
Fees or other sums payable to Gateway or to be deposited by the Operator
hereunder and such failure to pay continues for a period of five (5) Business
Days after notice of such failure is given to the Operator by Gateway;
(b) Failure by the Operator to observe or perform any other
covenant, agreement, condition or provision of this Agreement, if such failure
shall continue for more than thirty (30) days; PROVIDED, HOWEVER, that the
Operator shall not be in default with respect to matters that cannot be
reasonably cured within thirty (30) days, so long as the Operator has promptly
commenced such cure and diligently proceeds in a reasonable manner to complete
the same thereafter;
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(c) The Operator admits in writing its inability to pay its
debts as they mature, or makes an assignment for the benefit of creditors, or
applies for or consents to the appointment of a trustee or receiver for the
Operator or for a major part of its property;
(d) A trustee or receiver is appointed for the Operator or for
a major part of its property and is not discharged within thirty (30) days after
such appointment; or
(e) Bankruptcy, reorganization, receivership, arrangement,
insolvency or liquidation proceedings, or other proceedings for relief under any
federal or state bankruptcy law, or similar law for the relief of debtors, are
instituted by or against the Operator, and, if instituted against the Operator,
are allowed against it or are consented to by it or are not dismissed within
ninety (90) days after such institution.
18.2 GATEWAY'S REMEDIES. If an Operator Default occurs, in
addition to any other rights or remedies Gateway may have at law or in equity,
Gateway shall have the following rights:
(a) Gateway may enforce the provisions of this Agreement and
may enforce and protect the rights of Gateway hereunder by a suit or suits in
equity or at law for the specific performance of any covenant or agreement
contained herein, or for the enforcement of any other appropriate legal or
equitable remedy, including recovery of monetary damages and all moneys due or
to become due from the Operator under any of the provisions of this Agreement,
or any other relief or remedies to the extent permitted by law, by filing a
cause of action or actions for such damages, equitable relief, or other
appropriate remedies or relief from the Operator in any court of competent
jurisdiction in the State of Ohio.
(b) After the time when Gateway has given notice and any
applicable grace period provided has expired, if any sums payable by the
Operator shall remain due and payable, or after the time for performance by the
Operator of any other term, covenant, provision or condition of this Agreement,
or before the expiration of that time in the event of a bona fide emergency (in
which case Gateway shall only be required to give such notice as is reasonable
and practical under the circumstances), Gateway may, at Gateway's election (but
without obligation), make any payment required of the Operator under this
Agreement, or perform or comply with any covenant or condition imposed on the
Operator under this Agreement, as Gateway deems advisable. The amount so paid
plus the cost of such performance or compliance, plus interest on such sums at
the Interest Rate, shall be deemed to be Fees payable by the Operator
immediately upon demand. No such payment, performance or observance by Gateway
shall constitute a waiver of default or of any remedy for default or render
Gateway liable for any loss or damage resulting from any such act. Gateway may,
with notice to the Operator and at any time or from time to time, charge, set
off
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and otherwise apply all or any part of any of Gateway's Obligations
against Operator's Obligations now or in the future.
(c) No termination of this Agreement shall deprive Gateway of
any of its remedies or actions against the Operator for past or future Fees or
other sums due from the Operator hereunder.
18.3 DEFAULT BY GATEWAY. The occurrence of any one or more of
the following events constitutes a default by Gateway under this Agreement
("Gateway Default"):
(a) Failure by Gateway at any time to pay, when due, any sums
payable to the Operator or to be deposited by Gateway hereunder and such failure
to pay continues for a period of five (5) Business Days after notice of such
failure is given to Gateway by the Operator;
(b) A Completion Default shall have occurred as provided in
Article IV hereof;
(c) Failure by Gateway to observe or perform any other
covenant, agreement, condition or provision of this Agreement, if such failure
shall continue for more than thirty (30) days; PROVIDED, HOWEVER, that Gateway
shall not be in default with respect to matters that cannot be reasonably cured
within thirty (30) days, so long as Gateway has promptly commenced such cure and
diligently proceeds in a reasonable manner to complete the same thereafter;
(d) Gateway admits in writing its inability to pay its debts
as they mature, or makes an assignment for the benefit of creditors, or applies
for or consents to the appointment of a trustee or receiver for Gateway or for a
major part of its property;
(e) A trustee or receiver is appointed for Gateway or for a
major part of its property and is not discharged within thirty (30) days after
such appointment; or
(f) Bankruptcy, reorganization, receivership, arrangement,
insolvency or liquidation proceedings, or other proceedings for relief under any
federal or state bankruptcy law, or similar law for the relief of debtors, are
instituted by or against Gateway, and, if instituted against Gateway, are
allowed against it or are consented to by it or are not dismissed within ninety
(90) days after such institution.
18.4 OPERATOR'S REMEDIES. If a Gateway Default occurs, in
addition to any other rights or remedies the Operator may have at law or in
equity, the Operator shall have the following rights:
(a) The Operator may enforce the provisions of this
Agreement and may enforce and protect the rights of the Operator
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hereunder by a suit or suits in equity or at law for the specific performance of
any covenant or agreement contained herein, or for the enforcement of any other
appropriate legal or equitable remedy, including recovery of monetary damages
and all moneys due or to become due from Gateway under any of the provisions of
this Agreement, or any other relief or remedies to the extent permitted by law,
by filing a cause of action or actions for such damages, equitable relief, or
other appropriate remedies or relief from Gateway in any court of competent
jurisdiction in the State of Ohio.
(b) After the time when the Operator has given notice and any
applicable grace period provided has expired, if any sums payable by Gateway
shall remain due and payable, or after the time for performance by Gateway of
any other term, covenant, provision or condition of this Agreement, or before
the expiration of that time in the event of a bona fide emergency (in which case
the Operator shall only be required to give such notice as is reasonable and
practical under the circumstances), the Operator may, at the Operator's election
(but without obligation), make any payment required of Gateway under this
Agreement, or perform or comply with any covenant or condition imposed on
Gateway under this Agreement, as the Operator deems advisable. The amount so
paid plus the cost of such performance or compliance, plus interest on such sums
at the Interest Rate, shall be payable by Gateway immediately upon demand. No
such payment, performance or observance by the Operator shall constitute a
waiver of default or of any remedy for default or render the Operator liable for
any loss or damage resulting from any such act. The Operator may, with notice to
Gateway and at any time or from time to time, charge, set off and otherwise
apply all or any part of any of the Operator's Obligations against Gateway's
Obligations now or in the future.
(c) No termination of this Agreement shall deprive the
Operator of any of its remedies or actions against Gateway for past or future
sums due to the Operator from Gateway hereunder.
18.5 GENERAL PROVISIONS.
(a) No right or remedy herein conferred upon, or reserved to,
Gateway or the Operator is intended to be exclusive of any other right or
remedy, but each shall be cumulative and in addition to every other right or
remedy given herein or now or hereafter existing at law, or in equity or by
statute; PROVIDED, HOWEVER, that neither Gateway nor the Operator shall have any
right to cancel, rescind or otherwise terminate this Agreement due to a breach
of this Agreement by the other party except as otherwise specifically set forth
in this Agreement.
(b) No waiver by either party of any breach of obligations,
agreements or covenants herein shall be a waiver of any subsequent breach of any
obligation, agreement or covenant,
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nor shall any forbearance by either party to seek a remedy for any breach by the
other party be a waiver by such party of any rights or remedies with respect to
such or any subsequent breach, nor shall any express waiver by either party be
deemed to apply to any other existing or subsequent right to remedy any default
by the other party, nor shall any waiver by either party of any default or
breach by the other party in the performance of any of the covenants or
obligations of such other party under this Agreement be deemed to have been made
by the party against which the waiver is sought to be charged unless contained
in a writing executed by such party.
(c) In the event that either party fails to pay any payment
required hereunder, when due, then, without limiting any other rights of the
nondefaulting party, the defaulting party shall be liable for interest thereon
at the Interest Rate from the date that such payment was due until the date paid
in full.
ARTICLE XIX
-----------
SURRENDER OF USE RIGHTS
19.1 GENERAL. Upon the expiration or termination of this
Agreement (by lapse of time or otherwise), the Operator shall peaceably
surrender its right to use, occupy, operate and manage the Baseball Facility to
Gateway pursuant to this Agreement. The Operator shall surrender to Gateway all
keys in the possession of the Operator for the Baseball Facility at the place
then fixed for the receipt of notices by Gateway, and shall notify Gateway, in
writing, of all combinations of locks, safes and vaults, if any. The Operator's
obligations to observe and perform the covenants set forth in this Article XIX
shall survive the expiration or earlier termination of this Agreement (by lapse
of time or otherwise).
19.2 ALTERATIONS AND IMPROVEMENTS. At the expiration or
termination of this Agreement (by lapse of time or otherwise), all permanent
alterations, installations, changes, replacements, additions or improvements
made by the Operator to the Baseball Facility shall be deemed a part of the
Baseball Facility and the same shall not be removed.
19.3 OPERATOR'S PROPERTY. Upon the expiration or termination
of this Agreement (by lapse of time or otherwise), the Operator may remove all
property which is owned by the Operator and which the Operator is permitted to
remove from the Baseball Facility under the provisions of this Agreement and, in
such event, repair any damage caused to the Baseball Facility due to the removal
of such property at the Operator's expense. If the Operator fails to remove such
property, such property shall be deemed abandoned by the Operator. Gateway may,
at its option, (a) cause that property to be removed at no expense to the
Operator;
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(b) sell all or any part of such property at public or private sale without
notice to the Operator; or (c) declare that title to such property shall be
deemed to have passed to Gateway.
19.4 ABANDONING PREMISES OR PERSONAL PROPERTY. The Operator
shall not vacate or abandon the Baseball Facility at any time during the Term,
but if the Operator vacates or abandons the Baseball Facility or is dispossessed
by process of law, in breach of this Agreement, any personal property owned by
the Operator which may be left in the Baseball Facility following such
abandonment or dispossession shall be deemed to have been abandoned by the
Operator, and in that event such property shall be disposed of by Gateway in
accordance with the provisions of Section 19.3 hereof.
ARTICLE XX
----------
DAMAGE TO BASEBALL FACILITY
20.1 PROPERTY DAMAGE. If any Property Damage shall occur:
(a) All proceeds from property insurance required to be
obtained hereunder paid on account of such damage shall be paid to Gateway to be
held in escrow accounts with Permitted Escrow Agents and invested in Permitted
Investments, including the Bond Escrow Accounts, and applied in the following
manner:
(i) there shall be paid from said insurance proceeds
such part thereof as shall equal the cost of making such
temporary repairs or doing such other work as in the
reasonable opinion of the Project Architect (or such other
architect selected by Gateway and approved by the Operator)
may be necessary in order to protect the Baseball Facility
pending the adjustment of the insurance loss or the making of
permanent repairs, restoration or reconstruction of the
Baseball Facility;
(ii) there shall be paid from said insurance proceeds such
part thereof as shall equal the cost of repairing, restoring
or reconstructing the Baseball Facility or of any part thereof
or of erecting a new building or structure or improvement or
part thereof so that upon completion of such repairs,
restoration, reconstruction, or erection the building or
structure or improvement shall be equal to the replacement
value of the building or structure or improvement;
(iii) payments pursuant to paragraphs (i) or (ii) of this
Subsection 20.1(a) from such insurance proceeds shall be made
by Gateway from time to time as the work progresses in amounts
equal to the cost of labor and
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materials incorporated into and used in such work and
builders', architects' and engineers' fees and other charges
in connection with such work upon delivery to Gateway of a
certificate of an authorized architect in charge of such work
certifying that the amounts so to be paid are payable in
accordance with the provisions of this Article and that such
amounts are then due and payable and have not theretofore been
paid.
(b) All insurance proceeds paid to the Operator on account of
such Property Damage shall be held in trust by the Operator for the benefit of
Gateway and shall be paid immediately by the Operator to Gateway.
(c) In the event that any of the insurance proceeds paid by
the insurance companies shall remain after the completion of such repairs,
restoration, reconstruction or erection, the excess shall be deposited in the
Capital Repairs Fund and used for the purposes set forth in Article X hereof.
(d) In the event that the insurance proceeds paid, as
hereinabove provided, together with the funds available in the Capital Repairs
Fund are insufficient for making such permanent repairs, restoration or
reconstruction or erection and no party is willing to provide the additional
funds needed therefor, Gateway or the Operator shall notify the other party of
such determination in writing and thereupon this Agreement shall cease and
terminate and all future Fees and other amounts due by the Operator hereunder
shall cease as of the date of such written notice and the total insurance
proceeds so paid shall be used first to pay the principal, interest and
redemption premiums, if any, on the Bonds, and any remaining proceeds shall be
allocated equitably between Gateway, Lessee and Operator.
20.2 INABILITY TO OPERATE. Notwithstanding any other provision
of this Agreement, if the Baseball Facility is untenantable in whole or in any
material part as a result of any Major Capital Repair, or the event or events
which gave rise thereto, then for the period of such untenantability, the
Operator will not be responsible for any obligations accruing under this
Agreement. In the event that such untenantability continues for a period of two
(2) Seasons, or totals a number of days equal to two (2) Seasons in any three
(3) year period, the Operator may at its option, exercised in its sole
discretion, terminate this Agreement upon thirty (30) days prior written notice
to Gateway.
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ARTICLE XXI
-----------
INDEMNIFICATION
21.1 OPERATOR INDEMNIFICATION. Subject to the limitations
hereinafter set forth, the Operator hereby agrees to indemnify and hold harmless
Gateway, its officers, members, employees and agents from and against all loss,
cost and expense in connection with proceedings, judicial or otherwise, and
claims, demands and judgments, together with costs and expenses including
attorneys' fees relating thereto, arising out of damage or injury to person or
property occurring in or about the Baseball Facility which occurs after the
Completion Date and while this Agreement is in effect. Notwithstanding the
foregoing, in no event shall the foregoing indemnification obligation be
applicable to any loss, cost or expense arising out of any Excluded Occurrences.
21.2 GATEWAY INDEMNIFICATION. Gateway hereby agrees to
indemnify, defend and hold the Operator, its shareholders, officers, directors,
employees and agents harmless from and against all loss, cost and expense in
connection with proceedings, judicial or otherwise, and claims, demands and
judgments, together with costs and expenses including attorneys' fees, arising
solely out of any or all Excluded Occurrences which occur while this Agreement
is in effect.
21.3 PROCEDURE REGARDING INDEMNIFICATION.
(a) If any Indemnified Party shall discover or have actual
notice of facts giving rise or which may give rise to a claim for
indemnification under this Article XXI, or shall receive notice of any Action
with respect to any matter for which indemnification may be claimed, the
Indemnified Party shall, within twenty (20) days following service of process
(or within such shorter time as may be necessary to give the Indemnifying Party
a reasonable opportunity to respond to such service of process) or within twenty
(20) days after any other such notice, notify the Indemnifying Party in writing
thereof together with a statement of such information respecting such matter as
the Indemnified Party then has; it being understood and agreed that any failure
or delay of the Indemnified Party to so notify the Indemnifying Party shall not
relieve the Indemnifying Party from liability hereunder except and solely to the
extent that such failure or delay shall have materially adversely affected the
Indemnifying Party's ability to defend against, settle, or satisfy any such
Action. Following such notice, the Indemnifying Party shall have the right, at
its sole cost and expense, to contest or defend such Action through attorneys,
accountants, and others of its own choosing (the choice of such attorneys,
accountants, and others being subject to the approval of the Indemnified Party,
such approval not to be unreasonably withheld) and in the event it elects to do
so, it shall promptly notify the Indemnified Party of such intent to
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contest or defend such Action. If within twenty (20) days following such notice
from the Indemnified Party (or within such shorter time as may be necessary to
give the Indemnified Party a reasonable opportunity to respond to service of
process or other judicial or administrative action), the Indemnified Party has
not received notice from the Indemnifying Party that such Action will be
contested or defended by the Indemnifying Party, the Indemnified Party shall
have the right to (i) authorize attorneys satisfactory to it to represent it in
connection therewith or (ii) at any time settle, compromise, or pay such action,
in either of which events the Indemnified Party shall be entitled to
indemnification therefor subject to this Section 21.3.
(b) In the event and so long as the Indemnifying Party is
actively contesting or defending against an Action as hereinabove provided, the
Indemnified Party shall cooperate with the Indemnifying Party and its counsel in
such contest or defense, shall join in making any appropriate counterclaim or
cross-claim in connection with the Actions, and shall provide such access to the
books and records of the Indemnified Party as shall be necessary in connection
with such defense or contest, all at the sole cost and expense of the
Indemnifying Party. Notwithstanding that an Indemnifying Party is actively
conducting such defense or contest, any Action may be settled, compromised or
paid by the Indemnified Party without the consent of the Indemnifying Party;
PROVIDED, HOWEVER, that if such action is taken without the Indemnifying Party's
consent, its indemnification obligations in respect of such claim shall thereby
be nullified. Any such Action may be settled, compromised, or paid by the
Indemnifying Party without the Indemnified Party's consent, so long as such
settlement or compromise does not cause the Indemnified Party to incur any
present or future material cost, expense, obligation or liability of any kind or
nature.
(c) In the event any Action involves matters partly within or
partly outside the scope of the indemnification by the Indemnifying Party
hereunder, then the attorneys' fees, costs, and expenses of contesting or
defending such Action shall be equitably allocated between the Indemnified Party
and the Indemnifying Party.
21.4 LIMITATION. Indemnification under this Article XXI does
not include indemnification against loss or liability due to Force Majeure.
ARTICLE XXII
------------
ASSIGNMENT
22.1 ASSIGNMENT BY OPERATOR. The Operator shall not assign or
transfer this Agreement, in whole or in part, with or without consideration, to
any Person other than any Affiliate, without the prior written consent of
Gateway and the Lessee, which
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consent shall not be unreasonably withheld by Gateway or the Lessee. Upon the
assignment of this Agreement (or any part hereof) by the Operator with the
consent of Gateway and the Lessee, the liability of the Operator shall cease
with respect to liabilities accruing from and after the effective date of such
assignment.
22.2 ASSIGNMENT BY GATEWAY. Gateway shall have the right to
assign and transfer its interest in, and pledge any Fees or other sums to which
Gateway is entitled (including, without limitation, its interest in all sums
deposited into the Prepaid Premium Seating Revenue Account, the Premium Seating
Revenue Account and the Capital Repairs Fund) under this Agreement or any other
interest Gateway has in this Agreement, in whole or in part, as security for the
repayment of the Bonds, or other financing approved by the Operator, for the
costs of the design and construction of the Baseball Facility (including,
without limitation, any letter of credit issued to secure the Bonds). All costs
incurred in connection with any such pledge shall be the sole responsibility of
Gateway. Gateway shall also have the right to assign and transfer its right,
title and interest in and to this Agreement, in whole or in part, to the City or
the County pursuant to and subject to the Three Party Agreement.
22.3 ASSIGNEES. If Gateway consents at any time to any
assignment as set forth in this Article XXII, the Operator and any such
assignee, in addition to any other consideration that may pass between them in
connection therewith, shall be deemed to have covenanted not to make any further
assignment contrary to the provisions of this Article XXII. Such covenant shall
be deemed to have been made as of the date of such consent by Gateway, and shall
take effect prospectively from the date thereof.
ARTICLE XXIII
-------------
EMINENT DOMAIN
23.1 TERMINATION FOR CONDEMNATION. In the event that a
Condemnation with respect to any material part of the Baseball Facility shall
occur at any time during the Term, this Agreement shall terminate (except as
hereinafter provided below), on the date on which possession is required to be
delivered to the condemning authority. As used herein, "material part" shall
mean any of the following:
(a) Any part of the Baseball Facility that, in the reasonable
determination of the Operator, would cause the Operator to become unable to make
use of the Baseball Facility for its intended operations or to experience a
material loss of revenue (specifically including, without limitation, a
reduction by twenty percent (20%) or more in the number of seats available in
the Ballpark or loss of any material portion of the concourse areas);
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(b) Any part of the area between the Baseball Facility and a
public street or highway, Condemnation of which would cause the Operator to
become unable to provide sufficient access to the Baseball Facility; or
(c) Any portion of the Gateway Common Areas the loss of which
results in fewer than 1,500 parking spaces being available on the same terms and
conditions as the On-Site Parking to the Lessee and the Operator of equal
quality and no greater distance from the Baseball Facility than the On-Site
Parking.
PROVIDED, HOWEVER, that the Operator may elect in its sole discretion not to
treat any of the foregoing as a "material part" of the Baseball Facility, in
which event this Agreement shall not terminate. If this Agreement terminates
pursuant to the provisions of this Section 23.1, all rights, obligations and
liabilities of the parties hereto shall end as of the effective date of such
termination, without prejudice to any rights which have accrued prior to such
termination.
23.2 ALLOCATION OF AWARD. The amount of any award for or on
account of any Condemnation shall be first used to pay the principal, interest
and redemption premiums, if any, on the Stadium Revenue Bonds, and the remaining
proceeds shall be shared equitably between Gateway and the Operator. The
Operator shall have the right to be represented by counsel of its choosing in
any Condemnation proceedings.
23.3 PERFORMANCE OF WORK. If there shall be a Condemnation and
this Agreement shall not terminate as a result thereof, Gateway shall be
required to perform any and all work necessary to restore the Baseball Facility
to a complete architectural unit suitable for the Operator's use in as
expeditious a manner as possible.
23.4 TEMPORARY TAKING. This Agreement shall not terminate by
reason of a temporary taking of the Baseball Facility or any portion thereof for
public use, except as provided in this Section 23.4. In the event of such a
temporary taking, the rights and obligations of the parties under this Agreement
shall continue in full force and effect, except that:
(a) any award for such temporary taking shall be
governed by the provisions of Section 23.2 hereof;
(b) upon the termination of such temporary taking, Gateway
shall use its reasonable efforts to restore the Baseball Facility to a state
equivalent to that which the Baseball Facility was in immediately prior to such
temporary taking; and
(c) notwithstanding the foregoing, the Operator shall have the
right to terminate this Agreement as of the end of any Season if the remaining
period of such temporary taking will be
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for a period of more than two (2) Seasons following the date of the termination,
as evidenced by the issuance of any written statement by a duly authorized
official of the condemning authority to the effect that such temporary taking
will be for such period of time.
ARTICLE XXIV
------------
TERMINATION BY OPERATOR OR GATEWAY
In the event that the sum of: (a) Ballpark Expenses, (b) net
debt service on the Stadium Revenue Bonds, (c) Gateway's Scoreboard Advertising
Share, and (d) Gateway's share of Net Special Event Revenue exceed Ballpark
Revenues for any twelve (12) month period ending October 31 (any such exceeds
being referred to herein as an "Operating Deficit"), the Operator may elect, in
its sole discretion, to advance funds to cover any such Operating Deficit. The
Operator shall deliver written notice to Gateway of such election within ten
(10) Business Days after the expiration of such twelve (12) month period. In the
event that the Operator elects not to advance funds to cover any Operating
Deficit, either the Operator or Gateway may terminate this Agreement by giving
the other party ninety (90) days' notice of such party's election to do so, in
which event this Agreement shall terminate upon the expiration of such ninety
(90) day period, unless reinstated as hereinafter provided. During such ninety
(90) day period, Gateway and the Operator shall negotiate to restructure the
terms of this Agreement. In the event that the Operator and Gateway succeed in
restructuring the terms of this Agreement during such ninety (90) day period,
the parties shall execute an amendment to this Agreement reflecting such
restructured terms and the Operator shall continue to operate and manage the
Baseball Facility in accordance with this Agreement as so amended. In the event
a restructuring has not occurred at the end of such ninety (90) day period, this
Agreement shall terminate and Gateway or its assignee shall have the sole and
exclusive right to operate and manage the Baseball Facility in the same manner
and at the same level of quality and service as required hereunder. In any
event, termination of this Agreement shall not in any way disturb or affect the
Lessee's obligations or rights under the Lease Agreement or the Ground Lease,
provided Gateway performs its obligations to operate the Baseball Facility in
accordance herewith, unless such performance is waived or permitted to be
modified by the Lessee. In the event of a termination of this Agreement pursuant
to this Article XXIV, all contracts relating to the operation and management of
the Baseball Facility shall be fully assigned to and assumed by Gateway as the
Operator of the Baseball Facility without recourse to the Operator.
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ARTICLE XXV
-----------
CONDITIONS
25.1 PRECONDITIONS TO OPERATOR'S OBLIGATIONS. The Operator's
obligations to perform its duties hereunder and to make any payments to Gateway
or assume any other obligations pursuant to the terms of this Agreement are
expressly conditioned upon the satisfaction of each of the conditions precedent
on or before the dates set forth in this Article XXV (the "Deadline Dates")
unless waived in writing by the Operator. In the event any of the conditions
precedent set forth in this Article XXV is not satisfied by the applicable
Deadline Date, the Operator may elect to (i) waive the condition, (ii) extend
the Deadline Date on which such condition must be satisfied, or (iii) terminate
this Agreement upon thirty (30) days' prior written notice to Gateway. The
Operator shall notify Gateway of the Operator's election within thirty (30) days
after the Deadline Date. Failure of the Operator to notify Gateway shall be
deemed to be an election by the Operator to waive such condition.
25.2 PREMIUM SEATING. On or before January 15, 1992, there
shall be sufficient Premium Seating licensed or firmly committed to be licensed
to satisfy the requirements of the Financing Arrangements for the design and
construction of the Improvements and to satisfy the requirements of the
Operator.
25.3 SECURITY COMMITMENT. On or before July 31, 1991, the City
shall have committed to provide the police protection and traffic control
personnel for all events at the Baseball Facility as provided for in Section
14.1 hereof.
25.4 FINANCING ARRANGEMENTS. On or before January 15, 1992,
all of the Financing Arrangements necessary for the design and construction of
Gateway's Work and the operations of the Baseball Facility shall be in place and
all conditions precedent to release the escrow of all proceeds of the Bonds
shall have been satisfied.
25.5 NEW LEASE AND MANAGEMENT NEGOTIATIONS COMMITMENT. On or
before July 31, 1991, the Lessee and the Operator shall have received assurances
satisfactory to the Lessee and the Operator from the City and the County that
such entities shall, at least two (2) years prior to the expiration of this
Agreement and the Lease Agreement, commence discussions with the Lessee and the
Operator regarding the terms on which those entities would be prepared to enter
into new agreements as provided in Section 4.2 of the Ground Lease; PROVIDED,
HOWEVER, that no such renewal shall be executed or effective prior to the date
following the date on which the Bonds are discharged at their maturity, or in
the event of a defeasance of the Bonds by the City prior to the ninety-first
(91st) day after such defeasance.
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25.6 CONDITION TO GATEWAY'S OBLIGATIONS.
(a) Gateway's obligation to continue to perform its duties and
obligations hereunder is expressly conditioned upon the receipt of commitments
for Premium Seating Licenses for Prepaid Premium Seating sufficient to yield by
February 1, 1994, taking into account all investment earnings projected to be
earned thereon, Prepaid Premium Seating Revenue of at least $20,000,000.
(b) Gateway's obligation to continue its duties and
obligations hereunder is expressly conditioned upon the receipt of a commitment
for or an agreement to issue a post escrow letter of credit or other substitute
Financing Arrangement relative to the Stadium Revenue Bonds on terms and
conditions consistent with the terms of this Agreement, including but not
limited to Article VI, and the Lease Agreement; provided that Gateway shall
accept any commitment acceptable to Operator and Lessee if the terms and
conditions of such commitment do not impose additional material obligations of a
nature not otherwise contemplated hereunder or the Lease Agreement.
(c) In the event either or both of the preceding conditions
have not been satisfied by January 15, 1992, Gateway may elect to (i) waive the
condition, or (ii) extend such date on which such condition must be satisfied.
Gateway shall notify the Operator of Gateway's election on or before February
15, 1992. Failure of Gateway to notify the Operator shall be deemed to be an
election by Gateway to waive such condition. In the event Gateway elects to
terminate this Agreement as provided in this Section 25.6, Operator will be
entitled to share the reimbursements included in Section 22.6 of the Lease
Agreement.
ARTICLE XXVI
------------
REPRESENTATIONS BY OPERATOR
The Operator represents and warrants as follows, as of the
date hereof and at all times from and after the date hereof until the expiration
or termination of this Agreement:
26.1 VALID EXISTENCE. Operator is a corporation duly
organized, validly existing and in good standing under the laws of
the State of Ohio.
26.2 POWER; NO LIMITATION ON ABILITY TO PERFORM. The Operator
has full power and authority to execute and deliver this Agreement and to carry
out and perform all of the terms and provisions of this Agreement, and all
transactions contemplated hereby, to the extent required to be carried out or
performed by the Operator. Subject to satisfaction of the requirements of
Article XXXI hereof, (a) neither the Operator's articles of incorporation or
code of regulations, nor any rule, policy,
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constitution, bylaw or other agreement of the American League or Major League
Baseball, nor any other agreement, law or other rule in any way prohibits,
limits or otherwise affects the right or power of the Operator to enter into and
perform all of the terms and provisions of this Agreement and each document,
agreement and instrument executed and to be executed by the Operator in
connection herewith, and all transactions contemplated hereby and thereby, and
(b) neither the Operator nor any of its officers, directors or any of their
personal or legal representatives are party to or bound by any contract,
agreement, indenture, trust agreement, note, obligation or other instrument
which could prohibit, limit or otherwise affect the same. Except for the
approval required by Article XXXI hereof, no consent, authorization or approval
of, or other action by, and no notice to or filing with, any governmental
authority, regulatory body or any other person is required for the due
execution, delivery and performance by the Operator of this Agreement or any
other agreement, document or instrument executed and delivered by the Operator
in connection herewith, or any of the transactions contemplated hereby or
thereby.
26.3 VALID EXECUTION. The execution and delivery of this
Agreement by the Operator has been duly and validly authorized by all necessary
action. This Agreement and all other agreements, documents and instruments
executed and delivered by the Operator in connection herewith are, and each
other agreement, document or instrument to be executed and delivered by the
Operator in connection herewith when executed and delivered will be legal, valid
and binding obligations of the Operator, enforceable against the Operator in
accordance with their respective terms.
26.4 DEFAULTS. The execution, delivery and performance of this
Agreement and each agreement, document and instrument executed and delivered and
to be executed and delivered by the Operator in connection herewith (a) do not
and will not violate or result in a violation of, contravene or conflict with,
or constitute a default: under (i) any agreement, document or instrument to
which the Operator is a party or by which the Operator's assets may be bound or
affected, (ii) any law, statute, ordinance or regulation applicable to the
Operator or (iii) the articles of incorporation or code of regulations of the
Operator, and (b) do not and will not result in the creation or imposition of
any lien or other encumbrance upon the assets of the Operator.
26.5 COMPLIANCE WITH LAWS. The Operator shall comply, at all
times, with all laws and regulations applicable to its use and occupancy of the
Baseball Facility in accordance with the terms of this Agreement, and shall
obtain licenses and permits (other than building permits and certificates of
occupancy in connection with the construction thereof) necessary in connection
therewith at its sole cost and expense.
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ARTICLE XXVII
-------------
REPRESENTATIONS BY GATEWAY
Gateway represents and warrants as follows, as of the date
hereof and at all times from and after the date hereof until the expiration or
termination of this Agreement:
27.1 VALID EXISTENCE. Gateway is a nonprofit corporation, duly
organized, validly existing and in good standing under the laws of the State of
Ohio. Gateway has full corporate power to own its property and conduct its
business as presently conducted.
27.2 POWER; NO LIMITATION ON ABILITY TO PERFORM. Gateway has
the power and authority to execute and deliver this Agreement and to carry out
and perform all of the terms and provisions of this Agreement, and all
transactions contemplated hereby, to the extent required to be carried out or
performed by Gateway. Neither Gateway's articles of incorporation or code of
regulations, nor any other agreement, law or other rule in any way prohibits,
limits or otherwise affects the right or power of Gateway to enter into and
perform all of the terms and provisions of this Agreement and each document,
agreement and instrument executed and to be executed by Gateway in connection
herewith, and all transactions contemplated hereby and thereby, and neither
Gateway nor any of its officers, directors or any of their personal or legal
representatives are party to or bound by any contract, agreement, indenture,
trust agreement, note, obligation or other instrument which could prohibit,
limit or otherwise affect the same. No consent, authorization or approval of, or
other action by, and no notice to or filing with, any governmental authority,
regulatory body or any other person is required for the due execution, delivery
and performance by Gateway of this Agreement or any other agreement, document or
instrument executed and delivered by Gateway in connection herewith, or any of
the transactions contemplated hereby or thereby.
27.3 VALID EXECUTION. The execution and delivery of this
Agreement by Gateway has been duly and validly authorized by all necessary
action. This Agreement and all other agreements, documents and instruments
executed and delivered by Gateway in connection herewith are, and each other
agreement, document or instrument to be executed and delivered by Gateway in
connection herewith when executed and delivered will be, legal, valid and
binding obligations of Gateway, enforceable against Gateway in accordance with
their respective terms.
27.4 DEFAULTS. The execution, delivery and performance of this
Agreement and each agreement, document and instrument executed and delivered and
to be executed and delivered by Gateway in connection herewith (a) do not and
will not violate or result in a violation of, contravene or conflict with, or
constitute a
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default under: (i) any agreement, document or instrument to which Gateway is a
party or by which Gateway's assets may be bound or affected, (ii) any law,
statute, ordinance or regulation applicable to Gateway, or (iii) the articles of
incorporation or code of regulations of Gateway; and (b) do not and will not
result in the creation or imposition of any lien or other encumbrance upon the
assets of Gateway.
27.5 COMPLIANCE WITH LAWS. Gateway shall comply, at all times,
with all laws and regulations applicable to its construction and use of the
Baseball Facility in accordance with the terms of this Agreement, and shall
obtain licenses and permits, including, but not limited to, all building permits
and certificates of occupancy in connection with the construction thereof,
necessary in connection therewith at its sole cost and expense.
ARTICLE XXVIII
--------------
MISCELLANEOUS
28.1 FORCE MAJEURE. Except as otherwise herein expressly
provided, if either party shall be delayed or hindered in, or prevented from,
the performance of any covenant or obligation hereunder, other than one for the
payment of money, as a result of any Force Majeure, and, provided, that the
party delayed, hindered or prevented from performing notifies the other party
not later than ten (10) Business Days after a Reporting Period of any such
delay, hindrance or prevention occurring during the Reporting Period at issue,
then the performance of such covenant or obligation, other than one for the
payment of money, shall be excused for the period of such delay, hindrance or
prevention and the period for the performance of such covenant or obligation
shall be extended by the number of days equivalent to the number of days of the
impact of such delay, hindrance or prevention. Failure to so provide the
Reporting Period notice as to a delay commencing during the Reporting Period at
issue will result in waivers of both excuse in performance and extension of time
to perform under this Section 28.1 with respect to any delay within that
Reporting Period.
28.2 AMENDMENT; WAIVER. No alteration, amendment or
modification hereof shall be valid unless executed by an instrument in writing
by the parties hereto with the same formality as this Agreement. The failure of
the Operator or Gateway to insist in any one or more instances upon the strict
performance of any of the covenants, agreements, terms, provisions or conditions
of this Agreement or to exercise any election herein contained shall not be
construed as a waiver or relinquishment for the future of such covenant,
agreement, term, provision, condition, election or option, but the same shall
continue and remain in full force and effect. No waiver by the Operator or
Gateway of any covenant, agreement, term, provision or condition of this
Agreement shall be
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deemed to have been made unless expressed in writing and signed by an
appropriate official on behalf of Gateway or the Operator. The payment by either
party of sums due and payable hereunder, with knowledge of the breach of any
covenant, agreement, term, provisions or condition herein maintained, shall not
be deemed a waiver of such breach.
28.3 CONSENT. Unless otherwise specifically provided herein,
no consent or approval by the Operator or Gateway permitted or required under
the terms of this Agreement shall be valid or be of any validity whatsoever
unless the same shall be in writing, signed by the party by or on whose behalf
such consent is given.
28.4 SEVERABILITY. If any Article, Section, Subsection, term
or provision of this Agreement or the application thereof to any party or
circumstance shall, to any extent, be invalid or unenforceable, the remainder of
the Article, Section, Subsection, term or provision of this Agreement or the
application of same to parties or circumstances other than those to which it is
held invalid or unenforceable shall not be affected thereby and each remaining
Article, Section, Subsection, term or provision of this Agreement shall be valid
and enforceable to the fullest extent permitted by law.
28.5 COVENANT OF QUIET ENJOYMENT. Gateway covenants that if,
and so long as, the Operator keeps and performs each and every covenant,
agreement, term, provision and condition of this Agreement on the part and on
behalf of the Operator to be kept and performed, the Operator shall quietly
enjoy its rights under this Agreement without hindrance or molestation by
Gateway or by any other person lawfully claiming the same by, through or under
Gateway, subject to the covenants, agreements, terms, provisions and conditions
of this Agreement.
28.6 PRORATIONS. Any apportionment or prorations related to
the use of the Baseball Facility during a Season including but not limited to,
Scoreboard Advertising and the Annual Capital Repair Fund Deposit shall be
computed on the basis of the length of the Season, otherwise any apportionment
or prorations to be made under this Agreement shall be computed on the basis of
a year containing three hundred sixty-five (365) days, consisting of twelve (12)
months of the actual number of days in each.
28.7 TERMS. Unless the context clearly requires otherwise, the
singular includes the plural, and vice versa, and the masculine, feminine and
neuter adjectives and pronouns include one another.
28.8 CAPTIONS. The captions of Articles and Sections are for
convenient reference only and shall not be deemed to limit, construe, affect,
modify or alter the meaning of such Articles or Sections.
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28.9 BINDING EFFECT. Each of the provisions of this Agreement
shall extend to and shall, as the case may require, bind or inure to the benefit
not only of Gateway and of the Operator, but also of their respective permitted
successors and assigns pursuant to Article XXII and any other provision hereof
relating to assignment of rights hereunder.
28.10 AGREEMENT CONTAINS ALL TERMS. All of the
representations, agreements, understandings and obligations of the parties are
contained herein and in the Exhibits attached hereto. This Agreement shall be
deemed to supersede the Memorandum and all other documents, writings, letters,
and agreements executed in connection therewith.
28.11 NOTICES. All notices, demands, consents, approvals,
statements, requests and invoices to be given under this Agreement shall be in
writing, signed by the party or officer, agent or attorney of the party giving
the notice, and shall be deemed to have been effective upon delivery if served
personally, or upon the third day from and including the day of posting if
deposited in the United States mail, postage prepaid, registered or certified
mail, return receipt requested, addressed as follows:
For Gateway Gateway Economic Development
Corporation of Greater
Cleveland
402 Terminal Tower
Cleveland, Ohio 44113
Attention: Executive Director
With a copy to: Climaco, Climaco, Seminatore,
Lefkowitz & Garofoli Co. L.P.A.
The Halle Building, Suite 900
1228 Euclid Avenue
Cleveland, Ohio 44115
Attention: Anthony J. Garofoli, Esq.
With a copy to: Calfee, Halter & Griswold
1800 Society Building
Cleveland, Ohio 44114
Attention: Thomas E. Wagner, Esq.
For the Operator: Ballpark Management Company
Cleveland Stadium
Cleveland, Ohio 44114
Attention: General Manager
With a copy to: Richard E. Jacobs
President
25425 Center Ridge Road
Westlake, Ohio 44145
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With a copy to: Baker & Hostetler
3200 National City Center
Cleveland, Ohio 44114
Attention: Gary L. Bryenton, Esq.
Either party may from time to time by written notice given to the other pursuant
to the terms of this Section 28.11 change the address to which notices shall be
sent.
28.12 APPLICABLE LAW. This Agreement has been prepared in the
State of Ohio and shall be governed in all respects by the laws of the State of
Ohio.
28.13 CROSS REFERENCES. Any reference in this Agreement to a
Section, Subsection, Article or Exhibit is a reference to a Section, Subsection,
Article or Exhibit, as appropriate, of this Agreement, unless otherwise
expressly indicated.
28.14 REPRESENTATIVES. The Operator's representative for
implementation of the terms of this Agreement shall be Richard E. Jacobs, or
such individual or individuals designated, in writing, by Richard E. Jacobs to
act for the Operator on certain specified matters ("Operator's Representative").
Gateway's representative for implementation of the terms of this Agreement shall
be the Executive Director ("Gateway's Representative"). Either party may
substitute representatives by notice to the other party delivered in accordance
with Section 28.11.
28.15 EFFECTIVE DATE. Notwithstanding that the Term shall
commence on the Completion Date, this Agreement shall be a legally binding
agreement, in full force and effect, as of the date set forth in the first
paragraph of this Agreement.
28.16 ANTIDISCRIMINATION CLAUSE. The Operator shall not
discriminate on the basis of race, color, political or religious opinion or
affiliation, creed, age, physical or mental handicap, sex, marital status,
ancestry, national origin or sexual preference/orientation. This shall apply to
all organizations which receive permission for the use of all or any portion of
the Baseball Facility, either in writing or verbally, from the Operator and
Gateway or by applying for a permit or receiving permission in any other way
from the Operator and Gateway. Gateway and the Operator shall comply with all
applicable state, local and federal laws, rules, regulations, executive orders
and agreements pertaining to discrimination in employment, unlawful employment
practices and affirmative action. The Operator shall use reasonable efforts to
encourage and promote opportunities for minorities and women in its operations
at the Baseball Facility. The Operator is an equal opportunity employer.
28.17 ACCORD AND SATISFACTION. Payment by any party, or
receipt or acceptance by a receiving party, of any payment due hereunder in an
amount less than the amount required to be paid
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hereunder shall not be deemed an accord and satisfaction, or a waiver by the
receiving party of its right to receive and recover the full amount of such
payment due hereunder, notwithstanding any statement to the contrary on any
check or payment or on any letter accompanying such check or payment. The
receiving party may accept such check or payment without prejudice to the
receiving party's right to recover the balance of such payment due hereunder or
to pursue any other legal or equitable remedy provided in this Agreement.
28.18 FURTHER ASSURANCES. The Operator and Gateway shall
execute, acknowledge and deliver, after the date hereof, without additional
consideration, such further assurances, instruments and documents, and shall
take such further actions, as Gateway or the Operator shall reasonably request
of the other in order to fulfill the intent of this Agreement and the
transactions contemplated thereby.
28.19 JOINT PROMOTION OF BASEBALL. During the Term of this
Agreement, Gateway and the Operator shall at all times use their best efforts to
promote public attendance at the Team's home baseball games at the Baseball
Facility.
28.20 INDEPENDENT CONTRACTOR RELATIONSHIP. Nothing contained
in this Agreement shall be deemed or construed by the parties hereto or by any
third party to create the relationship of principal and agent, partnership,
joint venture or any association between Gateway and the Operator, it being
expressly understood and agreed that neither the method of computation of Fees
nor any act of the parties hereto shall be deemed to create any relationship
between Gateway and the Operator other than an independent contractor
relationship. No mechanics', materialmen's or laborers' liens or other liens of
any character whatsoever created or suffered by the Operator shall in any way,
or to any extent, affect, attach or apply to the interest or rights of Gateway
hereunder or its rights or interest in any of the Baseball Facility or attach to
its title to or rights in the Baseball Facility unless such lien is related to
work, services or goods either: (i) requested by Gateway, or (ii) required to be
performed or provided by Gateway pursuant to this Agreement.
28.21 NO THIRD PARTY BENEFICIARY. The provisions of this
Agreement are for the exclusive benefit of the parties hereto and not for the
benefit of any third person, nor shall this Agreement be deemed to have
conferred any rights, express or implied, upon any third person unless otherwise
expressly provided for herein.
28.22 CONFORMING AMENDMENTS. The parties acknowledge that this
Agreement will be amended to conform to any approved Financing Arrangements
entered into from and after the date of this Agreement with the Bank, which
amendments shall be subject to the approval of the parties hereto, which
approval shall not be unreasonably withheld.
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28.23 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
ARTICLE XXIX
------------
GATEWAY COMMON AREA EASEMENT
AND MAINTENANCE AGREEMENT
The Operator, Gateway and the Lessee have entered into the
Gateway CAM Agreement. Gateway shall use its best efforts to cause Gateway's
other lessees and all other operators or managers to enter into the Gateway CAM
Agreement.
ARTICLE XXX
-----------
LEGAL OPINIONS
30.1 OPERATOR'S LEGAL OPINION. Upon execution of this
Agreement, the Operator shall deliver to Gateway the favorable opinion of the
Operator's counsel in the form attached hereto as Exhibit A and made a part
hereof.
30.2 GATEWAY'S LEGAL OPINION. Upon execution of this
Agreement, Gateway shall deliver to the Operator the favorable opinion of
Gateway's counsel in the form attached hereto as Exhibit B and made a part
hereof.
ARTICLE XXXI
------------
LEAGUE APPROVAL
This Agreement shall be null and void, and of no further force
or effect, if within sixty (60) days after execution by Gateway and the
Operator, this Agreement has not been approved by the Commissioner of Baseball
and the President of the American
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League. After execution hereof by Gateway and the Operator, the
Operator shall immediately request such approval.
IN WITNESS WHEREOF, the parties hereto have entered into this
Agreement as of the day and year first above written.
Gateway:
GATEWAY ECONOMIC DEVELOPMENT
CORPORATION OF GREATER CLEVELAND,
an Ohio nonprofit corporation
By: /s/ Pat Parker
-----------------------------
Its: Chairman
-----------------------------
Operator:
BALLPARK MANAGEMENT COMPANY, an Ohio
corporation
By: /s/ Gary L. Bryenton
------------------------------
Gary L. Bryenton
Its: Secretary
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ACKNOWLEDGMENT BY LESSEE
------------------------
Lessee joins in the execution of this Agreement for the
purpose of acknowledging and approving the terms hereof and agreeing to the
Operator's rights to retain and receive the compensation provided for herein. In
consideration of the Lessee's execution hereof Gateway and the Operator hereby
agree that this Agreement shall be, in all respects, subject to the terms and
conditions of the Lease Agreement, the Ground Lease and the Gateway CAM
Agreement; including, without limitation, Sections 8.5 and 7.5 of the Lease
Agreement and the Ground Lease, respectively.
Lessee:
CLEVELAND INDIANS BASEBALL COMPANY
LIMITED PARTNERSHIP, an Ohio
limited partnership
By: Cleveland Baseball Corporation,
an Ohio corporation,
its sole general partner
By: /s/ Martin J. Cleary
---------------------------------
Martin J. Cleary
Its: Vice President
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<PAGE> 72
FIRST AMENDMENT TO MANAGEMENT AGREEMENT
---------------------------------------
THIS FIRST AMENDMENT TO MANAGEMENT AGREEMENT ("Agreement") is made as
of this 4th day of December, 1992 by and between GATEWAY ECONOMIC DEVELOPMENT
CORPORATION OF GREATER CLEVELAND, a non-profit corporation organized under the
laws of the State of Ohio (hereinafter referred to as "Gateway") and BALLPARK
MANAGEMENT COMPANY, an Ohio corporation (hereinafter referred to as "the
Operator").
RECITALS
A. Gateway and Operator have previously executed a Management Agreement
dated as of July 3, 1991 (hereinafter referred to as the "Management Agreement")
pursuant to which Gateway has granted to the Operator certain rights and
responsibilities with respect to the Baseball Facility, as defined therein.
B. Gateway and the Operator desire to clarify and restate their
respective rights and responsibilities with regard to the Baseball Facility.
C. Gateway and the Operator have each agreed to certain amendments and
modifications to the Management Agreement upon the terms and conditions set
forth herein.
NOW, THEREFORE, in consideration of the mutual promises and agreements
contained herein, and for other valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree to the
following modifications to the Management Agreement.
SECTION 1. AMENDMENTS TO ARTICLE I - DEFINITIONS.
(a) The definitions of the terms "Bank," "Net Debt Service on Stadium
Revenue Bonds" and "Premium Seating Debt Service Contribution" as
set forth in Section 1.1 of the Management Agreement are hereby
deleted in their entirety and the following definitions are
inserted in lieu thereof:
"BANK" shall mean Bank One, Cleveland, NA, Agent, its successors
and assigns, or any substitute letter of credit bank pursuant to
the documents relating to and evidencing the Stadium Revenue
Bonds.
"NET DEBT SERVICE ON THE STADIUM REVENUE BONDS" shall mean the
debt service (including principal and interest) and all other
charges due and payable on the Stadium Revenue Bonds pursuant to
the Stadium Indenture and/or the Stadium Reimbursement Agreement
(including any redemptions of the Stadium Revenue Bonds in
accordance with the Stadium Indenture and the Required
<PAGE> 73
Redemptions as defined in the Stadium Reimbursement Agreement, all
Advance Obligations (as defined in the Stadium Reimbursement
Agreement) and all amounts due the Bank pursuant to Sections
2.3(b) through 2.3(d), 2.10 and 2.11 of the Stadium Reimbursement
Agreement and excluding any other Reimbursement Obligations) in
any Premium Seating Year LESS the Required Reserve (as defined in
the Stadium Indenture) and any earnings thereon which are credited
to and utilized in accordance with the Principal Account and/or
the Interest Account (as such terms are defined in the Stadium
Indenture) pursuant to Section 4.1(c) of the Stadium Indenture
during such Premium Seating Year.
"PREMIUM SEATING DEBT SERVICE CONTRIBUTIONS" shall mean the lesser
of:
(a) the sum of (i) all of the proceeds for any Premium Seating
Year from the sale of Private Suites (other than Prepaid
Private Suites) and (ii) all of the proceeds of the sale of
Club Seats (other than Prepaid Club Seats), in both cases
applicable to such Premium Seating Year and exclusive of
security deposits, if any;
(b) the sum of (i) the Net Debt Service on the Stadium Revenue
Bonds due and payable during such Premium Seating Year and
(ii) the Additional Required Redemptions (as defined in the
Stadium Reimbursement Agreement) for such Premium Seating
Year; or
(c) $2,950,000.
(b) The following new definitions are hereby inserted into Section 1.1 of
the Management Agreement:
"PREMIUM SEATING INTERCREDITOR AGREEMENT" shall mean that certain Premium
Seating Revenue Intercreditor and Bailment Agreement dated as of December
4, 1992 by and among Gateway, the Bank, the Stadium Trustee, the Operator
and Bank One Ohio Trust Company, NA.
"PREMIUM SEATING YEAR" shall mean each period of twelve (12) consecutive
calendar months during the Term, with the first Premium Seating Year
commencing on the first day of the
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<PAGE> 74
September next succeeding the Completion Date and with successive Premium
Seating Years commencing on successive anniversaries of the first day of
the first Premium Seating Year. A "Partial Premium Seating Year" means if
the Completion Date is a date other than September 1, then the period
from the Completion Date to the first day of the first Premium Seating
Year. All terms and conditions herein shall apply to the same to a
Partial Premium Seating year as to a Premium Seating Year, PROVIDED,
HOWEVER, that all payments and other financial obligations shall be
apportioned or prorated pursuant to Section 28.6 hereof.
"REIMBURSEMENT OBLIGATIONS" means any and all obligations of Gateway to
the Bank pursuant to any Bank Document (as defined in the Stadium
Reimbursement Agreement), including, without limitation, the payment of
all Payment Obligations (as defined in the Stadium Reimbursement
Agreement), the funding and maintenance of the Bond Reserve Fund (as
defined in the Stadium Indenture) and all reserve funds pursuant to the
Reserves Agreement (as defined in the Stadium Reimbursement Agreement),
the payment of all fees necessary to comply with Section 3.4 of the
Stadium Reimbursement Agreement (interest rate limitation), and the
indemnification of the Bank pursuant to the Environmental Agreement (as
defined in the Stadium Reimbursement Agreement).
"STADIUM INDENTURE" means that certain Trust Indenture, dated as of
December 15, 1990, between the Corporation and the Stadium Trustee with
respect to the Stadium Bonds, as the same shall be amended from time to
time.
"STADIUM REIMBURSEMENT AGREEMENT" shall mean the Stadium Reimbursement
Agreement dated as of December 4, 1992 between Gateway and the Bank with
respect to the Stadium Revenue Bonds.
"STADIUM TRUSTEE" shall mean The Huntington National Bank, Cleveland,
Ohio, as trustee of the Stadium Revenue Bonds pursuant to the Stadium
Indenture, its successors and assigns, and any successor trustee
appointed thereunder.
SECTION 2. AMENDMENT TO ARTICLE III - MANAGEMENT AND OPERATION BY THE
OPERATOR. Section 3.1 of the Management Agreement is hereby amended by inserting
the following after the phrase "shall be paid to Lessee" in the final sentence
of Section 3.1:
"and certain limited Premium Seating Revenues which shall be paid to the
Stadium Trustee and/or the Bank in accordance with Article VI hereof and
the Premium Seating Intercreditor Agreement)"
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<PAGE> 75
SECTION 3. AMENDMENT TO ARTICLE VI - PREMIUM SEATING REVENUE ACCOUNT.
Section 6.2 of the Management Agreement is hereby deleted in its entirety. The
following new Section 6.2 and Section 6.3 shall be inserted into Article VI of
the Management Agreement.
6.2 Application of Funds.
--------------------
(a) On or after the Completion Date, the Premium Seating Depositary
shall distribute to Gateway, Prepaid Premium Seating Revenue in
an amount equal to the greater of (a) Twenty Million Dollars
($20,000,000); or (b) ten (10) times the weighted mean listed
annual sale price for Club Seats, multiplied by the actual number
of Prepaid Clubs sold on or before the Completion Date plus ten
(10) times the weighted mean listed annual sale price for Private
Suites (excluding, for purposes of computing this weighted mean,
any Private Suite with a listed annual sale price of less than
$30,000) multiplied by the actual number of Prepaid Private
Suites sold on or before the Completion Date plus the
proportionate share of investment income earned thereon.
Thereafter, the Premium Seating Depositary shall deposit any
remaining Prepaid Premium Seating Revenue and investment income
into the Premium Seating Revenue Account. Any amounts distributed
to Gateway under this Subsection 6.2(a) shall, upon the written
direction of Gateway and the written approval of the Bank, be
deposited by the Premium Seating Depositary either directly into
the Completion Guaranty Accounts for the purposes described in
Section 4.9 of the Lease Agreement or used by the Premium Seating
Depositary to make any debt service payments on any Financing
Arrangement of which the proceeds were used or will be used for
the completion of Gateway's Work.
(b) The Premium Seating Debt Service Contributions for each Premium
Seating Year shall be distributed to the Stadium Trustee and/or
the Bank for payments made with respect to the Stadium Revenue
Bonds or certain of the Reimbursement Obligations pursuant to the
Stadium Indenture and the Stadium Reimbursement Agreement,
respectively, in accordance with the Premium Seating Intercreditor
Agreement, not to exceed, in the aggregate, the absolute maximum
amount of $2,950,000 in any one Premium Seating Year. Upon the
written request of the Stadium Trustee and/or the Bank as set
forth in the Premium Seating Intercreditor Agreement, the Premium
Seating Depositary shall distribute such funds to the Stadium
Trustee and/or the Bank for purposes in accordance with terms and
conditions of the Premium Seating Intercreditor Agreement.
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<PAGE> 76
(c) Except for the permitted withdrawals as provided above in this
Section 6.2, all funds remaining in the Premium Seating Revenue
Account shall be paid by the Premium Seating Depositary to the
Operator and Gateway agrees that all remaining funds shall be paid
over to the Operator subject only, however, to the terms of the
Premium Seating Intercreditor Agreement.
(d) Except for the Premium Seating Revenue not to exceed the absolute
maximum amount of $2,950,000 in any one Premium Seating Year
payable in accordance with the terms of the Premium Seating
Intercreditor Agreement, no other Ballpark Revenues shall be
pledged or made available for any Financing Arrangement,
including, but not limited to, the Stadium Revenue Bond Financing
Arrangement, without the prior written consent of the Operator,
which consent may be withheld in the Opemtor's sole and absolute
discretion.
6.3 PREMIUM SEATING LICENSES. The Operator shall enter into all Premium
Seating Licenses on behalf of Gateway. The Operator acknowledges that the legal
title to Premium Seating Licenses and the Premium Seating Revenues shall remain
with Gateway at all times subject to the Premium Seating Intercreditor Agreement
and if the Premium Seating Intercreditor Agreement is no longer in effect, then
subject to Gateway's obligations to the Operator hereunder. Gateway shall have
the power and authority to pledge and grant only the security interest in the
Premium Seating Licenses and Premium Seating Revenues pursuant to the Premium
Seating Intercreditor Agreement and Gateway shall not make any other assignment
or pledge of Premium Seating Licenses or the Premium Seating Revenue of any kind
whatsoever. The Operator shall not assign the Premium Seating Licenses to any
Person other than a permitted assignee pursuant to Section 22.1 hereof. Upon a
lawful termination of this Agreement, the Operator or any permitted assignee
shall assign all the Premium Seating Licenses to Gateway and thereafter shall
have no interest in the Premium Seating Licenses or the Premium Seating Revenues
pursuant to this Agreement. Notwithstanding the foregoing, all Premium Seating
Revenues shall be subject to the terms of the Premium Seating Intercreditor
Agreement and the rights set forth in Section 6.2 hereof.
SECTION 4. REMAINDER OF MANAGEMENT AGREEMENT. Except as otherwise
provided herein, the terms, provisions and conditions of the Management
Agreement shall remain Unchanged.
SECTION 5. DEFINED TERMS. All capitalized terms not defined herein shall
have the same meaning as set forth in the Management Agreement.
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<PAGE> 77
IN WITNESS WHEREOF, the parties have caused this First Amendment to
Management Agreement to be executed by their duly authorized representatives on
the date first set forth above.
GATEWAY ECONOMIC
DEVELOPMENT CORPORATION
OF GREATER CLEVELAND
By: /s/ Thomas Chema
------------------------------
Its: Executive Director
----------------------------
"GATEWAY"
BALLPARK MANAGEMENT
COMPANY
By: /s/ M. Cleary
-------------------------------
Its: Vice President
------------------------------
"OPERATOR"
<PAGE> 78
EXECUTION COPY
SECOND AMENDMENT TO MANAGEMENT AGREEMENT
----------------------------------------
THIS SECOND AMENDMENT TO MANAGEMENT AGREEMENT ("Agreement") is made as
of this 16th day of December, 1993 by and between GATEWAY ECONOMIC DEVELOPMENT
CORPORATION OF GREATER CLEVELAND, a non-profit corporation organized under the
laws of the State of Ohio (hereinafter referred to as "Gateway") and BALLPARK
MANAGEMENT COMPANY, an Ohio corporation (hereinafter referred to as "the
Operator").
RECITALS
A. Gateway and Operator have previously executed a Management Agreement
dated as of July 3, 1991, as amended by a First Amendment to Management
Agreement, dated as of December 4, 1992 (hereinafter referred to as the
"Management Agreement"), pursuant to which Gateway has granted to the Operator
certain rights and responsibilities with respect to the Baseball Facility, as
defined therein.
B. Gateway and the Operator desire to clarify and restate their
respective rights and responsibilities with regard to the Baseball Facility.
C. Gateway and the Operator have each agreed to certain amendments and
modifications to the Management Agreement upon the terms and conditions set
forth herein.
NOW, THEREFORE, in consideration of the mutual promises and agreements
contained herein, and for other valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree to the
following modifications to the Management Agreement, which shall amend and
restate in its entirety the First Amendment to Management Agreement.
Section 1. Amendments to Article I - Definitions.
(a) The definitions of the terms "Net Debt Service on Stadium
Revenue Bonds" and "Premium Seating Debt Service
Contributions" as set forth in Section 1.1 of the Management
Agreement are hereby deleted in their entirety and the
following definitions are inserted in lieu thereof:
"NET DEBT SERVICE ON THE STADIUM REVENUE BONDS" shall mean, in
any Premium Seating Year, the sum of (1) (a) the principal of
and interest on the Stadium Revenue Bonds (including any
mandatory sinking fund installment) due and payable within
that Premium Seating Year, (b) the fees and
<PAGE> 79
expenses of the Trustee, Bond Registrar, and any Paying Agent
and Authentication Agent due and payable by Gateway under the
Stadium Indenture as Additional Payments, (c) the amount
needed to restore the balance in the Bond Reserve Fund to the
Required Reserve, to the extent the deficiency therein
resulted from payment of principal of or interest on the
Stadium Revenue Bonds, and (d) the amount needed to reimburse
the County for a drawing under the County Guaranty, to the
extent the proceeds of such drawing were used to pay principal
of or interest on the Stadium Revenue Bonds or to restore
amounts drawn from the Bond Reserve Fund for that purpose less
(2) earnings credited to the Bond Fund and the Bond Reserve
Fund.
"PREMIUM SEATING DEBT SERVICE CONTRIBUTIONS" shall mean, in
any Premium Seating Year, the lesser of:
(a) Premium Seating Revenues for such Premium Seating
Year (exclusive of security deposits, if any;
(b) the Net Debt Service on the Stadium Revenue Bonds due
and payable during such Premium Seating Year; or
(c) $2,950,000.
(b) The definition of "Bank" is hereby deleted in its entirety.
(c) The following new definitions are hereby inserted into Section
1.1 of the Management Agreement:
"PREMIUM SEATING YEAR" shall mean each period of twelve (12)
consecutive calendar months during the Term, with the first
Premium Seating Year commencing on the first day of the
October next succeeding the Completion Date (as defined in the
Lease) and with successive Premium Seating Years commencing on
successive anniversaries of the first day of the first Premium
Seating Year. A "Partial Premium Seating Year" means if the
Completion Date is a date other than October 1, then the
period from the Completion Date to the first day of the first
Premium Seating Year. All terms and conditions herein shall
apply to the same to a Partial Premium Seating year as to a
2
<PAGE> 80
Premium Seating Year, PROVIDED, HOWEVER, that the Premium
Seating Debt Service Contributions for the Partial Premium
Seating Year shall not exceed the Net Debt Service on Stadium
Revenue Bonds less interest on the Stadium Revenue Bonds which
accrued thereon prior to the commencement of the Partial
Premium Seating Year.
"STADIUM INDENTURE," means the Amended and Restated Trust
Indenture, dated as of December 16, 1993 between the
Corporation and the Stadium Trustee with respect to the
Stadium Bonds, as the same shall be amended from time to time.
"STADIUM TRUSTEE," means The Huntington National Bank,
Cleveland, Ohio, as trustee of the Stadium Revenue Bonds
pursuant to the Stadium Indenture, its successors and assigns,
and any successor trustee appointed thereunder.
Section 2. Amendment to Article III - Management and Operation
by the Operator. Section 3.1 of the Management Agreement is hereby amended by
deleting the following words after the phrase "shall be paid to Lessee" in the
final sentence of Section 3.1:
"and certain limited Premium Seating Revenues which shall be
paid to the Stadium Trustee and/or the Bank in accordance with
Article VI hereof)"
and substituting the following words in lieu thereof:
"and certain limited Premium Seating Revenues which shall be
paid to the Stadium Trustee in accordance with Article VI
hereof"
Section 3. Amendment to Article VI - Premium Seating Revenue Account.
Sections 6.2 and 6.3 of the Management Agreement are hereby deleted in their
entirety. The following new Section 6.2 and Section 6.3 shall be inserted into
Article VI of the Management Agreement:
6.2 APPLICATION OF FUNDS.
(a) On or after the Completion Date, the Premium Seating
Depositary shall distribute to the Gateway, Prepaid Premium
Seating Revenue in an amount equal to the greater of (a)
Twenty Million Dollars ($20,000,000); or (b) ten (10) times
the weighted mean listed annual sale
3
<PAGE> 81
price for Club Seats, multiplied by the actual number of
Prepaid Club Seats sold on or before the Completion Date plus
ten (10) times the weighted mean listed annual sale price for
Private Suites (excluding, for purposes of computing this
weighted mean, any Private Suite with a listed annual sale
price of less than $30,000) multiplied by the actual number of
Prepaid Private Suites sold on or before the Completion Date
plus the proportionate share of investment income earned
thereon. Thereafter, the Premium Seating Depositary shall
transfer any remaining Prepaid Premium Seating Revenue and
investment income to the Trustee for deposit in the Revenue
Fund under the Stadium Indenture. Any amounts distributed to
Gateway under this Subsection 6.2(a) shall, upon the written
direction of Gateway, be deposited by the Premium Seating
Depositary either directly into the Completion Guaranty
Accounts for the purposes described in Section 4.9 of the
Lease Agreement or to make any debt service payments on any
Financing Arrangement of which the proceeds were used or will
be used for the completion of Gateway's Work.
(b) On the Completion Date, the Operator shall cause the Premium
Seating Depositary to transfer to the Stadium Trustee for
deposit in the Revenue Fund an amount equal to the Premium
Seating Revenue. From and after the Completion Date, the
Operator shall direct the Premium Seating Licensees to make
all payments under the Premium Seating Licenses (other than
with respect to the Prepaid Premium Seating Licenses) directly
to the Stadium Trustee for deposit in the Revenue Fund, and
shall promptly transfer to the Stadium Trustee for deposit in
the Revenue Fund any Premium Seating Revenues received by the
Operator from Premium Seating Licensees. Any and all Premium
Seating Revenue delivered to or received by the Stadium
Trustee shall be received and held by it as bailee, and the
Stadium Trustee is hereby appointed bailee by the Operator,
for the purpose of perfecting its lien on and security
interest in the Premium Seating Revenues, subject only to the
prior lien thereon of the Stadium Trustee to the extent of
Premium Seating Debt Service Contributions. Amounts in the
Revenue Fund are to be applied as provided in the Stadium
4
<PAGE> 82
Indenture, provided, however, that the Premium Seating
Revenues to be applied to the payment of Gateway's obligations
under the Stadium Indenture in any Premium Seating Year shall
not exceed, in the aggregate, an amount equal to the Premium
Seating Debt Service Contributions for that Premium Seating
Year. Gateway has directed the Stadium Trustee, in the Stadium
Indenture, to pay to the Operator, as a management fee
hereunder, the Premium Seating Revenues for each Premium
Seating Year net of the Premium Seating Debt Service
Contributions for each such Premium Seating Year.
(c) Except for the Premium Seating Debt Service Contributions
payable by the Operator hereunder in any one Premium Seating
Year, no other Ballpark Revenues shall be pledged or made
available for any Financing Arrangement, including, but not
limited to, the Stadium Revenue Bond Financing Arrangement,
without the prior written consent of the Operator, which
consent may be withheld in the Operator's sole and absolute
discretion.
(d) Gateway hereby grants to the Operator a lien on and security
interest in the Premium Seating Revenues, subject only to the
prior lien on and security interest therein granted by Gateway
to the Stadium Trustee under the Stadium Indenture, to the
extent of Premium Seating Debt Service Contributions.
6.3 PREMIUM SEATING LICENSES. The Operator shall enter into all Premium
Seating Licenses on behalf of Gateway. The Operator acknowledges that
the legal title to Premium Seating Licenses and the Premium Seating
Revenues shall remain with Gateway at all times subject to the pledge
of the Premium Seating Revenues and the right to collect and enforce
the collection of the Premium Seating Revenues under the Premium
Seating Licenses to the Stadium Trustee and the Operator pursuant to
the Stadium Indenture and hereunder, and if the Stadium Indenture is no
longer in effect, then subject to Gateway's obligations to the Operator
hereunder. Gateway shall have the power and authority to pledge and
grant only the security interest in the Premium Seating Licenses and
Premium Seating Revenues pursuant to the Stadium Indenture and to the
Operator as provided herein. Gateway shall not make any other
assignment or pledge of Premium Seating Licenses or the Premium Seating
Revenue of any kind whatsoever. The Operator shall not assign the
Premium Seating Licenses to
5
<PAGE> 83
any Person other than a permitted assignee pursuant to Section 22.1
hereof. Upon a lawful termination of this Agreement, the Operator or
any permitted assignee shall assign all the Premium Seating Licenses to
Gateway and thereafter shall have no interest in the Premium Seating
Licenses or the Premium Seating Revenues pursuant to this Agreement.
The Operator and Gateway shall not make or permit to occur any
amendment or modification to this Agreement or the form of Premium
Seating License attached as Exhibit C to the Stadium Indenture which
materially and adversely affects the Trustee or the Trustee's rights to
the Premium Seating Revenues, or in any way increases the amount or
alters the conditions of the County's obligations under the County
Guaranty (as defined in the Stadium Indenture), without the prior
written consent of the Trustee and the County, including, but not
limited to, the timing and terms of payment of Premium Seating Revenues
under the Premium Seating Licenses and hereunder, provided, however,
that no consent of the Trustee or the County to a change in the amount
payable by holders of the Premium Seating Licenses shall be required so
long as the amount charged thereunder in each Premium Seating Year, in
the aggregate, is not less than 125% of the principal of and interest
on the Stadium Bonds due and payable in each such Premium Seating Year.
Gateway, the County and the Trustee agree that the consent of the
Trustee and the County shall not be required with respect to any
amendment or modification to this Agreement or the form of Premium
Seating License which (a) increases the amount of fees payable
thereunder or (b) permits a prepayment of fees due thereunder by
deposit with the Stadium Trustee.
Section 4. Amendments to Article XXIV.
The next to last sentence in Article XXIV of the Management Agreement
is hereby amended to read as follows: "Except as specifically provided in
Section 13.5(d) of the Lease Agreement and Section 12.5(d) of the Ground Lease,
termination of this Agreement, pursuant to this Article XXIV, shall not in any
way disturb or affect the Lessee's obligations or rights under the Lease
Agreement or the Ground Lease, provided Gateway performs its obligations to
operate the Baseball Facility in accordance herewith, unless such performance is
waived or permitted to be modified by the Lessee."
Section 5. Amendments to Section 18.5.
The following new Section 18.5(d) is added to the Management Agreement:
"If the Lease Agreement or the Ground Lease or both are rejected or terminated
by Lessee or any debtor in possession, trustee or receiver acting in the place
of, or on behalf of, Lessee, in any proceeding under title 11 of the United
States Code or other similar law, so that Gateway no longer has the benefit of
6
<PAGE> 84
the Lease Agreement or the Ground Lease, and within sixty (60) days of such
rejection or termination, the Lease Agreement or the Ground Lease is not
reinstated for the balance of the then remaining terms on the same terms and
conditions, then this Management Agreement shall terminate."
Section 6. Remainder of Management Agreement. Except as
otherwise provided herein, the terms, provisions and conditions of
the Management Agreement shall remain unchanged.
Section 7. Defined Terms. All capitalized terms not defined
herein shall have the same meaning as set forth in the Management
Agreement or the Stadium Indenture.
7
<PAGE> 85
IN WITNESS WHEREOF, the parties have caused this Second Amendment to
Management Agreement to be executed by their duly authorized representatives on
the date first set forth above.
GATEWAY ECONOMIC
DEVELOPMENT CORPORATION
OF GREATER CLEVELAND
By: /s/ illegible
------------------------------
Its: Chief Financial Officer
------------------------------
"GATEWAY"
BALLPARK MANAGEMENT
COMPANY
By: /s/ Martin J. Cleary
------------------------------
Its: Martin J. Cleary, Vice President
------------------------------
"OPERATOR"
8
<PAGE> 1
Exhibit 10.5
COMMON AREA EASEMENT AND
MAINTENANCE AGREEMENT
BY AND AMONG
GATEWAY ECONOMIC DEVELOPMENT
CORPORATION OF GREATER CLEVELAND
AND
BALLPARK MANAGEMENT COMPANY
DATED AS OF JULY 3, 1991
<PAGE> 2
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE I DEFINITIONS AND EXHIBITS .................................... 2
1.1 Definitions ........................................... 2
1.2 Exhibits .............................................. 7
ARTICLE II USE, CONTROL, MAINTENANCE AND
REPAIR OF COMMON AREAS ...................................... 7
2.1 Easements in Common Areas ............................. 7
2.2 Future Designated Areas ............................... 7
2.3 Control of Common Areas ............................... 7
2.4 Maintenance and Repair of Common Areas ................ 8
2.5 Self-Help ............................................. 8
2.6 Special Provisions for Area and Arena Land ............ 8
2.7 County Provision ...................................... 9
ARTICLE III LIGHTING OF COMMON AREAS .................................... 9
ARTICLE IV COMMON AREA SIGNS AND ADVERTISING ........................... 9
4.1 Content, Location, Design and
Appearance ............................................ 9
4.2 Joint Marketing Opportunities ......................... 10
ARTICLE V SECURITY OF COMMON AREAS .................................... 11
ARTICLE VI INSURANCE ................................................... 11
6.1 Construction Periods .................................. 11
6.2 Post-Construction Period .............................. 11
6.3 Insurance Requirements ................................ 12
6.4 Waiver of Subrogation ................................. 13
6.5 Certificates .......................................... 13
ARTICLE VII REAL ESTATE TAXES ........................................... 12
ARTICLE VIII CONCESSIONS ................................................. 14
ARTICLE IX PARKING ..................................................... 14
9.1 Designated Parking Areas .............................. 14
9.2 On-Site Parking ....................................... 15
9.3 Additional Parking .................................... 15
9.4 Lessee's Parking Revenue .............................. 15
ARTICLE X COMMON AREA NET REVENUE SHARING ............................. 16
10.1 Payment of Net Revenues ............................... 16
10.2 Audit ................................................. 16
</TABLE>
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<PAGE> 3
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE XI MISCELLANEOUS ............................................... 16
11.1 No Amendment of Baseball Facility
Agreements ............................................ 16
11.2 Notices ............................................... 16
11.3 Covenants Running with the Land ....................... 18
11.4 Breach Shall Not Permit Termination ................... 18
11.5 Estoppel Certificates ................................. 19
11.6 Terms ................................................. 19
11.7 No Joint Venture ...................................... 19
11.8 Headings .............................................. 19
11.9 Agreement Contains All Terms .......................... 19
11.10 Governing Law ......................................... 19
11.11 Cross References ...................................... 19
11.12 Force Majeure ......................................... 19
11.13 Amendment, Waiver ..................................... 20
11.14 Consent ............................................... 20
11.15 Severability .......................................... 20
11.16 Accord and Satisfaction ............................... 20
11.17 Further Assurances .................................... 21
11.18 No Third Party Beneficiary ............................ 21
11.19 Conforming Amendments ................................. 21
11.20 Counterparts .......................................... 21
11.21 Term .................................................. 21
ARTICLE XII THREE PARTY AGREEMENT AND
CENTRAL MARKET COMMUNITY DEVELOPMENT PLAN ................... 21
ARTICLE XIII LEAGUE APPROVAL ............................................. 22
</TABLE>
-ii-
<PAGE> 4
COMMON AREA EASEMENT AND MAINTENANCE AGREEMENT
THIS COMMON AREA EASEMENT AND MAINTENANCE AGREEMENT (hereinafter this
"Agreement") is made as of this 3rd day of July, 1991, by and among GATEWAY
ECONOMIC DEVELOPMENT CORPORATION OF GREATER CLEVELAND, a nonprofit corporation
organized under the laws of the State of Ohio (hereinafter referred to as
"Gateway"), CLEVELAND INDIANS BASEBALL COMPANY LIMITED PARTNERSHIP, an Ohio
limited partnership (hereinafter referred to as the "Lessee") and BALLPARK
MANAGEMENT COMPANY, an Ohio corporation (hereinafter referred to as the
"Operator").
RECITALS:
A. Gateway is the fee owner of a parcel of land consisting of
approximately 28 acres located generally west of East Ninth Street, south of
Huron Road, east of Ontario Street and north of Carnegie Avenue, in the City of
Cleveland (the "City"), Cuyahoga County (the "County"), Ohio, commonly referred
to as the Central Market Square Site and more fully described in Exhibit A
attached hereto and made a part hereof (the "CMS Site").
B. Gateway intends to construct a Baseball Facility (as defined in the
Lease Agreement) on a portion of the CMS Site for the purpose of staging home
games for the Lessee and other special events, including civic and charitable
events.
C. Gateway and the Lessee have executed and delivered the Lease
Agreement (as hereinafter defined), pursuant to which Gateway has leased to the
Lessee Gateway's interest in the Ballpark Land and the Ballpark Improvements
(both as defined in the Lease Agreement).
D. Gateway and the Lessee have executed and delivered the Ground Lease
(as hereinafter defined) pursuant to which Gateway has leased to the Lessee
Gateway's fee interest in the Field and the Field Improvements (both as defined
in the Ground Lease).
E. Gateway and the Operator shall execute and deliver the Management
Agreement (as hereinafter defined) pursuant to which Gateway shall grant to the
operator the exclusive right and obligation to manage and operate the Baseball
Facility.
F. With respect to the remaining property in the CMS Site, Gateway has
agreed to grant to the Lessee and the Operator and the operator of the Arena for
the benefit of and as an appurtenance to the Baseball Facility and the Arena
certain easements with respect thereto and the parties desire to provide for the
division of costs and expenses for the maintenance, operation, repair, or
replacement of such areas and the facilities
<PAGE> 5
located therein (hereinafter defined as the "Common Areas") and to impose
covenants and obligations with respect to the use or operation thereof.
NOW, THEREFORE, in consideration of the premises and the covenants
contained herein, and for one dollar ($1.00) paid by each of the parties to the
other, the receipt and sufficiency of which is hereby mutually acknowledged, the
parties agree as follows:
ARTICLE I
---------
DEFINITIONS AND EXHIBITS
A. DEFINITIONS. As used in this Agreement and unless otherwise
expressly indicated herein, the following terms shall have the following
meanings:
"ADDITIONAL PARKING" shall have the meaning set forth in Section 9.3
hereof.
"AFFILIATE(S)" shall mean as to any named individual or entity: (a) any
individual or entity directly or indirectly owning, controlling or holding with
power to vote, fifty percent (50%) or more of the outstanding voting interests
of such named entity; (b) any entity fifty percent (50%) or more of whose
outstanding voting interests are, directly or indirectly, owned, controlled or
held with power to vote by such named individual or entity; (c) any entity or
individual directly or indirectly controlling, controlled by or under common
control (using ownership of fifty percent (50%) or more of the outstanding
voting interests as a test for determining control with respect to an entity)
with such named individual or entity; (d) any trustee, officer, director or
general partner of such named entity; or (e) if a named individual or entity is
an officer, director, general partner, trustee of an entity, such entity.
"AGREEMENT" shall mean this Common Area Easement and Maintenance
Agreement.
"ARENA" shall have the meaning set forth in the Lease Agreement.
"ARENA LAND" shall have the meaning set forth in the Lease Agreement.
"ARENA PARKING" shall have the meaning set forth in the Lease
Agreement.
"BALLPARK IMPROVEMENTS" shall have the meaning set forth in the Lease
Agreement.
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"BALLPARK LAND" shall have the meaning set forth in the Lease
Agreement.
"BASEBALL CONCESSIONS" shall mean any and all concessions, merchandise,
novelties or other articles (other than food or beverage) of the type or
substantially similar to such products provided by the Operator or its licensees
or concessionaires in the Baseball Facility or sold in the gift shops located in
the Baseball Facility.
"BASEBALL FACILITY" shall have the meaning set forth in the Lease
Agreement.
"BASEBALL FACILITY AGREEMENTS" shall mean, collectively, the Lease
Agreement, the Management Agreement and the Ground Lease.
"BONDS" shall have the meaning set forth in the Lease Agreement.
"BUSINESS DAY" shall mean any day other than a Saturday, a Sunday or a
public or bank holiday or the equivalent for banks generally under the laws of
the State of Ohio.
"CENTRAL MARKET COMMUNITY DEVELOPMENT PLAN" shall mean the Central
Market Community Development Plan approved by Council of the City on September
29, 1986, and amended on November 5, 1990 and June 17, 1991.
"CITY" shall mean Cleveland, Ohio.
"CMS SITE" shall mean the site plan of the CMS Site attached hereto as
Exhibit B and made a part hereof.
"COMMON AREAS" shall mean those portions of the CMS Site (other than
(i) the Baseball Facility; (ii) from and after the execution of an amendment to
this Agreement pursuant to Section 2.6 hereof by the operator and lessee of any
sports facility constructed pursuant to the Three Party Agreement, including,
but not limited to, the operator and lessee of the Arena, the Arena Land and the
Arena Parking; and (iii) areas designated pursuant to Article II hereof),
including, but not limited to, the On-Site Parking, the Additional Parking (to
the extent located in the CMS walkways, seating and other amenities, landscaped
areas, curbs, exterior and interior ramps, ingress and egress streets, access
and perimeter roads, storm or sanitary sewers, common underground utility lines,
bus and taxi stands.
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<PAGE> 7
"COMMON AREA EXPENSES" shall mean all costs related to maintaining,
managing, operating, equipping, policing, securing, repairing, replacing and
protecting the Common Areas, including, but not limited to, cleaning, lighting,
removal of snow, trash, dirt and debris; and all expenses incurred in connection
with obtaining and maintaining the insurance coverage described in Article VI
hereof; maintenance and construction work required to preserve and maintain the
utility and appearance of the Common Areas; operating, maintaining, repairing
and replacing machinery and equipment used in the operation and maintenance of
the Common Areas or any rent paid for the leasing of any such machinery and
equipment; enforcing any operating agreements pertaining to the Common Areas or
any portion thereof, or any arbitration or judicial actions undertaken with
respect to the same; policing and security, including uniforms, equipment and
supplies; acquisition, installation, maintenance and operation of any cost
savings devices or equipment; advertising and directional signs; pest
extermination; payroll, payroll taxes and reasonable employee benefits of
management personnel, including, without limitation, security and maintenance
personnel, but excluding excessive compensation of executive and administrative
personnel; and an administrative cost equal to ten percent (10%) of the total
cost and expense of all the foregoing included costs.
"COMMON AREA NET REVENUE" shall mean the Common Area Revenue LESS
Common Area Expenses.
"COMMON AREA REVENUE" shall mean any and all cash and other property
from time to time actually received by Gateway from any source located or
operated in or from the Common Areas by Gateway or its designees, including, but
not limited to, all revenue from concessions, parking, advertising and special
events operated from or conducted in the Common Areas.
"COMPLETION DATE" shall have the meaning set forth in the Lease
Agreement.
"CONCESSIONAIRE" shall have the meaning set forth in Section 2.3 of the
Management Agreement.
"CONCESSIONS" shall mean any and all food, beverage, eating facilities
or vending machines.
"COUNTY" shall mean Cuyahoga County, Ohio.
"EMERGENCY" shall mean an event or occurrence which requires immediate
remedial action (a) for the protection of persons or property; or (b) to comply
with any legal requirement to the extent that noncompliance therewith would
materially adversely affect the operations or property or would result, or may
be asserted or alleged to result, in criminal or civil liability of Gateway, the
Lessee or the Operator.
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<PAGE> 8
"EVENT PERIOD" shall mean the period commencing three (3) hours prior
to and two (2) hours after any Home Date or Special Event conducted at the
Baseball Facility.
"FORCE MAJEURE" shall mean acts of God, fire or other casualty,
earthquake, flood, epidemic, landslide, enemy act, war, holocaust, riot,
intervention by civil or military authorities of government, insurrection or
other civil commotion, general unavailability of certain materials, strikes,
boycotts or labor disputes beyond the control of either party hereto that cause
such party to be delayed or hindered in, or prevented from, the performance of
any covenant or obligation hereunder, other than one for the payment of money.
"GROUND LEASE" shall mean the document so titled by and between Gateway
and the Lessee and dated of even date herewith.
"HOME DATE" shall have the meaning set forth in the Lease Agreement.
"INTEREST RATE" shall mean the interest rate of two percent (2%) above
the rate of interest per annum then charged to large corporate borrowers of the
highest credit standing for short-term unsecured obligations, but in no event
exceeding the maximum legal rate permitted to be charged to the Lessee, the
Operator or Gateway, whichever is less.
"LEASE AGREEMENT" shall mean the document so titled by and between
Gateway and the Lessee and dated of even date herewith.
"MANAGEMENT AGREEMENT" shall mean the document so titled by and between
Gateway and the Operator and dated of even date herewith.
"NOTICE" shall have the meaning set forth in Section 11.2 hereof.
"ON-SITE PARKING" shall have the meaning set forth in Section 9.2
hereof.
"PERMITTEE" shall mean owners and lawful occupants of any portion of
the CMS Site and their respective officers, directors, employees, agents,
partners, contractors, customers, visitors, invitees, licensees and
concessionaires.
"PERMITTEE" shall mean owners and lawful occupants of any portion of
the CMS Site and their respective officers, directors, employees agents,
partners, contractors, customers, visitors, invitees, licensees and
concessionaires.
"PRIVATE STREETS" shall mean any and all streets, routes, roads, ways
or thoroughfares that are open for use and located on the CMS Site not
designated as Public Streets.
"PUBLIC STREETS" shall mean all streets, routes, roads, public ways or
thoroughfares owned and controlled by the City.
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"REPORTING PERIOD" shall mean, from and after the date of this
Agreement, each calendar quarter ending on March 31, June 30, September 30 and
December 31.
"SECURITY FORCE" shall mean licensed, bonded and trained personnel
including, without limitation, off-duty police officers employed for the purpose
of guarding and protecting persons and property from injury, theft and harm.
"SERVICE LINES" shall mean any pipeline, utility line, electrical line,
gas line, cable, sanitary or storm sewer, pipe, vent, conduit, duct or other
line or wire that provides or distributes Utility Service to the CMS Site,
including, without limitation, all mechanical, plumbing, heating, ventilating
and other fixtures and equipment necessary for such provision or distribution to
the CMS Site.
"SIGNS" shall mean directional, promotional or advertising signs,
signboard frames and appurtenant fixtures designed for public display of
information, including, but not limited to, information concerning or related to
the Lessee, the Operator or the Baseball Facility.
"SITE AND ON-SITE PARKING REQUIREMENTS" shall have the meaning set
forth in the Lease Agreement.
"SPECIAL EVENT" shall have the meaning set forth in the Lease
Agreement.
"TERM" shall mean the period commencing on the Completion Date and
ending on the earlier of (a) December 31 of the year in which the twentieth
(20th) full Season (as defined in the Lease Agreement) following the Completion
Date is concluded, or (b) upon the retirement, defeasance or discharge (as
provided in The three Party Agreement) of all Bonds, (c) the termination of the
Ground Lease, or (d) the termination of the Lease Agreement.
"THREE PARTY AGREEMENT" shall mean that certain Agreement Relating to
Ownership, Financing, Construction and Operation of a Sports Facility and
Related Economic and Redevelopment Projects, dated as of November 7, 1990, by
and among the County, the City and Gateway.
"UTILITY SERVICE" shall mean the furnishing of water, electricity, gas,
electric, electronic communications, telephone, storm or sanitary drainage and
any other similar or related power or information transmission lines.
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<PAGE> 10
1.2 EXHIBITS. The following Exhibits are attached to and form a part of
this Agreement:
Exhibit A - Legal description of CMS Site
Exhibit B - CMS Site Plan
ARTICLE II
----------
USE, CONTROL, MAINTENANCE AND
REPAIR OF COMMON AREAS
2.1 EASEMENTS IN COMMON AREAS. During the Term, here are hereby created
for the benefit of the Baseball Facility easements for the use of the Common
Areas in accordance with the purposes for which the Common Areas were designed
and intended. Said easements shall be used and enjoyed in common by all owners,
operators or lessees of the Baseball Facility, including, but not limited to,
the Lessee, the Operator and Gateway and by their respective Permittees, in
connection with the development, use and enjoyment of their respective
properties, subject to the terms and conditions hereof (including, without
limitation, terms and conditions that may result in the designation of portions
of the present Common Areas for exclusive use) and further subject to the
Baseball Facility Agreements and reasonable rules and regulations adopted by
Gateway and approved by the Lessee and the Operator. Notwithstanding the
preceding, Lessee and Operator shall enter into an amendment to this Agreement
and any common area easement agreement filed for record, to expressly exclude
from the Common Areas the Arena, the Arena Land and the Arena Parking, as more
fully set forth in Section 2.6 hereof and to include the benefits of the
easements hereby created to the lawful owners, operators and lessees of the
Arena and their respective Permittees.
2.2 FUTURE DESIGNATED AREAS. No part of the Common Areas may be
designated for another use without the prior written consent of the Lessee and
the Operator, which consent may be withheld in the sole and absolute discretion
of the Lessee and the operator if such future development would: (a) materially
adversely affect, in the opinion of the Lessee or the operator, the operations
of the Baseball Facility; (b) reduce the On-Site Parking; (c) result in the loss
or obstruction of natural light or ventilation to the Baseball Facility; or (d)
be aesthetically incompatible, in the opinion of the Lessee or the Operator,
with the design or appearance of the Common Areas or the Baseball Facility.
2.3 CONTROL OF COMMON AREAS. Except as may otherwise be expressly
provided for herein or in the Baseball Facility Agreements, Gateway shall have
the right to control, manage, and direct the Common Areas in accordance with the
purposes for which
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<PAGE> 11
the Common Areas are designed and intended; provided, however, that Gateway,
without the prior written consent of the Lessee and the Operator, which consent
shall not be unreasonably withheld or delayed, shall not (a) modify, restrict or
otherwise control ingress to and egress from the Common Areas; (b) conduct
promotions, festivals, shows, displays, and other activities and events in the
Common Areas during any Event Period; (c) sell or permit to be sold Concessions
in the Common Areas during any Event Period; (d) materially change the location
of, enlarge, reduce or otherwise alter the Common Areas except for providing for
designated areas contemplated by the Baseball Facility Agreements, such as
On-Site Parking, or (e) enter into material contracts with respect to the use of
the Common Areas.
2.4 MAINTENANCE AND REPAIR OF COMMON AREAS. Gateway covenants and
agrees, at Gateway's expense, to maintain, repair and replace and keep in good
order, condition and repair the Common Areas, including, without limitation, all
facilities, structures, Service Lines and Private Streets located in or forming
part of, the common Areas. For purposes of this Agreement, "maintenance,"
"maintain" or "repair" shall mean keeping the Common Area and its improvements
in a good, safe and sanitary condition and appearance, promptly making all
foreseen and unforeseen, and ordinary and extraordinary, changes, repairs and
improvements of every kind and nature required to be made in order to keep and
maintain the Common Areas and its improvements in good, safe and sanitary
condition and appearance, promptly collecting and removing therefrom all
rubbish, litter and debris, and promptly removing, to the extent reasonably
practicable, snow, ice and surface waters, all in compliance with all applicable
laws, ordinances and regulations including, without limitation, applicable
environmental regulations.
2.5 SELF-HELP. In the event that Gateway fails to discharge its
maintenance and repair obligations hereunder within a reasonable time after
receiving notice of such failure from the Lessee or the Operator, the Lessee or
the Operator shall have the right to perform such maintenance or repair and
charge Gateway with the reasonable cost thereof plus an overhead charge of ten
percent (10%) of such costs. In addition to, and without limiting in any way the
Lessee's or the Operator's rights and remedies at law or equity, the Lessee or
the Operator may, with notice to Gateway, and at any time or from time to time,
charge, setoff and otherwise apply all or any part of the Lessee's or the
Operator's Obligations (as defined in the Baseball Facility Agreements) other
than the operator's obligations pursuant to Article VI of the Management
Agreement, against any of Gateway's obligations under this Agreement.
2.6 SPECIAL PROVISIONS FOR ARENA AND ARENA LAND. The Lessee and the
operator acknowledge that Gateway is attempting to develop the Arena on the
Arena Land and that Gateway has entered into that certain Memorandum of Intent
with the Cavaliers Division
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<PAGE> 12
of Nationwide Advertising Services, Inc. and Selkirk Arena Management, Inc.
(jointly referred to herein as the "Cavs") to lease the proposed Arena to the
Cavs. Upon the execution and delivery of formal agreements for the lease of the
Arena, the parties intend to provide the opportunity for the Cavs, or such other
developer of the Arena Land, including, but not limited to, the Operator or
lessee of the Arena, to join in the execution of this Agreement pursuant to an
amendment hereto, which amendment shall: (i) not materially alter or impair the
Lessee's or the Operator's rights hereunder, (ii) provide to operators of the
Arena, similar rights to those provided the Operator herein, and (iii) provide
for equitable arrangements for preserving such respective rights during
overlapping events. The Lessee and the operator agree to enter into any
necessary amendments to any recorded common area easement agreements to reflect
the amendments to this Agreement and to evidence of record the exclusion from
the Common Areas, the Arena, the Arena Land and Arena Parking as provided
herein.
2.7 COUNTY PROVISION. The Lessee and the Operator acknowledge that
Gateway may assign to the County (or such other governmental entities as are
approved by the Lessee and the Operator) certain rights and request that the
County assume certain obligations of Gateway hereunder and the Lessee and the
Operator agree to enter into any necessary amendment hereto to accomplish such
assignments to and assumption by the County, provided such amendment shall not,
in any way, materially alter or impair the Lessee's or the Operator's rights
hereunder. The parties agree that such assignment must occur prior to the
expiration of the five-year period commencing upon the Completion Date as
defined in the Lease Agreement.
ARTICLE III
-----------
LIGHTING OF COMMON AREAS
Gateway agrees to keep all Common Areas well lighted, at Gateway's
expense, during any period that the Baseball Facility is open for business to
the public and for reasonable times before and after such periods. Gateway
further agrees to maintain and keep lighted for security purposes, seven days
each week during the hours of darkness, security lights sufficient to illuminate
the exterior Common Areas at a minimum level of one (1) foot-candle at grade.
ARTICLE IV
----------
COMMON AREA SIGNS AND ADVERTISING
4.1 CONTENT, LOCATION, DESIGN AND APPEARANCE. The content, location,
design and appearance of all Signs located in
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the Common Areas shall be subject to the prior written approval of the Lessee
and the Operator, which approval shall not be unreasonably withheld. The
Operator shall be entitled to operate, and retain the revenues generated
therefrom, one (1) free-standing, movable or non-movable, lighted Sign in the
Common Area, in an area selected by the Operator and approved by Gateway; such
sign to be treated as an advertising sign on the exterior of the Baseball
Facility and governed by the terms and conditions of the Management Agreement
and the Lease Agreement as such. Gateway shall maintain in good condition and
repair, and replace all Signs in the Common Areas that are damaged or in
disrepair; provided, however, that the Operator shall conduct all Capital
Repairs and Routine Maintenance (as defined in the Management Agreement) for the
sign referred to in the preceding sentence.
4.2 JOINT MARKETING OPPORTUNITIES. The parties recognize that the
Operator, Gateway and the operator of the Arena may derive extra value from
mutual cooperation between the parties in procuring advertising, vendor and
supplier contracts based upon the promotion of the Baseball Facility, the Arena
and the Common Areas as an integrated sports complex ("Joint Marketing
Opportunities"). Subject to the terms and conditions of the Baseball Facility
Agreements, the Operator and Gateway shall:
(a) use reasonable efforts to cooperate in exploring and
capitalizing on the benefits to be derived from Joint
Marketing opportunities; and
(b) allocate the incremental net income generated solely
as a result of Joint Marketing Opportunities and not
otherwise available to any of the parties but for the
Joint Marketing Opportunities as follows: (i)
one-third (1/3) to Gateway, (ii) one-third (1/3) to
the operator of the Arena, and (iii) one-third (1/3)
to the Operator and the Lessee, in the aggregate.
Any proposal for a Joint Marketing Opportunity must include (i) the
terms and conditions the proposing party would be willing to make available to
the Operator if such proposal were solely for the Baseball Facility, (ii) a
comparative economic analysis of the proposal solely for the Baseball Facility
and the Joint Marketing Opportunity; and (iii) sufficient detail to allow
independent verification by the Operator of the terms and conditions. Joint
Marketing Opportunities or any contracts entered into as a result thereof shall
not encumber or reduce, in any way, the revenues anticipated to be generated at
the Baseball Facility and available to the Lessee or the Operator. The Operator
and the Cavs will each have the right, in their sole discretion, to approve any
Joint Marketing Opportunities.
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<PAGE> 14
ARTICLE V
---------
SECURITY OF COMMON AREAS
Gateway agrees to keep all Common Areas secure by employing and
maintaining a Security Force for the Common Areas, at Gateway's expense, during
any period that the Baseball Facility is open for business to the public, and
for reasonable times before and after such periods. Gateway shall provide a
security Force of sufficient size to adequately monitor the Common Areas and
such Security Force shall be flexible as to size dependent on the number of
persons anticipated to be present in the Common Areas.
ARTICLE VI
----------
INSURANCE
6.1 CONSTRUCTION PERIODS. Gateway shall, until the Completion Date and
any additional construction periods during which improvements are constructed in
the common Areas, maintain in full force and effect, at Gateway's expense: (a)
insurance against damage or destruction to any Common Area improvements for the
full value thereof, including all materials, equipment, machinery and supplies
for use in construction or installation of any Common Area improvements on an
"all risk" peril basis, including coverage against flood, sewer backup and
earthquake, in the form of builder's risk coverage, and (b) cause its
professionals to carry professional liability insurance providing coverage for
errors and omissions relating to workmanship and design.
6.2 POST-CONSTRUCTION PERIOD. From and after the Completion Date,
Gateway, in its name, shall maintain in full force and effect the following:
(a) insurance against damage or destruction to Gateway's
equipment and other personal property, improvements
and betterments to the Common Areas by providing "all
risk" peril coverage in the amount of at least ninety
percent (90%) of replacement cost, subject to
deductible limits not to exceed $25,000. Such
insurance shall have an agreed amount endorsement;
(b) statutory workers' compensation coverage through the
State of Ohio, and Ohio Stop Gap Liability coverage
in the amount of $1,000,000 per occurrence, or such
lesser amount as may
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<PAGE> 15
satisfy carriers of Gateway's umbrella or excess
liability coverage;
(c) "occurrence type" general liability insurance against
bodily injury and property damage arising from
occurrences in and about the Common Areas and
covering Gateway Is contractual liability for
indemnification under this Agreement. Such insurance
shall be written on a commercial general liability
policy form to include premises operations, products
and completed operations, personal injury/advertising
injury, independent contractors and broad form
property damage. The policy shall also contain a
general aggregate per location of not less than
$2,000,000 and a general occurrence and a
products/completed operations aggregate of not less
than $1,000,000 and naming the Operator and the
Lessee as additional insureds; and
(d) umbrella or excess liability coverage (in form no
less broad than underlying coverage) to apply excess
of automobile, general, contractual and employer's
liability limits, in an amount necessary to increase
overall coverage to $50,000,000 per occurrence and
naming the Operator and the Lessee as additional
insureds.
6.3 INSURANCE REQUIREMENTS.
(a) All policies of insurance required hereunder shall be
written by carriers which are members of the Ohio
Guaranty Fund and possess a policyholder's rating or
better and a minimum Class VII financial size
category as listed at the time of issuance by A.M.
BEST INSURANCE REPORTS ("Best Reports") (the
aforesaid rating classifications to be adjusted if
and to the extent that BEST REPORTS adjusts its
rating categories).
(b) All policies shall provide that they may not be
canceled, renewed or reduced unless at least thirty
(30) days' notice thereof has been provided to the
additional insureds. In no event shall any party be
required to insure for liability limits in excess of
coverage which is available at commercially
reasonable rates. In the event that tort liability
reform is adopted which makes the limits of liability
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<PAGE> 16
hereinabove provided in excess of commercially
reasonable and prudent limits of liability, such
limits will be equitably reduced. The insurance
policies required hereunder shall be reviewed on an
annual basis to determine the adequacy of the
coverage amounts.
6.4 WAIVER OF SUBROGATION. Gateway, the Lessee and the Operator agree
that all insurance policies against loss or damage to property and business
interruption or rent/revenue loss, and all liability insurance policies required
hereunder, shall be endorsed to provide that any release from liability of, or
waiver of claim for, recovery from the other party entered into in writing by
the insured thereunder prior to any loss or damage shall not affect the validity
of said policy or the right of the insured to recover thereunder. Such insurance
policies shall further provide that the insurer waives all rights of subrogation
which such insurer might have against the other party. Without limiting any
release or waiver of liability or recovery contained in any other section of
this Agreement, but rather in confirmation and furtherance thereof, each of the
parties hereto waives all claims for recovery from the other party for any loss
or damage to any of its property or damages as a result of business
interruption, rent loss or liability of the types covered in Subsections 6.2(c)
and (d) above, insured under valid and collectible insurance policies to the
extent of any recovery collectible under such insurance policies.
6.5 CERTIFICATES. Not later than the date on which coverage is to be
provided hereunder, the party required to provide same shall furnish to the
other party a certificate evidencing the required coverage.
ARTICLE VII
-----------
REAL ESTATE TAXES
During the Term, Gateway shall pay when due all real estate taxes,
personal property taxes, assessments and other governmental levies and charges,
general and special, ordinary and extraordinary, of any kind or nature, lawfully
levied or assessed by federal, state, county or municipal government, upon or
with respect to the Common Areas and any and all other improvements hereafter
constituting a part of the Common Areas, or any payments in lieu thereof
(collectively, "Real and Personal Property Taxes"); provided, however, that if,
because of any change in the method of taxation of real estate or personal
property, any other or additional tax or assessment is imposed upon the
property, any other or additional tax or assessment is imposed upon the Common
Areas or in substitution for, or in lieu of, any tax or assessment which would
otherwise be included in Real and Personal Property Taxes, such other tax or
assessment shall also be Gateway's
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responsibility. Gateway hereby agrees to indemnify, defend and hold the Lessee
and the Operator harmless from and against all Real and Personal Property Taxes.
In the event the Operator's interest in the Management Agreement, or the
Lessee's interests in the Lease Agreement or the Ground Lease, is terminated as
a result of a failure to pay Real and Personal Property Taxes, including,
without limitation, a sale of the Baseball Facility pursuant to a foreclosure
sale, and within sixty (60) days after such termination are not reinstated for
the balance of the then remaining terms thereof on the same terms and
conditions, the Operator or the Lessee shall be entitled to terminate this
Agreement upon thirty (30) days prior written notice to Gateway. In the event
Gateway fails to pay any Real and Personal Property Taxes when the same shall be
due and payable, the Operator or the Lessee shall have the right, but shall have
no obligation, to pay the same or any of them and upon such payment by the
Operator or the Lessee, Gateway shall, immediately after proof of such payment
shall have been submitted to Gateway by the Operator or the Lessee and on demand
therefor, pay the Operator or the Lessee the amount of any such payment so made
by the Operator or the Lessee, with interest thereon at the Interest Rate.
ARTICLE VIII
------------
CONCESSIONS
In accordance with the Management Agreement, the Operator, or its
designated concessionaire, has the exclusive right to control all concessions
sold at the Baseball Facility. Gateway acknowledges that the sale of Concessions
in the Common Areas during events at the Baseball Facility would have an adverse
impact on the sale of concessions at the Baseball Facility. Therefore, the
Operator, or its designated concessionaire, shall have the sole and exclusive
right to sell Concessions on the CMS Site during an Event Period, and, in the
event the Operator utilizes the Common Area for such purposes, the Operator
shall cause the Common Areas so utilized to be cleaned to the same condition
existing immediately preceding such use. Gateway shall not permit the sale of
Concessions in the Common Area during an Event Period. The Operator, or its
designated concessionaire, shall have the sole and exclusive right to sell
Baseball Concessions on the CMS Site and Gateway shall not otherwise permit the
sale of any Baseball Concessions on the CMS Site at any time.
ARTICLE IX
----------
PARKING
9.1 DESIGNATED PARKING AREAS. The Site and On-Site Parking Requirements
refers to alternative parking plans for the
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location and size of all garage and surface parking areas on the CMS Site
presently contemplated by the parties. Changes in the composition, size or
location of any parking areas on the CMS Site shall require the prior written
approval of the Operator and the Lessee.
9.2 ON-SITE PARKING. Gateway shall construct, on or before the
Completion Date within, the alternative designated areas as more fully
described in the Site and On-Site Parking Requirements, not less than one
thousand five hundred (1,500) parking spaces (the "On-Site Parking"). The
Operator and the Lessee shall have the exclusive use of the On-Site Parking,
without charge, for all events held at the Baseball Facility. In addition, the
Operator and the Lessee shall have the exclusive use of two hundred fifty (250)
spaces, selected by the Operator and the Lessee in the On-Site Parking, without
charge, at all times. Gateway shall also provide free adequate parking for the
part-time employees of the Operator and the Lessee, but such parking may be more
distant from the Ballpark than that provided to the full-time employees;
provided, however, that in the event the 250 spaces referred to above exceed the
number of spaces used by the Lessee and the Operator for their full-time
employees and Team personnel, the Lessee and the Operator shall first make such
excess spaces available to the part-time employees prior to requesting
additional spaces for any part-time employees. The Lessee shall have the option
to manage and operate the On-Site Parking as set forth in the Lease Agreement.
9.3 ADDITIONAL PARKING. In addition to the On-Site Parking, Gateway
shall use its best efforts to secure, on or before the Completion Date, the
availability of an additional seven thousand (7,000) to ten thousand (10,000)
parking spaces within a two thousand (2,000) foot radius of the Baseball
Facility, using the approximate proposed location of second base as the point of
beginning for such calculation (the "Additional Parking").
9.4 LESSEE'S PARKING REVENUE. Gateway shall be obligated to pay the
Lessee "Lessee's Parking Revenue" as provided for in the Lease Agreement.
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<PAGE> 19
ARTICLE X
---------
COMMON AREA NET REVENUE SHARING
10.1 PAYMENT OF NET REVENUES. Gateway shall pay to the Lessee each year
an amount equal to fifty percent (50%) of Common Area Net Revenue. Common Area
Net Revenue shall be payable on or before February 15 following the end of each
year for which such payments are due. Notwithstanding the preceding, in the
event the Arena is constructed and there is an obligation to share Common Area
Net Revenue with an operator or lessee of the Arena, the Lessee's share of
Common Area Net Revenue shall be diluted equally with Gateway's share, but in no
event shall the Lessee's share of such Common Area Net Revenue be less than
thirty-three and one-third percent (33-1/3%).
10.2 AUDIT. Payments of Lessee's Parking Revenue and Common Area Net
Revenue shall be accompanied by a statement, certified as true and correct by
Gateway's Chief Financial officer, showing with reasonable specificity all
computations relating thereto. For a period of ninety (90) days after delivery
by the Chief Financial Officer of Gateway to the Lessee of the certificate on
which such computation is based, the Lessee shall have the right, through the
use of an independent certified public accounting firm selected by the Lessee,
at any time during normal business hours and at the offices of Gateway, to
review, at the Lessee's expense, all books and records of Gateway which relate
solely to computations of Lessee's Parking Revenue and Common Area Net Revenue.
In the event such review results in a determination that the computations are
erroneous, the error shall be promptly corrected, and if such review discloses
an error of a three and one-half percent (3.5%) or more discrepancy in favor of
the Lessee, the expense of such review shall be reimbursed to the Lessee by
Gateway.
ARTICLE XI
----------
MISCELLANEOUS
11.1 NO AMENDMENT OF BASEBALL FACILITY AGREEMENTS. The rights and
obligations of the parties under this Agreement shall not affect the rights and
obligations of Gateway, the Lessee and the Operator under the Baseball Facility
Agreements.
11.2 NOTICES. Any notice (including, without limitation, demands,
notices of consent or nonconsent, approval or disapproval, statements, requests,
and invoices), election or other communication (hereinafter "Notices") which
any party shall desire or, be required to give pursuant to the provisions of
this Agreement shall be in writing, signed by the party or officer, agent or
attorney of the party giving the notice and shall be sent by
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<PAGE> 20
registered or certified mail, return receipt requested. The giving of Notices
shall be deemed effective upon delivery if served personally, or upon the third
business day from and including the day of posting, if deposited with the United
States Postal Service with postage charges prepaid, enclosed in a securely
sealed, properly addressed envelope as follows:
For Gateway:
Gateway Economic Development
Corporation of Greater Cleveland
402 Terminal Tower
Cleveland, Ohio 44113
Attention: Executive Director
With a copy to:
Climaco, Climaco, Seminatore, Lefkowitz &
Garofoli Co. L.P.A.
The Halle Building, Suite 900
1228 Euclid Avenue
Cleveland, Ohio 44115
Attention: Anthony J. Garofoli, Esq.
With a copy to:
Calfee, Halter & Griswold
1800 Society Building
Cleveland, Ohio 44114
Attention: Thomas E. Wagner, Esq.
For the Lessee:
Cleveland Indians Baseball
Company Limited Partnership
Cleveland Stadium
Cleveland, Ohio 44114
Attention: General Manager
With a copy to:
Richard E. Jacobs
25425 Center Ridge Road
Cleveland, Ohio 44145
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<PAGE> 21
With a copy to:
Baker & Hostetler
3200 National City Center
Cleveland, Ohio 44114
Attention: Gary L. Bryenton, Esq.
For the Operator:
Ballpark Management Company
Cleveland Stadium
Cleveland, Ohio 44114
Attention: General Manager
With a copy to:
Richard E. Jacobs
25425 Center Ridge Road
Westlake, Ohio 44145
With a copy to:
Baker & Hostetler
3200 National City Center
Cleveland, Ohio 44114
Attention: Gary L. Bryenton, Esq.
Notwithstanding the foregoing, however, notice shall also be deemed
complete two (2) business days after Notice has been delivered to a commercial
overnight delivery service, charges prepaid and enclosed in a securely sealed
envelope addressed as described above, provided that a follow up of such Notice
is sent by registered or certified mail as described above within twenty-four
(24) hours thereafter. Any party may change the address to which Notices are to
be directed pursuant to this Section 11.2 by providing written Notice, in a
manner herein provided, of such change of address to the other parties hereto.
11.3 COVENANTS RUNNING WITH THE LAND. The covenants and agreements set
forth in this Agreement are intended to be and shall be construed as covenants
running with the land comprising the CMS Site, both as to the benefits and
burdens thereof and shall be binding upon, inure to the benefit of, and be
enforceable by, the parties hereto and their respective successors and assigns
in the ownership of the Baseball Facility, the Common Areas or interests
therein; provided, however, that this Section is subject to the provisions of
Section 2.6 hereof.
11.4 BREACH SHALL NOT PERMIT TERMINATION. It is expressly agreed that
no breach of this Agreement shall entitle any party to cancel, rescind or
otherwise terminate this Agreement, but
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<PAGE> 22
such limitation shall not affect in any manner any other right or remedies which
the parties may have hereunder or by law by reason of any breach of this
Agreement.
11.5 ESTOPPEL CERTIFICATES. At any time and from time to time, the
Lessee agrees, upon request in writing from Gateway, to execute and deliver to
Gateway or to Gateway's lender holding or proposing to hold a mortgage on the
CMS Site, not later than thirty (30) days after receipt of such request, a
statement in writing certifying to all or any part of the following information
as may be requested: 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 stating the modifications) and that to the best
information and belief of the Lessee or the Operator, there is no default under
this Agreement by Gateway or, if there is a default, the nature thereof.
11.6 TERMS. Unless the context clearly requires otherwise, the singular
includes the plural, and vice versa, and the masculine, feminine and neuter
adjectives and pronouns include one another.
11.7 NO JOINT VENTURE. Nothing contained in this Agreement shall be
construed to make the parties partners or joint venturers or to render any party
liable for the debts or obligations of any other party, except as expressly
provided in this Agreement.
11.8 HEADINGS. The Article, Section and Subsection headings herein are
for convenience and reference only, and in no way define or limit the scope and
content of this Agreement or in any way affect its provisions.
11.9 AGREEMENT CONTAINS ALL TERMS. All of the representations,
agreements, understandings and obligations of the parties are contained herein
and in the Exhibits attached hereto.
11.10 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Ohio.
11.11 CROSS REFERENCES. Any reference in this Agreement to a Section,
Subsection, Article or Exhibit is a reference to a Section, Subsection, Article
or Exhibit, as appropriate, of this Agreement, unless otherwise expressly
indicated.
11.12 FORCE MAJEURE. Except as otherwise herein expressly provided, if
either party shall be delayed or hindered in or prevented from the performance
of any covenant or obligation hereunder, other than for the payment of money, as
a result of any Force Majeure and, provided, that the party delayed, hindered or
prevented from performing notifies the other party not later than ten (10)
Business Days after a Reporting Period of any such delay,
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<PAGE> 23
hindrance or prevention occurring during the Reporting Period at issue, then the
performance of such covenant or obligation, other than one for the payment of
money, shall be excused for the period of the impact of such delay, hindrance or
prevention and the period for the performance of such covenant or obligation
shall be extended by the number of days equivalent to the number of days of such
delay, hindrance or prevention. Failure to so provide the Reporting Period
notice as to a delay commencing during the Reporting Period at issue will result
in waivers of both excuse in performance and extension of time to perform under
this Section 11.12 with respect to any delay within that Reporting Period.
11.13 AMENDMENT, WAIVER. No alteration, amendment or modification
hereof shall be valid unless executed by an instrument in writing by the parties
hereto with the same formality as this Agreement. The failure of the Lessee, the
Operator or Gateway to insist in any one or more instances upon the strict
performance of any of the covenants, agreements, terms, provisions or conditions
of this Agreement or to exercise any election herein contained shall not be
construed as a waiver or relinquishment for the future of such covenant,
agreement, term, provision, condition, election or option, but the same shall
continue and remain in full force and effect. No waiver by the Lessee,
the Operator or Gateway of any covenant, agreement, term, provision or condition
of this Agreement shall be deemed to have been made unless expressed in writing
and signed by an appropriate official on behalf of Gateway or the Lessee or the
Operator. The payment by either party of sums due and payable hereunder, with
knowledge of the breach of any covenant, agreement, term, provisions or
condition herein maintained, shall not be deemed as a waiver of such breach.
11.14 CONSENT. Unless otherwise specifically provided herein, no
consent or approval by the Lessee, the Operator or Gateway permitted or required
under the terms of this Agreement shall be valid or be of any validity
whatsoever unless the same shall be in writing, signed by the party by or on
whose behalf such consent is given.
11.15 SEVERABILITY. If any Article, Section, Subsection, term or
provision of this Agreement or the application thereof to any party or
circumstance shall, to any extent, be invalid or unenforceable, the remainder of
the Article, Section, subsection, term or provision of this Agreement or the
application of same to parties or circumstances other than those to which it is
held invalid or unenforceable shall not be affected thereby and each remaining
Article, Section, Subsection, term or provision of this Agreement shall be valid
and enforceable to the fullest extent permitted by law.
11.16 ACCORD AND SATISFACTION. Payment by any party, or receipt or
acceptance by a receiving party, of any payment due hereunder in an amount less
than the amount required to be paid
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<PAGE> 24
hereunder shall not be deemed an accord and satisfaction, or a waiver by the
receiving party of its right to receive and recover the full amount of such
payment due hereunder, notwithstanding any statement to the contrary on any
check or payment or on any letter accompanying such check or payment. The
receiving party may accept such check or payment without prejudice to the
receiving party's right to recover the balance of such payment due hereunder or
to pursue any other legal or equitable remedy provided in this Agreement.
11.17 FURTHER ASSURANCES. The parties shall execute, acknowledge and
deliver, after the date hereof, without additional consideration, such further
assurances, instruments and documents, and shall take such further actions, as
any party shall reasonably request of the other in order to fulfill the intent
of this Agreement and the transactions contemplated hereby.
11.18 NO THIRD PARTY BENEFICIARY. The provision of this Agreement are
for the exclusive benefit of the parties hereto and not for the benefit of any
third person, nor shall this Agreement be deemed to have conferred any rights,
express or implied, upon any third person.
11.19 CONFORMING AMENDMENTS. The parties acknowledge that this
Agreement will be amended to conform to any approved Financing Arrangements
entered into from and after the date of this Agreement with the Bank, which
amendments shall be subject to the approval of the parties hereto, which
approval shall not be unreasonably withheld.
11.20 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
11.21 TERM. The term of this Agreement shall be for the Term.
ARTICLE XII
-----------
THREE PARTY AGREEMENT AND
CENTRAL MARKET COMMUNITY DEVELOPMENT PLAN
Gateway shall not approve any amendment to the Three Party Agreement as
provided in Section 5.05 thereof or the Central Market Community Development
Plan as provided in Section III.D. thereof without the prior written consent of
the Lessee and the Operator, which consent may be withheld in the Lessee's and
the Operator's sole discretion if such amendment would affect Lessee's or the
Operator's rights provided for in this Agreement, the Lease Agreement, the
Management Agreement or the Ground Lease.
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<PAGE> 25
ARTICLE XIII
------------
LEAGUE APPROVAL
This Agreement shall be null and void, and of no further force or
effect, if within sixty (60) days after execution by Gateway, the Lessee and the
Operator, this Agreement has not been approved by the Commissioner of Baseball
and the President of the American League. After execution hereof by Gateway, the
Lessee and the Operator, the Lessee and the Operator shall immediately request
such approval.
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<PAGE> 26
IN WITNESS WHEREOF, Gateway, the Lessee and the Operator hereto have
caused this Agreement to be executed and delivered as of the day and year first
above written.
Witness as to Gateway: GATEWAY ECONOMIC DEVELOPMENT
CORPORATION OF GREATER CLEVELAND,
an Ohio nonprofit corporation
/s/ illegible By: /s/ Pat Parker
- -------------------------------- --------------------------------------
/s/ illegible Its: Chairman
- -------------------------------- -------------------------------------
Witness as to Lessee: CLEVELAND INDIANS BASEBALL COMPANY
an Ohio Limited partnership
By: Cleveland Baseball Corporation,
an Ohio corporation, its sole
general partner
/s/ illegible By: /s/ Martin J. Cleary
- -------------------------------- --------------------------------------
Martin J. Cleary
/s/ illegible Its: Vice President
- --------------------------------
Witness as to Operator: BALLPARK MANAGEMENT COMPANY, an Ohio
corporation
/s/ illegible By: /s/ Gary L. Bryenton
- -------------------------------- --------------------------------------
Gary L. Bryenton
/s/ illegible Its: Secretary
- --------------------------------
<PAGE> 1
Exhibit 10.6
AMENDED AND RESTATED
USE AGREEMENT
BY AND BETWEEN
THE CITY OF WINTER HAVEN, FLORIDA
CLEVELAND INDIANS BASEBALL COMPANY
LIMITED PARTNERSHIP
OCTOBER 15, 1993
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
DEFINITIONS..................................................................................................... 1
1.1. Definitions................................................................................... 1
1.2. Terms......................................................................................... 6
USE OF BASEBALL FACILITY........................................................................................ 6
2.1. Indians' Use.................................................................................. 6
2.2. Minor League Franchise........................................................................ 8
2.3. Management and Operation of Baseball Facility................................................. 9
2.4. Other Uses of Baseball Facility............................................................... 11
TERM............................................................................................................ 11
3.1. Initial Term.................................................................................. 11
3.2. Renewal Options............................................................................... 12
FINANCING....................................................................................................... 12
IMPROVEMENTS AND ALTERATIONS.................................................................................... 12
5.1. City's Improvements to Baseball Facility...................................................... 12
5.2. Alterations and Additions by the Indians...................................................... 13
BASEBALL FACILITY REVENUES...................................................................................... 13
6.1. City Revenues................................................................................. 13
6.2. Office Rent................................................................................... 13
6.3. Indians' Revenues............................................................................. 14
6.4. Payments...................................................................................... 14
INSURANCE AND SUBROGATION....................................................................................... 15
7.1. City's Insurance.............................................................................. 15
7.2. Indians' Insurance............................................................................ 16
7.3. Insurance Requirements........................................................................ 17
7.4. Certificates.................................................................................. 17
7.5. Waiver of Subrogation......................................................................... 17
OPERATIONS, MAINTENANCE AND REPAIR.............................................................................. 18
8.1. Maintenance and Operating Expenses............................................................ 18
8.2. Capital Repairs............................................................................... 18
8.3. Maintenance and Repair Procedures............................................................. 18
8.4. Emergency Repairs............................................................................. 19
8.5. Indians' Self Help............................................................................ 19
TAXES........................................................................................................... 19
9.1. Real Estate and Personal Property Taxes....................................................... 19
9.2. Sales and Use Taxes........................................................................... 19
9.3. Sales Tax; Gross Concession Revenues and Gross Parking Revenues............................... 20
SECURITY AND CROWD CONTROL...................................................................................... 20
RIGHT OF ENTRY AND INSPECTION................................................................................... 21
EVENTS OF DEFAULT AND REMEDIES.................................................................................. 21
12.1. Events of Default by the Indians.............................................................. 21
12.2. Events of Default by the City................................................................. 22
12.3. Remedies...................................................................................... 23
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C>
12.4. General Provisions............................................................................ 23
12.5. Nondefaulting Party's Right to Cure Defaults.................................................. 24
TERMINATION..................................................................................................... 24
INDEMNIFICATION................................................................................................. 25
14.1. Indemnification by the Indians................................................................ 25
14.2. Indemnification by the City................................................................... 25
14.3. Procedure Regarding Indemnification........................................................... 25
14.4. Limitation.................................................................................... 26
ASSIGNMENT...................................................................................................... 27
15.1. Assignment By The Indians..................................................................... 27
15.2. Assignment By The City........................................................................ 27
EMINENT DOMAIN.................................................................................................. 27
16.1. Termination for Condemnation.................................................................. 27
16.2. Allocation of Award........................................................................... 28
16.3. Performance of Work........................................................................... 28
16.4. Temporary Taking.............................................................................. 28
UNTENANTABILITY AND OBLIGATION TO RESTORE UPON DAMAGE........................................................... 29
17.1. Property Damage............................................................................... 29
17.2. City to Restore............................................................................... 30
17.3. Untenantability............................................................................... 30
BASEBALL FACILITY NAME.......................................................................................... 30
NO MORTGAGE OF BASEBALL FACILITY................................................................................ 31
MISCELLANEOUS................................................................................................... 31
20.1. Force Majeure................................................................................. 31
20.2. Amendment; Waiver............................................................................. 31
20.3. Consent....................................................................................... 32
20.4. Severability.................................................................................. 32
20.5. Covenant of Quiet Environment................................................................. 32
20.6. Prorations.................................................................................... 32
20.7. Captions...................................................................................... 32
20.8. Binding Effect................................................................................ 32
20.9. Agreement Contains All Terms.................................................................. 33
20.10. Notices....................................................................................... 33
20.11. Applicable Law; Venue......................................................................... 33
20.12. Cross References.............................................................................. 33
20.13. Representatives............................................................................... 33
20.14. Effective Date................................................................................ 34
20.15. Radon Gas..................................................................................... 34
20.16. Accord and Satisfaction....................................................................... 34
20.17. Further Assurances............................................................................ 34
20.18. Retained Revenues............................................................................. 34
20.19. No Third Party Beneficiary.................................................................... 34
20.20. Counterparts.................................................................................. 35
20.21. No General Obligation......................................................................... 35
20.22. Recordable Memorandum of Use Agreement........................................................ 35
REPRESENTATIONS AND WARRANTIES.................................................................................. 35
21.1. Indians' Representations and Warranties....................................................... 35
21.2. City's Representations and Warranties......................................................... 36
</TABLE>
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<PAGE> 4
<TABLE>
<S> <C>
MAJOR LEAGUE APPROVAL........................................................................................... 37
TICKET AND PROMOTIONS AGREEMENT................................................................................. 37
23.1. Community Participation....................................................................... 37
23.2. Indians' Promotions........................................................................... 37
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</TABLE>
<PAGE> 5
AMENDED AND RESTATED
USE AGREEMENT
THIS AMENDED AND RESTATED USE AGREEMENT (the "Agreement") is made this
15 day of October, 1993 by and between THE CITY OF WINTER HAVEN, FLORIDA, a
Florida municipal corporation (the "City"), and CLEVELAND INDIANS BASEBALL
COMPANY LIMITED PARTNERSHIP, an Ohio limited partnership (the "Indians").
WHEREAS, the City owns the "Chain O'Lakes Park" baseball park with
3,100 reserved seats, 900 box seats and 2,300 bleacher seats and related
amenities, including a major league clubhouse, a minor league clubhouse,
administrative offices, 5 1/2 practice fields (exclusive of the regular playing
field) and training facilities and presently approximately 3,000 surface parking
spaces located adjacent to the Ballpark; and
WHEREAS, pursuant to that certain Use Agreement by and between the City
and the Indians entered into on October 12, 1992 (the "Original Agreement"), the
Indians conducted its 1993 major league and minor league baseball spring
training operations at the Baseball Facility; and
WHEREAS, the Indians and the City have agreed to enter into a long term
agreement by amending and restating in its entirety the original Agreement
pursuant to this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and promises contained herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1. DEFINITIONS. As used in this Agreement, the following terms
shall have the following meanings:
(a) "Action" means any demand, assertion, claim, action, or proceeding,
judicial or otherwise.
(b) "Advertising Revenue" means all revenue from the sale of
advertising at the Ballpark during the Term of this Agreement.
(c) "Ballpark" means the "Chain O'Lakes Park" baseball stadium
consisting of 3,100 reserved seats, 900 box seats and 2,300 bleacher seats and
appurtenant facilities including, but not limited to, concession stands, press
box, and restroom facilities.
<PAGE> 6
(d) "Baseball Camps" means any baseball related event conducted by the
Indians or its nominee at the Baseball Facility, other than during the Spring
Training Season or Instructional League Activities period, such as a fantasy
camp.
(e) "Baseball Facility" means, collectively, the Ballpark, the Parking
Spaces and related facilities located on the Land including a major league
clubhouse, a minor league clubhouse, administrative offices, 5 1/2 practice
fields (exclusive of the stadium playing field) and training facilities such as
batting tunnels and pitching areas, and all additions and improvements to be
made thereto in accordance with the Construction Contract.
(f) "Capital Repairs" means any repair or maintenance work (other than
routine and ordinary cleaning and maintenance) that is reasonably required to be
performed in and about the Baseball Facility to maintain the Baseball Facility
in good working order and repair and keep the Baseball Facility in a condition
comparable to other spring training facilities used by other major league
baseball teams in the State of Florida, including, but not limited to (i)
replacing any Obsolete Component; (ii) changes or improvements required by the
American League, the Commissioner of Baseball or Baseball Rules and Regulations;
(iii) changes or improvements required or recommended by a mutually agreed upon
insurance carrier to obtain insurance coverage at commercially reasonable rates;
and (iv) changes or improvements required by any laws, ordinances, orders,
rules, regulations or requirements of any governmental entity having
jurisdiction and authority over the Baseball Facility.
(g) "City" means the City of Winter Haven, Florida, a Florida municipal
corporation, and any successors or assigns.
(h) "City's Events" means any event to occur at the Baseball Facility
conducted by the City or some person other than the Indians consistent with the
use of the Baseball Facility by the Indians as provided in Article II.
(i) "City Revenues" mean the revenues referred to in Sections 6.1 and
6.2 hereof.
(j) "City Ticket Revenue" shall mean a percentage of the Net Ticket
Revenue for the spring Training Season based on the average paid attendance for
Spring Training Ballgames during each Spring Training Season in accordance with
the following chart:
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<PAGE> 7
CITY'S TICKET
AVERAGE, PAID ATTENDANCE REVENUE PERCENTAGE OF
PER SPRING TRAINING BALLGAME TOTAL NET TICKET REVENUE
FOR SPRING TRAINING SEASON FOR SPRING TRAINING SEASON
- -------------------------- --------------------------
4,000 or less 3 1/2% of total Net Ticket Revenue
4,001 to 4,333 5% of total Net Ticket Revenue
4,334 to 4,667 7 1/2% of total Net Ticket Revenue
4,668 to 5,000 10% of total Net Ticket Revenue
5,001 or above 12 1/2% of total Net Ticket Revenue
(k) "Condemnation" means the taking by exercise of the power of eminent
domain or by purchase under the threat of exercise of the power of eminent
domain.
(l) "Construction Contract" means the contract setting forth the City's
obligations to make certain improvements to and install certain equipment in the
Baseball Facility in the form attached hereto as Exhibit "A" and made a part
hereof, to be executed and delivered on the date of this Agreement.
(m) "Emergency Repair" means work to the Baseball Facility which is
necessary to protect public health or safety.
(n) "Extended Spring Training" means all baseball-related operations of
the Indians at the Baseball Facility between the end of the Spring Training
Season and the later of: (i) seventy-five (75) days after the end of the Spring
Training Season, (ii) June 15th of each year, or (iii) such other dates as may
be mutually agreed upon.
(o) "Force Majeure" means the events or conditions preventing
performance of a parties obligation under this Agreement as more particularly
described in Section 20.1 hereof.
(p) "Gross Concession Revenue" means all of the gross revenue derived
from the sale at the Baseball Facility during Indians' Events of food, beverages
and merchandise, including, but not limited to, candy, tobacco, novelties and
logo items and similar products.
(q) "Gross Parking Revenue" means all revenues derived, whether by
cash, credit or other consideration, from the sale of parking during any Spring
Training Ballgame.
(r) "Indemnified Party" means any party entitled to indemnification
under this Agreement as provided in Article 14 hereof.
(s) "Indemnifying Party" means the party required by the terms of this
Agreement to provide indemnification as provided in Article 14 hereof.
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<PAGE> 8
(t) "Indians' Events" means Spring Training operations, Extended Spring
Training, Instructional League Activities and Baseball Camps conducted at the
Baseball Facility, together with the necessary and reasonable period of time to
prepare the Baseball Facility for the Indians' Event or dismantle or remove any
temporary items after an Indians' Event.
(u) "Indians' Revenues" mean the revenues and license fees referred to
in Section 6.3 hereof.
(v) "Indians' Ticket Revenue" means all Net Ticket Revenue less the
City's Ticket Revenue.
(w) "Initial Term" means the term of this Agreement commencing on the
execution date of this Agreement and ending on October 31, 2003, as more
particularly described in section 3.1 hereof.
(x) "Instructional League Activities" means all baseball practice
sessions and games at the Baseball Facility during the period generally
commencing on or about September 1 and ending by October 31 of each year, to
provide additional instruction to players outside of the Spring Training Season.
(y) "Interest Rate" means the interest rate of two percent (2%) above
the rate of interest per annum then charged by Society National Bank, Cleveland,
Ohio, to large corporate borrowers of the highest credit standing for short-term
unsecured obligations, but in no event exceeding the maximum legal rate to be
charged to the paying party.
(z) "Land" means the property on which the Baseball Facility is located
in the City, together with rights of ingress and egress appurtenant thereto.
(aa) "Minor League Ballgames" means all baseball games played by Minor
League Franchises at the Baseball Facility.
(ab) "Minor League Franchises" means Florida State League or other
minor league baseball franchises or operations controlled by or affiliated with
the Indians or its designee or affiliates.
(ac) "Net Fixed Advertising Revenue" means the gross revenues collected
for the sale of advertising signs and panels affixed to the Baseball Facility
less all expenses and commissions incurred in the production and sale of such
advertising.
(ad) "Net Ticket Revenue" means all revenues derived, whether by cash,
credit Dr other consideration, from the sale of admission
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<PAGE> 9
tickets to Spring Training Ballgames net of admissions, entertainment, sales
or similar taxes.
(ae) "Obsolete Component" means items incorporated into the Baseball
Facility, including, but not limited to, electronic parts, scoreboards and
ballpark equipment, that are no longer utilized in comparable major league
spring training facilities in the State of Florida as evidenced by the use of a
more modern component in at least fifty percent (50%) of major league spring
training facilities.
(af) "Parking Spaces" means the approximately 3,000 surface parking
spaces presently located on the property owned by the City adjacent to the
Ballpark.
(ag) "Property Damage" means any damage or destruction by fire or other
casualty to any material part of the Baseball Facility. "Material part" shall
have the meaning ascribed to it in Section 16.1 hereof.
(ah) "Real and Personal Property Taxes" means all real estate taxes,
personal property taxes (other than for tangible personal property owned by the
Indians), sales and use taxes, assessments and other governmental levies and
charges, general and special, ordinary and extraordinary, of any kind or nature,
levied or assessed: by federal, state, county or municipal government, upon or
with respect to the Baseball Facility (including any charges levied against the
Indians, intangible interest in the Baseball Facility), or any taxes in lieu
thereof, and, in the event of any change in the method of taxation of real
estate or personal property, including any other or additional tax or assessment
is imposed upon the Baseball Facility as or in substitution for, or in lieu of,
any tax or assessment which would otherwise be such real or personal property
taxes.
(ai) "Renewal Term" or, collectively, the "Renewal Terms" means the
four (4), five (5) year periods following the Initial Term for which the Indians
shall have the right to extend this Agreement as provided in Section 3.2.
(aj) "Spring Training" or "Spring Training operations" means all
baseball-related spring training operations of the Indians during any Spring
Training Season.
(ak) "Spring Training Ballgames" means all regularly scheduled,
official Spring Training baseball games played by the Indians at the Baseball
Facility during any Spring Training Season for which admission tickets are sold.
(al) "Spring Training season" means a period of time commencing on the
first day of February in any calendar year and ending on April 15 of such year,
or such later date as provided in
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Subsection 2.1(f) below, and are sometimes herein referred to by the calendar
year in which they occur (e.g., "1994 Spring Training Season").
(am) "Term" means the Initial Term and, if the Indians exercise any or
all of its option(s), then the Renewal Terms to the extent exercised by the
Indians.
1.2. TERMS. Unless the context clearly requires otherwise, the singular
includes the plural, and vice versa, and the masculine, feminine and neuter
adjectives and pronouns include one another.
ARTICLE II
USE OF BASEBALL FACILITY
2.1. INDIANS' USE.
(a) In consideration for the Indians' use of the Baseball Facility
pursuant to this Agreement, the City shall receive the City Revenues during the
Term, and the Indians and its guests, invitees, and subtenants, if any, will be
entitled to the exclusive possession and use of the Baseball Facility during
Indians' Events. The parties recognize and acknowledge that the City Revenues
are the full consideration by the Indians for use of the Baseball Facility as
provided herein and that there shall not be any separate or additional charge to
the Indians for the use of the Baseball Facility for any Indians' Event as
contemplated by this Agreement.
(b)(1) The Indians will use reasonable efforts to play (subject to
events or conditions beyond the reasonable control of the Indians, including,
but not limited to, adverse weather conditions, scheduling changes by the
visiting team and Force majeure), a minimum of fourteen (14) major league Spring
Training Ballgames at the Baseball Facility commencing with the 1994 Spring
Training Season.
(2) The Indians shall use its reasonable efforts to furnish to the City
its Spring Training Ballgames schedule and Spring Training Operations schedule
no later than December 1 of the year prior to the next Spring Training Season.
(3) The Indians shall be entitled to a minimum of 100 parking spaces
for each Indians' Event or such other number of parking spaces as shall be
mutually agreed upon, and the City acknowledges and agrees that the fee or
charge for use of such parking spaces is included within the City Revenues.
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(c) The Indians shall control the method, manner and price for the sale
of all Indians' Events admission tickets and all complimentary ticket policies,
provided that the parties agree that twenty (20) complimentary tickets and
passes (ten box seats and ten reserved seats) to Spring Training Ballgames will
be provided by the Indians to the City for use by the City and such tickets or
passes will not be resold.
(d) The Indians will use the Baseball Facility for the Indians Baseball
Fantasy Camp from January 23 through January 30, 1994 (and in future years shall
be entitled, but not obligated, to conduct its Fantasy Camp for not more than
two (2) weeks in either January or February of each year). The fee for use of
the Baseball Facility for its Fantasy Camp is included within the City Revenues.
(e)(1) The City does hereby grant a license to the Indians to sell all
advertising in and on the Ballpark, including, but not limited to, advertising
panels and scoreboard advertising (subject to the existing uses and rights
described below). The fee for the license to install such advertising is
included within the City Revenues. The City represents that there is no City
ordinance, regulation or policy which would prohibit or adversely affect the
Indians ability to sell or maintain advertising signs in or on the Ballpark.
(2) The Indians may, at its own expense, erect additional advertising
signs inland on the Ballpark. The cost of art work and graphics for such
advertising (other than the existing uses described below) shall be paid or
caused to be paid by the Indians. The City shall provide (i) a sufficient and
appropriate support system on the outfield fence of the Ballpark to affix
advertising banners, and (ii) make the additional improvements provided for in
the Construction Contract including the installation of the new scoreboard,
message board, advertising panels and outfield signs.
(3) The City agrees that the Indians may enter into advertising
contracts for terms extending beyond the Term; provided, any such contract is
either freely assignable to the City or terminable upon thirty (30) days notice
to the contracting advertiser.
(4) The Indians acknowledge that the City entered into an
arrangement with the Miller Brewing Company ("Miller") pursuant to which Miller
provided the scoreboard for the Ballpark in exchange for ten (10) years of free
advertising on that scoreboard. The City represents that there are three (3)
years remaining on Miller's right to use the scoreboard for advertising. The
Indians recognize the remaining term of the arrangement with Miller and agree
that Miller can continue to use the scoreboard at the Ballpark for advertising
for such remaining term and that such advertising is not included within the
license granted to the Indians by this subsection (e) until after the expiration
of the
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City's existing contract with Miller. The City presently uses one advertising
panel at the Ballpark to promote the City for civic and not-for-profit purposes
and the Indians agree to allow such use by the City to continue.
(5) The City shall allow the Indians to use the City's marquee sign
located at the entrance to the Land to promote the Spring Training Baseball
Games. The parties agree that the cost or charge for use of the marquee is
included in the City Revenues.
(f) The Indians may continue any given spring Training Season beyond
April 15 of each year by delivering thirty (30) days' prior written notice to
the City that the Spring Training Season period shall be continued to such later
date as specified in the notice, but in any event no later than May 15th, or
such other mutually agreed upon later date and after which expiration date the
City shall be free to use the Baseball Facility for other municipal and public
purposes subject to Section 2.4.
(g) The Indians shall have the unrestricted right to enter into lawful
contracts related to any or all of the foregoing upon terms and conditions
deemed acceptable by the Indians in its sole discretion, provided that no such
contract shall impair any right of the City hereunder or impose any contractual
liability on the City.
(h) The Indians may use the Baseball Facility for Extended Spring
Training during the Term, provided that, in the event the Indians elect not to
have Extended spring Training at the Baseball Facility, the Indians shall so
notify the City no later than April 1 of each year during the Term. The fee for
use of the Baseball Facility during Extended Spring Training is included in the
City Revenues.
(i) The Indians may use the Baseball Facility for Instructional League
Activities during the Term provided the Indians notify the City of their
intention to do so by delivering a notice to that effect to the City no later
than thirty (30) days prior to the commencement of Instructional League
Activities. The fee for use of the Baseball Facility during Instructional League
Activities is included in the City Revenues.
2.2. MINOR LEAGUE FRANCHISE.
(a) The Indians or another person pursuant to a player development or
affiliation agreement with the Indians shall have an exclusive right to operate
one or more Minor League Franchises at the Baseball Facility during the Term. If
the Indians decide to operate or have another person operate such a franchise at
the Baseball Facility during the Term, then the Indians shall give notice to
that effect to the City in accordance with Section 20.11
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at least ninety (90) days prior to the proposed commencement date of such minor
league franchise operations at the Baseball Facility.
(b) In the event the Indians elect to operate a Minor League Franchise
at the Baseball Facility, then either the Indians or the other person operating
such Minor League Franchise shall enter into an agreement for such operations
with the City, provided, however, that such an agreement shall not have a term
extending beyond the Term. That agreement shall provide among other things for
the use of the Baseball Facility for the practices and all home dates of Minor
League Franchises and the sharing of revenues attributable to Minor League
Ballgames.
(c) Notwithstanding anything in this Section 2.2, any and all City
Events scheduled prior to the Indians giving notice of its decision to operate
or cause another person to operate a Minor League Franchise at the Baseball
Facility shall be permitted to take place, and the use of the Baseball Facility
by any Minor League Franchise shall be subject to such events. However, the City
will use its best efforts to coordinate with the Indians the scheduling of any
and all City Events.
2.3. MANAGEMENT AND OPERATION OF BASEBALL FACILITY.
(a) The City shall be responsible for the management and operation of
the Baseball Facility, including, but not limited to, the following rights,
responsibilities, obligations and costs:
(i) Providing all concession, security, parking attendants, crowd
control, traffic control, ticket takers, ushers, maintenance,
cleaning (other than the administrative offices and the
clubhouses at the Baseball Facility during the Indians use for
Indians' Events), emergency medical, landscaping, other
personnel and supervisors thereof required for the operation
of the Baseball Facility for the uses contemplated by this
Agreement;
(ii) Maintaining comprehensive liability insurance and property
insurance, inform, substance and amount consistent with the
terms set forth in Article VII hereof;
(iii) Ordinary and customary cleaning and maintenance of the
Baseball Facility and the Capital Repairs as provided for in
Article VIII;
(iv) Providing the personnel to clean the Baseball Facility after
each Indians' Event, which personnel shall be in addition to
the ground crew for the Baseball Facility and shall represent
an increase of three (3) additional staff members over the
staff levels for the 1993 Spring Training Season;
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(v) Arrangement of all gas, electricity, telephone and other
utilities necessary for the operation of the Baseball Facility
as contemplated by this Agreement and payment of all such
utility charges and expenses (except long distance telephone
calls and fax charges);
(vi) Operating all concession facilities at the Baseball Facility;
and
(vii) Operating all public and reserved parking at the Baseball
Facility.
(b) The City will operate and maintain the Baseball Facility in a
professional, businesslike and efficient manner and in a manner consistent with
the operations of other comparable major league spring training facilities in
the State of Florida.
(c)(1) Three dollars ($3.00) per car will be charged or collected for
parking by the public at any Indians' Events during the 1994 Season, and,
thereafter, the charge for parking at Indians' Events may be adjusted as may be
mutually agreed upon, in writing, by the Indians and the City.
(2)(i) Subject to paragraph (ii), the City will operate the parking and
concessions at the Baseball Facility and not contract the operation and
management of such concessions to any third-party. The City agrees to consult
with the Indians prior to the Spring Training Season as to the pricing and
quality of all concession product to be offered for sale to the public at the
Baseball Facility during Indians' Events, and agrees to not offer any such
product which does not meet the price and quality standards agreed upon by the
City and the Indians.
(ii) If during the Term the City decides to contract with any
third-party (which could be the Indians, or an affiliate thereof) to operate and
manage the parking and concessions at the Baseball Facility, then prior to doing
so the City will give notice to that effect to the Indians and will consult with
the Indians regarding qualifications of concessionaires operating or managing
parking and concessions at the Baseball Facility during Indians' Events. Any
concessionaire for the Baseball Facility shall meet the qualifications agreed to
by the City and the Indians and shall offer for sale concession products of a
quality or price agreed to by the City and the Indians. The selection by the
City of any such concessionaire will be done in accordance with applicable
procurement laws, regulations and policies and the standards and qualifications
of such concessionaire will not be less than the standards and qualifications of
similarly situated concessionaires for other major league baseball spring
training facilities in the State of Florida. The terms and conditions of any
third-party
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concession contract must be mutually acceptable to the City and the
Indians.
(d) During Indians' Events, the Indians will be responsible for (i) the
costs of day-of-game ticket sellers and program sellers; (ii) the cost of
printing programs; (iii) the production costs of advertising signage; (iv) the
costs of janitorial services (but not maintenance or repair costs) for the
administrative offices and clubhouses during the Indians use for Indians'
Events; and (v) the cost of any food or beverage provided to the media, in the
sole and absolute discretion of the Indians; provided, however, that the City
shall make all concession food and beverage available to the Indians and the
news media at the City's cost and the Indians and the media may bring food and
beverage of their own selection into the Baseball Facility for the personal use
and consumption of the Indians or the media.
2.4. OTHER USES OF BASEBALL FACILITY.
(a) During the Term, subject to the Indians (i) right to exclusive use
and possession of the Baseball Facility as provided in Section 2.1 and (ii)
exclusive option pursuant to Section 2.2, the City may conduct the City's Events
at the Baseball Facility at times that do not conflict or otherwise interfere
with the Indians' Events. With respect to any City Event proposed to be
conducted during Indians' Events, the City will notify and consult with the
Indians of such City Event a reasonable time before the scheduling of such event
is confirmed for the purpose of insuring that the requirements of the preceding
sentence are met.
(b) During the Term, the City will not permit any activities to be
conducted at the Baseball Facility that, in the reasonable judgment of the
Indians: (i) would conflict or otherwise interfere in any way with the Indians
use and preparation for Indians' Events at the Baseball Facility as contemplated
herein, or (ii) would render the playing fields unsuitable for any Indians'
Events.
(c) The City will not agree to any use of the Baseball Facility during
the Term by any professional baseball league, team or organization other than
the Indians without the prior written consent of the Indians.
ARTICLE III
TERM
3.1. INITIAL TERM. The Initial Term of this Agreement shall commence on
the execution date of this Agreement and shall end on October 31, 2003.
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3.2. RENEWAL OPTIONS. The Indians shall have the option to extend the
Term for up to four (4) successive five (5) year periods (the "Renewal Terms")
each commencing on November 1, with the first Renewal Term beginning on November
1, 2003, on the same terms and conditions as provided for in the Initial Term.
The Indians may elect, in the Indians' sole discretion, on or before October 1
of the last year of the then current Term, with the first option exercise
deadline being October 1, 2003, to extend for one or more of the four (4), five
(5) year Renewal Terms then remaining under option.
ARTICLE IV
FINANCING
The City does hereby represent to the Indians that the City has
available to it sufficient funds to pay the costs of improving and equipping the
Baseball Facility in accordance with the terms and conditions of the
Construction Contract. All obligations with respect to any financing
arrangements will be without recourse to the Indians and its partners (general
or limited), or their personal or legal representatives, successors or assigns.
ARTICLE V
IMPROVEMENTS AND ALTERATIONS
5.1. CITY'S IMPROVEMENTS TO BASEBALL FACILITY. As a material inducement
to the Indians execution of this Agreement, the City shall make certain
improvements to, install certain furniture, fixtures and equipment in, and
provide other personal property and equipment to be used at and for the benefit
of, the Baseball Facility, all as more fully set forth in the Construction
Contract of even date herewith. The Indians obligations hereunder are expressly
conditioned on the performance by the City of the City's obligations pursuant to
the Construction Contract. In addition to, and without limiting the Indians'
rights and remedies set forth in Article XII hereof, in the event that the City
shall fail to acquire, construct and install the Additional Items by the
required Completion Date, or such later date as may be agreed to in writing by
the Indians as to any portion of the Additional Items, the Indians may elect, in
its sole discretion, to reinstate the Initial Term, Renewal Options and the Long
Term Proposal provisions provided in Sections 3.1, 3.2 and 3.3 of the Original
Agreement, in lieu of Sections 3.1 and 3.2 hereof, as if such provisions were
restated herein in full; provided, however, that the dates set forth in the
Original Agreement shall all be extended by one (1) year.
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5.2. ALTERATIONS AND ADDITIONS BY THE INDIANS. Without limiting any of
the City's obligations hereunder, the Indians, at its sole cost and expense,
may, but shall in no way be obligated to make alterations or additions to the
Baseball Facility which do not: (i) affect the structural integrity of the
Baseball Facility; or (ii) violate any laws, ordinances, or regulations. The
Indians shall give notice to the City of its intent to make such alterations and
additions and, prior to the Indians undertaking such alterations and additions,
the City shall have consented to such alterations and additions, which consent
shall not unreasonably be withheld. The Indians hereby agree to perform or cause
to be performed such work in a good and workmanlike manner, and to pay for same,
or, in the event of a dispute, the Indians agree to indemnify and, defend the
City from and against mechanics, liens and any other costs and attorneys' fees
incurred by the City and related thereto, or other costs and expenses arising
out of such performance. The Indians shall not have the power to subject the
interest of the City in the Baseball Facility or any portion of the Baseball
Facility to any mechanics liens or liens of any kind and all persons who may
hereafter, during the Term, furnish work, labor, services, or materials to the
Baseball Facility, or any portion thereof upon the request or order of the
Indians, or any person claiming under, by, or through the Indians, must look
wholly to the interest of the Indians and not to that of the City.
ARTICLE VI
BASEBALL FACILITY REVENUES
6.1. CITY REVENUES. In consideration of the use of the Baseball
Facility by, and the granting of certain licenses to, the Indians pursuant to
this Agreement, during the Term the City shall receive: (a) Eighty-Five Percent
(85%) of the Gross Parking Revenue, (b) Eighty Percent (80%) of the Gross
Concession Revenue, (c) the City's Ticket Revenue, and (d) Ten Percent (10%) of
the Net Fixed Advertising Revenue.
6.2. OFFICE RENT. The Indians shall pay to the City the sum of Two
Hundred and Fifty Dollars ($250) each month as office rent during the Term.
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6.3. INDIANS' REVENUES. During the Term, the Indians shall receive: (a)
Twenty Percent (20%) of the Gross Concession Revenues, (b) Fifteen Percent (15%)
of the Gross Parking Revenues, (c) the Indians' Ticket Revenue, (d) Ninety
Percent (90%) of the Net Fixed Advertising Revenue, and (e) One Hundred Percent
(100%) of all revenue derived from: (1) the sale of all programs for Indians'
Events, (2) the sale of all program advertising; (3) the sale of all advertising
in and on the Ballpark at any time during the Term (exclusive of the Net Fixed
Advertising Revenue), and (4) the sale of any radio and television broadcast
rights for Indians' Events.
6.4. PAYMENTS.
(a) Gross Concession Revenues and Gross Parking Revenues shall be
collected by the City. Gross Ticket Revenue and Net Fixed Advertising Revenue
shall be collected by the Indians. Payment of the revenues described in this
Article shall be paid on or before the fifteenth (15th) day of each month for
the immediately preceding calendar month during the Spring Training Season. The
City shall provide the Indians with a weekly report of Gross Concession Revenues
and Gross Parking Revenues by each Wednesday for the prior week just ended. The
Indians shall provide to the City a monthly report of Gross Ticket Revenue and
Net Fixed Advertising Revenue with each monthly payment. Payments by either
party pursuant to this Section 6.4 shall be accompanied by a statement,
certified as correct as to all computations relating thereto. Either party may
elect, initially at its expense, to either use its own employee(s) or designate
an independent certified public accountant to review or audit the statement and
computations certified by the other party for any Spring Training Season and
raise any objections thereto. If such review or audit determines the amount
reported was understated by more than five percent (5%), then the cost of such
review or audit shall be paid by the party delivering such report, provided that
in the case of such review or audit being done by an employee of a party the
other party shall reimburse such party only for out-of-pocket expenses incurred
and paid by such party and shall not pay any overhead, salaries or indirect
costs. If the review or audit should show an underpayment by the party
delivering such report, such party shall pay any deficiency, with interest
thereon at the Interest Rate, from the date such deficiency was due and payable
to the other party to the date of payment of the deficiency amount, to the other
party-within five (5) days of such determination.
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ARTICLE VII
INSURANCE AND SUBROGATION
7.1. CITY'S INSURANCE.
(a) The City shall, commencing on the date hereof and continuing
through the end of the Term, maintain, at the City's expense, property insurance
against damage or destruction to the Baseball Facility for the full value
thereof, including all materials, equipment, machinery and supplies for use in
construction or installation of the Baseball Facility and commercial general
liability insurance in addition to the following coverages, which shall have the
following minimum specifications:
(1) All property coverage shall be provided on an "all risk" peril
basis, including, but not limited to, coverage against sewer
backup coverage and shall be in the amount of one hundred
percent (100%) of full replacement cost, with deductible
limits of not more than $1,000. The City shall furnish an
"agreed amount" endorsement and full replacement cost
endorsement;
(2) Boiler and machinery insurance, including business
interruption, on a repair and replacement cost basis, with
direct damage limit of not less than $1,000,000 per
occurrence, a direct damage deductible of not more than $1,000
and a deductible (or waiting period) of no more than 24 hours
with respect to business interruption;
(3) Cause any architectural or engineering firm retained by the
City for any improvements to the Baseball Facility to obtain
professional liability insurance providing coverage for errors
and omissions relating to the Additional Items or any
improvements to the Baseball Facility;
(4) Statutory workers' compensation coverage and employer's
liability coverage in the amount of $1,000,000 each
accident/$1,000,000 policy limit/$1,000,000 each employee, or
such lesser amount as may satisfy carriers of the city's
umbrella liability coverage;
(5) Automobile liability coverage for bodily injury and property
damage with a combined single limit per accident of $500,000;
(6) "Occurrence type" commercial general liability insurance
against bodily injury and property damage arising from
occurrences in and about the Baseball Facility and covering
the City's contractual liability, including athletic
participant liability, for indemnification under
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this Agreement. Such insurance shall include product liability
and completed operations coverage and be written on a form
with coverages no less broad than those found on ISO CG 0001
11/88. Such coverage shall be in the amount of $500,000 per
occurrence combined single limit for bodily injury and
property damage;
(7) Umbrella liability coverage (in form no less broad than
underlying coverage) to apply excess of automobile, general
and employer liability, in an amount necessary to increase
overall coverage to $5,000,000 per occurrence at all times
during the year and, commencing in 1995 and each year
thereafter, from February 1 through April 30, an amount
necessary to increase overall coverage to an amount of overall
coverage as shall be mutually agreed upon by the parties; and
(b) All policies referred to in subsections (5), (6) and (7) shall name
as additional insureds the Indians and its general partner and such other
affiliated persons or entities as shall be requested by the Indians.
(c) In the event the insurance policies are written as part of the
City's blanket limits, such policies shall provide that the total limits shall
apply on an aggregate limit by location basis.
7.2. INDIANS' INSURANCE.
(a) The Indians shall obtain and maintain throughout the Term
comprehensive general liability and casualty insurance of a type, coverage and
in policy amounts comparable to that carried by other major league baseball
teams having spring training operations in the State of Florida to include
coverage of the operations, bodily injury, automobile and vehicle, property
damage, and contractual liability coverage for the indemnity provided in Section
14.1 with a combined single limit ("CSL") of at least $1,000,000 for bodily
injury, including death, and property damage. The Indians shall deliver
certificates of insurance to the City evidencing such insurance is in full force
and effect, and evidencing the City is named as an additional insured with
respect to the negligence of the Indians, and provide updated and corrected
certificates from time to time.
(b) The Indians shall be solely responsible for securing, at its own
expense, whatever insurance coverage it may desire on its personal property
located at the Baseball Facility.
(c) The Indians shall provide workers' compensation coverage for its
employees as may be required by law.
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7.3. INSURANCE REQUIREMENTS.
(a) All policies of insurance required hereunder shall be written by
carriers which possess an A- policyholder's rating or better and a minimum Class
VII financial size category as listed at the time of issuance by A.M. BEST
INSURANCE REPORTS (the aforesaid rating classifications to be adjusted if and to
the extent that Best adjusts its rating categories).
(b) All policies shall provide that they may not be cancelled, renewed
or reduced unless at least thirty (30) days, notice thereof has been provided to
the other party. In the event that tort liability reform is adopted which makes
the limits of liability hereinabove provided in excess of commercially
reasonable and prudent limits of liability, such limits will be equitably
reduced.
(c) The City shall maintain cash or cash equivalents equal to or
greater than all self-insured retention amounts set forth in this Article VII
throughout the term of this Agreement, for the exclusive purpose of funding any
liability or obligation that is self-insured hereunder.
(d) Nothing in this Agreement shall be construed that either party has
recommended any or all of the policy provisions, including policy limits, of any
of the terms of the other parties insurance policies.
7.4. CERTIFICATES. Upon the execution of this Agreement, each party
will furnish to the other party certificates evidencing the coverage required by
this Agreement and provide updated or corrected copies of such certificates from
time to time during the Term.
7.5. WAIVER OF SUBROGATION. The City agrees that all insurance against
loss or damage to property and business interruption or revenue loss shall be
endorsed to provide that any release from liability of, or waiver of claim for,
recovery from the Indians entered into in writing by the City prior to any loss
or damage shall not affect the validity of said policy or the right of the
insured to recover thereunder and providing, further,that, the insurer waives
all rights of subrogation which such insurer might have against the Indians. To
that end, all insurance policies providing insurance coverage against loss or
damage to property and business interruption of revenue loss shall either be
endorsed, or shall contain in the body of said policy, the following language,
to wit: "This insurance shall not be invalidated should the insured waive in
writing prior to a loss any or all right of recovery against any party of loss
occurring to the property described herein", or such other language
substantially equivalent thereto. Without limiting any release or waiver of
liability or recovery contained in any other Section of this Agreement, but
rather in confirmation and furtherance thereof, each
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of the parties hereto waives all claims for recovery from the other party for
any loss or damage to any of its property or damages as a result of fire,
business interruption, revenue loss or other perils, events or happenings
insured under valid and collectible insurance policies to the extent of any
recovery collectible under such insurance policies.
ARTICLE VIII
OPERATIONS, MAINTENANCE AND REPAIR
8.1. MAINTENANCE AND OPERATING EXPENSES. Except as expressly provided
in Subsection 2.3(d) above, the City will be responsible for all maintenance and
operating expenses of the Baseball Facility, including, but not limited to,
cleaning, routine maintenance and repair of the Baseball Facility, utility costs
and hiring and paying all personnel necessary for the staging of baseball games
including, without limitation, a ground crew and a maintenance crew. The City
will operate and maintain the Baseball Facility as a first-class, major league
spring training facility in a professional, businesslike and efficient manner.
Without limiting the general obligations of the City as provided in this
Agreement, and in addition thereto, the City shall at all times comply with the
maintenance program attached hereto as Exhibit "B" and made a part hereof, as
such maintenance program may be modified from time to time with the mutual
consent of the City and the Indians. The City will not be responsible for any
maintenance, repairs or restoration related to damage occurring to property
during an Indians' Event, as a result of willful or negligent acts or omissions
of the Indians, its officers, agents or employees.
8.2. CAPITAL REPAIRS. The City will keep the Baseball Facility in good
working order and repair and will complete all necessary Capital Repairs and
improvements to the Baseball Facility as are necessary to keep the Baseball
Facility a baseball facility comparable to the spring training facilities used
by other major league baseball teams in the State of Florida.
8.3. MAINTENANCE AND REPAIR PROCEDURES.
(a) The City agrees to repair and maintain the Baseball Facility to a
condition comparable to other major league spring training facilities in the
State of Florida. No later than October 1 of the year prior to the next Spring
Training Season the parties shall confer and mutually agree upon any maintenance
or repairs to the Baseball Facility necessary for it to be in condition for the
upcoming Spring Training Season.
(b) It is expressly recognized that contained within the City's
obligations hereunder, and as a condition to the Indians' obligation
to perform hereunder, it is the City's obligation
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(including the payment of the cost thereof) to maintain and, if necessary,
restore the Baseball Facility to a condition customary for comparable major
league spring training facilities in the State of Florida prior to the beginning
of each Spring Training Season.
(c) Upon reasonable request from the Indians for the performance of
maintenance or a Capital Repair, the City shall use its reasonable best efforts
to perform such work within a reasonable amount of time. The city and the
Indians will meet again on or before January 10 of each year, to review the
preparation of the Baseball Facility and the completion of the items agreed to
be completed as provided herein.
8.4. EMERGENCY REPAIRS. If there is a need for any Emergency Repairs
and the City is unable to undertake such repairs immediately, the Indians may in
its reasonable discretion perform such Emergency Repairs using reputable
contractors or Indians' personnel. In such an event, notification of such
Emergency Repairs being undertaken by the Indians shall be given to the City as
soon as practicable. The City will reimburse the Indians for the expenses,
including personnel expenses, of such work within ten (10) days after
presentation of an invoice therefor by the Indians.
8.5. INDIANS' SELF HELP. In the event the City fails to perform the
city's obligations under this Article VIII after written notice from the
Indians, the Indians may perform such maintenance or Capital Repair using
reputable contractors or Indians' personnel. The City will reimburse the Indians
for the expenses, including personnel expenses, of such work within ten (10)
days after presentation of an invoice therefor by the Indians, or, at the
election of the Indians, the Indians may deduct any amounts due and owing the
Indians hereunder against any amounts due and payable to the City under this
Agreement.
ARTICLE IX
TAXES
9.1. REAL ESTATE AND PERSONAL PROPERTY TAXES. The parties recognize and
acknowledge that as of the Effective Date the Indians will not be responsible
for payment of any Real and Personal Property Taxes assessed with respect to the
Baseball Facility, but in the event the Indians are later determined to be
responsible for payment of such taxes, to the extent permitted by law, the City
will indemnify and hold the Indians harmless from any such taxes.
9.2. SALES AND USE TAXES.
(a) The City represents to the Indians that as of the date of this
Agreement it does not have any intent to impose, levy, assess or collect any
tax, assessment, or surcharge on the use of
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the Baseball Facility by the Indians pursuant to this Agreement, and to the
extent permitted by law, the City agrees that it will not levy or assess any
tax, assessment, or surcharges, including but not limited to, tourist, amusement
or entertainment taxes or assessments or similar impositions assessed on the
sale of tickets at the Baseball Facility, and, to the extent permitted by law,
the City shall indemnify and hold the Indians' harmless from any of such taxes,
assessments, or surcharges imposed by any other governmental entity.
(b) The parties recognize and acknowledge that as of the date of the
Agreement the State of Florida imposes a sales tax on the sale of tickets to
events such as the Indians' Events and, under Florida law, it is the obligation
of the seller of the ticket (which in the case of the Indians' Events will be
the Indians) to pay collect and remit such tax to the State of Florida. The City
is not obligated to collect and remit any such tax on the sale of tickets to the
Indians' Events, nor is it obligated or required by this Agreement to pay or
reimburse the Indians for such sales tax.
9.3. SALES TAX; GROSS CONCESSION REVENUES AND GROSS PARKING REVENUES.
In the event, for whatever reason, any sales tax is imposed or assessed on the
City's Gross Concession Revenues or Gross Parking Revenues, then payment of such
tax will be the sole responsibility of the City, provided that, if the Indians
are required to pay such taxes, to the extent permitted by law, the City will
reimburse the Indians for such amounts paid; and, provided further, that the
City shall not enact any law or take any legal action that would prohibit any
reimbursement pursuant to this Section 9.3.
ARTICLE X
SECURITY AND CROWD CONTROL
The City shall provide, at the City's expense, such security and crowd
control personnel during Indians' Events that is necessary to preserve the
health, welfare and safety of Indians players and personnel, patrons and
invitees using the Baseball Facility and the citizens of the City, as shall be
reasonably requested by the Indians and mutually agreed upon by the parties.
Such personnel shall include, without limitation, sufficient traffic control
personnel and police or security guards stationed throughout the Baseball
Facility and the surrounding area before, during and after all Indians' Events.
The Indians recognize and acknowledge the City has provided security, traffic
control and crowd control in the past for major league baseball spring training
games at the Baseball Facility and does agree to and approve the crowd control,
traffic control and security plan used by the City for the 1993 spring training
season as a reasonable and appropriate means for satisfying the City's
obligation under this Section 10.1. The City agrees to not make any material
change in the crowd control, traffic control and security plan used by the City
for
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Indians' Events at the Baseball Facility without prior
consultation with and approval by the Indians.
ARTICLE XI
RIGHT OF ENTRY AND INSPECTION
Upon reasonable written notice to the City, the Indians and the
Indians, agents, representatives, invitees and contractors shall have the right,
during normal business hours of the City or of the City's general contractor,
prime contractor or construction manager, as the case may be, and at such other
times as the Indians may reasonably request, to review all design plans, inspect
the progress of the completion and installation of the improvements and items
provided for in the Construction Contract and provide tours of the Baseball
Facility. The provisions of this Article XI shall in no way limit or otherwise
relieve the City from the City's obligation to complete the City's work in
conformance with the Construction Contract.
ARTICLE XII
EVENTS OF DEFAULT AND REMEDIES
12.1. EVENTS OF DEFAULT BY THE INDIANS. The following shall constitute
events of default by the Indians:
(a) If the Indians shall at any time fail to pay, when due, any sums
payable by the Indians hereunder and such failure to pay continues for a period
of fifteen (15) days after written notice of such failure is given to the
Indians by the City; or
(b) If any involuntary petition in bankruptcy or for reorganization or
liquidation shall be filed against the Indians under any federal or state
bankruptcy or insolvency act, and shall not have been dismissed within ninety
(90) days from the filing of same; or
(c) If the Indians shall make an assignment for the benefit of
creditors or file a petition in bankruptcy or for reorganization or liquidation
under a federal or state bankruptcy or insolvency act; or
(d) If a receiver shall be appointed for the Indians, or for the
property of the Indians, by any court and such receiver shall not have been
dismissed within thirty (30) days from the date of such appointment; or
(e) If the Indians cease operations as a major league baseball team;
or
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(f) If the Indians shall fail to perform or observe or if the Indians
otherwise breaches any of the other agreements, terms, covenants or conditions
hereof and failure to perform or observe or such breach shall continue for a
period of thirty (30) days after notice thereof by the City to the Indians or,
if the failure or breach is of such nature that it cannot be cured within the
thirty (30) day period, then only if the Indians fails to commence the cure
promptly and within the thirty (30) day period or thereafter fails to diligently
continue in good faith until such failure or breach is fully cured.
12.2. EVENTS OF DEFAULT BY THE CITY. The following shall constitute
events of default by the City:
(a) If the City shall at any time fail to pay, when due, to the
Indians, the Indians' allocation of Gross Concession Revenue, Gross Parking
Revenue or any other sums payable by the City hereunder and such failure to pay
continues for a period of fifteen (15) days after notice of such failure is
given to the City; or
(b) If the City shall fail to cause (i) the improvements, fixtures,
furnishings, equipment and other personal property to be completed or installed
as required pursuant to the Construction Contract, or (ii) the Baseball Facility
to be maintained in accordance with the terms and provisions of this Agreement;
or
(c) If any petition in bankruptcy or for reorganization or liquidation
shall be filed by the City under any federal or state bankruptcy or insolvency
act, and shall not, have been dismissed within ninety (90) days from the filing
of same; or
(d) If the city shall make an assignment for the benefit of creditors
or file a petition in bankruptcy or for reorganization or liquidation under a
federal or state bankruptcy or insolvency act; or
(e) If a receiver shall be appointed for the City, or for the property
of the City, by any court and such received shall not have been dismissed within
thirty (30) days from the date of such appointment, or the City is found to be
subject to the provisions of the Local Government Financial Emergencies Act; or
(f) the City is dissolved or otherwise ceases operating as a municipal
government; or
(g) If the City shall fail to perform or observe, or if the City
otherwise breaches, any of the other agreements, terms, covenants or conditions
hereof and such failure to perform or observe or such breach shall continue for
a period of thirty (30) days after notice thereof by the Indians to the City or,
if the failure or breach is of such nature that it cannot be cured within
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the thirty (30) day period, then only if the City fails to commence the cure
promptly and within the thirty (30) day period or thereafter fails to diligently
continue in good faith until such failure or breach is fully cured.
12.3. REMEDIES. Upon the occurrence of an event of default described in
either Section 12.1 or 12.2, in addition to any other rights or remedies the
nondefaulting party may have at law or in equity, the nondefaulting party shall,
so long as such Event of Default shall be continuing, have the following rights:
(a) To injunctive relief to enjoin any act or omission which
constitutes an event of default by the defaulting party or to compel performance
of the covenants, agreements, terms and conditions of this Agreement;
(b) To be reimbursed for any damages suffered by the nondefaulting
party, including, without limitation, actual damages and consequential damages;
or
(c) To offset any amounts owing from the nondefaulting party to the
defaulting party pursuant to this Agreement, against any amounts owing from the
defaulting party to the nondefaulting party pursuant to this Agreement and not
paid due to the event of default.
12.4. GENERAL PROVISIONS.
(a) No right or remedy herein conferred upon, or reserved to, the City
or the Indians is intended to be exclusive of any other right or remedy, but
each shall be cumulative and in addition to every other right or remedy given
herein or now or hereafter existing at law, or in equity or by statute.
(b) No waiver by either party of any breach of obligations, agreements
or covenants herein shall be a waiver of any subsequent breach of any
obligation, agreement or covenant, nor shall any forbearance by either party to
seek a remedy for any breach by the other party be a waiver by such party of any
rights or remedies with respect to such or any subsequent breach, nor shall any
express waiver by either party be deemed to apply to any other existing or
subsequent right to remedy any default by the other party, nor shall any waiver
by either party of any default or breach by the other party in the performance
of any of the covenants or obligations of such other party under this Agreement
be deemed to have been made by the party against which the waiver is sought to
be charged unless contained in a writing executed by such party.
(c) If either party shall fail to pay any payment required hereunder,
as the case may be, when due, then, without limiting any other rights of such
party, the breaching party shall be liable for
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interest thereon at the Interest Rate from the date that such allocation or
other payment was due until the date paid in full, whether or not notice of
default or failure to make timely payment had been given.
12.5. NONDEFAULTING PARTY'S RIGHT TO CURE DEFAULTS. After the time when
the nondefaulting party has given notice and the applicable grace period
provided has expired, if any sums payable by the defaulting party shall remain
due and payable, or after the time for performance by the defaulting party of
any other term, covenant, provision or condition of this Agreement, or before
the expiration of that time in the event of a bona fide emergency (in which case
the nondefaulting party shall only be required to give such notice as is
reasonable and practical under the circumstances), the nondefaulting party may,
at the nondefaulting party's election (but without obligation), make any payment
required of the defaulting party under this Agreement, or perform or comply with
any covenant or condition imposed on the defaulting party under this Agreement,
and the amount so paid plus the cost of such performance or compliance, plus
interest on such sums at the Interest Rate, shall be collectible by the
nondefaulting party. In order to collect such reimbursement, the nondefaulting
party shall have all the remedies available under this Agreement for default and
the payment of the monies due hereunder, including reasonable attorney's fees.
No such payment, performance or observance by the nondefaulting party shall
constitute a waiver of default or of any remedy for default or render the
nondefaulting party liable for any loss or damage resulting from any such act.
ARTICLE XIII
TERMINATION
Not later than the date of expiration of this Agreement (or, in the
case of any termination of this Agreement other than by lapse of time, within
thirty (30) days after the date of such termination), the Indians shall
surrender the use of the Baseball Facility and the Indians may, in the Indians'
sole discretion, but shall have no responsibility, liability or obligation, to
remove all of its trade fixtures and other personal property and equipment
located in or at the Baseball Facility, including any team equipment; provided,
however, that the Indians shall, at the Indians' sole expense, repair all damage
caused by the removal of such items, except any normal wear and tear, taking by
eminent domain and damage by fire or other casualty regardless of cause.
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ARTICLE XIV
INDEMNIFICATION
14.1. INDEMNIFICATION BY THE INDIANS. Subject to the limitations
hereinafter set forth, the Indians hereby agree to indemnify and hold harmless
the City, its officers, members, employees and agents from and against all loss,
cost and expense in connection with proceedings, judicial or otherwise, and
claims, demands and judgments, together with costs and expenses including
attorneys' fees relating thereto, arising out of damage or injury to person or
property occurring in or about the Baseball Facility resulting directly from any
negligent or wilful actions of the Indians or any employee or agent of the
Indians.
14.2. INDEMNIFICATION BY THE CITY.
(a) The City hereby agrees to the extent permitted by law
(particularly, Section 768.28, Florida Statues (1991), or successor provisions
thereto) to indemnify, defend and hold the Indians, its partners, officers,
employees and agents, harmless from and against all loss, cost and expense in
connection with proceedings, judicial or otherwise, and claims, demands, and
judgments, together with costs and expenses including attorneys', fees relating
thereto, arising out of the City's negligent or wrongful acts or omissions
occurring in or around the Baseball Facility and not subject to indemnification
by the Indians pursuant to Section 14.1.
(b) However, with respect to any person who is not a party or who is
not affiliated with a party, this Section 14.2 shall not be deemed a waiver of
any defense or limitations available to the City under the sovereign immunity
law, Section 768.28, Florida Statutes, or successor provisions thereto.
14.3. PROCEDURE REGARDING INDEMNIFICATION.
(a) If an Indemnified Party shall discover or have actual notice of
facts giving rise or which may give rise to a claim for indemnification under
this Article XIV, or shall receive notice of any Action, with respect to any
matter for which indemnification may be claimed, the Indemnified Party shall,
within twenty (20) days following service of process (or within such shorter
time as may be necessary to give the Indemnifying Party a reasonable opportunity
to respond to such service of process) or within twenty (20) days after any
other such notice, notify the Indemnifying Party in writing thereof together
with a statement of such information respecting such matter as the Indemnified
Party then has; it being understood and agreed that any failure or delay of the
Indemnified Party to so notify the Indemnifying Party shall not relieve the
Indemnifying Party from liability hereunder except and solely to the extent that
such failure or delay shall have materially adversely affected the Indemnifying
Party's ability to
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defend against, settle, or satisfy any such Action. Following such notice, the
Indemnifying Party shall have the right, at its sole cost and expense, to
contest or defend such Action through attorneys, accountants, and others of its
own choosing (the choice of such attorneys, accountants, and others being
subject to the approval of the Indemnified Party, such approval not to be
unreasonably withheld) and in the event it elects to do so, it shall promptly
notify the Indemnified Party of such intent to contest or defend such Action. If
within twenty (20) days following such notice from the Indemnified Party (or
within such shorter time as may be necessary to give the Indemnified Party a
reasonable opportunity to respond to service of process or other judicial or
administrative action), the Indemnified Party has not received notice from the
Indemnifying Party such Action will be contested or defended by the Indemnifying
Party, the Indemnified Party shall have the right to (i) authorize attorneys
satisfactory to it to represent it in connection therewith or (ii) at any time
settle, compromise, or pay such action, in either of which events the
Indemnified Party shall be entitled to indemnification therefor subject to this
Section 14.3. Following any notice of an indemnification claim not based on an
Action, the Indemnifying Party shall promptly reimburse the Indemnified Party
for all amounts owed to it by reason of such indemnification obligation.
(b) In the event and so long as the Indemnifying Party is actively
contesting or defending against an Action as hereinabove provided, the
Indemnified Party shall cooperate with the Indemnifying Party and its counsel in
such contest or defense, shall join in making any appropriate counterclaim or
cross-claim in connection with the Action, and shall provide such access to the
books and records of the Indemnified Party as shall be necessary in connection
with such defense or contest, all at the sole cost and expense of the
Indemnifying Party. Notwithstanding that an Indemnifying Party is actively
conducting such defense or contest, any Action may be settled, compromised or
paid by the Indemnified Party without the consent of the Indemnifying Party;
provided, however, that if such action is taken without the Indemnifying Party's
consent, its indemnification obligations in respect of such claim shall thereby
be nullified. Any such Action may be settled, compromised, or paid by the
Indemnifying Party without the Indemnified Party's consent, so long as such
settlement or compromise does not cause the Indemnified Party to incur any
present or future cost, expense, obligation or liability of any kind or nature.
(c) In the event any Action involves matters partly within or partly
outside the scope of the indemnification by the Indemnifying Party hereunder,
then the attorneys' fees, costs, and expenses of contesting or defending such
Action shall be fairly allocated between the Indemnified Party and the
Indemnifying Party.
14.4. LIMITATION. Indemnification under this Article XIV
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does not include indemnification against loss or liability due to natural
causes.
ARTICLE XV
ASSIGNMENT
15.1. ASSIGNMENT BY THE INDIANS. The Indians may assign the Indians'
interest in this Agreement, without the consent of the City, to any person,
firm, corporation or entity which acquires, in accordance with all applicable
major league rules and regulations, a major league baseball franchise which may
include, but shall not be limited to, the franchise now held by the Indians;
provided such assignee assumes the Indians' obligations hereunder and agrees to
be bound hereby. The Indians shall promptly provide the City with notice of any
assignment of its interest in this Agreement and a copy of any major league
approvals of such assignment. Upon the assignment of the Agreement by the
Indians in compliance with this Section 15.1, the liability of the Indians shall
cease with respect to liabilities accruing from and after such transfer,
provided the assignee has assumed such liability.
15.2. ASSIGNMENT BY THE CITY. The City shall not transfer the City's
right, title or interest in all or any part of the Baseball Facility or assign
the City's interest in this Agreement except, (i) to a successor governing
entity that assumes the City's obligations hereunder and agrees to be bound
hereby, or (ii) with the prior written consent of the Indians, which consent may
be withheld in the reasonable discretion of the Indians.
ARTICLE XVI
EMINENT DOMAIN
16.1. TERMINATION FOR CONDEMNATION.
(a) In the event of any Condemnation of a material part of the Baseball
Facility (or any improvements hereafter constructed thereon), this Agreement
shall terminate (except as hereinafter provided below) on the date on which
possession is required to be delivered to the condemning authority.
(b) As used herein, a "material part" shall include any of the
following, unless the Indians elects in its sole discretion to treat any of the
foregoing as not a "material part" of the Baseball Facility:
(1) Any part of the Baseball Facility which, in the Indians'
reasonable determination, would cause the Indians to become
unable to make use of the Baseball Facility for
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its intended operations or to experience a material loss of
revenue (specifically including, without limitation, any loss
of seating in excess of a number of seats having a face ticket
price equal to 10% or more of the aggregate face ticket price
of all seats in the Baseball Facility, loss of any material
portion of the concourse areas, or the loss of a practice
field);
(2) Any part of the area between the Baseball Facility and a
public street or highway, Condemnation of which would cause
the Indians to become unable to provide reasonable access to
the Baseball Facility; or
(3) Any portion of the Baseball Facility the loss of which results
in fewer than 2,500 parking spaces being available on the
Site;
(b) If this Agreement terminates pursuant to the provisions of this
Section 16.1, all rights, obligations and liabilities of the parties hereto
shall end as of the effective date of such termination), without prejudice to
any rights which have accrued prior to such termination.
16.2. ALLOCATION OF AWARD. The amount of any award for or on account of
any Condemnation shall be shared equitably between the City and the Indians to
the extent of their respective affected interests, and the condemning authority
or the court in which the award is made shall be requested to make a separate
award for the then current value of the Indians' rights under this Agreement.
The Indians shall have the right to be represented by counsel of its choosing in
any Condemnation proceedings.
16.3. PERFORMANCE OF WORK. If there shall be a Condemnation and this
Agreement shall not terminate as a result thereof in accordance with the
provisions of Section 16.1, the City shall be required to perform any and all
work necessary to restore the Baseball Facility to a complete architectural unit
suitable for the Indians' use in as expeditious a manner as possible.
16.4. TEMPORARY TAKING. In the event of any temporary taking of the
Baseball Facility or any portion thereof for public use which prevents the use
of the Baseball Facility for the purposes contemplated by this Agreement, this
Agreement shall not terminate by reason thereof, except as hereafter provided,
and the rights and obligations of the parties shall continue in full force and
effect as provided herein except that any award for such temporary taking shall
be allocated on the basis of the parties respective interests affected by such
temporary taking.
(b) Upon the termination of such temporary taking and upon
receipt of the Condemnation award, the City shall restore the
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Baseball Facility to the extent applicable to its state as existed immediately
prior to such temporary taking.
(c)(1) During any period of a temporary taking preventing the use of
the Baseball Facility for the purposes contemplated by this Agreement, the
Indians shall be entitled to make arrangements for an alternative site for its
spring training operations.
(2) In the event the Indians make arrangements for an alternative site
for its spring training operations as contemplated by this subsection, then upon
receipt of the proceeds from an award for compensation for such temporary
taking, the City agrees to reimburse the Indians for payments and expenses
incurred by the Indians for use of an alternative spring training facility,
within thirty (30) days after receipt by the City of a certificate from the
Chief Financial Officer of the Indians setting forth the amount paid for such
alternate facility by the Indians, together with reasonable documentation
supporting the same, including invoices and supporting data, provided that the
total amount paid by the City to the Indians shall not exceed the amount of any
award for compensation received by the City for such temporary taking. The
Indians may make a separate claim against the condemning body for an award of
any damages sustained by it as a result of such temporary taking, provided that
in the event the Indians make such a claim, the City shall not be obligated to
pay any portion of its award for compensation to the Indians.
(3) The Indians shall have the right to terminate this Agreement as of
the end of any Spring Training Season and treat a temporary taking as a taking
under Section 16.1 if the remaining period of such temporary taking will be for
a period of more than one (1) year following the date of the termination, as
evidenced by the issuance by a duly authorized official of the condemning
authority of any written statement to the effect that such Condemnation will be
for such period of time.
ARTICLE XVII
UNTENANTABILITY AND OBLIGATION TO RESTORE UPON DAMAGE
17.1. PROPERTY DAMAGE.
(a) In the event of any Property Damage (whether or not insured), the
Indians may elect in its sole discretion, by notice to the City delivered within
one hundred twenty (120) days of the occurrence of the Property Damage, to
either:
(i) terminate this Agreement as of the date of the Property
Damage, or
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(ii) request city, at the City's expense, to repair the Property
Damage so as to restore the Baseball Facility to its condition
immediately prior to the Property Damage.
(b) If this Agreement terminates pursuant to the provisions of this
Section 17. 1, all rights, obligations and liabilities of the parties hereto
shall end as of the effective date of such termination, without prejudice to any
rights which have accrued prior to such termination.
17.2. CITY TO RESTORE.
(a) In the event the Indians elect pursuant to section 17.1 to have the
City repair any Property Damage, and the proceeds from insurance on the Baseball
Facility as described in Section 7.1 are or will be available, the City shall
promptly initiate the repair and restoration work to repair such Property Damage
and shall continue diligently without interruption to completion.
(b) During any period beginning with the occurrence of any Property
Damage and ending upon completion of the repair and restoration, the obligations
of the City and of the Indians under this Agreement shall abate and be suspended
to any extent caused by such damage or the repair work, as determined by the
Indians, in light of the part, if any, of the Baseball Facility being used by
the Indians.
17.3. UNTENANTABILITY. Notwithstanding any other provision of this
Article XVII, if the Baseball Facility is untenantable in whole or in any
material part as a result of the City's inability to complete any Capital
Repair, or a power failure on or offsite, or the event or events which gave rise
thereto, then for the period of such untenantability, or during such longer
period as may be reasonably necessary to enable the Indians to arrange for an
alternate site, the Indians shall be entitled to make arrangements for an
alternate site for its Spring Training Ballgames. During the period in which the
Indians is playing its games at an alternate site, the Indians will not be
responsible for any obligations accruing under this Agreement.
ARTICLE XVIII
BASEBALL FACILITY NAME
During the Term, the Baseball Facility will be known and referred to as
the Chain O'Lakes Park, the Spring Training Home of the Cleveland Indians.
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ARTICLE XIX
NO MORTGAGE OF BASEBALL FACILITY
The City represents to the Indians that it has not mortgaged the
Baseball Facility, or any part thereof, and covenants with the Indians to not
mortgage the Baseball Facility during the Term.
ARTICLE XX
MISCELLANEOUS
20.1. FORCE MAJEURE. Except as otherwise herein expressly provided, if
either party shall be delayed or hindered in, or prevented from, the performance
of any covenant or obligation hereunder as a result of acts of God, fire or
other casualty, earthquake, flood, epidemic, landslide, enemy act, war, riot,
intervention by civil or military authorities of government, insurrection or
other civil commotion, general unavailability of certain materials, strikes,
boycotts,lockouts, labor disputes or work stoppage beyond the control of either
party hereto, then the performance of such covenant or obligation, shall be
excused for the period of such delay, hindrance or prevention and the period of
the performance of such covenant or obligation shall be extended by the number
of days equivalent to the number of days of such delay, hindrance or prevention.
Without limiting the foregoing, in the event of a labor dispute or work stoppage
involving professional baseball, the Indians shall have no obligation to conduct
games, share revenue, pay expenses or do any other act related to the subject
matter of this Agreement or have any liability to the City as a result thereof.
20.2. AMENDMENT; WAIVER.
(a) No alteration, amendment or modification hereof shall be valid
unless executed by an instrument in writing by the parties hereto with the same
formality as this Agreement.
(b) The failure of the Indians or the City to insist in any one or more
instances upon the strict performance of any of the covenants, agreements,
terms, provisions or conditions of this Agreement or to exercise any election
herein contained shall not be construed as a waiver or relinquishment for the
future of such covenant, agreement, term, provision, condition, election or
option, but the same shall continue and remain in full force and effect. No
waiver by the Indians or the City of any covenant, agreement, term, provision or
condition of this agreement shall be deemed to have been made unless expressed
in writing and signed by an appropriate official on behalf of the City or the
Indians. Neither the payment by either party of sums due and payable hereunder,
with knowledge of the breach of any covenant, agreement,
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term, provisions or condition herein contained, shall be deemed a waiver of such
breach.
20.3. CONSENT. No consent or approval by the Indians or the City
permitted or required under the terms of this Agreement shall be valid or be of
any validity whatsoever unless the same shall be in writing, signed by the party
by or on whose behalf such consent is executed.
20.4. SEVERABILITY. If any article, section, subsection, term or
provision of this Agreement or the application thereof to any party or
circumstance shall, to any extent, be invalid or unenforceable, the remainder of
the article, section, subsection, term or provision of this Agreement or the
application of same to parties or circumstances other than those to which it is
held invalid or unenforceable shall not be affected thereby and each remaining
article, section, subsection, term or provision of this Agreement shall be valid
and enforceable to the fullest extent permitted by law.
20.5. COVENANT OF QUIET ENVIRONMENT. The City covenants that if, and so
long as, the Indians keeps and performs each and every covenant, agreement,
term, provision and condition of this Agreement on the part and on behalf of the
Indians to be kept and performed, the Indians shall quietly enjoy its rights
under this Agreement without hindrance or molestation by the City or by any
other person lawfully claiming the same by, through or under the City, subject
to the covenants, agreement, terms, provisions and conditions of this Agreement.
20.6. PRORATIONS. Any apportionment or prorations to be made under this
Agreement shall be computed on the basis of a year containing three hundred
sixty-five (365) days, consisting of twelve (12) months of the actual number of
days in each.
20.7. CAPTIONS. The captions of articles and sections are for
convenient reference only and shall not be deemed to limit construe, affect,
modify or alter the meaning of such Articles or sections.
20.8. BINDING EFFECT. The covenants, terms, conditions, provisions and
undertakings in this Agreement, or in any renewals thereof, shall extend to and
be binding upon the heirs, personal representatives, executors, administrators,
successors and assigns of the respective parties hereto as if they were in every
case named and expressed in whatever reference is made to either of the parties
hereto it shall be held to include and apply also to the heirs, personal
representatives, executors, administrators, successors and assigns of such party
as if in each case so expressed.
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<PAGE> 37
20.9. AGREEMENT CONTAINS ALL TERMS. This Agreement contains the entire
agreement and understanding between the parties. There are no oral
understandings, terms or conditions neither party has relied on any
representation, expressed or implied, not contained in this Agreement or the
simultaneous or prior writing heretofore. All prior understandings, terms and
conditions, including the Memorandum of Agreement, are deemed to merge in this
Agreement, and this Agreement cannot be changed or supplemented orally, but only
by an agreement in writing and signed by the party against whom enforcement of
any waiver, change, modification or discharge is sought.
20.10. NOTICES. All notices, demands, consents, approvals, statements,
requests and invoices to be given under this Agreement shall be in writing,
signed by the party or officer, agent or attorney of the party giving the
notice, and shall be deemed to have been effective upon delivery if served
personally, or upon the third day from and including the day of posting if
deposited in the United States mail, postage prepaid, registered or certified
mail, return receipt requested, addressed as follows:
For the City: The City of Winter Haven, Florida
451 Third Street, N.W.
Winter Haven, Florida 33881
Attention: City Manager
With a Copy to Attention: Mayor
For the Indians: Cleveland Indians Baseball Company
Limited Partnership
Cleveland Municipal Stadium
Cleveland, Ohio 44114
Attention: President
With a copy to: Baker & Hostetler
3200 National City Center
Cleveland, Ohio 44114
Attention: Gary L. Bryenton
20.11. APPLICABLE LAW; VENUE. This Agreement shall be governed by the
laws of the State of Florida. Venue for any judicial proceedings pertaining to
this Agreement shall be in Polk County, Florida.
20.12. CROSS REFERENCES. Any reference in this Agreement to a section,
subsection, article or exhibit is a reference to a section, subsection, article
or exhibit, as appropriate, of this Agreement, unless otherwise expressly
indicated.
20.13. REPRESENTATIVES. The Indians' representative for implementation
of the terms of this Agreement shall be Richard E. Jacobs, or such individual or
individuals designated, in writing, by Richard E. Jacobs to act for the Indians
on certain specified
-33-
<PAGE> 38
matters. The City's representative for implementation of the terms of this
Agreement shall be the City Manager. Either party may substitute representatives
by notice to the other party delivered in accordance with Section 20.10.
20.14. EFFECTIVE DATE. This Agreement shall be a legally binding
agreement, in full force and effect, as of the date set forth in the first
paragraph of this Agreement.
20.15. RADON GAS. Radon is a naturally occurring radioactive gas that,
when it has accumulated in a building in sufficient quantities, may present
health risks to persons who are exposed to it over time. Levels of radon that
exceed federal and state guidelines have been found in buildings in Florida.
Additional information regarding radon and radon testing may be obtained from
your county public health unit.
20.16. ACCORD AND SATISFACTION. Payment by any party, or receipt or
acceptance by a receiving party, of any payment due hereunder in an amount less
than the amount required to be paid hereunder shall not be deemed an accord and
satisfaction, or a waiver by the receiving party of its right to receive and
recover the full amount of such payment due hereunder, notwithstanding any
statement to the contrary on any check or payment or on any letter accompanying
such check or payment. The receiving party may accept such check or payment
without prejudice to the receiving party's right to recover the balance of such
payment due hereunder or to pursue any other legal or equitable remedy provided
in this Agreement.
20.17. FURTHER ASSURANCES. The City and the Indians shall execute,
acknowledge and deliver, after the date hereof, without additional
consideration, such further assurances, instruments and documents, and shall
take such further actions as the City or the Indians shall reasonably request of
the other in order to fulfill the intent of this Agreement and the transaction
contemplated thereby.
20.18. RETAINED REVENUES. Unless otherwise expressly provided for in
this Agreement, the Indians shall be entitled to receive and retain all revenues
generated by the operations of the Indians or derived from the ownership of the
franchise rights to the Indians, including, but not limited to, radio,
television, broadcast or other media fees.
20.19. NO THIRD PARTY BENEFICIARY. The provisions of this Agreement are
for the exclusive benefit of the parties hereto and not for the benefit of any
third person, nor shall this Agreement be deemed to have conferred any rights,
express or implied, upon any third person.
-34-
<PAGE> 39
20.20. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
20.21. NO GENERAL OBLIGATION. In no event shall any obligation of the
City under this Agreement be or constitute a general obligation or indebtedness
of the City, a pledge of the ad valorem taxing power of the City or a general
obligation or indebtedness of the City within the meaning of the Constitution of
the State of Florida or any other applicable laws, but shall be payable solely
from legally available revenues and funds. The Indians do not have the right
under this Agreement to compel the exercise of the ad valorem taxing power of
the City or any other governmental entity or taxation in any form on any real or
personal property to pay the City's obligations or undertaking hereunder.
20.22. RECORDABLE MEMORANDUM OF USE AGREEMENT. If requested by either
party, the City and the Indians agree to execute, in recordable form, the
"Memorandum of Amended and Restated Use Agreement," in substantially the form
attached hereto as Exhibit "C," and agree, authorize and hereby direct such
Memorandum to be recorded in the public records of Polk County, Florida, as soon
as possible after execution thereof. The parties further agree that in the event
the Memorandum has been recorded, upon the termination or expiration of this
Agreement they will execute and have recorded a memorandum or other instrument
evidencing that this Agreement has expired or terminated.
ARTICLE XXI
REPRESENTATIONS AND WARRANTIES
21.1. INDIANS' REPRESENTATIONS AND WARRANTIES. The Indians represents
and warrants as follows, as of the date hereof and at all times hereafter during
the Term that:
(1) The Indians is a duly organized and validly existing limited
partnership under the laws of the State of Ohio;
(2) The Indians has full power and authority to execute, deliver
and perform its obligations under this Agreement;
(3) All requisite partnership action has been taken by or on
behalf of the Indians to authorize the execution and delivery
by the Indians of this Agreement and the performance of its
obligations hereunder, and this Agreement constitutes a
legally valid and binding obligation of the Indians
enforceable in accordance with its terms; and
-35-
<PAGE> 40
(4) The execution and delivery by the Indians of this Agreement
and the performance by the Indians of its obligations
hereunder does not conflict with or violate any provision of
the Indians' Limited Partnership Agreement or Certificate of
Limited Partnership or any applicable law to which the Indians
is subject, nor does it conflict with, violate or constitute a
default under any contract or other obligation, subject to the
required approval set forth in Article XXII hereof, binding
upon the Indians.
21.2. CITY'S REPRESENTATIONS AND WARRANTIES. The City represents and
warrants as follows, as of the date hereof and at all times hereafter during the
Term that:
(1) The City is a validly existing municipal corporation of the
State of Florida;
(2) The City has full power and authority to execute, deliver and
perform its obligations under this Agreement;
(3) The governing body of the City has approved this Agreement in
all respects and that all corporate and municipal action has
been taken by or on behalf of the City to authorize the
execution and delivery by the City of this Agreement and the
performance of its obligations hereunder, and this Agreement
constitutes a legally valid and binding obligation of the City
enforceable in accordance with its terms;
(4) The execution and delivery by the City of this Agreement and
the performance by the City of its obligations hereunder does
not conflict with or violate any provision of the City's
charter (or similar governing document) or any applicable law
to which the City is subject, nor does it conflict with,
violate or constitute a default under any contract or other
obligation binding upon the City;
(5) The City owns fee simple title to the Baseball Facility free
and clear of liens and encumbrances thereon; and
(6) There are no City or local laws, regulations or ordinances
that require the Indians to obtain any licenses or permits to
conduct its business in accordance with the terms of this
Agreement.
-36-
<PAGE> 41
ARTICLE XXII
MAJOR LEAGUE APPROVAL
All of the terms and conditions of this Agreement must be approved by
the Commissioner of Major League Baseball and the President of the American
League. The City and the Indians acknowledge that this Agreement and other
related documents may be amended to add such notice and approval provisions as
may be required by the Commissioner of Major League Baseball and the President
of the American League. The City acknowledges that approval may be given or
withheld or actions taken as described in this Article XXII in the discretion of
such persons. After execution hereof by the City, the Indians shall promptly
request approval of this Agreement.
ARTICLE XXIII
TICKET AND PROMOTIONS AGREEMENT
23.1. COMMUNITY PARTICIPATION. The City and the Indians acknowledge
that to make this project a more viable, economic enterprise the full support of
the community is needed. Therefore, the City shall request the Winter Haven
Chamber of Commerce or such other sources acceptable to the Indians to use their
good faith efforts to: (a) sell at least 15,000 admission tickets to Spring
Training Ballgames at regular admission prices during each Spring Training
Season, (b) obtain sponsors who will expend at least $25,000 each Spring
Training Season to promote Spring Training Ballgames through radio, television,
newspapers, merchant posters and banners, and similar media in the Winter Haven
area, and (c) sponsor a season ticket drive for each Spring Training Season
during a four (4) week period determined by Indians each Term Year. All
promotional materials shall be submitted to the Indians for the Indians approval
prior to their distribution or use. It is understood and agreed by the City and
the Indians that if, after reasonable good faith efforts by the City, the goals
of this Section 23.1 are not met; such event shall not constitute a breach or
default of this Agreement by the City nor shall it excuse or release the Indians
from any of its obligations under this Agreement.
23.2. INDIANS' PROMOTIONS. The,Indians will provide during the Term,
one (1) scoreboard message at each regular season home game for the purpose of
promoting travel to Winter Haven, the Indians' Spring Training Headquarters. The
City shall provide, at the City's cost and expense, appropriate scoreboard
message copy, which message copy shall be subject to the approval of the
Indians.
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<PAGE> 42
IN WITNESS THEREOF, the parties hereto have executed this Agreement as
of the date first above written.
CITY OF WINTER HAVEN, FLORIDA
ATTESTED BY:
/s/ Gladys L. Larson By /s/ Ellie Therlkel
- ----------------------------------- -----------------------------------
City Clerk (Deputy) Mayor
APPROVED AS TO FORM:
/s/ Robert J. Antonelli
- -----------------------------------
City Attorney
CLEVELAND INDIANS BASEBALL COMPANY LIMITED
PARTNERSHIP, an Ohio limited partnership
By: CLEVELAND BASEBALL CORPORATION,
an Ohio corporation and its general partner
By: /s/ Dennis Lehman
----------------------------------------
Its: E.V.P.
-------------------------------------
/s/ ??? McAfee
- -----------------------------------
/s/ Beverly Taliaferro
- -----------------------------------
(Witnesses as to Indians)
-38-
<PAGE> 43
FIRST AMENDMENT TO AMENDED
AND RESTATED USE AGREEMENT
THIS FIRST AMENDMENT TO AMENDED AND RESTATED USE AGREEMENT
(this "Amendment") is made as of this 11th day of February 1994, by and between
the CITY OF WINTER HAVEN, Florida, a Florida municipal corporation (the "City"),
and CLEVELAND INDIANS BASEBALL COMPANY LIMITED PARTNERSHIP, an Ohio limited
partnership (the "Indians") .
WHEREAS, the Indians and the City have entered into that
certain Amended and Restated Use Agreement dated October 15, 1993 (the
"Agreement"); and
WHEREAS, the Indians and the City have agreed to make certain
amendments and modifications to the Agreement to reflect the Indians, exclusive
right to control concession sales at the Baseball Facility (all capitalized
terms not otherwise defined herein shall have the same meaning ascribed to them
in the Agreement), and the build-out and equipping of certain concession areas
and concession equipment as more fully set forth in this Amendment.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and promises contained herein, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
1.1. ADDITIONAL DEFINITIONS. The following additional defined terms are
hereby added to Article I of the Agreement:
(A) "Concession Equipment" means the kitchen and retail food and
beverage preparation and service equipment, smallwares and devices, cash
registers, telephone and other concession equipment as more fully described on
Exhibit A, attached hereto and made a part hereof.
(B) "Concession Facilities"' means all concession stands and booths,
beer gardens, concession storage and dressing rooms, loading docks and
facilities, gift shops and concession offices which are presently located in the
Baseball Facility or may hereafter be constructed, relocated or expanded within
the Baseball Facility.
(C) "Concession Revenue" means Gross Concession Revenues less all sales
taxes paid thereon.
(D) "Concessionaire" means such professional concession operator
selected by the Indians and approved by the City, which approval shall not be
unreasonably withheld, as the
<PAGE> 44
same may be replaced from time to time by the Indians. The initial
Concessionaire shall be Sportservice Corporation, a New York corporation.
(E) "Gross Concession Revenues" means all gross receipts collected from
the sale of Refreshments and Merchandise and any sublicensing revenues
pertaining to Refreshments and Merchandise received from third-party vendors.
(F) "Merchandise" means all novelties, souvenirs (excluding Indians
periodicals, programs and publications), binoculars, seat cushions (which may be
sold or rented), clothing, garments, and any other appropriate merchandise as
shall be approved from time to time by the Indians for sale at the Baseball
Facility.
(G) "Refreshments" means all refreshments, confectioneries, beverages
(including alcoholic beverages to extent permitted by applicable law, now or
hereafter in effect), snacks, tobacco products and all other food products as
may be approved from time to time by the Indians for sale at the Baseball
Facility.
(H) "Utility Services" means all utilities necessary for the operations
of Concession Facilities or Concession Equipment, including, but not limited to
HVAC, water, electricity, sewage, general lighting, gas for cooking and local
telephone services.
1.1. DELETION OF DEFINITION. The definition of Gross Concession Revenue
previously set forth in Section 1.1(p) of the Agreement is hereby deleted in its
entirety.
ARTICLE II
CONCESSION OPERATIONS
2.1. INDIANS' CONTROL OF CONCESSION OPERATIONS. The Indians shall be
responsible for the management and operation of all concession operations at the
Baseball Facility during Indians' Events. The Indians may subcontract all or any
portion of the Indians' concession rights and obligations to the Concessionaire.
Any concessionaire for the Ballpark Facility shall meet the qualifications
agreed to by the City and the Indians and shall offer for sale concession
products of a nature, quality, and price determined by the Indians and approved
by the City. The City shall retain complete and exclusive control over the
choice of concessionaire, concession equipment, and concession facilities for
any and all non-Indians events and the Indians shall not share in any concession
revenue from such non-Indians events.
-2-
<PAGE> 45
2.2. CITY'S RESPONSIBILITIES. The City shall continue to be responsible
for any and all costs of constructing the Concession Facilities and providing
the Concession Equipment, including, the construction, renovation and provision
of the Concession Facilities and Concession Equipment as described on Exhibit B,
attached hereto and made a part hereof. The City shall be responsible for the
repair and replacement of all Concession Facilities and Concession Equipment in
need of repair and replacement due to normal wear and tear or damage; provided
such damage is not caused by the improper use of such Concession Facilities or
Concession Equipment by the Indians or the concessionaire. The City shall ensure
that there are proper and adequate Utility Services, Concession Facilities and
connections of Utility Services to Concession Facilities and Concession
Equipment. The City shall pay all costs and expenses of Utility Services,
excluding long distance telephone charges incurred by the Indians or the
Concessionaire.
2.3. ADDITIONAL AMENDMENTS TO USE PROVISIONS OF AGREEMENT. The word
"Concession" in Section 2.3(a)(i) of the Agreement is hereby deleted. Section
2.3(a)(vi) of the Agreement is hereby deleted in its entirety and Section
2.3(a)(vii) is hereby renumbered to be Section 2.3(a)(vi). Section 2.3(c)(2) is
hereby deleted in its entirety and inserted in lieu thereof is the following new
Section 2.3(c)(2):
"The City will operate the parking at the Baseball Facility.
If during the Term, the City decides to contract with any
third-party (which could be the Indians, or an affiliate
thereof) to operate and manage the parking at the Baseball
Facility, then prior to doing so the City will give notice to
that effect to the Indians and will consult with the Indians
regarding qualifications of any proposed parking managers."
Section 2.3(d) is hereby amended by inserting a period after the word
"Events" in the sixth line thereof and deleting all of the remaining language
thereafter.
ARTICLE III
CONCESSION REVENUES
3.1. CITY CONCESSION REVENUES. The words "(b) Eighty Percent
(80%) of the Gross Concession Revenue," in Section 6.1 of the Agreement are
hereby deleted and inserted in lieu thereof is the following:
"(b)(i) 21% of the annual Concession Revenue from the sale of
all Refreshments up to $275,000, plus 21.75% of all annual
-3-
<PAGE> 46
Concession Revenues for the sale of all Refreshments in excess
of $275,000 up to $325,000 plus 22.50% of all annual
Concession Revenue from the sale of all Refreshments in excess
of $325,000, and (ii) 20% of Concession Revenues from the sale
of all Merchandise, except tobacco products."
3.2. INDIANS' CONCESSION REVENUES. The words "(a) Twenty Percent (20%)
of the Gross Concession Revenues," set forth in Section 6.3 of the Agreement are
hereby deleted in their entirety and the following is hereby inserted in lieu
thereof:
"(a) all Gross Concession Revenues not otherwise due and
payable to the City as set forth in Section 6.1 above".
3.2. PAYMENTS. Section 6.4 of the Agreement is hereby amended to
provide that all Gross Concession Revenue shall be collected by the Indians or
the Concessionaire. The Indians or the Concessionaire shall provide the City
with a weekly report of Gross Concession Revenues and make the payments to the
City in accordance with the provisions contained in Section 6.4 of the
Agreement.
3.3. SALES TAXES ON GROSS CONCESSION REVENUES. Section 9.3 of the
Agreement is hereby amended to delete the words "City's Gross Concession
Revenues" therefrom.
ARTICLE IV
CONCESSIONAIRE RIGHTS
The City hereby agrees that the Indians may grant all of the concession
rights and obligations as provided in the Agreement as amended by this Amendment
to the Concessionaire pursuant to an agreement by and between the Indians and
the Concessionaire.
ARTICLE V
EXCLUSIVE RIGHTS
The concession rights set forth in the Agreement as amended by this
Amendment are exclusive to the Indians and the Concessionaire. The City shall
prohibit vendors, peddlers or persons other than the Indians and/or the
Concessionaire to vend, otherwise sell, or distribute any Refreshments or
Merchandise in, on, or about the Baseball Facility, during any Indians' Event.
The City further agrees that in keeping with the exclusivity of the Indians' and
Concessionaire's rights hereunder, neither the City nor its agents or employees
will sell any products covered
-4-
<PAGE> 47
by the Agreement as amended by this Amendment or any products which will
conflict or compete with the products to be sold hereunder.
ARTICLE VI
NO OTHER AMENDMENTS
Except as set forth in this Amendment, there are no other
amendments, modifications or changes to the Agreement and the Agreement shall
remain in full force and effect.
IN WITNESS THEREOF, the parties hereto have executed this Agreement as
of the date first above written.
CITY OF WINTER HAVEN FLORIDA
ATTESTED BY:
/s/ Sarah Lee Shumate By: /s/ Ellie Threlkel
- --------------------------- -------------------------
City Clerk Mayor
APPROVED AS TO FORM:
/s/ Robert J. Antonello
- --------------------------
City Attorney CLEVELAND INDIANS BASEBALL COMPANY LIMITED
PARTNERSHIP, an Ohio limited partnership
By: CLEVELAND BASEBALL CORPORATION,
an Ohio corporation and its general
partner
/s/ illegible
- ------------------------ By: /s/ Dennis Lehman
--------------------------
Vice President
/s/ Constance D. Kress Its:--------------------------
- --------------------------
(Witnesses as to Indians)
-5-
<PAGE> 48
SECOND AMENDMENT TO AMENDED AND
RESTATED USE AGREEMENT
THIS SECOND AMENDMENT TO AMENDED AND RESTATED USE AGREEMENT (this "Second
Amendment") is made as of this 11th day of February, 1994, by and between the
CITY OF WINTER HAVEN, Florida, a Florida municipal corporation (the "City"), and
CLEVELAND INDIANS BASEBALL COMPANY LIMITED PARTNERSHIP, an Ohio limited
partnership (the "Indians").
WHEREAS, the Indians and the City entered into that certain Amended and
Restated Use Agreement dated October 15, 1993 (the "Agreement"); and
WHEREAS, the Indians and the City have, concurrent with the entering of
this Second Amendment, entered into a First Amendment to Amended and Restated
Use Agreement (the "First Amendment"); and
WHEREAS, it is the intent of Indians and the City that this Second
Amendment be effective only through December 31, 1994. However, to the extent of
matters covered herein, this Second Amendment shall supersede the Agreement and
the First Amendment notwithstanding any provisions, agreements, or obligations
in either of the previous documents which are in conflict herewith.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and promises contained herein, the parties hereto agree as follows:
ARTICLE I
CITY'S MERCHANDISE CONCESSION RIGHTS
The City shall have the exclusive right to vend, otherwise sell, or
distribute merchandise (as defined in the First Amendment) in, on, or about the
Baseball Facility, during any Indians' Event, or during any other event, until
December 31, 1994 at which time this right shall expire.
<PAGE> 49
ARTICLE II
EXCLUSIVE RIGHTS
The City's merchandise concession rights set forth in this Second Amendment
are exclusive to the City. The Indians shall prohibit vendors, peddlers or
persons other than the City to vend, otherwise sell, or distribute any
merchandise in, on, or about the Baseball Facility, during any Indians' Event.
The Indians further agree that in keeping with the exclusivity of the City's
merchandise concession rights hereunder, neither the Indians or its agents,
employees or assigns will sell any products covered by this Second Amendment or
any products which will conflict or compete with the products to be sold
hereunder.
ARTICLE III
MERCHANDISE CONCESSION REVENUES
All revenues from the sale of merchandise hereunder shall be collected by
the City. The City shall pay to the Indians twenty percent (20%) of said
merchandise concession revenues. The City shall make payments to the Indians in
accordance with the provisions contained in Section 6.4 of the Agreement. No
third party shall be entitled to share in said revenues.
ARTICLE IV
NO OTHER AMENDMENTS
Except as set forth in the First Amendment and this Second Amendment, there
are no other amendments, modifications or changes to the Agreement. It is the
intent of the parties that where not inconsistent herewith, the Agreement and
the First Amendment shall remain in full force and effect, and subsequent to
December 31, 1994 the parties shall operate exclusively in accordance with the
Agreement and the First Amendment as they presently exist.
IN WITNESS THEREOF, the parties hereto have executed this Second Amendment
as of the date first above written.
<PAGE> 50
CITY OF WINTER HAVEN, FLORIDA
ATTESTED BY:
/s/ Sarah Lee Shumate By: /s/ Ellie Threlkel
- ---------------------- ---------------------------
City Clerk Mayor
APPROVED AS TO FORM:
CLEVELAND INDIANS BASEBALL COMPANY
LIMITED PARTNERSHIP, an Ohio
limited partnership
By: CLEVELAND BASEBALL CORPORATION,
an Ohio corporation and its
general partner
/s/ illegible By: /s/ Dennis J. Lehman
- ----------------------- -----------------------
/s/ Constance D. ? Its: Exec V.P.
- ------------------------- ----------------------
(Witnesses as to Indians)
STATE OF FLORIDA )
)
COUNTY OF POLK )
I HEREBY CERTIFY, that on this l1th day of February, 1994, before me
personally appeared Ellie Threlkel as Mayor and Sarah Lee Shumate as City Clerk
respectively, of the CITY OF WINTER HAVEN, FLORIDA, a municipal corporation
under the laws of the State of Florida, who are personally known to me to be the
persons described in and who executed the foregoing Second Amendment and
severally acknowledged the execution thereof to be their free act and deed as
such officers, for the uses and purposes therein mentioned; and that they
affixed thereto the official seal of said corporation, and the said instrument
is the act and deed of said corporation and who do not take an oath.
<PAGE> 1
Exhibit 10.7
================================================================================
CLUB TRUST REDUCING REVOLVING CREDIT AGREEMENT
(the "Club Trust Credit Agreement")
among
MAJOR LEAGUE BASEBALL TRUST
and
FLEET NATIONAL BANK
and
CLUB TRUSTS DEEMED TO BE PARTIES HERETO
Dated as of June 28, 1996
================================================================================
<PAGE> 2
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I - Definitions and Accounting Terms.................................................................... 1
SECTION 1.01. Certain Defined Terms................................................................... 1
SECTION 1.02. Computation of Time Periods............................................................. 1
SECTION 1.03. Accounting Terms........................................................................ 1
ARTICLE II - Amounts and Terms of the Loans..................................................................... 2
SECTION 2.01. The Club Trust Loans.................................................................... 2
SECTION 2.02. Making the Loans........................................................................ 3
SECTION 2.03. Fees.................................................................................... 4
SECTION 2.04. Reduction of Maximum Available Amount................................................... 4
SECTION 2.05. Principal Repayment..................................................................... 7
SECTION 2.06. Interest................................................................................ 7
SECTION 2.07. Additional Interest..................................................................... 11
SECTION 2.08. Interest Rate Determination and Protection.............................................. 11
SECTION 2.09. Prepayments............................................................................. 12
SECTION 2.10. Increased Costs......................................................................... 14
SECTION 2.11. Illegality.............................................................................. 14
SECTION 2.12. Payments; Limited Recourse; No Cross Collateralization
and Computations........................................................................ 15
SECTION 2.13. Taxes................................................................................... 20
SECTION 2.14. Additional Club Trusts; Creation of Additional Sub-Facilities........................... 26
ARTICLE III - Conditions of Lending............................................................................. 29
SECTION 3.01. Condition Precedent to Initial Loans.................................................... 29
SECTION 3.02. Conditions Precedent to Each Loan....................................................... 31
ARTICLE IV - Representations and Warranties..................................................................... 33
SECTION 4.01. Representations and Warranties of each Club Trust....................................... 33
ARTICLE V - Covenants of the Club Trusts........................................................................ 35
SECTION 5.01. Affirmative Covenants................................................................... 35
SECTION 5.02. Negative Covenants...................................................................... 38
ARTICLE VI - Default............................................................................................ 41
SECTION 6.01. Club Trust Events of Default............................................................ 41
SECTION 6.02. Remedies................................................................................ 46
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
ARTICLE VII - The Facilitating Agent............................................................................ 46
SECTION 7.01. Authorization and Action................................................................ 46
SECTION 7.02. Facilitating Agent's Reliance, etc...................................................... 47
SECTION 7.03. Indemnification......................................................................... 48
SECTION 7.04. Successor Facilitating Agent............................................................ 49
ARTICLE VIII - Miscellaneous.................................................................................... 50
SECTION 8.01. Amendments, etc......................................................................... 50
SECTION 8.02. Notices, etc............................................................................ 51
SECTION 8.03. No Waiver, Remedies..................................................................... 53
SECTION 8.04. Costs and Expenses...................................................................... 53
SECTION 8.05. Binding Effect.......................................................................... 55
SECTION 8.06. The Register............................................................................ 55
SECTION 8.07. Limitation of Liability................................................................. 55
SECTION 8.08. Governing Law; Consent to Jurisdiction; Other Matters................................... 56
SECTION 8.09. Execution in Counterparts............................................................... 57
ANNEX A Definitions
EXHIBIT A Club Trust Promissory Note
EXHIBIT B Form of Notice of Borrowing
EXHIBIT C Form of Club Trust Pledge and Security Agreement
EXHIBIT D Form of Ratification Agreement
EXHIBIT E Form of Administration Agreement
SCHEDULE I Schedule of Club Trusts, Participating Clubs and Maximum Available
Amounts
</TABLE>
-ii-
<PAGE> 4
CLUB TRUST REDUCING REVOLVING CREDIT AGREEMENT
Dated as of June 28, 1996
MAJOR LEAGUE BASEBALL TRUST. a Delaware business trust (the
"MLB Trust"), FLEET NATIONAL BANK , a national banking
association ("Fleet"), as facilitating agent (the
"Facilitating Agent") for the MLB Trust and the Club Trusts
deemed to be parties hereto as a result of the execution of a
Ratification Agreement.
ARTICLE I
Definitions and Accounting Terms
--------------------------------
SECTION 1.01. CERTAIN DEFINED TERMS. Unless otherwise defined herein,
capitalized terms shall have the meanings set forth in Annex A hereto. In
addition, the interpretive guidelines set forth in such Annex A shall be
applicable to this Agreement.
SECTION 1.02. COMPUTATION OF TIME PERIODS. In this Agreement, in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
mean "to but excluding".
SECTION 1.03. ACCOUNTING TERMS. All accounting terms not specifically
defined herein shall be construed in accordance with generally accepted
accounting principles.
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ARTICLE II
Amounts and Terms of the Loans
------------------------------
SECTION 2.01. THE CLUB TRUST LOANS. The MLB Trust agrees, on the terms
and subject to the conditions hereinafter set forth, to make Loans to the Club
Trusts pursuant to this Agreement from time to time on any Monthly Transaction
Date during the period from the date hereof until the Termination Date in an
amount with respect to each Club Trust up to the Maximum Available Amount for
such Club Trust and in an ag(ire(,ate amount not to exceed at any time the sum
of all the outstanding Maximum Available Amounts corresponding to the Club Trust
Sub-Facilities (initially, $290,000,000), as such amount shall be reduced
pursuant to Section 2.04 and increased pursuant to Section 2.14 and 8.01 (the
"Total Commitment"); PROVIDED, HOWEVER, that the aggregate amount of all Loans
made to any particular Club Trust shall not at any time exceed such Club Trust's
Maximum Available Amount under its Club Trust Sub-Facility (initially, either
$25,000,000 under Option A or $40,000,000 under Option B, as reduced by the
amount of the Labor Contingency Interest Reserve, if applicable). Each Loan with
respect to a Club Trust shall be in a minimum of 1,000,000 and an integral
multiple of $500,000, PROVIDED, HOWEVER, that at any time any Loan(s) shall be
outstanding hereunder with respect to such Club Trust, such Loan(s) shall
aggregate at least $5,000,000. The Loans with respect to each Club Trust shall
be evidenced by a Club Trust Note. Each Club Trust Note shall be payable on the
Final Payment Date. Within the limits of the Commitment and its Maximum
Available Amount, and provided that all conditions set forth in Section 3.01 or
3.02, as the case may be, have been satisfied. each Club Trust may borrow,
prepay pursuant to Section 2.09 and reborrow under this Section 2.01.
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SECTION 2.02. MAKING THE LOANS.
(a) Each Loan to a Club Trust shall be made on notice, given not later
than 12:00 noon (Boston time) on the third Business Day prior to the Monthly
Transaction Date of the proposed Loan, by the related Club Trust to the MLB
Trust and the Facilitating Agent. Any such notice of a Borrowing (a "Notice of
Borrowing") shall be by telecopier, telex or cable, confirmed immediately in
writing, in substantially the form of Exhibit B hereto, specifying therein (i)
the Club Trust with respect to which the Loan is requested, (ii) the related
Monthly Transaction Date Of such Loan, (ill) the amount of such Loan and (iv)
any amount of such Loan which is to be subject to a LIBO Rate Option (which
amount shall be a minimum of $1,000,000 and an integral multiple of $500,000)
and the initial Interest Period (consistent with the provisions of Section
2.06(b)) for any such amount which is to be subject to a LIBO Rate Option. On
the date of each Loan and upon fulfillment of the applicable conditions set
forth in Article III, the MLB Trust shall make available such Loan proceeds to
the Club Trusts in their respective Distribution Accounts.
(b) Each Notice of Borrowing shall be irrevocable and binding on the
related Club Trust. Subject to the provisions of Section 2.12, each Club Trust
shall indemnify the MLB Trust against any loss, cost or expense incurred by the
MLB Trust as a result of any failure to fulfill, on or before the date specified
in such Notice of Borrowing for any related Loan, the applicable conditions
related to its Loan set forth in Article 111, including any loss payable by the
MLB Trust to any Bank pursuant to MLB Credit Agreement because such related Loan
is not made on such date.
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SECTION 2.03. FEES.
(a) Each Club Trust agrees to pay to the MLB Trust a commitment fee on
the average daily unused portion of the MLB Trust's Total Commitment
attributable to such Club Trust from the date hereof until the Termination Date
at the rate of 1/4 of 1% per annum, payable in arrears on the last day of each
March, June, September and December during the term of the MLB Trust's Total
Commitment, commencing September 30, 1996, and ending on the Termination Date
(or, if any such day is not a Business Day, the immediately following Business
Day).
(b) All fees payable pursuant to this Section 2.03 shall be paid on the
date due in immediately available funds or fees shall be withheld by the MLB
Trust from any Loan if the Administrative Agent, in accordance with the terms of
the MLB Credit Agreement, shall have withheld such fees from the Club Trust
Related Advances made to the MLB Trust corresponding to such Loan. Once paid,
all fees shall be nonrefundable under all circumstances.
SECTION 2.04. REDUCTION OF MAXIMUM AVAILABLE AMOUNT.
(a) VOLUNTARY REDUCTIONS. Prior to the Termination Date, each Club
Trust shall have the right, upon at least one Business Day's prior notice to the
MLB Trust and the Facilitating Agent, to terminate in whole or reduce in part
the unused portion of the Maximum Available Amount under its Club Trust
Sub-Facility; PROVIDED that each partial reduction shall be in the aggregate
amount of $250,000 and integral multiples thereof, and PROVIDED FURTHER that
such Club Trust shall not be permitted prior to the Termination Date to reduce
its Maximum Available Amount below $5,000,000, unless the Maximum
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Available Amount with respect to such Club Trust shall be reduced to zero. Any
Club Trust which shall have (1) reduced its Maximum Available Amount under its
Sub-Facility to zero, (ii) paid in full all other amounts owed by it hereunder
and under its Club Trust Pledge and Security Agreement and (iii) caused the
agreement with respect to tile continuation of certain of its and its related
Participating Club's obligations to be delivered as contemplated in Section II
of the related Club Trust Pledge and Security Agreement shall be deemed no
longer to be a party to this Agreement.
(b) REQUIRED REDUCTIONS.
(i) The Maximum Available Amount under each Club Trust's Sub-Facility
shall be reduced, on or prior to each of the dates set forth below, to the
corresponding amounts set forth below for a Club Trust that has elected Option A
or Option B, as the case may be:
<TABLE>
<CAPTION>
Maximum Available
Amount Per Club Trust
---------------------
Date Option A Option B
---- -------- --------
<S> <C> <C>
December 15, 1996 $25,000,000 $38,500,000
December 15, 1997 $25,000,000 $32,000,000
December 15, 1998 $25,000,000 $25,250,000
December 15, 1999 $19,000,000 $19,000,000
December 15, 2000 $12,500,000 $12,500,000
December 31, 2000 Balance Due Balance Due
</TABLE>
PROVIDED, that if a National Media Contract with a joint venture between Fox
Broadcasting Company and Liberty providing for annual payments of at least
$46,000,000, a term of at least four years and fee reduction and termination
provisions which are no more materially
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detrimental to the Lenders than those set fourth in the National Media Contract
with Fox Broadcasting Company (as determined in the reasonable judgment of the
Required Banks. which determination shall be deemed made if the Required Banks
have not objected to such provisions within 10 days of delivery of the
substantially final agreement is not fully executed on or before the first
scheduled telecast by such venture of the 1997 Major League Baseball Season (and
in any event on or before July 15, 1997) the Maximum Available Amount per Club
Trust under Option B in 1997 and under Option A and Option B in 1998, 1999 and
2000 shall be reduced by an additional $1,650,000 per Club Trust per year.
(ii) In addition to the foregoing, prior to any Collective Bargaining
Agreement Effective Date, and on and after any Collective Bargaining Agreement
Expiration Date but prior to a subsequent Collective Bargaining Agreement
Effective Date, the Maximum Available Amount under each Club Trust's
Sub-Facility shall be reduced, pursuant to a temporary reduction of the unused
portion of the MLB Trust's Total Commitment attributable to such Club Trust, by
an amount equal to the Labor Contingency Interest Reserve for such Club Trust,
PROVIDED, HOWEVER, that such Labor Contingency Interest Reserve shall be
eliminated and such Club Trust's Maximum Available Amount shall be restored to
the amount otherwise in effect under this Agreement without giving effect to
this Section 2.04(b)(ii) on and after any Collective Bargaining Agreement
Effective Date until the next Collective Bargaining Agreement Expiration Date;
and PROVIDED, FURTHER, that with respect to such a reduction occurring on and
after any Collective Bargaining Agreement Expiration Date, the Labor Contingency
Interest Reserve shall be reestablished by each Club Trust either (i) reducing
its Maximum Available
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Amount pursuant to a temporary reduction of the unused portion of the MLB
Trust's Total Commitment attributable to such Club Trust or, (ii) if it does not
have a Sufficient unused portion repaying (and not reborrowing) a corresponding
amount of unpaid principal of all outstanding Loans from the MLB Trust to such
Club Trust under its Club Trust Sub-Facility (in accordance with and subject to
the provisions of Section 2.12) ratably during the three-month period prior to
the applicable Collective Bargaining Agreement Expiration Date if projected
revenues from the National Media Contracts during such three-month period are
sufficient in the reasonable judgment of the Facilitating Agent to effect such a
reduction and if not, a period comprising a sufficient number of months in the
reasonable judgment of the Facilitating Agent to effect such a reduction.
(iii) In addition to the foregoing, if at any time the aggregate
outstanding amount of all Loans from the MLB Trust to a Club Trust exceeds the
Maximum Available Amount under such Club Trust's Sub-Facility, such Club Trust
shall immediately repay the Loans in the amount of such excess.
SECTION 2.05. PRINCIPAL REPAYMENT. Each Club Trust shall repay the
outstanding principal amount of all Loans from the MLB Trust to such Club Trust
under its Club Trust Sub-Facility in full on the Final Payment Date (subject to
the provisions of Section 2.12).
SECTION 2.06. INTEREST.
(a) ORDINARY INTEREST. Each Club Trust shall pay interest on the unpaid
principal amount of each Loan made to it by the MLB Trust from the date of such
Loan until such principal amount shall be paid in full at the interest rate or
rates determined pursuant to
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Section 2.08(a). Interest on each Loan (or portion thereof) which is not then
subject to the LIBO Rate Option shall be payable quarterly in arrears on the
last day of each March, June. September and December, commencing September 30,
1996, and interest on each LIBO Rate Portion of any Loan shall be payable on the
last day of each Interest Period and. if such Interest Period has a duration of
six months, on the day which is three months after the first day of such
Interest Period and on the last day of such Interest Period.
(b) INTEREST PERIODS. Subject to Section 2.02(a), Section 2.08(c) and
Section 2.10, any Administrator on behalf of the related Club Trust may (i)
request in any Notice of Borrowing delivered pursuant to Section 2.02(a) that
interest on the Loan requested in such Notice of Borrowing (or on a specified
principal amount thereof) be based on the LIBO Rate or (ii) request in any
Notice of Borrowing delivered pursuant to Section 2.02(a) that interest on any
then outstanding Loan (or on a specified principal amount thereof) be based on
the LIBO Rate. in each case for a period (an "Interest Period") for such Loan
(or portion thereof) of one. two, three or six months; PROVIDED, HOWEVER, that:
(i) any Notice of Borrowing given on the Closing Date shall
satisfy the prior notice requirements set forth in Section 2.02(a);
(ii) if any Club Trust fails so to select the duration of any
Interest Period, the duration of such Interest Period shall be one
month;
(iii) no more than five Interest Periods shall be outstanding
with respect to any Club Trust;
(iv) no Interest Period may extend beyond the Final Payment
Date;
(v) a Club Trust may not select any Interest Period which ends
after any principal repayment or reduction date unless, after giving
effect to such selection, the
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aggregate unpaid principal amount of Loans (or portions thereof) with
respect to such Club Trust which are not then subject to a LIBO Rate
Option, together with the appropriate unpaid principal amount of LIBO
Rate Portions of Loans having Interest Periods which end on or prior to
such principal repayment or reduction date shall be at least equal to
the principal amount of Loans with respect to such Club Trust due and
payable on and prior to such date;
(vi) whenever the last day of any Interest Period would
otherwise occur on a day other than a Business Day, the last day of
such Interest Period shall be extended to occur on the next succeeding
Business Day; PROVIDED that, if such extension would cause the last day
of such Interest Period to occur in the next following calendar month,
the last day of such Interest Period shall occur on the next preceding
Business Day;
(vii) if any Club Trust (through its Administrator on behalf
of the Club Trust) shall not have delivered to the MLB Trust and the
Facilitating Agent, not later than 12:00 noon (Boston time) on the
third Business Day prior to the termination of any Interest Period, a
Notice of Borrowing requesting that interest on the LIBO Rate Portion
(or any portion thereof) corresponding to such Interest Period be based
on the LIBO Rate for a new Interest Period, then the interest on the
amount of such LIBO Rate Portion (or any portion thereof as to which
such Club Trust has not requested that interest be based on a LIBO
Rate) shall be calculated pursuant to Section 2.06(a)(i) of the MLB
Credit Agreement following termination of the applicable Interest
Period; and
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PROVIDED, FURTHER, that in the case of a Business Interruption Event,
the selection of new Interest Periods for outstanding Loans shall
Continue to be permitted.
(c) DEFAULT INTEREST. Each Club Trust shall pay interest on the unpaid
principal amount of each Loan made to such Club Trust that is not paid when due
and on the unpaid amount of all interest, fees and other amounts payable
hereunder that is not paid when due, payable on demand, at a rate per annum
equal at all times to (i) in the case of any amount of principal, 2.5% per annum
above the rate per annum required to be paid on such Loan immediately prior to
the date on which such amount became due and (ii) in the case of all other
amounts, 2.5% per annum above the Base Rate in effect from time to time;
PROVIDED, however, that in no event shall the amount contracted for and agreed
to be paid by any Club Trust under any provision of this Agreement or its Club
Trust Note exceed the highest lawful rate permissible under any law applicable
thereto.
(d) BUSINESS INTERRUPTION EVENT INTEREST. Upon the occurrence of a
Business Interruption Event, each Club Trust shall pay interest on the unpaid
principal amount of each Loan at a rate per annum equal at all times to 2% per
annum above the rate per annum that would otherwise be required to be paid on
such Loan under this Agreement without giving effect to this Section 2.06(d);
PROVIDED, that following the earlier of the termination of the strike or dispute
which gave rise to a Business Interruption Event or the resumption of games
involving players of Major League Baseball and not replacement players, the
interest rate shall be restored to the rate that would otherwise be required
under this Agreement without giving effect to this Section 2.06(d).
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SECTION 2.07. ADDITIONAL INTEREST. Each Club Trust shall pay to the MLB
Trust the amount of any additional interest required to be paid by the MLB Trust
to any Bank pursuant to Section 2.07 of the MLB Credit Agreement with respect to
the Club Trust Related Advances corresponding to the Loan(s) made by the MLB
Trust to such Club Trust under its Club Trust Sub-Facility. Such amounts shall
be paid to the MLB Trust at or prior to the time that the MLB Trust shall be
required to pay such amount to any Bank.
SECTION 2.08. INTEREST RATE DETERMINATION AND PROTECTION.
(a) The interest rate for each Club Trust's Loan under its Sub-
Facility shall be the interest rate or rates on the Club Trust Related Advances
corresponding to such Loan as determined pursuant to Section 2.06 of the MLB
Credit Agreement.
(b) The Facilitating Agent shall give prompt notice to the related Club
Trust of the applicable interest rate or rates determined by the Administrative
Agent under the MLB credit Agreement for purposes of Section 2.06.
(c) If, pursuant to Section 2.08(c) of the MLB Credit Agreement, each
of the Agent Banks determines that the LIBO Rate for any Interest Period for the
Club Trust Related Advances which correspond to the Loans made to the Club
Trusts hereunder is not available, or if the Required Banks notify the MLB Trust
that the LIBO Rate for any Interest Period for the Club Trust Related Advances
which correspond to the Loans made to the Club Trusts hereunder will not
adequately reflect,the cost to such Required Banks of making, funding or
maintaining their respective Club Trust Related Advances for such Interest
Period:
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(i) the MLB Trust (or the Facilitating Agent on its behalf)
shall forthwith notify the Club Trusts of such event:
(ii) consistent with this Section 2.08 and Section 2.08(c) of
the MLB Credit Agreement, the Banks shall Continue to make Club Trust
Related Advances in accordance with the other terms and conditions of
this Agreement, but the Base Rate shall be the applicable interest rate
for each such Loan hereunder from and after the last day of the then
existing Interest Period therefor; and
(iii) the LIBO Rate Option shall be suspended until reinstated
pursuant to paragraph (d) below.
(d) The LIBO Rate Option shall be reinstated upon notification by the
MLB Trust (or the Facilitating Agent on its behalf) to the Club Trusts that the
circumstances giving rise to the suspension of the LIBO Rate Option pursuant to
paragraph (c) above are no longer applicable.
SECTION 2.09. PREPAYMENTS.
(a) In addition to the required repayment of principal specified in
Section 2.05, with respect to each Club Trust, on any day on which the Maximum
Available Amount under such Club Trust's Sub-Facility is reduced pursuant to
Section 2.04, principal in the amount equal to the excess, if any, of (i) all
outstanding Loans to such Club Trust under its Sub-Facility over (ii) the
Maximum Available Amount as so reduced shall be immediately payable hereunder
and a "Club Trust Prepayment Event" with respect to such excess shall be deemed
to have occurred.
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(b) Other than with respect to any prepayment pursuant to the
provisions of paragraph (c) below, each Club Trust may, upon at least three
Business Days' notice in the case of any LIBO Rate Loan and one Business Day's
notice in the case of any Base Rate Loan to the MLB Trust and the Facilitating
Agent stating the Club Trust with respect to which any such prepayment relates,
the proposed date and aggregate principal amount of each such prepayment, prepay
the Loan(s) under its Club Trust Sub-Facility in whole or ratably in part, and,
if such notice is given, the related Club Trust shall prepay the Loan(s) under
its Club Trust Sub-Facility in whole or ratably in part in the aggregate
principal amount designated in such notice, together with accrued interest to
the date of such prepayment on the principal amount prepaid; PROVIDED, HOWEVER,
that with respect to each Club Trust (i) each partial prepayment shall be in an
aggregate principal amount not less than $250,000, (ii) any prepayment of any
LIBO Rate Portion of any Club Trust's Loan(s) under its Club Trust Sub-Facility
shall be made on, and only on, the last day of an Interest Period for such LIBO
Rate Portion (PROVIDED, THAT prepayments may be made at other times as long as
all costs payable pursuant to Section 8.04(b) are paid) and (iii) no prepayment
shall be permitted pursuant to this Section 2.09 if, after giving effect to such
prepayment, the aggregate principal amount of Loans outstanding under such Club
Trust's Sub-Facility shall be less than $5,000,000, unless the amount of Loans
outstanding under such Club Trust Sub-Facility shall be reduced by such
prepayment to zero.
(c) In accordance with the provisions of Section 2.07 of each Club
Trust Agreement, each Club Trust may, upon at least three Business Days' notice
to the MLB Trust and the Facilitating Agent stating the Club Trust with respect
to which any such prepayment relates and the proposed date and aggregate
principal amount of such
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prepayment, prepay all of its Loans under its Club Trust Sub-Facility in whole,
and, if such notice is given the related Club Trust shall prepay any, and all
Loans under its Sub-Facility in whole, together with accrued interest to the
date of such prepayment on the principal amount prepaid. Any Club Trust which
shall have (i) made such a prepayment pursuant to this paragraph (c), (ii) paid
in full all other amounts owed by it hereunder and under its Club Trust Pledge
and Security Agreement and (iii) caused the agreement with respect to the
continuation of certain of its and its related Participating Club's obligations
to be delivered as contemplated in Section II of the related Club Trust Pledge
and Security Agreement shall be deemed no longer to be a party to this
Agreement.
SECTION 2.10. INCREASED COSTS. Each Club Trust shall pay to the MLB
Trust the amount of any increased costs required to be paid by the MLB Trust to
any Bank pursuant to Section 2.10 of the MLB Credit Agreement with respect to
the Club Trust Related Advances corresponding to the Loan(s) made by the MLB
Trust to such Club Trust under its Club Trust Sub-Facility. Such amounts shall
be paid to the MLB Trust at or prior to the time that the MLB Trust shall be
required to pay such amount to any Bank.
SECTION 2.11. ILLEGALITY.
(a) Notwithstanding any other provision of this Agreement but subject
to the provisions of this Section, if, pursuant to Section 2.11, of the MLB
Credit Agreement, any Bank shall notify the Administrative Agent that the
introduction of or any change in or in the interpretation of any law or
regulation makes it unlawful, or any central bank or other governmental
authority asserts that it is unlawful, for any Bank or its Lending Office to
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perform its obligations thereunder to make, fund or maintain Club Trust Related
Advances subject to a LIBO Rate Option thereunder, (i) the obligation of the MLB
Trust to make Loans (or portions thereof) subject to a LIBO Rate Option under
any Club Trust Sub-Facility, shall be suspended until the Administrative Agent
under the MLB Credit Agreement shall notify the MLB Trust and the Banks that the
circumstances causing such suspension no longer exist (prompt notice of which
will be given to the Club Trusts by the MLB Trust (or the Facilitating Agent on
its behalf) and (ii) the Base Rate shall be the applicable interest for all
Loans unless such Club Trust, within five Business Days of notice from the MLB
Trust (or the Facilitating Agent on its behalf) of the above described events,
elects to prepay in full all Loans (or portions thereof) subject to a LIBO Rate
Option under its Club Trust Sub-Facility then outstanding, together with
interest accrued thereon.
(b) Upon the occurrence of the events specified in Section 2.11 (a),
the MLB Trust shall continue to make Loans in accordance with the other terms
and conditions of this Agreement, but the Base Rate shall be the applicable
interest rate for each such Loan until the MLB Trust and the Club Trusts receive
the notice described in 2.11 (a)(i) above.
SECTION 2.12. PAYMENTS; LIMITED RECOURSE; NO CROSS COLLATERALIZATION
AND COMPUTATIONS.
(a) Subject to the provisions of this Section, on any day on which any
amount is due hereunder or under the related Club Trust Pledge and Security
Agreement with respect to any Club Trust Sub-Facility or on which any Club Trust
in accordance with Section 2.09 elects to make a principal payment, subject to
the provisions of the MLB Pledge and Security Agreement, amounts on deposit in
the Debt Service Account attributable to the related Club Trust shall be
withdrawn from the Debt Service Account and such amounts
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shall be applied to make actual or deemed distributions with respect thereto.
Deemed distributions consist of payments to the Banks under MLB Credit Agreement
with respect to Club Trust Related Advances and related obligations (including
Secured Obligations) corresponding to the such Club Trust's outstanding Loans,
payment with respect to which will satisfy such Club's payment obligation to the
MLB Trust hereunder or under the MLB Trust Agreement.
(b) [Reserved].
(c) Each Club Trust's obligations hereunder shall (subject to Section
2.12(d)) be satisfied solely by recourse to the assets of such Club Trust and
its related Club Trust Collateral and none of the Major League Clubs (except as
provided in any Transfer Agreement), the Commissioner, the National League or
the American League or any of their Affiliates shall be obligated with respect
thereto.
(d) (i) The assets of a particular Club Trust and its related Club
Trust Collateral shall be used solely to pay obligations attributable
to such Club Trust and in no event, except as provided in (iii) below,
shall the Club Trust Collateral of one Club Trust be used to pay any
obligations attributable to another Club Trust. Obligations hereunder
or under the MLB Pledge and Security Agreement not specifically
attributable to a Club Trust shall be allocated equally among the Club
Trusts.
(ii) As further provided in paragraphs (e), (f) and (g) below,
the MLB Trust and the Facilitating Agent agree to account for all Loans
under the Club Trust Sub-Facilities, payments and the Club Trust
Collateral so as to prevent cross-collateralization between the assets
and obligations attributable to each of the Club
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Trusts. Except as permitted in (iii) below, any amounts received by the
MLB Trusts in satisfaction of any obligations attributable to any Club
Trust from the assets of, or assets attributable to, another Club Trust
shall be deposited by the MLB Trust into the Debt Service Account and
the obligation previously satisfied by such deposited amounts shall be
reinstated effective as of the date on which such amount was
incorrectly applied.
(iii) The assets attributable to a particular Club Trust or
Club Trusts and any other portion of the Club Trust Collateral
attributable to such Club Trust or Club Trusts may be used to the
extent provided in this clause (iii) to satisfy the obligations of any
other Club Trust (A) if for any reason any such other Club Trust
receives less than its Pro Rata share of Revenues or (B) if (x) such
other Club Trust's related Participating Club is expelled or withdraws
from its respective League or Major League Baseball, as a whole, and
such other Club Trust's share of Revenues is reduced or eliminated and
(y) the American League or the National League, as appropriate, elects
to allow a new Major League Club to become a member of Major League
Baseball. The amount permitted to be paid with respect to the
obligations of any such adversely affected Club Trust (x) in the case
of subclause (A), shall equal the incremental dollar increase in
Revenues allocated to the nonadversely affected Club Trusts as a result
of such nonadversely affected Club Trusts' Pro Rata share of Revenues
being increased by such reduction in or elimination of the adversely
affected Club Trust's Pro Rata share of Revenues and (y) in the case of
subclause (B), shall equal any amounts paid to the remaining
Participating Clubs and included the Club Trusts' Rights in connection
with the
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addition of the next Major League Club following the expulsion or
withdrawal of such Club, PROVIDED, HOWEVER, that in the case of each of
the immediately preceding clause (x) and clause (y), in no event shall
the aggregate amounts paid by all nonadversely affected Club Trusts
exceed the amount of the obligations of the adversely affected Club
Trust under the Transaction Documents. The obligation of any
nonadversely affected Club Trust or Club Trusts to pay any amount on
behalf of an adversely affected Club Trust or Club Trusts shall be
allocated Pro Rata based upon Maximum Available Amount among the
nonadversely affected Club Trusts.
(e) The MLB Trust shall maintain an account or accounts evidencing the
indebtedness of each Club Trust resulting from each Loan under such Club Trust's
Sub-Facility made by the MLB Trust to such Club Trust from time to time,
including the amounts of principal and interest payable and paid to the MLB
Trust from time to time under this Agreement, the Club Trust Pledge and Security
Agreement or the MLB Pledge and Security Agreement with respect to such Club
Trust.
(f) The Facilitating Agent shall maintain the Register pursuant to
Section 8.07 hereof in which Register shall be reported with respect to each
Club Trust and its Sub-Facility (i) each Loan hereunder made with respect to
such Club Trust and the amount of each such Loan, (ii) the Interest Period and
principal amount of each LIBO Rate Portion of each such Loan, (iii) the amount
of any principal or interest due and payable or to become due and payable with
respect to each such Loan and (.iv) the amount of any sum received by the MLB
Trust hereunder, under the Club Trust Pledge and Security Agreement or under the
MLB Pledge and Security Agreement from such Club Trust.
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(g) The entries made in the accounts or the Register maintained
pursuant to paragraphs (e) and (f) of this Section 2.12 shall, to the extent
permitted by applicable law, be prima facie evidence of the existence and the
amounts of the obligations of each Club Trust with respect to each Loan therein
recorded; PROVIDED, HOWEVER, that the failure of the Facilitating Agent to
maintain any such accounts or such Register, as applicable, or any error therein
shall not in any manner affect the obligation of any Club Trust in accordance
with the terms hereof.
(h) It is the intent of the parties hereto that all computations of
interest on the Loans hereunder correspond to the calculation of interest on the
corresponding Club Trust Related Advances and that the calculation of fees
hereunder correspond to the calculation of fees under the MLB Credit Agreement.
Consistent with such intent, all computations of interest based on the LIBO Rate
shall be made by the Facilitating Agent on the basis of a year of 360 days, and
all computations of interest based on the Base Rate and of fees shall be made by
the Facilitating Agent on the basis of a year of 365 days, in each case for the
actual number of days (including the first day but excluding the last day)
occurring in the period for which such interest, fees or additional interest are
payable. Each determination by the Facilitating Agent of an interest rate
hereunder shall be conclusive and binding for all purposes, absent manifest
error.
(i) Whenever any payment hereunder or under the Club Trust Notes shall
be stated to be due on a day other than a Business Day, such payment shall be
made on the next succeeding Business Day, and such extension of time shall in
such case be included in the computation of payment of interest or any fee, as
the case may be; PROVIDED, HOWEVER,
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that if such extension would cause payment to be made in the next following
calendar month, such payment shall be made on the next preceding Business Day.
SECTION 2.13. TAXES.
(a) Any and all payments by each Club Trust hereunder or under the Club
Trust Notes shall be made, in accordance with Section 2.12, free and clear of
and without deduction for any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
EXCLUDING, in the case of each of the MLB Trust and the Facilitating Agent,
taxes imposed on its income, and franchise taxes imposed on it, by the
jurisdiction under the laws of which the MLB Trust or the Facilitating Agent (as
the case may be) is organized or any political subdivision thereof (all such
nonexcluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes"). If any Club Trust shall
be required by law to deduct any Taxes from or in respect of, any sum payable
hereunder or under the Club Trust Notes to the MLB Trust or the Facilitating
Agent, (i) the sum payable shall be increased as may be necessary so that after
making all required deductions (including deductions applicable to additional
sums payable under Section 2.13(a), (b) or (c)) the MLB Trust or the
Facilitating Agent (as the case may be) receives an amount equal to the sum it
would have received had no such deductions been made, (ii) such Club Trust shall
make such deductions and (iii) such Club Trust shall pay the full amount
deducted to the relevant taxation authority or other authority in accordance
with applicable law.
(b) In addition, each Club Trust agrees to pay any present or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies which
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arise from any payment made hereunder or under the Club Trust Notes or from the
execution. delivery or registration of, or otherwise with respect to, this
Agreement, the Notes or any other Transaction Document (hereinafter referred to
as "Other Taxes").
(c) Each Club Trust will indemnify the MLB Trust and the Facilitating
Agent for the full amount of Taxes or Other Taxes which are attributable to such
Club Trust (including, without limitation, any Taxes or Other Taxes imposed by
any jurisdiction on amounts payable under Section 2.13(a), (b) or (c)) paid by
the MLB Trust or the Facilitating Agent (as the case may be) and any liability
(including penalties. interest and expenses) arising therefrom or with respect
thereto, whether or not such Taxes or Other Taxes were correctly or legally
asserted. Such indemnification shall be made within 30 days from the date the
MLB Trust or the Facilitating Agent (as the case may be) makes written demand
therefor. If the MLB Trust or the Facilitating Agent shall become aware or shall
be notified by an), Club Trust that it is entitled to receive a refund in
respect of Taxes or Other Taxes as to which it has been indemnified by such Club
Trust pursuant to Section 2.13(a), (b) or (c), it shall promptly notify such
Club Trust of the availability of such refund and shall, within 30 days after
receipt of a written request by any such Club Trust, apply for such refund at
the such Club Trust's expense. If the MLB Trust or the Facilitating Agent
receives a refund in respect of any Taxes or Other Taxes as to which it has been
indemnified by any Club Trust pursuant to Section 2.13(a), (b) or (c), it shall
promptly notify the appropriate Club Trust of such refund and shall, within 30
days after receipt of a written request by such Club Trust (or promptly upon
receipt, if such Club Trust has requested application for such refund pursuant
hereto), repay such refund to such Club Trust (to the extent of amounts that
have been paid by such Club Trust under
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Section 2.13(a),(b) or (c) with respect to such refund), net of all
out-of-pocket expenses (including the net amount of taxes, if any, imposed on
such MLB Trust or Facilitating Agent with respect to such refund) of the MLB
Trust or the Facilitating Agent, PROVIDED that each Club Trust, upon the request
of the MLB Trust or Facilitating Agent, agrees to return such refund (plus
penalties, interest or other charges) to the MLB Trust or Facilitating Agent in
the event the MLB Trust or the Facilitating Agent is required to repay such
refund to any person, including the relevant taxing authority.
(d) Within 30 days after the date of any payment of Taxes or Other
Taxes withheld by a Club Trust in respect of any payment to the MLB Trust or the
Facilitating Agent, each Club Trust Will furnish to the Facilitating Agent, at
its address referred to in Section 8.02, the original or a certified copy of a
receipt evidencing payment thereof.
(e) (i) Each Club Trust, without duplication of any amounts paid or
indemnified pursuant to Section 2.13(a), (b) or (c), shall indemnify
the MLB Trust and the Facilitating Agent for any MLB Taxes required to
be paid by the MLB Trust or Facilitating Agent (as the case may be) to
any Bank, Bank Transferee, Agent Bank and the Administrative Agent
pursuant to Section 2.13 of the MLB Credit Agreement in an amount equal
to the sum of (x) the amount of MLB Taxes that are specifically
attributable to such Club Trust and (y) an amount equal to the product
of (I) the amount of MLB Taxes not specifically attributable to any
Club Trust and (II) the quotient of (A) the sum of the amount of the
Loans made to such Club Trust that is outstanding on each day in the
period to which such MLB Taxes relate divided by the number of days in
such period divided by (B) the sum of the amount of the Loans made to
all the Club Trusts that is outstanding on each day in the
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period to which such MLB Taxes relate divided by the number of days in
such period; PROVIDED, HOWEVER, that with respect to MLB Taxes
described in clause (y)(I) if (C) there are no Loans outstanding during
any period to which such MLB Taxes relate or (D) such MLB Taxes would
have been imposed if none of the Loans to any Club Trust were
outstanding, then each such Club Trust shall indemnify the MLB Trust
and the Facilitating Agent in an amount equal to the amount of such MLB
Taxes divided by the number of Club Trusts parties to this Agreement;
PROVIDED FURTHER, HOWEVER, that if for any reason after the application
of the foregoing formulas to determine the amount that a Club Trust
must indemnify the MLB Trust and the Facilitating Agent with respect to
MLB Taxes, an amount of MLB Taxes has not been indemnified, then each
such Club Trust shall indemnify the MLB Trust and Facilitating Agent in
an amount equal to the amount of such MLB Taxes that has not been
indemnified divided by the number of Club Trusts parties to this
Agreement; and PROVIDED FURTHER that no Club Trust shall be responsible
for the payment of any such amounts payable by any other Club Trust.
Any such MLB Taxes that are required to be indemnified by a Club Trust
shall be paid by such Club Trust at or prior to the time that the MLB
Trust or Facilitating Agent shall be required to pay such MLB Taxes.
The Facilitating Agent shall have the exclusive authority to apply and
interpret the provisions of this Section 2.13(e) to determine the
amounts each Club Trust is required to indemnify the MLB Trust or
Facilitating Agent pursuant to this Section 2.13(e).
(ii) If the MLB Trust or the Facilitating Agent shall become
aware that it is entitled to receive a refund in respect of MLB Taxes
as to which it has been
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indemnified by any Club Trust pursuant to this Section 2.13(e), it
shall promptly notify the Club Trust(s) that made the related indemnity
payment(s) of the availability of such refund and shall, within 30 days
after receipt of a written request by any such Club Trust, apply or
cause any Bank, Bank Transferee, Agent Bank or Administrative Agent to
apply for such refund at the expense of such Club Trust(s). If the MLB
Trust or the Facilitating Agent receives a refund in respect of any MLB
Taxes as to which it has been indemnified by any Club Trust pursuant(s)
to this Section 2.13(e), it shall promptly notify the appropriate Club
Trust(s) of such refund and shall, within 30 days after receipt of a
written request by such Club Trust(s) (or promptly upon receipt, if
such Club Trust has requested application for such refund pursuant
hereto), repay to such Club Trust an amount equal to the product of (x)
such refund, including any interest thereon, net of all out-of-pocket
expenses (including expenses incurred to apply for such refund and the
net amount of taxes, if any, imposed on the MLB Trust or the
Facilitating Agent in respect of such refund) of the MLB Trust or the
Facilitating Agent, and (y) the quotient of (1) the amount paid by such
Club Trust and (II) the total amounts paid by all the Club Trusts, each
pursuant to this Section 2.13(e) with respect to the MLB Taxes giving
rise to such refund (excluding any expense reimbursements paid to the
MLB Trust or Facilitating Agent with respect to such refund), plus an
amount equal to any expense reimbursed by such Club Trust to the MLB
Trust or Facilitating Agent pursuant to this Section 2.13(e) to apply
for such refund which was deducted by the MLB Trust from the amount of
such refund as an out-of-pocket expense, PROVIDED that each Club Trust,
upon request of the MLB Trust or Facilitating Agent, agrees to return
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such refund (plus penalties, interest or other charges) to the MLB
Trust or Facilitating Agent in the event the MLB Trust or the
Facilitating Agent is required to repay such refund to any person,
including the relevant taxing authority.
(iii) This Section 2.13(e) is intended to equitably apportion
the burden of MLB Taxes among the Club Trusts and equitably apportion
the benefit of any refund received in respect of MLB Taxes. Each Club
Trust, the MLB Trust and the Facilitating Agent agree to negotiate in
good faith to amend this Section 2.13(e) to achieve the intent of this
Section 2.13(e) if, as a result of any unusual circumstances, pursuant
to Section 2.13(e) the burden of MLB Taxes is not equitably apportioned
among the Club Trusts or the benefit of refunds of MLB Taxes are not
equitably apportioned among the Club Trusts; PROVIDED, HOWEVER, each
Club Trust shall comply with this Section 2.13(e) until any such
amendment.
(f) Without prejudice to the survival of any other agreement of each
Club Trust hereunder, the agreements and obligations of each Club Trust
contained in this Section 2.13) shall survive the payment in full of principal
and interest hereunder and under the related Club Trust Note.
(g) If any Club Trust is required to pay any amount pursuant to this
Section 2.13 to any Bank, Bank Transferee, Administrative Agent, Facilitating
Agent, taxing jurisdiction, or other third party, the Administrative Agent shall
have the power and authority (but not the duty) to pay such amounts as specified
in the MLB Pledge and Security Agreement.
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SECTION 2.14. ADDITIONAL CLUB TRUSTS; CREATION OF ADDITIONAL SUB-
FACILITIES.
(a) Subsequent to the Closing Date, but prior to the Termination Date,
at any time during, the first year following the Closing Date, and thereafter
once a calendar quarter, additional Club Trusts may be added as parties to this
Agreement and, in connection with any such addition, a Club Trust Sub-Facility
with respect to each such additional Club Trust shall be created hereunder. The
consent of the Club Trusts party hereto at the time of any such proposed
addition shall not be required in connection with such proposed addition;
PROVIDED, HOWEVER, that such proposed addition shall be subject to the
satisfaction of any conditions thereto established by the Administrative Agent
on behalf of the MLB Trust; and PROVIDED FURTHER, HOWEVER, that any, proposed
addition shall be at a minimum subject to the satisfaction of the conditions
that:
(i) the Maximum Available Amount under such proposed Club
Trust's Club Trust Sub-Facility shall not exceed $25,000,000 for a Club
Trust desiring to elect Option A or $40,000,000 for a Club Trust
desiring to elect Option B, subject to all required reductions in any
Club Trust's Maximum Available Amount pursuant to Section 2.04(b));
(ii) the Total Commitment shall have been increased under and
in accordance with the provisions of the MLB Credit Agreement to make
Club Trust Related Advances to the Borrower in an amount equal to such
proposed Club Trust's Maximum Available Amount under its Sub-Facility;
(iii) no Club Trust Event of Default or event which would
constitute a Club Trust Event of Default but for the requirement that
notice be given or time elapse or both will result from the proposed
addition of such Club Trust and such Club
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Trust's related Participating Club must be entitled to, and must have
transferred to such Club Trust, a full Pro Rata Share of the Rights and
Revenues;
(iv) the representations and warranties contained in Section 3
of the MLB Pledge and Security Agreement and the representations and
warranties contained in Section 4.01 of this Agreement and Section 3 of
the Club Trust Pledge and Security Agreement with respect to such Club
Trust will be true and correct in all material respects as of the date
of such proposed addition.
(v) subject to provisions of paragraph (c) below, such
proposed Club Trust shall have delivered to the MLB Trust and the
Facilitating Agent those items required to be delivered to them by a
Club Trust and such Club Trust shall have taken such actions as are
required to be taken by a Club Trust pursuant to Section 3.01;
(vi) the conditions under the MLB Credit Agreement to the
proposed addition of any Club Trust and the corresponding increase in
the Total Commitment thereunder to make Club Trust Related Advances
shall have been satisfied;
(vii) such proposed Club Trust shall have entered into a
Ratification Agreement;
(viii) the MLB Trust and the Facilitating Agent shall have
received such other approvals, opinions or documents as the MLB Trust
and Facilitating Agent shall have reasonably requested; and
(ix) such proposed Club Trust shall be responsible for the
payment of its allocable share of all amounts payable by the MLB Trust
to the Banks pursuant to Section 8.04(b) of the MLB Credit Agreement as
a result of any reallocation of the
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Club Trust Related Advances among the Banks in connection with the
increase in the aggregate Club Trust Related Advances of the Banks
related to the addition of such propose Club Trust.
(b) Following the addition of any such proposed Club Trust, (i) all
references herein or any Transaction Document to Club Trust, Participating Club,
Administrator, Maximum Available Amount and Club Trust Sub-Facility shall be
deemed to include such proposed Club Trust, its related Participating Club and
Administrator and, as appropriate, such proposed Club Trust's Maximum Available
Amount and Club Trust Sub-Facility and (ii) for all purposes such proposed Club
Trust shall be deemed to be a party to this Agreement.
(c) In connection with the addition of any proposed Club Trust whose
related Participating Club is located outside of the United States, the
Administrative Agent may, in addition to or in lieu of any Uniform Commercial
Code financing statements (and any related requests for information) required to
be delivered in connection with (i) the perfection of the ownership interest of
such proposed Club Trust in the Rights and Revenues contributed to it by such
proposed Club Trust's related Participating Club and (ii) the perfection of the
security interest created by such proposed Club Trust in the Club Trust
Collateral pursuant to its Club Trust Pledge and Security Agreement, require
such proposed Club Trust to deliver such other documents and/or any Opinion of
Counsel as the Administrative Agent may deem appropriate or necessary to assure
itself of such proposed Club Trust's perfected ownership interest in the Rights
and Revenues under the laws of such other jurisdiction. In addition, with
respect to any proposed Club Trust whose related Participating Club is located
outside of the United States, the Administrative Agent may
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require such proposed Club Trust to deliver such other documents and/or any
Opinion of Counsel necessary to assure itself of the absence of any withholding
tax imposed by such other jurisdiction with respect to such proposed Club
Trust's Rights and Revenues.
(d) As contemplated in and subject to the provisions of Section
8.01(b), this Agreement, the MLB Credit Agreement and the MLB Pledge and
Security Agreement may be amended to the extent necessary or desirable in the
sole judgment of the Administrative Agent in connection with the addition of a
proposed Club Trust.
ARTICLE III
Conditions of Lending
---------------------
SECTION 3.01. CONDITION PRECEDENT TO INITIAL LOANS. The obligation of
the MLB Trust to make its initial Loan to any Club Trust under its Sub-Facility
hereunder is subject to the condition precedent that the MLB Trust and the
Facilitating Agent shall have received on or before the day of the initial Loan
thereunder the following, each dated such day, in form and substance
satisfactory to the MLB Trust and the Facilitating Agent (except for the Club
Trust Note):
(a) A pledge and security agreement, duly executed by such Club Trust
and the MLB Trust in substantially the form of Exhibit C hereto (the "Club Trust
Pledge and Security Agreement"), together with (i) executed copies of proper
financing statements to be filed under the Uniform Commercial Code of all
jurisdictions that the MLB Trust may deem necessary or desirable in order to
perfect the ownership interest in the Rights and Revenues contributed by such
Club Trust's related Participating Club to such Club Trust and (ii) executed
copies of proper financing statements to be filed under the Uniform
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Commercial Code of all jurisdictions that the MLB Trust may deem necessary or
desirable in order to perfect the security interests by such Club Trust in the
Club Trust Collateral pursuant to the Club Trust Pledge and Security Agreement.
(b) A certificate of the Club Trustee certifying the names and true
signatures of their officers authorized to sign each Transaction Document to
which such Club Trust is a party and the other documents to be delivered
hereunder or thereunder.
(c) The list of Authorized officers for each Administrator.
(d) Certified copies of all corporate or partnership action taken by
such Club Trust's related Participating Club, including appropriate resolutions
authorizing the execution, delivery and performance of the Transaction Documents
to which it is a party and each other document delivered pursuant to such
documents.
(e) Copies of the Ratification Agreement executed by such Club Trust.
(f) A Certificate of such Club Trust's Administrator certifying that
(a) as of the date of such Club Trust's Ratification Agreement no event has
occurred and is continuing, or would result from any Loan under such Club
Trust's Sub-Facility or from the application of the proceeds therefrom on such
date, which constitutes a Club Trust Event of Default or would constitute a Club
Trust Event of Default but for the requirement that notice be given or time
elapse or both and (b) as of the date of the initial Loan, with respect to each
Club Trust in existence prior to the date of this Agreement, such Club Trust's
related Participating Club is Solvent, and with respect to each Club Trust
organized after the date of this Agreement, such Club Trust's related
Participating Club is Solvent prior to, and will be Solvent after giving effect
to, the transfer of the Rights and Revenues to such Club Trust
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and that such Participating Club is receiving fair and reasonably equivalent
value for the transfer of the Rights and Revenues to its related Club Trust.
(g) The Club Trust Note with respect to the related Club Trust to the
order of the MLB Trust.
(h) Copies of the Transfer Agreement executed by such Club Trust.
(i) The delivery of all collateral with respect to such Club Trust
under the Club Trust Pledge and Security Agreement (including the related Club
Trust Note) to the Administrative Agent for the benefit of all the Banks under
the MLB Credit Agreement.
(j) A favorable opinion of counsel to such Club Trust, substantially in
the form of Exhibit B to its Transfer Agreement and as to such other matters as
the MLB Trust and the Facilitating Agent may reasonably request.
(k) Copies of the Administration Agreement executed by such Club Trust.
(l) Copies of all documents, certificates and opinions delivered by
such Club Trust or its related Participating Club pursuant to the Transaction
Documents.
(m) An election by such Club Trust's Administrator with respect to
Option A or Option B.
(n) Such other documents as the MLB Trust or the Facilitating Agent
shall reasonably request.
SECTION 3.02. CONDITIONS PRECEDENT TO EACH LOAN. The obligation of the
MLB Trust to make a Loan (including the initial Loan) under any Club Trust's
Sub-Facility shall be subject to the receipt by the MLB Trust of the Club Trust
Related Advances with respect to the related Club Trust necessary to make such
Loans and to the further conditions
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precedent that on the date of such Loan (i) the following statements shall be
true (and each of the giving of the applicable Notice of Borrowing with respect
to such Club Trust and the acceptance of the Loan proceeds by such Club Trust
shall constitute a representation and warranty by such Club Trust that on the
date of such Loan such statements are true):
(a) the representations and warranties contained in Section 3 of the
MLB Pledge and Security Agreement and the representations and warranties with
respect to such Club Trust contained in Section 4.01 of this Agreement and
Section 3 of the Club Trust Pledge and Security Agreement are correct in all
material respects on and as of the date of such Loan, before and after giving
effect to such Loan and to the application of the proceeds therefrom, as though
made on and as of such date;
(b) no event has occurred and is continuing, or would result from such
Loan or from the application of the proceeds therefrom, which constitutes a Club
Trust Event of Default or would constitute a Club Trust Event of Default but for
the requirement that notice be given or time elapse or both;
(c) no Business Interruption Event has occurred and is continuing as
evidenced by a notice from the Facilitating Agent to the Club Trusts;
(d) except as provided in the Transaction Documents, none of the
Central Fund Custody Account, the MLB Properties Royalty Account, the Collection
Account or the Debt Service Account or Eligible Investments otherwise to the
credit of, the Central Fund Custody Account, the MLB Properties Royalty Account,
the Collection Account or the Debt Service Account shall be subject to any Lien,
writ, judgment, warrant of attachment, execution or other similar process;
PROVIDED, that with respect to the Central Fund Custody Account and the MLB
Properties Royalty Account, this restriction shall not apply to any
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Lien, writ, judgment, warrant of attachment, execution or other similar process
which (i) attaches or relates solely to the interests of the non-Participating
Clubs in such accounts or (ii) relates only to the interests of a specific Club
Trust in such accounts and not the interests of the Club Trust requesting the
Loan, all of the Club Trusts or the MLB Trust in such accounts;
(e) the MLB Trust shall have received such evidence and instruments
(including stamped receipt Uniform Commercial Code release statements) as it or
the Facilitating Agent may request with respect to the release of any Lien
(other than any Lien created pursuant to the Transaction Documents) on the Club
Trust Collateral existing on the Closing Data as described in Schedule
3.02(b)(v) of the related Transfer Agreement; and
(f) the MLB Trust and the Facilitating Agent shall have received from
such Club Trust such other approvals, opinions or documents as the MLB Trust and
the Facilitating Agent may reasonably request.
ARTICLE IV
Representations and Warranties
------------------------------
SECTION 4.01. REPRESENTATIONS AND WARRANTIES OF EACH CLUB TRUST. Each
Club Trust represents and warrants to the MLB Trust as follows:
(a) Such Club Trust is a Delaware business trust duly organized,
validly existing and in good standing under the laws of the State of Delaware.
(b) The execution, delivery and performance by such Club Trust of each
Transaction Document to which it is or will be a party are within such Club
Trust's trust powers, have been duly authorized by all necessary trust action,
and do not contravene
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(i) such Club Trust's certificate of trust or the related Club Trust Agreement
or (ii) any law or any contractual restriction binding on or affecting such Club
Trust, and do not result in or require the creation of any lien, security
interest or other charge or encumbrance (other than pursuant hereto or the
related Club Trust Pledge and Security, Agreement) upon or with respect to any
of its properties.
(c) No authorization or approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body is required for
the due execution, delivery and performance by such Club Trust of any
Transaction Document to which it is or will be a party.
(d) This Agreement is, and each other Transaction Document to which
such Club Trust will be a party when delivered hereunder will be, legal, valid
and binding obligations of such Club Trust enforceable against such Club Trust
in accordance with their respective terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect affecting the enforcement of
creditors' rights in general and except as such enforceability may be limited by
general principles of equity (whether considered in a suit at law or in equity).
(e) There is no pending or, to the knowledge of such Club Trust,
threatened action or proceeding affecting such Club Trust or the related Club
Trust Collateral before any court, governmental agency or arbitrator, which may
materially adversely affect the financial condition or operations of such Club
Trust or the related Club Trust Collateral or which purports to affect the
legality, validity or enforceability of this Agreement or any Transaction
Document to which such Club Trust will be a party.
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(f) Such Club Trust is not engaged in the business of extending credit
for the purpose of purchasing or carrying margin stock (within the meaning of
Regulation U issued by the Board of Governors of the Federal Reserve System),
and no proceeds of any Loan will be used to purchase or carry any margin stock
or to extend credit to others for the purpose of purchasing or carrying any
margin stock.
(g) The proceeds of each Loan are being used solely for the purpose of
refinancing existing indebtedness, (ii) paying Transaction Costs and (iii)
making distributions for general corporate purposes of such Participating Club
including, without limitation, refinancing such Participating Club's existing
indebtedness (including indebtedness to Affiliates).
ARTICLE V
Covenants of the Club Trusts
----------------------------
SECTION 5.01. AFFIRMATIVE COVENANTS. So long as any Club Trust's Club
Trust Note shall remain unpaid or any Club Trust Secured Obligation of such Club
Trust hereunder shall be outstanding or the MLB Trust shall have any Commitment
under such Club Trust's Club Trust Sub-Facility, such Club Trust will, unless
the MLB Trust shall otherwise consent in writing:
(a) COMPLIANCE WITH LAWS, ETC. Comply in all material respects with all
applicable laws, rules, regulations and orders, such compliance to include,
without limitation, paying before the same become delinquent all taxes,
assessments and governmental charges imposed upon it or upon its property except
to the extent contested in good faith.
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(b) EXISTENCE. Keep in full effect its existence, rights and franchises
as a business trust under the laws of the State of Delaware and obtain and
preserve its qualification to do business in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, any other Transaction Document and each other
instrument or agreement included in the Collateral.
(c) REPORTING REQUIREMENTS. Furnish to the MLB Trust and the
Facilitating Agent:
(i) as soon as possible and in any event within five days
after the occurrence of each Club Trust Event of Default and each event
which, with the giving of notice or lapse of time, or both, would
constitute a Club Trust Event of Default, which is continuing on the
date of such statement, a statement of such Club Trust setting forth
details of such Club Trust Event of Default or other event and the
action which such Club Trust has taken and proposes to take with
respect thereto;
(ii) promptly after the filing or receiving thereof, copies of
all reports and notices which such Club Trust files under ERISA with
the Internal Revenue Service or the Pension Benefit Guaranty
Corporation or the U.S. Department of Labor or which such Club Trust
receives from such corporation; and
(iii) such other information respecting the condition or
operations, financial or otherwise, of such Club Trust as the MLB Trust
or Facilitating Agent may from time to time reasonably request.
(d) FINANCIAL STATEMENTS AND ANNUAL STATEMENT AS TO COMPLIANCE. Cause
to be delivered to the Facilitating Agent, within 120 days after the end of each
fiscal year of such Club Trust (commencing with the fiscal year 1996), a balance
sheet of such Club Trust and
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the related statement of income and cash flows audited upon by the Accountants,
together with a certificate of such accounting firm stating that:
(i) a review of the activities of such Club Trust during such
year and of performance under this Agreement and each other Transaction
Document has been made; and
(ii) based on such review, such Club Trust has fulfilled all
its obligations under this Agreement and each other Transaction
Document throughout such year, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known
to the Accountants and the nature and status thereof.
(e) ADMINISTRATOR'S CERTIFICATE. Cause to be delivered to the
Facilitating Agent, within 120 days after the end of each fiscal year of such
Club Trust (commencing with the fiscal year 1996), a certificate of an
Authorized Officer of the such Club Trust's Administrator stating that:
(i) a review of the activities of such Club Trust during such
year and of performance under this Agreement and each other Transaction
Document has been made; and
(ii) based on such review, such Club Trust has fulfilled all
its obligations under this Agreement and each other Transaction
Document throughout such year, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known
to such Administrator and the nature and status thereof.
(f) PROTECTION OF COLLATERAL. In addition to any obligation under the
Club Trust Pledge and Security Agreement, from time to time execute and deliver
all such supplements and amendments to the Club Trust Pledge and Security
Agreement and all such financing
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statements, continuation statements, instruments of further assurance and other
instruments, and take such other action reasonably requested by, the MLB Trust
and the Facilitating Agent necessary or advisable to:
(i) maintain or preserve the lien and security interest (and
the priority thereof) of the Club Trust Pledge and Security Agreement
and the MLB Pledge and Security Agreement or carry out more effectively
the purposes of this Agreement and any other Transaction Document and
the transactions contemplated hereby or thereby;
(ii) perfect, publish notice of or protect the validity of any
Grant made or to be made by the Club Trust Pledge and Security
Agreement;
(iii) enforce any agreements included in the Club Trust
Collateral; or
(iv) preserve and defend title to and the rights of the MLB
Trust in the Club Trust Collateral against the claims of all persons
and parties.
Pursuant to the Transfer Agreement, the Club Trust Pledge and Security
Agreements and the MLB Pledge and Security Agreement, each Participating Club,
each Club Trust and the MLB Trust have designated the Administrative Agent as
its agent and attorney-in-fact to execute any financing statement, continuation
statement or other instrument required by such party pursuant to the Transfer
Agreement, the Club Trust Pledge and Security Agreement, the MLB Pledge and
Security Agreement or this Agreement, as appropriate.
SECTION 5.02. NEGATIVE COVENANTS. So long as any Club Trust's Club
Trust Note shall remain unpaid or any obligation of such Club Trust shall be
outstanding or the MLB
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Trust shall have any Commitment under such Club Trust's Club Trust Sub-Facility,
such Club Trust will not, without the written consent of the MLB Trust:
(a) DISPOSE OF COLLATERAL.. Except as expressly permitted by this
Agreement or the Club Trust Pledge and Security Agreement, sell, transfer,
exchange or otherwise dispose of any of the properties or assets of such Club
Trust or the related Club Trust Collateral unless directed to do so by the
Administrative Agent (acting at the direction of or with the consent of all the
Banks):
(b) SECURITY INTEREST. (i) Permit the validity or effectiveness of the
Club Trust Pledge and Security Agreement to be impaired, or permit the lien of
the Club Trust Pledge and Security Agreement to be amended, hypothecated,
subordinated, terminated or discharged, or permit any Person to be released from
any covenants or obligations with respect to the obligations under this
Agreement or the Club Trust Pledge and Security Agreement except as may be
expressly permitted hereby or thereby, (ii) permit any lien, charge, excise,
claim, security interest, mortgage or other encumbrance (other than any Lien
under any Transaction Document) to be created on or extend to or otherwise arise
upon or burden the related Club Trust Collateral or any part thereof or any
interest therein or the proceeds thereof (other than tax liens and other liens
that arise by operation of law) or (iii) permit the lien of the Club Trust
Pledge and Security Agreement not to constitute a valid first priority (other
than with respect to any such tax or other lien or the lien of the MLB Pledge
and Security Agreement) security interest in the related Club Trust Collateral.
(c) NO OTHER ACTIVITY. Engage in any activity other than borrowing
amounts with respect to Loans in the manner contemplated by this Agreement, the
Club Trust
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Agreement or any other Transaction Document and activities reasonably incidental
thereto or otherwise contemplated by the Transaction Documents.
(d) NO BORROWING. Issue, incur, assume, guarantee or otherwise become
liable, directly or indirectly, for any Debt (including, without limitation,
interest rate swap agreements, interest rate collar agreements, interest rate
futures contracts and interest rate option contracts) except for the Club Trust
Secured Obligations or any other obligation hereunder or under the Club Trust
Pledge and Security Agreement.
(e) GUARANTEES, LOANS, ADVANCES AND OTHER LIABILITIES. Except as
contemplated by this Agreement or any other Transaction Document, make any loan
or advance or credit to, or guarantee (directly or indirectly or by an
instrument having the effect of assuring another's payment or performance on any
obligation or capability of so doing or otherwise), endorse or otherwise become
contingently liable, directly or indirectly, in connection with the obligations,
stocks or dividends of, or own, purchase, repurchase or acquire (or agree
contingently to do so) any stock, obligations, assets or securities of, or any
other interest in, or make any capital contribution to, any other Person.
(f) CAPITAL EXPENDITURES. Make any expenditure (by long-term or
operating lease or otherwise) for capital assets (either realty or personalty).
(g) REMOVAL OF ADMINISTRATOR. Remove its Administrator without cause
and the written consent of the MLB Trust and the Facilitating Agent, which
consent shall not be unreasonably withheld.
(h) RESTRICTED PAYMENTS. Directly or indirectly, (i) pay any dividend
or make any distribution (by reduction of capital or otherwise), whether in
cash, property, securities or a combination thereof, to the Club Trustee or any
owner of a beneficial interest in such Club
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Trust or ownership or equity interest or security in or of such Club Trust, (ii)
redeem, purchase, retire or otherwise acquire for value any such ownership
interest or security or (iii) otherwise segregate any amounts for any such
purpose; PROVIDED, HOWEVER, that the Club Trust may pay, or cause to be paid,
amounts to the Commissioner, the Club Trust Trustee and such Club Trust's
Administrator and such Club Trust may make, or cause to be made, distributions
as permitted by, and to the extent funds are available for such purpose under,
the MLB Pledge and Security Agreement and the related Club Trust Agreement.
(i) MERGERS, ETC. Merge or consolidate with or into, or convey,
transfer, lease or otherwise dispose of (whether in one transaction or in a
series of transactions) any or all of its assets (whether now owned or hereafter
acquired) to any Person except as permitted by the Club Trust Pledge and
Security Agreement.
(j) FEDERAL INCOME TAX. Take any action which might cause it to be
classified for Federal income tax purposes as an association taxable as a
corporation.
ARTICLE VI
Default
-------
SECTION 6.01. CLUB TRUST EVENTS OF DEFAULT. The occurrence of any one
or more of the following events shall constitute a "Club Trust Event of Default"
with respect to the Sub-Facility of any Club Trust and any Loans made to such
Club Trust hereunder:
(a) default shall be made by such Club Trust in the payment of any
principal of any Loan outstanding under such Club Trust's Sub-Facility when and
as the same shall
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become due and payable, whether at the due date thereof or by acceleration
thereof or otherwise;
(b) default shall be made by such Club Trust in the payment of any
interest on any Loan outstanding under such Club Trust's Sub-Facility or any fee
or any other amount allocable to such Club Trust (other than an amount referred
to in paragraph (a) above) due hereunder, under any other Transaction Document
or under any other agreement with the MLB Trust with respect to such
Sub-Facility when and as the same shall become due and payable, and such default
shall continue unremedied for a period of three days;
(c) any representation or warranty made (or deemed made pursuant to
Section 3.02) by such Club Trust in or in connection with the execution and
delivery of this Agreement or any Transaction Document to which such Club Trust
is a party or the Loans hereunder or in any document, certificate, written
statement or report delivered to the MLB Trust, the Facilitating Agent, the
Administrative Agent, the Agent Banks or any Bank pursuant to this Agreement or
any Transaction Document executed by such Club Trust, shall prove to have been
false or misleading in any material respect when so made, deemed made or
furnished;
(d) default shall be made by such Club Trust in the due observance or
performance of any covenant or agreement of such Club Trust contained herein
(other than those specified in (a), (b) or (c) above or specified elsewhere in
this Section) or in any Transaction Document executed by such Club Trust, and
such default shall continue unremedied for a period of ten days after the giving
of written notice of such default to such Club Trust by the MLB Trust, which
notice shall be given by the MLB Trust at the request of the Facilitating Agent
(itself acting at the request, or with the consent of the
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Required Banks) or may be given by the MLB Trust with the consent of the
Facilitating Agent (itself acting at the request, or with the consent of the
Required Banks);
(e) default shall be made by such Club Trust's related Participating
Club in the due observance or performance of any covenant or agreement of such
Participating Club under its Transfer Agreement or any Transaction Document
executed by such Participating Club, and such default shall continue unremedied
for a period of ten days after the giving of written notice of such default to
such Participating Club by the MLB Trust, which notice shall be given by the MLB
Trust at the request of the Facilitating Agent (itself acting at the request, or
with the consent of the Required Banks) or may be given by the MLB Trust with
the consent of the Facilitating Agent (itself acting at the request, or with the
consent of the Required Banks);
(f) the occurrence of any Bankruptcy Event with respect to such Club
Trust or its related Participating Club;
(g) any judgment, writ, warrant of attachment or execution or similar
process involving an amount in excess of $125,000 shall be issued or levied
against any of the properties of such Club Trust and such judgment, writ,
warrant of attachment or execution or similar process shall not be released,
vacated or fully bonded within 30 days of its issue or levy;
(h) the occurrence of any event of default under any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement, interest
rate futures contract, interest rate option contract or other similar agreement
or arrangement acceptable to the Administrative Agent entered into by or
obtained for the benefit of such Club Trust with an Agent Bank with respect to
the Loans under such Club Trust's Sub-Facility;
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(i) any representation or warranty made by such Club Trust's related
Participating Club in or in connection with the execution and delivery of its
Transfer Agreement or any other Transaction Document executed by such
Participating Club or in any document, certificates written statement or written
report delivered to such Club Trust, the MLB Trust, the Facilitating Agent, the
Administrative Agent, an Agent Bank or any Bank pursuant to such Transfer
Agreement or any Transaction Document shall prove to have been false or
misleading in any material respect when so made or furnished;
(j) the failure of such Club Trust at any time, to have a valid
unencumbered ownership interest (other than any Lien under the Transaction
Documents and other than tax liens and other liens that arise by the operation
of law) in the Club Trust Collateral (including the Rights and Revenues
contributed by the such Club Trust's related Participating Club to such Club
Trust pursuant to the related Transfer Agreement);
(k) the failure of the MLB Trust at any time, to have a first priority
unencumbered security interest (other than any Lien under the Transaction
Documents and other than tax liens and other liens that arise by the operation
or law) in the Club Trust Collateral (including the Rights and Revenues) pledged
to the MLB Trust by such Club Trust pursuant to its Club Trust Pledge and
Security Agreement except as permitted by Section 5.02(b);
(l) the occurrence of any material adverse event with respect to such
Club Trust's related Participating Club, which event has or may have the effect
of reducing or delaying the receipt of Revenues by such Club Trust or otherwise
materially impairing the assets of such Club Trust or delaying payment of any
obligation of such Club Trust under its Club Trust Sub-Facility or Club Trust
Note or any obligation under such Club Trust's
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Club Trust Pledge and Security Agreement, PROVIDED, HOWEVER, that a Business
Interruption Event shall not constitute a Club Trust Event of Default under this
Section 6.01(1) so long as such Club Trust makes all payments required to be
made by it hereunder or under any Transaction Document on a timely basis during
such period;
(m) any accumulated funding deficiency, prohibited transaction,
reportable event, penalty, withdrawal liability, disqualification or termination
under (and as such words and phrases are defined in) ERISA or the Code, as
applicable, in respect of any Plan shall occur, or any action, suit or
proceeding involving or affecting any Plan or any assets of properties of any
Plan shall be adversely determined, that would have or has had (in the
reasonable judgment of the MLB Trust) a material and adverse effect on the
related Participating Club and its ERISA affiliates;
(n) the occurrence of (i) any Club Trust Event of Default under
Sections 6.01(b) or (c) of the MLB Credit Agreement with respect to such Club
Trust or (ii) any Event of Default under Section 6.02 of the MLB Credit
Agreement; or
(o) if as a result of an arbitration between a National Media Contract
Obligor and the Commissioner under any National Media Contract, an award is made
in favor of such National Media Contract Obligor and such award remains
outstanding under any material National Media Contract at the time such National
Media Contract is renewed or extended or a replacement contract is executed, and
such renewal, extension or replacement contract contains a provision which
offsets future fees payable under such renewal, extension or replacement
contract in order to cause the National Media Contract Obligor in whose favor
the award was entered to be paid the remaining balance of the award.
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SECTION 6.02. REMEDIES. In the event that any Club Trust Event of
Default has occurred and is continuing, the MLB Trust shall at the request, or
with the consent of the Facilitating Agent (itself acting at the request, or
with the consent of the Required Banks) (a) declare its obligation to make Loans
under the Sub-Facility to any Club Trust that is the subject of the Club Trust
Event of Default to be terminated and (b) declare the Club Trust Note for the
Club Trust which is the subject of the Club Trust Event of Default, all interest
thereon and all other amounts payable hereunder to be forthwith due and payable,
whereupon such Club Trust Note, all such interest and all such amounts shall
become and be forthwith due and payable, without presentment, demand, protest or
further notice of any kind, all of which are waived by such Club Trust
hereunder; PROVIDED, HOWEVER, that, in the event of an actual or deemed entry of
an order for relief with respect to any Club Trust under the Federal Bankruptcy
Code, (A) the obligation of the MLB Trust to make Loans to such Club Trust under
its Club Trust Sub-Facility shall automatically be terminated and (B) the
related Club Trust Note, all such interest and all such amounts shall
automatically become due and payable, without presentment, demand, protest or
any notice of any kind, all of which are hereby expressly waived by such Club
Trust.
ARTICLE VII
The Facilitating Agent
----------------------
SECTION 7.01. AUTHORIZATION AND ACTION. The MLB Trust hereby appoints
and authorizes the Facilitating Agent to take such action as agent on its behalf
and to exercise such powers under this Agreement and the Transaction Documents
as are delegated to the
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Facilitating Agent by the terms hereof or thereof, as the case may be, together
with such powers as are reasonably incidental thereto.
SECTION 7.02. FACILITATING AGENT'S RELIANCE, ETC. Neither the
Facilitating Agent, nor any of its directors, officers, agents or employees
shall be liable for any action taken or omitted to be taken by it or them under
or in connection with this Agreement or any other Transaction Document, except
for its or their own gross negligence, willful misconduct or unlawful conduct
hereunder. Without limitation of the generality of the foregoing, the
Facilitating Agent: (a) may consult with legal counsel (including counsel for
the MLB Trust), independent public accountants and other experts selected by it
and shall not be liable for any action taken or omitted to be taken in good
faith by it in accordance with the advice of such counsel, accountants or
experts; (b) makes no warranty or representation to MLB Trust and shall not be
responsible to the MLB Trust for any statements, warranties or representations
(whether written or oral) made in or in connection with this Agreement or any
other Transaction Document; (c) shall not have any duty to ascertain or to
inquire as to the performance or observance of any of the terms. covenants or
conditions of this Agreement or the Transaction Documents on the part of any
Club Trust or to inspect the property (including the books and records) of the
Club Trusts; (d) shall not be responsible to the MLB Trust for the due
execution, legality, validity, enforceability, genuineness, sufficiency or value
of this Agreement, any Transaction Document or any other instrument or document
furnished pursuant hereto; and (e) shall incur no liability under or in respect
of this Agreement or any Transaction Document by acting upon any notice,
consent, certificate
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or other instrument or writing (which may be by telecopier, telegram, cable or
telex) believed by it to be genuine and signed or sent by the proper party or
parties.
SECTION 7.03. INDEMNIFICATION. Subject to the provisions of Section
2.12, the MLB Trust agrees to indemnify the Facilitating Agent (to the extent
not reimbursed by the Club Trusts), from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by, or asserted against the Facilitating Agent in any way relating
to or arising out of this Agreement, any Transaction Document or any action
taken or omitted by the Facilitating Agent under this agreement or any
Transaction Document, PROVIDED that the MLB Trust shall not be liable for any
portion of such liabilities,obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the
Facilitating Agent's gross negligence, willful misconduct or unlawful conduct
hereunder. Without limitation of the foregoing, the MLB Trust agrees to
reimburse the Facilitating Agent (from equal and several assessments to each
Club Trust) promptly upon demand for any out-of-pocket expenses (including
counsel fees) incurred by the Facilitating Agent in connection with the
preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement,
to the extent that the Facilitating Agent is not reimbursed for such expenses
directly or indirectly by the Club Trusts.
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SECTION 7.04. SUCCESSOR FACILITATING AGENT. The Facilitation Agent may
resign at any time by giving notice thereof to the MLB Trust and the Club Trusts
and the Facilitating Agent may be removed at any time with or without cause by
the MLB Trust. Upon any such resignation or removal, the MLB Trust shall have
the right to appoint a successor or Facilitating Agent. If no such successor
shall have been so appointed by the MLB Trust and shall have accepted such
appointment, within 30 days after the retiring Facilitating Agent, then the
retiring Facilitating Agent may, on behalf of the MLB Trust, appoint a successor
Facilitating Agent, which shall be a commercial bank organized under the laws of
the United States of America or of any State thereof and having a combined
capital and surplus of at least $500,000,000. Upon the acceptance of any
appointment as Facilitating Agent hereunder by a successor Facilitating Agent,
such successor Facilitating Agent shall thereupon succeed to and become vested
with all the rights, powers, privileges and duties of the retiring Facilitating
Agent, and the retiring Facilitating Agent shall be discharged from its duties
and obligations under this Agreement. After any retiring Facilitating Agent's
resignation or removal hereunder as Facilitating Agent, the provisions of this
Article VII shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Facilitating Agent under this Agreement.
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ARTICLE VIII
Miscellaneous
-------------
SECTION 8.01. AMENDMENTS, ETC.
(a) GENERAL AMENDMENTS, ETC. Subject to paragraph (b) with respect to
certain amendments, no amendment or waiver of any provision of this Agreement or
the Club Trust Notes, nor consent to any departure by any Club Trust therefrom,
shall in any event be effective unless the same shall be in writing and signed
by the MLB Trust and the Facilitating Agent (at the request or with the consent
of the Required Banks), and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given; PROVIDED,
HOWEVER, that no amendment, waiver or consent shall, unless in writing and
signed by the Facilitating Agent (at the request or with the consent of all of
the Banks), in addition to the MLB Trust, affect Section 2.04 of this Agreement
or the rights or duties of the Facilitating Agent under this Agreement or any
Club Trust Note.
(b) CLUB TRUST CONSENT, ADDITIONAL CLUB TRUST RELATED AMENDMENTS. No
amendment of this Agreement shall be effective unless the same shall be in
writing and signed by a majority in number of the Club Trusts; PROVIDED,
HOWEVER, that no such amendment shall be effective to reduce the number of Club
Trusts required to consent to any such amendment, without the consent of all the
Club Trusts; PROVIDED, FURTHER, that no amendment to this Agreement to change
the Final Payment Date shall be effective without the consent of (i) all the
Club Trusts deemed to be parties hereto at the time of such proposed amendment
and (ii) all Clubs which are no longer Participating Clubs but which have (or
their related Club Trusts have) continuing obligations pursuant to Section
2.12(d)(iii) of this Agreement as contemplated by Section 11 of the related Club
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Trust Pledge Agreements. Notwithstanding the foregoing, this Agreement, the MLB
Credit Agreement and the MLB Pledge and Security Agreement, to the extent
necessary or appropriate in the sole judgment of the Administrative Agent, may
be amended (i) in case of this Agreement, by action of only the Facilitating
Agent acting at the direction of the Administrative Agent, which direction shall
be given by the Administrative Agent with the consent of the Required Banks, or
(ii) in the case of the MLB Credit Agreement or the MLB Pledge and Security
Agreement, by action of only the Administrative Agent with the consent of the
Required Banks in connection with any amendment (i) to give effect to the
addition of any additional Club Trust and the creation of an additional
Sub-Facility hereunder with respect to such addition pursuant to Section 2.14
and to give effect to the corresponding increase in the Commitment hereunder and
(ii) to give effect to any increase in the Commitment hereunder as a result of
any increase in the Maximum Available Amount of any Club Trust under its Club
Trust Sub-Facility (which increase shall be subject to the conditions determined
by the Administrative Agent); PROVIDED, HOWEVER, that any such amendment shall
be subject to the condition that such amendment not have a material adverse
effect on the Club Trusts party hereto immediately prior to the time of such
amendment. Promptly following any amendment as provided in the immediately
preceding sentence, the Administrative Agent shall provide duplicate copies of
such amendments to the MLB Trust and the Club Trusts.
SECTION 8.02. NOTICES, ETC. All notices and other communications
provided for hereunder shall be in writing (including telecopier, telegraphic,
telex or cable communication) and mailed, telecopied, telegraphed, telexed,
cabled or delivered, if to the
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MLB Trust, at its address at Wilmington Trust Company, 1100 North Market Street,
Wilmington, Delaware 19890, Attention: Corporate Trust Administration (facsimile
number (302) 651-8882), with copies to (a) the Commissioner at The Baseball
Office of the Commissioner, 350 Park Avenue, New York, N.Y. 10022, Attention:
Jeffrey White (facsimile number (212) 888-8632), (b) Paul, Weiss, Rifkind,
Wharton & Garrison, 1285 Avenue of the Americas, New York, N.Y. 10019 Attention:
Matthew Nimetz, Esq. (facsimile number (212) 757-3990), (c) the Facilitating
Agent, at its address at Fleet National Bank, One Federal Street, Boston, MA
02211, Attention: Keith J. Collar (facsimile number (617) 346-0590) and (d)
Choate, Hall & Stewart, Exchange Place, 53 State Street, Boston, MA 02109,
Attention: Lyman G. Bullard, Jr., Esq. (facsimile number (617) 248-4000); if to
the Facilitating Agent, at its address at Fleet National Bank, One Federal
Street, Boston, MA 02211, Attention: Keith J. Collar (facsimile number (617)
346-0590), with copies to (a) the Administrative Agent, at its address at Fleet
National Bank, One Federal Street, Boston, MA 02211, Attention: Keith J. Collar
(facsimile number (617) 346-0590), and (b) Choate, Hall & Stewart, Exchange
Place, 53 State Street, Boston, MA 02109, Attention: Lyman G. Bullard, Jr., Esq.
(facsimile number (617) 248-4000); if to any Club Trust, at its address at
Wilmington Trust Company, 1100 North Market Street, Wilmington, Delaware 19890,
Attention: Corporate Trust Administration (facsimile number (302) 651-1576),
with copies to (a) its Administrator at the address set forth in the related
Administration Agreement, (b) the Commissioner at The Baseball Office of the
Commissioner, 350 Park Avenue, New York, N.Y. 10022, Attention: Jeffrey White
(facsimile number (212) 888-8632), and (c) Paul, Weiss, Rifkind, Wharton &
Garrison, 1285 Avenue of the Americas, New York, N.Y. 10019 Attention: Matthew
Nimetz, Esq.
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(facsimile number (212) 757-3990); or, as to each party, at such other address
as shall be designated by such party in a written notice to the other parties.
All such notices and communications shall; when mailed, telecopied, telegraphed,
telexed or cabled, be effective either three days after being deposited in the
mails or when received, or when telecopied, delivered to the telegraph company,
confirmed by telex answerback or delivered to the cable company, respectively,
except that notices and communications to the Facilitating Agent pursuant to
Article II or VII shall not be effective until received by the Facilitating
Agent.
SECTION 8.03. NO WAIVER, REMEDIES. No failure on the part of the MLB
Trust or the Facilitating Agent to exercise, and no delay in exercising, any
right under any Transaction Document shall operate as a waiver thereof; nor
shall any single or partial exercise of any such right preclude any other or
further exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
SECTION 8.04. COSTS AND EXPENSES.
(a) Subject to the conditions that each Club Trust shall be responsible
for the payment of (x) all amounts specifically attributable solely to it and
(y) an equal portion of all amounts not attributable solely to any other Club
Trust, the Club Trusts are to equally pay on demand all costs and expenses of
the Facilitating Agent and the MLB Trust in connection with the preparation,
execution, delivery, administration, modification and amendment of the
Transaction Documents and the other documents to be delivered under
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the Transaction Documents, including, without limitation, the reasonable fees
and out-of-pocket expenses of counsel for the Facilitating Agent with respect
thereto. Subject to the same conditions set forth in the immediately preceding
sentence, each Club Trust further agrees to pay on demand all costs and expenses
of the MLB Trust and the Facilitating Agent, if any (including, without
limitation, reasonable counsel fees and expenses), in connection with the
enforcement against such Club Trust (whether through negotiations, legal
proceedings or otherwise) of the Transaction Documents and the other documents
to be delivered under the Transaction Documents, including, without limitation,
reasonable counsel fees and expenses in correction with the enforcement of
rights under this Section 8.04(a); PROVIDED, HOWEVER, that the costs and
expenses incurred solely with respect to any amendment contemplated in Section
8.01(b) shall be borne equally by the Club Trust(s) with respect to which such
amendment relates.
(b) If any payment of principal of the LIBO Rate Portion of any Loan
under a Club Trust Sub-Facility is made other than on the last day of an
Interest Period relating to such LIBO Rate Portion, as a result of a payment
pursuant to Section 2.09 or 2.11 or acceleration of the maturity of the Club
Trust Notes pursuant to Section 6.02 or for any other reason, the related Club
Trust shall, upon demand by the MLB Trust (with a copy of such demand to the
Administrative Agent), pay to the Administrative Agent for the account of the
MLB Trust any amounts required to compensate the MLB Trust for any additional
losses, costs or expenses which it may reasonably incur as a result of such
payment, including without limitation, any loss (including loss of anticipated
profits), cost or expense incurred by reason of the liquidation or redeployment
of deposits or other funds acquired to fund or maintain such Loan.
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SECTION 8.05. BINDING EFFECT. This Agreement shall become effective (a)
with respect to the MLB Trust and the Facilitating Agent, when it shall have
been executed by the MLB Trust and the Facilitating Agent and (b) with respect
to each Club Trust, when such Club Trust shall have signed and the
Administrative Agent shall have accepted its Ratification Agreement and,
thereafter, this Agreement shall be binding upon and inure to the benefit of the
MLB Trust, the Facilitating Agent and each Club Trust party hereto and their
respective successors and assigns, except that none of the MLB Trust or the Club
Trusts party hereto shall have the right to assign its rights hereunder or any
interest herein without the prior written consent of the other.
SECTION 8.06. THE REGISTER. The Facilitating Agent shall maintain at
one of its offices in The City of Boston a register (the "Register") in which it
shall record the identity of each Club Trust, the Maximum Available Amount for
each Club Trust under its Sub-Facility, the principal amount of each Loan and
the Interest Period and principal amount of each LIBO Rate Portion of each
outstanding Loan under the related Club Trust Sub-Facility for each Club Trust.
The Facilitating Agent will make reasonable efforts to maintain the accuracy of
the Register and to promptly update the Register from time to time, as
necessary. The Register shall be available for inspection by the MLB Trust, each
Club Trust and its related Participating Club, at any reasonable time and from
time to time upon reasonable prior notice.
SECTION 8.07. LIMITATION OF LIABILITY. It is expressly understood and
agreed by the parties hereto that (a) this Agreement is executed and delivered
by Wilmington Trust
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Company, not individually or personally but solely as trustee of the MLB Trust
under the MLB Trust Agreement, in the exercise of the powers and authority
conferred and vested in it, (b) each of the representations, undertakings and
agreements herein made on the part of the MLB Trust is made and intended not as
personal representations, undertakings and agreements by Wilmington Trust
Company but is made and intended for the purpose for binding only the MLB Trust,
(c) except as Wilmington Trust Company shall otherwise expressly agree, nothing
herein contained shall be construed as creating any liability on Wilmington
Trust Company, individually or personally, to perform any covenant either
expressly or implied contained herein, all such liability, if any, being
expressly waived by the Facilitating Agent, the Agent Banks, the Administrative
Agent and the Banks and by any Person claiming by, through or under any of them
and (d) under no circumstances shall Wilmington Trust company be personally
liable for the payment of any indebtedness or expense of the MLB Trust or be
liable for the breach or failure of any obligation, representation, warranty or
covenant made or undertaken by the MLB Trust under this Agreement or the other
Transaction Documents.
SECTION 8.08. GOVERNING LAW; CONSENT TO JURISDICTION; OTHER MATTERS.
This Agreement and the Club Trust Notes shall be governed by, and construed in
accordance with, the laws of the State of New York without reference to its
choice of law provisions. Each Club Trust hereby submits to the extent effective
under applicable law to the jurisdiction and venue of the state and Federal
courts of New York and agrees that the MLB Trust may, at its option, enforce its
rights hereunder in such courts. To the extent permitted by applicable law, each
Club Trust hereby irrevocably waives the defense of an
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inconvenient forum to maintenance of any action or proceeding by the MLB Trust
in such courts. Each Club Trust hereby irrevocably waives all right to trial by
jury in any action, proceeding or counterclaim arising out of or relating to
this Agreement or any other Transaction Document or any of the transactions
contemplated hereby or thereby.
SECTION 8.09. EXECUTION IN COUNTERPARTS. This Agreement may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as a sealed instrument by their respective officers thereunto duly
authorized, as of the date first above written.
MAJOR LEAGUE BASEBALL TRUST,
as Lender,
By: WILMINGTON TRUST COMPANY, not in
its individual capacity but solely as MLB
Trustee
By: /s/ David A. Vanaskey Jr.
-----------------------------
Name: David A. Vanaskey Jr.
Title: Senior Financial Services Officer
FLEET NATIONAL BANK, as Facilitating Agent
By: /s/ Keith J. Collar
-----------------------------
Keith J. Collar
Vice President
Acknowledged and Accepted:
FLEET NATIONAL BANK, as Administrative
Agent
By: /s/ Keith J. Collar
-----------------------------
Name: Keith J. Collar
Title: Vice President
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ANNEX A
DEFINITIONS
Except as otherwise specified in the Transaction Document of which this
Annex A is a part, all references in such agreement (i) to any Person shall be
deemed to include such Person's successors and assigns and (ii) to any law,
agreement, statute or contract specifically defined or referred to in such
agreements shall be deemed to be references to such law, agreement, statute or
contract as the same may be supplemented, amended, waived, consolidated,
replaced or modified from time to time, but only to the extent permitted by, and
effected in accordance with, the terms thereof. The words "herein", "hereof" and
"hereunder" and words of similar import, when used in any Transaction Document
shall refer to such agreement as a whole and not to any provision of such
agreement, and "Article", "Section", "paragraph", "Exhibit", "Schedule" and
similar references are to such agreement unless otherwise specified. Whenever
the context so requires, words importing any gender include the other gender.
Any of the terms defined in this Annex A may, unless the context otherwise
requires, be used in the singular or the plural depending on the reference; the
singular includes the plural and the plural includes the singular.
All terms defined in this Annex A shall have the defined meanings when
used in any Transaction Document or, except as otherwise expressly stated
therein, any certificate, opinion or other document delivered pursuant to such
agreements.
For purposes of any Transaction Document, all terms used in Article 9
of the UCC and not specifically defined in this Annex A or in such agreements
shall be defined herein and in such agreement as such terms are defined in the
UCC as in effect on the Closing Date.
References to "writing" include printing, typing, lithography and other
means of reproducing words in a tangible visible form. References to "written"
include "printed", "typed", "lithographed" and other adjectives relating to
words reproduced in a tangible visible form consistent with the preceding
sentence. The words "including", "includes" and "include" shall be deemed to be
followed by the words "without limitation".
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"ACCOUNTANTS" has the meaning specified in Section 5.01(d) of the MLB
Credit Agreement.
"ADMINISTRATION AGREEMENT" means, with respect to each Club Trust, the
Administration Agreement dated as of June 28, 1996, among the related
Administrator and the related Club Trust and which is substantially in the form
of Exhibit E to the Club Trust Credit Agreement.
"ADMINISTRATIVE AGENT" means Fleet National Bank in its capacity as
Administrative Agent under the MLB Credit Agreement and any successor thereto.
"ADMINISTRATOR" means, with respect to any Club Trust, the party
retained pursuant to such Club Trust's Administration Agreement to perform
certain obligations on behalf of such Club Trust with respect to or related to
the Transaction Documents, and any successor administrator under the
Administration Agreement.
"AFFILIATE" means, with respect to any specified Person, any other
Person controlling or controlled by or under common control with such specified
Person. For the purposes of this definition, "control" 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; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"AGENT BANKS" has the meaning specified in the recitals to the MLB
Credit Agreement.
"AGREEMENT" shall refer to the Transaction Document in which such term
appears as the same may be amended and supplemented from time to time.
"ALL STAR GAME" shall mean the official baseball game or games played
by the stars of the National League and the stars of the American League.
"AMERICAN LEAGUE" means The American League of Professional Baseball
Clubs, a not-for-profit association having its chief executive office at 350
Park Avenue, New York, New York 10022.
"AMERICAN LEAGUE AGREEMENT" means the Constitution of The American
League of Professional Baseball Clubs as adopted by the American League on
January 1, 1966, as the
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same may be supplemented, modified, amended or restated from time to time in the
manner provided therein and all successor agreements that may in the future be
entered into.
"ASSIGNED DOCUMENTS" means, collectively, all the Club Trust Pledge and
Security Agreements, all the Club Trust Assigned Documents, the Club Trust
Credit Agreement and all the Ratification Agreements.
"ASSIGNMENT" means the documents of assignment executed by the
Participating Clubs on various dates, as confirmed on June 28, 1996, attached to
the Transfer Agreements as Exhibit A.
"AUTHORIZED OFFICER" means any officer of the MLB Trustee who is
authorized to act for the MLB Trustee in matters relating to the MLB Trust and
who is identified on the list of Authorized Officers delivered by the MLB
Trustee to the Administrative Agent pursuant to Section 3.01 of the MLB Credit
Agreement (as such list may be modified or supplemented from time to time
thereafter) and, so long as any Administration Agreement is in effect, any Vice
President or more senior officer of the Administrator who is authorized to act
for the Administrator in matters relating to the related Club Trust and to be
acted upon by the Administrator pursuant to the Administration Agreement and who
is identified on the list of Authorized Officers delivered by the Administrator
to the MLB Trust pursuant to Section 3.01 of the Club Trust Credit Agreement (as
such list may be modified or supplemented from time to time thereafter).
"B OF A" means Bank of America.
"BANKRUPTCY EVENT" shall mean, with respect to any Person, the
occurrence of any of the following with respect to such Person: (i) a court or
governmental agency having jurisdiction in the premises shall enter a decree or
order for relief in respect of such Person in an involuntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect or appointing a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar official) of such Person or for any substantial part of
its property or ordering the winding up or liquidation of its affairs, and such
decree or order shall remain unstayed and in effect for a period of 60
consecutive days; or (ii) such Person shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect or consent to the entry or an order for relief in an involuntary case
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under any such law or consent to the appointment or taking possession by a
receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar
official) or such Person or for any substantial part of its property or make any
general assignment for the benefit of creditors, or (iii) such Person shall
admit in writing its inability to pay its debts generally as they become due
(otherwise than on a purely temporary basis), or any action shall be taken by
such Person in furtherance of any of the aforesaid purposes.
"BANKS" means, collectively, the Banks listed on the signature pages to
the MLB Credit Agreement, any assignee of any Bank pursuant to Section 8.06 of
the MLB Credit Agreement; PROVIDED, HOWEVER, that for purposes of Section 2.10
and Section 2.13 of the MLB Credit Agreement Banks shall not include the
assignee of any Bank pursuant to Section 8.06 of the MLB Credit Agreement.
"BANK TRANSFEREE" has the meaning specified in Section 2.10(a) of the
MLB Credit Agreement.
"BASE RATE" means, for any period, a fluctuating interest rate per
annum as shall be in effect from time to time, which rate per annum shall at all
times be equal to the higher of:
(a) the rate of interest announced publicly by Fleet in
Boston, Massachusetts, from time to time, as Fleet's commercial base
rate; or
(b) 1/2 of 1% per annum above the latest three-week moving
average of secondary market morning offering rates in the United States
for three-month certificates of deposit of major United States money
market banks, such three-week moving average being determined weekly on
each Monday (or, if any such day is not a Business Day, on the next
succeeding Business Day) for the three-week period ending on the
previous Friday by Fleet on the basis of such rates reported by
certificate of deposit dealers to and published by the Federal Reserve
Bank of New York or, if such publication shall be suspended or
terminated, on the basis of quotations for such rates received by Fleet
from three New York certificate of deposit dealers of recognized
standing selected by Fleet, in either case adjusted to the nearest 1/4
of 1% or, if there is no nearest 1/4 of 1%, to the next higher 1/4 of
1%. "BORROWER" means MLB Trust as Borrower under the MLB Credit
Agreement.
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"BORROWING" means the aggregate of the Club Trust Related Advances made
on any given day by the Banks to the Borrower with respect to a specific Club
Trust.
"BUSINESS DAY" means any day that is not a Saturday, Sunday or any
other day on which commercial banking institutions in Boston, Massachusetts, New
York, New York, or Wilmington, Delaware, are authorized or obligated by law or
executive order to be closed and on which dealings are carried on in the London
interbank market and banks are open for business in London.
"BUSINESS INTERRUPTION EVENT" has the meaning specified in Section
2.06(d) of the MLB Credit Agreement.
"BUSINESS TRUST STATUTE" means Chapter 38 of Title 12 of the Delaware
Code, 12 Del. Code ss. 3801 ET SEQ., as the same may be amended from time to
time.
"CENTRAL FUND AGREEMENT" means the Major League Agreement in re Major
Leagues Central Fund among the Major League Clubs dated as of December 8, 1983,
as the same may be supplemented, modified, amended or restated from time to time
in the manner provided therein and all successor or replacement agreements that
may in the future be entered into.
"CENTRAL FUND CUSTODY ACCOUNT" means the account known as the "Major
Leagues Central Fund" or the "Major League Central Fund Custody Account"
established by the Major League Clubs pursuant to the Central Fund Agreement and
any successor fund which serves as a receipt and disbursement account for
revenues that are shared by the various Major League Clubs and located at the
Administrative Agent.
"CHEMICAL" means Chemical Bank.
"CHIEF OPERATING OFFICER OF MLB PROPERTIES" means Don E. N. Gibson, and
any successor to his responsibilities.
"CLASS A INTERESTS" means the 90 Ownership Interests in a Club Trust
representing certain rights to distributions as set forth in Section 5.02 of any
Club Trust Agreement.
"CLASS A OWNER CERTIFICATES" means the Owner Certificates representing
ownership of the Class A Interests.
"CLASS B INTERESTS" means the 10 Ownership Interests in a Club Trust
representing certain rights to distributions as set forth in Section 5.02 of any
Club Trust Agreement.
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"CLASS B OWNER CERTIFICATES" means the Owner Certificates representing
ownership of the Class B Interests.
"CLOSING" means the simultaneous closings under each of the Transaction
Documents to take place at the offices of Choate, Hall & Stewart, Exchange
Place, 53 State Street, Boston, Massachusetts 02109 on the Closing Date.
"CLOSING DATE" means June 28, 1996.
"CLUB" or "MAJOR LEAGUE CLUB" means any Major League Baseball Club that
is a member of the National League or the American League and that is a
signatory to the Major League Agreement.
"CLUB TRUST" or "CLUB TRUSTS" means, as to any Participating Club, the
Delaware business trust established pursuant to the Business Trust Statute (a)
in which its related Participating Club holds the Class A Interests and (b)
which, collectively with all the other Participating Clubs' Club Trusts, will
constitute the Club Trusts. The names of the Club Trusts deemed to be party to
the Club Trust Credit Agreement and their respective Participating Clubs, and
Maximum Available Amounts, as of the Closing Date are set forth on Schedule I to
the Club Trust Credit Agreement and Schedule II to the MLB Credit Agreement.
"CLUB TRUST ADMINISTRATION FEE LETTER" means, with respect to any Club
Trust, the letter agreement dated as of June 28, 1996, between such Club Trust
and the MLB Trust.
"CLUB TRUST AGREEMENTS" means the trust agreements pursuant to which
each of the Club Trusts was established, as amended and restated, each
substantially in the form attached as Exhibit E to the MLB Credit Agreement.
"CLUB TRUST ASSIGNED DOCUMENTS" means, with respect to each Club Trust,
its Administration Agreement, its Transfer Agreement, its Club Trust Agreement
and any financial hedge entered into by or on behalf of such Club Trust.
"CLUB TRUST COLLATERAL" has the meaning specified in Section 2(a) of
each of the Club Trust Pledge and Security Agreements.
"CLUB TRUST CREDIT AGREEMENT" means the credit agreement in
substantially the form attached as Exhibit D to the MLB Credit Agreement
pursuant to which the MLB Trust will make loans to the Club Trusts from the
proceeds of the Club Trust Related Advances.
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"CLUB TRUST ESTATE" means all the right, title and interest of the Club
Trust in and to the property and rights transferred to the Club Trust pursuant
to the Transfer Agreement, all funds on deposit from time to time in its
Distribution Account and all other property of the Club Trust from time to time,
including any rights of the Club Trustee and the Club Trust pursuant to the
Transfer Agreement.
"CLUB TRUST EVENT OF DEFAULT" has the meaning specified in Section 6.01
of the Club Trust Credit Agreement.
"CLUB TRUST NOTE" means a promissory note of the Club Trust payable to
the order of the MLB Trust, in substantially the form of Exhibit A to the Club
Trust Credit Agreement, evidencing the aggregate indebtedness of the Club Trust
to the MLB Trust.
"CLUB TRUST PLEDGE AND SECURITY AGREEMENT" has, with respect to each
Club Trust, the meaning specified in Section 3.01(a) of the Club Trust Credit
Agreement, and which is substantially in the form of Exhibit C to the Club Trust
Credit Agreement.
"CLUB TRUST PREPAYMENT EVENT" means any Prepayment Event (as defined in
the Club Trust Credit Agreement) with respect to any Club Trust under its Club
Trust Sub-Facility.
"CLUB TRUST RELATED ADVANCE" means an advance by a Bank to the Borrower
pursuant to Article II of the MLB Credit Agreement in anticipation of a related
loan by the Borrower to a specific Club Trust.
"CLUB TRUST SECURED OBLIGATIONS" means, with respect to any Club Trust,
(a) all indebtedness, obligations and liabilities of such Club Trust under or in
connection with (i) the Club Trust Credit Agreement, (ii) its Club Trust Note or
other evidence of indebtedness of such Club Trust now or hereafter issued in
connection with the Club Trust Credit Agreement, (iii) its Club Trust Pledge and
Security Agreement, any other Transaction Document to which it is a party or the
loans and extensions or credit thereunder to it or its Club Trust Administration
Fee Letter or (iv) any interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate futures contract,
interest rate option contract or other similar agreement or arrangement entered
into by or on behalf of such Club Trust with an Agent Bank designed to protect
such Club Trust against fluctuations in interest rates applicable to loans and
advances made available to it under its Club Trust Sub-Facility, in each case
whether now existing or hereafter arising, due or to become due,
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direct or indirect, absolute or contingent, and howsoever evidenced, held or
acquired and (b) all expenses and charges, legal and otherwise, reasonably
incurred by the MLB Trust, the Facilitating Agent, the Administrative Agent, the
Agent Banks and/or any Bank collecting or enforcing any of such indebtedness,
obligations and liabilities of such Club Trust or in realizing on or protecting
any security therefor, together with any and all modifications, extensions,
renewals and/or substitutions thereof.
"CLUB TRUST SUB-FACILITY" means, with respect to each Club Trust, the
sub-facility under the Club Trust Credit Agreement established for the purpose
of permitting such Club Trust to request Loans from the MLB Trust in an
aggregate amount not to exceed at any time such Club Trust's Maximum Available
Amount.
"CLUB TRUSTEE" means, with respect to each Club Trust, Wilmington Trust
Company, a Delaware banking corporation, not in its individual capacity but
solely as trustee under the Club Trust Agreements, and any successor trustee
thereunder.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COLLATERAL" has the meaning specified in Section 2 of the MLB Pledge
and Security Agreement.
"COLLECTION ACCOUNT" has the meaning specified in Section 7 of the MLB
Pledge and Security Agreement.
"COLLECTIVE BARGAINING AGREEMENT" means a fully executed, valid and
binding collective bargaining agreement between each of the American League and
National League, on its own behalf and as agent on behalf of each of its member
Clubs, and the Major League Baseball Players Association.
"COLLECTIVE BARGAINING AGREEMENT EFFECTIVE DATE" means the date upon
which a Collective Bargaining Agreement becomes legally effective.
"COLLECTIVE BARGAINING AGREEMENT EXPIRATION DATE" means the date upon
which a Collective Bargaining Agreement legally expires and no other Collective
Bargaining Agreement is legally effective.
"COMMISSIONER" means the Office of the Commissioner of Major League
Baseball created and governed by Article I of the Major League Agreement.
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"COMMISSIONER DISTRIBUTION DATE" means each date (or if such date is
not a Business Day, the next succeeding Business Day) on which the Commissioner
(i) distributes to the nonParticipating Clubs amounts on deposit in the Central
Fund Custody Account attributable to the non-Participating Clubs and (ii)
transfers into the Collection Account amounts on deposit in the Central Fund
Custody Account attributable to the Club Trusts, on a schedule submitted in
advance each year by the Commissioner and reasonably approved by the
Administrative Agent.
"COMMISSIONER EXPENSES" means the expenses of the Commissioner and the
office of the Commissioner paid pursuant to Sections 5(b) and (c) of the Central
Fund Agreement by the Major League Clubs as in effect on the Closing Date;
PROVIDED, however, that with respect to each Participating Club, aggregate
annual payments of such Participating Club's Pro Rata share of Commissioner
Expenses made by the Commissioner on behalf of such Participating Club out of
the Central Fund Custody Account shall be limited to (i) $1,600,000 in 1996, and
(ii) an aggregate annual amount in each succeeding year equal to the sum of (x)
the prior year's maximum amount, plus (y) the product of the amount of any
increase in the Consumer Price Index (expressed as a percentage) multiplied
times the prior year's maximum amount, plus (z) the product of five percent (5%)
multiplied times the prior year's maximum amount; and provided, further, that
each Participating Club will remain tertiarily liable for its share of any
Commissioner Expenses in any year which exceed such permitted payments.
"COMMISSIONER LETTER" means the letter of the Commissioner
substantially in the form attached as Exhibit H to the MLB Credit Agreement.
"COMMITMENT" has the meaning specified in Section 2.01 of the MLB
Credit Agreement.
"CONSUMER PRICE INDEX" means the consumer price index as measured in
the City of New York.
"COPYRIGHT ROYALTY TRIBUNAL" means a Copyright Arbitration Royalty
Panel created pursuant to 17 U.S.C. ss. 801, ET. SEQ.
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"DEBT" means (a) indebtedness for borrowed money, (b) obligations
evidenced by bonds, debentures, notes or other similar instruments, (c)
obligations to pay the deferred purchase price of property or services, (d)
obligations as lessee under leases which shall have been or should be, in
accordance with generally accepted accounting principles, recorded as capital
leases and (e) obligations under direct or indirect guarantees in respect of,
and obligations (contingent or otherwise) to purchase or otherwise acquire, or
otherwise to assure a creditor against loss in respect of, indebtedness or
obligations of others of the kinds referred to in clauses (a) through (d) above.
"DEBT SERVICE ACCOUNT" has the meaning specified in Section 7 of the
MLB Pledge and Security Agreement.
"DEFAULT RATE" has the meaning specified in Section 3(i) of the MLB
Pledge and Security Agreement or Section 3(i) of the Club Trust Pledge and
Security Agreements, as the context shall indicate is appropriate.
"DISTRIBUTION ACCOUNT" means, with respect to each Club Trust, the
account specified in Section 5.01 of the related Club Trust Agreement.
"DISTRIBUTION DATE" means a Commissioner Distribution Date, each date
on which amounts in the MLB Properties Royalty Account are distributed to the
non-Participating Clubs pursuant to the terms of the MLB Properties Agreement
and deposited to the Collection Account pursuant to the MLB Properties Payment
Directives, and each date on which Expansion Fees are distributed to the
non-Participating Clubs and deposited to the Collection Account pursuant to the
Commissioner Letter.
"DOCUMENTATION AGENT" means Morgan Guaranty Trust Company of New York
in its capacity as Documentation Agent under the MLB Credit Agreement and any
successor thereto.
"DOLLARS" or "$" means the lawful money of the United States of
America.
"ELIGIBLE INVESTMENTS" shall mean book-entry securities, negotiable
instruments or securities represented by instruments in bearer or registered
form which evidence:
(a) direct obligations of, and obligations fully guaranteed as
to timely payment by, the United States of America;
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(b) demand deposits, time deposits or certificates of deposit
of any depository institution or trust company incorporated under the
laws of the United States of America or any state thereof (or any
domestic branch of a foreign bank) and subject to supervision and
examination by Federal or state banking or depository institution
authorities; PROVIDED, HOWEVER, that at the time of any investment or
contractual commitment to invest therein, the commercial paper or other
short-term unsecured debt obligations (other than such obligations the
rating of which is based on the credit of a person or entity other than
such depository institution or trust company) thereof shall have a
credit rating from each of Standard & Poor's and Moody's in the highest
investment category granted thereby;
(c) commercial paper having, at the time of any investment or
contractual commitment to invest therein, a rating of A-1 and P-1 from
each of Standard & Poor's and Moody's, respectively;
(d) investments in money market funds having a rating of A-1
and P-1 from each of Standard & Poor's and Moody's, respectively;
(e) demand deposits, time deposits and certificates of deposit
with a rating of A-1 and P-1 from each of Standard & Poor's and
Moody's, respectively, and which are fully insured by the FDIC;
(f) bankers' acceptances issued by any depository institution
or trust company referred to in clause (b) above; and
(g) repurchase obligations with respect to any security that
is a direct obligation of, or fully guaranteed by, the United States of
America or any agency or instrumentality thereof the obligations of
which are backed by the full faith and credit of the United States of
America, in either case entered into with (i) a depository institution
or trust company (acting as principal) described in clause (b) or (ii)
a depository institution or trust company the deposits of which are
insured by FDIC.
"ENTITY" has the meaning specified in Section 3.02(c)(iv) of each
Transfer Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and rulings issued
thereunder.
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"EUROCURRENCY LIABILITIES" has the meaning assigned to that term in
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
"EVENTS OF DEFAULT" has the meaning specified in Section 6.02 of the
MLB Credit Agreement.
"EXECUTIVE COUNCIL" means the Executive Council of Major League
Baseball, which is created and governed by Article II of the Major League
Agreement or any other body serving similar functions in the future.
"EXPANSION FEES" means any payments received by the Clubs upon
expansion of Major League Baseball beyond twenty-eight Clubs or upon the
addition of a new Club following the expulsion of a Club.
"EXPENSES" has, with respect to any Club Trust Agreement or the MLB
Trust Agreement, the meaning specified in Section 8.02 thereof.
"FACILITATING AGENT" means Fleet National Bank in its capacity as
Facilitating Agent under the Club Trust Credit Agreement and any successor
thereto.
"FDIC" shall mean the Federal Deposit Insurance Corporation or any
successor entity thereto.
"FEDERAL FUNDS RATE" means, for any period, a fluctuating interest rate
per annum equal for each day during such period to the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
"FINAL PAYMENT DATE" means December 31, 2000, which corresponds to the
date on which the final principal payment with respect to the Club Trust Related
Advances shall be due to the Banks; PROVIDED, HOWEVER, that the Final Payment
Date may be changed with the consent of all of the Banks (or, if the Final
Payment Date is to be extended beyond December 31, 2001, with the consent of all
the Banks and all of the Club Trusts) as contemplated in Section 8.01 of the MLB
Credit Agreement.
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"FLEET" means Fleet National Bank.
"GOVERNMENTAL AUTHORITY" means any governmental department, commission,
board, bureau, agency, court or other instrumentality of any nation, state,
province, territory, commonwealth, municipality or other political subdivision
thereof.
"GRANT" means mortgage, pledge, bargain, sell, warrant, alienate,
remise, release, convey, assign, transfer, create and grant a Lien upon and a
security interest in and right of setoff against, deposit, set over and confirm;
and "Granting" shall have a meaning corresponding to the foregoing. A Grant of
the Collateral, in the case of the MLB Pledge and Security Agreement, or a Grant
of the Club Trust Collateral, in the case of a Club Trust Pledge and Security
Agreement, or of any other agreement or instrument shall include all rights,
powers and options (but none of the obligations) of the Granting party
thereunder, including the immediate and continuing right to claim for, collect,
receive and give receipt for principal and interest payments in respect of the
Collateral or the Club Trust Collateral, as the case may be, and all other
moneys payable thereunder, to give and receive notices and other communications,
to make waivers or other agreements, to exercise all rights and options, to
bring Proceedings in the name of the Granting party or otherwise and generally
to do and receive anything that the Granting party is or may be entitled to do
or receive thereunder or with respect thereto.
"INFORMATION" has the meaning specified in Section 8.10 of the MLB
Credit Agreement.
"INTEREST PERIOD" has the meaning specified in Section 2.06(b) of the
MLB Credit Agreement.
"INTERNATIONAL BROADCAST CONTRACTS" means radio or television or other
media agreements now existing or entered into in the future respecting the
broadcast of any baseball games of Major League Baseball to audiences outside
the United States and Canada, whether such games are regular season games or
otherwise, and whether transmission of such broadcast is over-the-air, over
cable, by pay per view, by Internet or like means, by satellite transmission or
by any other means of transmission (except for those that are the subject of a
Superstation Agreement).
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"LABOR CONTINGENCY INTEREST RESERVE" means, with respect to each Club
Trust, an amount equal to nine months of interest on such Club Trust's Maximum
Available Amount (before giving effect to any reductions, including the Labor
Contingency Interest Reserve, under Section 2.04 of the Club Trust Credit
Agreement) computed at a rate equal to the sum of (i) such Club Trust's rate per
annum under Section 2.06(a)(ii) or (iii), as the case may be, of the MLB Credit
Agreement (assuming in all cases a LIBO Rate based on a 90 day Interest Period),
either as of the date of its initial Loan thereunder or as of any Collective
Bargaining Agreement Expiration Date, plus (ii) 2%; PROVIDED, that if such Club
Trust has entered into an interest cap agreement with an Agent Bank (or in the
case of the Rangers Club Trust, with a Bank) which extends through the Final
Payment Date, interest shall be computed solely at the maximum interest rate
provided for in such agreement.
"LEAGUE" means, with respect to any Club, The American League of
Professional Baseball Clubs or The National League of Professional Baseball
Clubs, as appropriate.
"LEAGUE AGREEMENT" means, with respect to any Club, the American League
Agreement or the National League Agreement, as appropriate.
"LENDING OFFICE" means, with respect to any Bank, the office of such
Bank specified as its "Lending Office" opposite its name on Schedule I to the
MLB Credit Agreement or such other office of such Bank as such Bank may from
time to time specify to the Borrower and the Agent Bank.
"LIBO RATE" means, for any Interest Period, for any Club Trust Related
Advance, the interest rate per annum equal to the rate per annum at which
deposits in dollars are offered to the Reference Bank in the London interbank
market at 11:00 a.m. (London time) two Business Days before the first day of
such Interest Period in an amount substantially equal to the amount of the
Borrowing with respect to which such Club Trust Related Advance relates and for
a period equal to such Interest Period.
"LIBO RATE OPTION" means the option granted to the Borrower under
Section 2.02(a) of the MLB Credit Agreement to have the interest on all or a
portion of any Borrowing based on the LIBO Rate or the option granted to each
Club Trust under Section 2.02(a) of the Club Trust Credit Agreement to have the
interest on all or a portion of any Loan based on the LIBO Rate, as applicable.
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"LIBO RATE PORTION" means any portion of any Borrowing, or of the
corresponding Club Trust Related Advances, or of any Loan, which is subject to a
LIBO Rate Option.
"LIBO RATE RESERVE PERCENTAGE" of any Bank for any Interest Period for
any Club Trust Related Advance means the reserve percentage applicable during
such Interest Period (or, if more than one such percentage shall be so
applicable, the daily average of such percentages for those days in such
Interest Period during which any such percentage shall be so applicable) under
regulations issued from time to time by the Board of Governors of the Federal
Reserve System (or any successor) for determining the maximum reserve
requirement (including any emergency, supplemental or other marginal reserve
requirement) for such Bank with respect to liabilities or assets consisting of
or including Eurocurrency Liabilities having a term equal to such Interest
Period.
"LIEN" means any mortgage, deed of trust, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other),
preference, participation interest, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever, including any
conditional sale or other title retention agreement and any financing lease
having substantially the same economic effect as any of the foregoing.
"LOAN" means any loan made to a Club Trust under such Club Trust's
Sub-Facility pursuant to the Club Trust Credit Agreement.
"MAJOR LEAGUE AGREEMENT" means the Major League Agreement dated January
1, 1975 (which amended and restated the Major League Agreement dated January 12,
1921), between the National League, the American League and each of their
respective member Clubs, as the same may be supplemented, modified, amended or
restated from time to time in the manner provided therein and all replacement or
successor agreements that may in the future be entered into.
"MAJOR LEAGUE AGREEMENTS" means, collectively, the Major League
Agreement, the National League Agreement, the American League Agreement and the
Central Fund Agreement.
"MAJOR LEAGUE BASEBALL" means collectively, the National League and the
American League and each of their respective members.
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<PAGE> 77
"MAJOR LEAGUE BASEBALL PENSION PLAN" means the Agreement re Major
League Baseball Players' Benefit Plan dated as of March 18, 1990 as the same may
be supplemented, modified, amended or restated from time to time in the manner
provided therein.
"MANAGING AGENT" means Bank of America in its capacity as Managing
Agent under the MLB Credit Agreement and any successor thereto.
"MAXIMUM AVAILABLE AMOUNT" means, with respect to each Club Trust's
Club Trust Sub-Facility, the amount initially set forth on Schedule I to the
Club Trust Credit Agreement as such amount may be reduced pursuant to the terms
of the Club Trust Credit Agreement; PROVIDED, HOWEVER, that no Club Trust's
Maximum Available Amount (before giving effect to any voluntary or involuntary
reductions therein, including the Labor Contingency Interest Reserve, as
contemplated in Section 2.04 of the Club Trust Credit Agreement) shall exceed
$25,000,000 in the case of Option A or $40,000,000 in the case of Option B.
"MLB CREDIT AGREEMENT" means the Reducing Revolving Credit Agreement
dated as of June 28, 1996, among the Borrower, Fleet, as Administrative Agent
and an Agent Bank, B of A, as Managing Agent and an Agent Bank, Chemical, as
Syndication Agent and an Agent Bank and Morgan, as Documentation Agent and an
Agent Bank, and the Banks.
"MLB PLEDGE AND SECURITY AGREEMENT" has the meaning specified in
Section 3.01(a) of the MLB Credit Agreement.
"MLB PROPERTIES" means Major League Baseball Properties, Inc., a New
York corporation.
"MLB PROPERTIES AGREEMENT" means the agency agreement dated as of
January 1, 1991, by and between MLB Properties and the member Clubs of Major
League Baseball, as the same may be supplemented, modified, amended or restated
from time to time in the manner provided therein and all replacement or
successor contracts that may in the future be entered into.
"MLB PROPERTIES LETTER" means the letter of the Chief Operating Officer
of MLB Properties substantially in the form attached as Exhibit I to the MLB
Credit Agreement.
"MLB PROPERTIES PAYMENT DIRECTIVE" means the irrevocable instructions
of each Participating Club and the Chief Operating Officer of MLB Properties
pursuant to which
16
<PAGE> 78
such Chief Operating Officer will cause all amounts in the MLB Properties
Royalty Account (after giving effect to all reductions therefrom with respect to
expenses, commissions or fees that otherwise would have been permitted to be
taken therefrom pursuant to the MLB Properties Agreement) to be deposited to the
Collection Account on the dates on which amounts are distributed to the
non-Participating Clubs pursuant to the terms of the MLB Properties Agreement,
which directive is substantially in the form attached as Exhibit J to the MLB
Credit Agreement.
"MLB PROPERTIES ROYALTY ACCOUNT" means the account established by MLB
Properties under the MLB Properties Agreement or any successor account which
serves as a receipt account for MLB Properties in connection with the MLB
Properties licensing agreements, the proceeds of which are shared by the various
Major League Clubs, including all accounts (other than the Central Fund Custody
Account) into which payment with respect to the Rights and Revenues flow for the
benefit of the Major League Clubs.
"MLB TAXES" means Taxes and Other Taxes as defined in Sections 2.13(a)
and 2.13(b), respectively, of the MLB Credit Agreement and any other amounts
required to be paid by the Borrower pursuant to Section 2.13(f) of the MLB
Credit Agreement.
"MLB TRUST" means the Major League Baseball Trust, a Delaware business
trust formed pursuant to the MLB Trust Agreement dated May 22, 1992, as amended
and restated on December 20, 1993 and amended and restated again pursuant to the
Second Amended and Restated MLB Trust Agreement dated June 28, 1996, among the
Participating Clubs and Wilmington Trust Company, as MLB Trustee.
"MLB TRUST ACCOUNT" has the meaning specified in Section 5.01 of the
MLB Trust Agreement.
"MLB TRUST ADMINISTRATION FEE LETTER" means the letter agreement dated
as of June 28, 1996, between the MLB Trust and the Administrative Agent solely
for the benefit of the Administrative Agent.
"MLB TRUST AGREEMENT" means the second amended and restated agreement
dated June 28, 1996 between the Participating Clubs and the MLB Trustee pursuant
to which the MLB Trust was established pursuant to the Business Trust Statute
substantially in the form attached as Exhibit F to the MLB Credit Agreement.
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<PAGE> 79
"MLB TRUST ESTATE" means all the right, title and interest of the MLB
Trust in and to the property and rights transferred to the MLB Trust pursuant to
the MLB Trust Agreement, all funds on deposit from time to time in its MLB Trust
Account and all other property of the MLB Trust from time to time, including any
rights of the MLB Trust pursuant to the Transaction Documents.
"MLB TRUSTEE" means Wilmington Trust Company, a Delaware banking
corporation, not in its individual capacity but solely as trustee under the MLB
Trust Agreement, and any successor trustee thereunder.
"MLBP AGREEMENTS" means the MLB Properties Agreement, the Major League
Agreement in Re: Major League Promotions Corporation dated as of January 1,
1984, by and between MLB Properties and the member Clubs of the American League
and the National League and the constitutive documents of MLB Properties as the
same may be supplemented, modified, amended or restated from time to time in the
manner provided therein and all replacement or successor contracts that may in
the future be entered into.
"MONTHLY TRANSACTION DATE" means the second Business Day immediately
following the Closing Date and, thereafter, the 15th day (or, if such date is
not a Business Day, the next succeeding Business Day) of each calendar month
occurring after the Closing Date and prior to the Termination Date.
"MOODY'S" means Moody's Investors Service Inc., or its successor.
"MORGAN" means Morgan Guaranty Trust Company of New York.
"NATIONAL LEAGUE" means The National League of Professional Baseball
Clubs, a not-for-profit association having its chief executive office at 350
Park Avenue, New York, New York 10022.
"NATIONAL LEAGUE AGREEMENT" means The Constitution and Rules of the
National League of Professional Baseball Clubs, as the same may be supplemented,
modified, amended or restated from time to time in the manner provided therein
and all successor agreements that may in the future be entered into.
"NATIONAL MEDIA CONTRACTS" means radio or television or other media
agreements now existing or entered into in the future respecting the broadcast
of any baseball games of Major League Baseball to audiences outside of the home
territories of the home and visiting Clubs
18
<PAGE> 80
playing such games, whether such games are regular season games or otherwise,
and whether transmission of such broadcast is over-the-air, over cable, by pay
per view, by Internet or like means, by satellite transmission or by any other
means of transmission (except for those contracts that are the subject of a
Superstation Agreement), including the Agreement dated as of May 31, 1996
between the Commissioner, as agent for each of the Clubs, and Fox Broadcasting
Company, the Agreement dated as of June 20, 1996 between the Commissioner, as
agent for each of the Clubs, and National Broadcasting Company, Inc., the
Agreement dated as of March 30, 1996 between the Commissioner as agent for each
of the Clubs, and ESPN, Inc., the Post-Season Cable Agreement dated as of June
20, 1996 between the Commissioner, as agent for each of the Clubs, and ESPN,
Inc., the Agreement dated as of June 20, 1996 among the Commissioner, as agent
for each of the Clubs, MLBP and National Broadcasting Company, Inc., and the
Agreement of Assignment, Assumption, Release and Indemnity dated as of June 20,
1996 among National Broadcasting Company, Inc., ESPN, Inc. and the Commissioner,
as agent for each of the Clubs, as each may be supplemented, modified, amended
or restated from time to time in the manner provided therein and all successor
contracts that may in the future be entered into.
"NOTE" means the promissory note of the Borrower payable to the order
of the Administrative Agent, on behalf of the Banks, in substantially the form
of Exhibit A to the MLB Credit Agreement, evidencing the aggregate indebtedness
of the Borrower to the Banks resulting from the Club Trust Related Advances made
by the Banks with respect to the Club Trusts.
"NOTICE OF BORROWING" has the meaning specified in Section 2.02 of the
MLB Credit Agreement or Section 2.02 of the Club Trust Credit Agreement, as the
context shall indicate is appropriate.
"OBLIGOR PAYMENT DIRECTIVES" means the irrevocable instructions to each
Obligor under the National Media Contracts to deposit payments thereunder into
the Central Fund Custody Account substantially in the form attached as Exhibit J
to the MLB Credit Agreement.
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<PAGE> 81
"OBLIGORS" means any one or more of the contract obligors under the
National Media Contracts or International Broadcast Contracts, including Fox
Broadcasting, Company, National Broadcasting Company, Inc. and ESPN, Inc.
"OPINION OF COUNSEL" means a written opinion of counsel reasonably
acceptable, as to form, substance and counsel, to the addressee thereof.
"OPTION A" means the option, exercisable in writing by a Club Trust's
Administrator as a condition precedent to the initial Loan to such Club Trust,
to have the Maximum Available Amount of such Club Trust's Sub-Facility set
initially at $25,000,000 before giving effect to any voluntary or involuntary
reductions thereof, including the Labor Contingency Interest Reserve, as
contemplated in Section 2.04 of the Club Trust Credit Agreement.
"OPTION B" means the option, exercisable in writing by a Club Trust's
Administrator as a condition precedent to the initial Loan to such Club Trust,
to have the Maximum Available Amount of such Club Trust's Sub-Facility set
initially at $40,000,000 before giving effect to any voluntary or involuntary
reductions thereof, including the Labor Contingency Interest Reserve, as
contemplated in Section 2.04 of the Club Trust Credit Agreement.
"OTHER TAXES" has the meaning specified in Section 2.13(b) of the MLB
Credit Agreement or Section 2.13(b) of the Club Trust Credit Agreement, as
applicable.
"OWNERS" has, with respect to any of the Club Trust Agreements or the
MLB Trust Agreement, the meaning specified in Section 3.01 thereof.
"OWNERSHIP INTERESTS" shall have the meaning assigned to such term in
Section 3.02 of the Club Trust Agreements.
"PARTICIPATING CLUB" means any Club that (a) is the Owner of the Class
A Owner Certificate of a Club Trust, (b) is an Owner of the MLB Trust and (c) is
a party to, or has assumed all the obligations under, the Transfer Agreement
with the Club Trust referred to in clause (a). The names of the Clubs that are
Participating Clubs as of the Closing Date are set forth on Schedule I to the
Club Trust Credit Agreement and Schedule II to the MLB Credit Agreement.
"PENSION CONTRIBUTIONS" means such amounts as the Major League Clubs
are or may become obligated to contribute to the Major League Baseball Players
Pension Plan by
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<PAGE> 82
agreement with the Major League Baseball Players Association or by joint action
of the Major League Clubs.
"PERMITTED LIENS" has the meaning specified in Section 3(c) of the MLB
Pledge and Security Agreement.
"PERMITTED LOCATIONS" has the meaning specified in Section 3(c) of the
MLB Pledge and Security Agreement.
"PERMITTED TRANSFER" has, with respect to any Club Trust Agreement, the
meaning specified in Section 3.05 thereof, and as to the MLB Trust Agreement,
the meaning specified in section 3.04 thereof.
"PERSON" means an individual, partnership, corporation, business trust,
joint stock company, limited liability company, trust, unincorporated
association, joint venture or other entity or a government or any political
subdivision or agency thereof.
"PLAN" means with respect to any Club Trust, (a) any employee pension
and other plans subject to ERISA or the Code maintained by its related
Participating Club or any of such Participating Club's affiliates or (b) any
employee pension and other plans subject to ERISA or the Code in which its
related Participating Club or any of such Participating Club's affiliates
participates, including the Major League Baseball Players Pension Plan as
currently in effect or as hereafter modified or amended.
"PLEDGED COLLATERAL" means, collectively, the Club Trust Notes and the
certificates of the MLB Trust representing a 10% ownership interest in each of
the Club Trusts party to the Club Trust Credit Agreement.
"PREPAYMENT EVENT" has the meaning specified in Section 2.09(a) of the
MLB Credit Agreement.
"PROCEEDINGS" means any suit in equity, action at law or other judicial
or administrative proceeding.
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<PAGE> 83
"PRO RATA" means a share of any amount allocated to a Participating
Club based on a fraction the numerator of which is one and the denominator of
which is the number of Major League Clubs (excluding any Club not entitled to
share in Central Fund revenues in accordance with any agreement with the Major
League Clubs in connection with the expansion of Major League Baseball).
"RATIFICATION AGREEMENT" means, with respect to each Club Trust, the
Ratification Agreement substantially in the form of Exhibit D to the Club Trust
Credit Agreement.
"REFERENCE BANK" means Fleet.
"REGISTER" has the meaning set forth in Section 8.07 of the MLB Credit
Agreement and Section 8.06 of the Club Trust Credit Agreement, as the context
shall indicate is appropriate.
"REQUIRED BANKS" means at any time Banks holding interests in at least
66-2/3% of the then aggregate unpaid principal amount of the Note held by the
Administrative Agent for the benefit of the Banks or, if no such principal
amount is then outstanding, Banks having at least 66-2/3% of the Commitments.
"REVENUES" shall mean all payments of any kind made or to be made on
account of any of the Rights.
"RIGHTS" means (i) the rights of the Transferor to receive revenues
under the Central Fund Agreement, (ii) the rights of the Transferor to receive
revenues under the MLB Properties Agreement and from MLB Properties (including
rights to royalties and dividends), (iii) the rights of the Transferor to
receive any revenues under the Major League Agreement and the League Agreements
which are shared among all the Clubs or all of the Clubs in either League, (iv)
the rights of the Transferor to receive funds deposited in the Central Fund
Custody Account (subject solely to the rights of the Commissioner to make
payments of the Transferor's Pro Rata share of Pension Contributions and
Commissioner Expenses (subject to the annual limitations contained in the
definition thereof) on behalf of the Transferor therefrom), (v) the rights of
the Transferor to receive funds deposited in the MLB Properties Royalty Account,
(vi) the rights of the Transferor to receive payments from the Copyright Royalty
Tribunal, (vii) the rights of the Transferor to receive Expansion Fees, (viii)
the rights of the Transferor to receive payments on account of any Superstation
Agreement, (ix)
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<PAGE> 84
the rights of the Transferor to receive revenues under the National Media
Contracts, subject at all times to the Commissioner's exclusive right to enforce
the obligations of any Obligor under any National Media Contract, and (x) the
rights of the Transferor to receive revenues under the International Broadcast
Contracts, subject at all times to the Commissioner's exclusive right to enforce
the obligations of any Obligor under any International Broadcast Contract.
"SECRETARY OF STATE" means the Secretary of State of the State of
Delaware.
"SECURED OBLIGATIONS" means (a) all indebtedness, obligations and
liabilities of the MLB Trust under or in connection with (i) the MLB Credit
Agreement, (ii) the Note or other evidence of indebtedness of the MLB Trust now
or hereafter issued in connection with the MLB Credit Agreement, (iii) the MLB
Pledge and Security Agreement, any other Transaction Document, the MLB Trust
Administration Fee Letter or the loans and extensions or credit thereunder or
(iv) any interest rate swap agreement, interest rate cap agreement, interest
rate collar agreement, interest rate futures contract, interest rate option
contract or other similar agreement or arrangement entered into by or on behalf
of a Club Trust with an Agent Bank designed to protect a Club Trust against
fluctuations in interest rates applicable with regard to loans and advances made
available to it under the Club Trust Credit Agreement, in each case whether now
existing or hereafter arising, due or to become due, direct or indirect,
absolute or contingent, and howsoever evidenced, held or acquired and (b) all
expenses and charges, legal and otherwise, reasonably incurred by the
Administrative Agent, the Agent Banks and/or any Bank collecting or enforcing
any of such indebtedness, obligations and liabilities or in realizing on or
protecting any security therefor, including the security afforded under the MLB
Credit Agreement and the MLB Pledge and Security Agreement, together with any
and all modifications, extensions, renewals and/or substitutions thereof.
"SOLVENT" means, with respect to any Person, that such Person is not
"insolvent" as that term is defined in 11 U.S.C. ss. 101(32) or under the
fraudulent conveyance laws of the state of incorporation, formation or legal
residence of such Person.
"STANDARD & POOR'S" means Standard & Poor's Corporation, or its
successor.
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<PAGE> 85
"SUB-ACCOUNTS" has the meaning specified in Section 5.01 of the MLB
Trust Agreement.
"SUB-ACCOUNT BALANCE" has the meaning specified in Section 5.01 of the
MLB Trust Agreement.
"SUPERSTATION AGREEMENTS" means all agreements now existence or entered
into in the future between the Commissioner and individual Clubs regarding the
sharing with the other Major League Clubs of revenues received by the individual
Clubs with respect to agreements to broadcast baseball games outside of the
local areas of such Clubs or the local areas of the visiting teams entered into
by such Clubs with individual broadcasters, as each may be supplemented,
modified, amended or restated from time to time in the manner provided therein
and all successor contracts that may in the future be entered into.
"SYNDICATION AGENT" means Chemical Bank in its capacity as Syndication
Agent under the MLB Credit Agreement and any successor thereto.
"TAXES" has the meaning specified in Section 2.13 of each of the MLB
Trust Agreement and the Club Trust Credit Agreement, as applicable.
"TERMINATION DATE" means the earliest to occur of (a) December 31, 2000
or (b) the termination in whole of the Commitments pursuant to Section 2.04 or
6.02 of the MLB Credit Agreement.
"TOTAL COMMITMENT" has the meaning specified in Section 2.01 of the MLB
Credit Agreement or Section 2.01 of the Club Trust Credit Agreement, as
applicable.
"TRANSACTION COSTS" means all fees and actual out-of-pocket costs and
expenses incurred by the Borrower and the Club Trusts in connection with the
Borrowings and the Loans, including, without limitation, Borrower's obligation
to pay all reasonable legal fees and out-of-pocket expenses of counsel to the
Administrative Agent and the Agent Banks.
"TRANSACTION DOCUMENTS" means the MLB Credit Agreement, the MLB Pledge
and Security Agreement, the Club Trust Credit Agreement, the Club Trust Pledge
and Security Agreements, the MLB Trust Agreement, the Club Trust Agreements, the
Transfer Agreements, the Assignments, the Administration Agreements and any
other documents and certificates delivered in connection therewith.
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<PAGE> 86
"TRANSFER AGREEMENTS" means the transfer agreements dated May 22, 1992,
as amended on December 20, 1993 (or the transfer agreement dated April 12, 1994
in the case of the New York Yankees or the transfer agreement dated July 15,
1994 in the case of the Montreal Expos), each as amended and confirmed pursuant
to amendment and confirmation agreements dated June 28, 1996, between each
Participating Club and its related Club Trust pursuant to which each such
Participating Club contributed to its related Club Trust its Rights and Revenues
substantially in the form attached as Exhibit G to the MLB Credit Agreement.
"TRANSFER AUTHORIZATIONS" means the irrevocable authorizations of each
Participating Club pursuant to which each Participating Club will authorize and
direct the Commissioner to cause all Revenues deposited in the Central Fund
Custody Account allocable to such Participating Club's Club Trust to be
immediately separated from amounts allocable to the non-Participating Clubs and,
after payment by the Commissioner of such Participating Club's Pro Rata share of
Pension Contributions and Commissioner Expenses (subject to the annual
limitations contained in the definition thereof) on behalf of such Participating
Club therefrom, to deposit the balance into the Collection Account on each
Commissioner Distribution Date substantially in the form attached as Exhibit L
to the MLB Credit Agreement.
"TRANSFEREE" means each Club Trust in its capacity as Transferee under
its Transfer Agreement.
"TRANSFEROR" means each Participating Club in its capacity as
Transferor under its Transfer Agreement.
"TREASURY REGULATIONS" shall mean regulations, proposed or temporary
regulations, promulgated under the Code. References herein to specific
provisions of proposed or temporary regulations shall include analogous
provisions of final Treasury Regulations or other successor Treasury
Regulations.
"UCC" shall mean the Uniform Commercial Code as enacted in the State of
New York (and any successor statute thereto).
25
<PAGE> 1
Exhibit 10.8
RATIFICATION AGREEMENT
----------------------
RATIFICATION AGREEMENT dated as of June 28, 1996 among INDIANS CLUB
TRUST, a Delaware business trust, and FLEET NATIONAL BANK, as Administrative
Agent under the Reducing Revolving Credit Agreement dated as of June 28, 1996
(the "MLB Credit Agreement"), among Major League Baseball Trust, a Delaware
business trust (the "MLB Trust"), the banks party thereto and Fleet National
Bank, as Administrative Agent, and Bank of America, Chemical Bank and Morgan
Guaranty Trust Company of New York (together with the Administrative Agent, the
"Agent Banks"). Capitalized terms used but not defined herein shall have the
meaning assigned thereto in Annex A to the MLB Credit Agreement.
1. The Indians Club Trust desires to become a party to the
Club Trust Reducing Revolving Credit Agreement dated as of June 28, 1996 (the
"Club Trust Credit Agreement"), among MLB Trust, Fleet National Bank, as
Facilitating Agent and the Club Trusts deemed to be parties thereto, and upon
acceptance hereof by the Administrative Agent on behalf of the MLB Trust, has
requested that the MLB Trust make available to the Indians Club Trust a
sub-facility having an initial Maximum Available Amount of $25,000,000 (the
"Club Trust Sub-Facility"). As a condition precedent to the establishment of
such Club Trust Sub-Facility, the MLB Trust has required, among other things,
that the Indians Club Trust enter into this Ratification Agreement (this
"Agreement") in order to undertake expressly certain representations,
warranties, covenants, agreements and other rights and obligations of a Club
Trust under and pursuant to the Club Trust Credit Agreement and the MLB Credit
Agreement. Accordingly, the Indians Club Trust hereby agrees as follows with the
MLB Trust and the Administrative Agent (for the benefit of the Banks): (i) the
Indians Club Trust hereby acknowledges and agrees and confirms that by its
execution of this Agreement the Indians Club Trust will be deemed to be a party
to the Club Trust Credit Agreement and, with respect to its Club Trust
Sub-Facility, shall be a Club Trust for all purposes of the Club Trust Credit
Agreement and shall have all of the obligations of a Club Trust thereunder as if
it had executed the Club Trust Credit Agreement. The Indians Club Trust hereby
ratifies, as of the date hereof, and agrees to be bound by all the terms,
provisions and additions contained in the Club Trust Credit Agreement including
(i) the representations and warranties of a Club Trust set forth in Section 4.01
thereof, (ii) all the affirmative and negative covenants set forth in Sections
5.01 and 5.02 thereof and (iii) the obligation to pay Club Trust Secured
Obligations and, without duplication and subject to the restrictions on
cross-collateralization contained in the Transaction Documents, Secured
Obligations attributable to such Club Trust, whether at the due date thereof or
by acceleration thereof.
2. The Indians Club Trust hereby designates the following
address as its address for notices and other communications under the Club Trust
Credit Agreement
<PAGE> 2
(unless and until the Indians Club Trust shall have designated another address,
telecopy or other number in a notice complying with the provisions of Section
8.02 of the Club Trust Credit Agreement to each other party to such agreement):
Indians Club Trust
c/o Wilmington Trust Company
1100 North Market Street
Wilmington, Delaware 19890
Attention: Corporate Trust Administration
With a copy to:
Cleveland Indians Baseball
Company, Limited Partnership
Jacobs Field, 2401 Ontario St.
Cleveland, OH 44115
Attention: Mr. Ken Stefanov
with a copy to:
Baker & Hostetler
1900 East Ninth Street, Suite 3200
Cleveland, OH 44114
Attention: Edward Ptaszek, Esq.
3. If the Indians Club Trust is becoming a Club Trust on a
date other the Closing Date, the Indians Club Trust hereby represents and
warrants that all the conditions precedent set forth in Section 2.14(a) of the
Club Trust Credit Agreement and Section 2.15(a) of the MLB Credit Agreement have
been satisfied as of the date hereof.
4. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same Agreement.
5. It is expressly understood and agreed by the parties hereto
that (a) this Agreement is executed and delivered by Wilmington Trust Company,
not individually or personally but solely as trustee of the Indians Club Trust
under its Club Trust Agreement, in the exercise of the powers and authority
conferred and vested in it, (b) each of the representations, undertakings and
agreements herein made on the part of the Indians Club Trust is made and
intended not as personal representations, undertakings and agreements by
Wilmington Trust Company but is made and intended for the purpose for binding
only the Indians Club Trust, (c) except as Wilmington Trust Company shall
otherwise expressly agree, nothing herein contained shall be construed as
creating any liability on Wilmington
<PAGE> 3
Trust Company, individually or personally, to perform any covenant
either expressed or implied contained herein, all such liability, if any, being
expressly waived by the Facilitating Agent, the Agent Banks, the Administrative
Agent and the Banks and by any Person claiming by, through or under any of them
and (d) under no circumstances shall Wilmington Trust Company be personally
liable for the payment of any indebtedness or expense of the Indians Club Trust
or be liable for the breach or failure of any obligation, representation,
warranty or covenant made or undertaken by the Indians Club Trust under this
Agreement or the other Transaction Documents.
[Remainder of this Page Intentionally Left Blank and Signature Pages Follow]
<PAGE> 4
SIGNATURE PAGE TO RATIFICATION AGREEMENT
INDIANS CLUB TRUST
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized
as of the day and year first above written.
INDIANS CLUB TRUST,
By
WILMINGTON TRUST COMPANY,
not in its individual
capacity but solely as
Club Trustee,
By: /s/ illegible
---------------------------
Acknowledged and Accepted:
FLEET NATIONAL BANK, as Administrative
Agent,
By /s/ Keith J. Collar
------------------------------
Keith J. Collar
Vice President
<PAGE> 1
Exhiit 10.9
CLUB TRUST PLEDGE AND SECURITY AGREEMENT
THIS PLEDGE AND SECURITY AGREEMENT (the "Agreement" or the
"Club Trust Pledge and Security Agreement") dated as of June 28, 1996, by and
between INDIANS CLUB TRUST, a Delaware business trust (the "Indians Club
Trust"), and MAJOR LEAGUE BASEBALL TRUST, a Delaware business trust (the "MLB
Trust").
WITNESSETH:
WHEREAS the MLB Trust, Fleet National Bank, as Facilitating
Agent and the Club Trusts deemed to be parties thereto, have entered into a Club
Trust Reducing Revolving Credit Agreement dated as of June 28, 1996 (as modified
or amended from time to time, the "Club Trust Credit Agreement").
WHEREAS the Indians Club Trust has executed a Ratification
Agreement dated as of June 28, 1996, pursuant to which, upon its acceptance by
the Administrative Agent, such Club Trust will be deemed to be a party to the
Club Trust Credit Agreement.
WHEREAS the MLB Trust will make Loans to the Indians Club
Trust and each of the other Club Trusts deemed to be parties to the Club Trust
Credit Agreement under their respective Club Trust Sub-Facilities.
WHEREAS the assets of each Club Trust (including the Indians
Club Trust) consist primarily of the Rights and Revenues contributed by the
related Participating Club and the proceeds thereof.
WHEREAS, as a condition precedent to entering into the Club
Trust Credit Agreement, and the making of any Loans under a Club Trust's Club
Trust Sub-Facility, the MLB Trust has required, among other things, that each
Club Trust (including the Indians Club Trust) Grant to the MLB Trust a lien on,
security interest in and collateral assignment of certain of the Club Trust's
assets as collateral security for the Loans and other obligations incurred by
such Club Trust under its Sub-Facility.
WHEREAS, to acquire the funds necessary to make Loans to the
Club Trusts (including the Indians Club Trust), the MLB Trust has entered into a
Reducing Revolving Credit Agreement dated as of June 28, 1996 (as modified or
amended from time to time, the "MLB Credit Agreement"), among Fleet National
Bank, as Administrative Agent, Bank of America, Chemical Bank, and Morgan
Guaranty Trust Company of New York (together with the Administrative Agent, the
"Agent Banks"), the Banks and the MLB Trust.
<PAGE> 2
WHEREAS, as a condition precedent to entering into the MLB
Credit Agreement, the Banks have required, among other things, that (a) the MLB
Trust pursuant to the MLB Pledge and Security Agreement Grant to the
Administrative Agent a lien on, security interest in and collateral assignment
of, among other things, the collateral pledged to the MLB Trust by the Club
Trusts (including the Indians Club Trust) as security for their Loans under
their Club Trust Sub-Facilities and (b) each of the Club Trusts consent to such
collateral assignment to the Administrative Agent.
WHEREAS the MLB Trust, the Club Trusts and the Banks under the
MLB Credit Agreement wish to establish, pursuant to the MLB Pledge and Security
Agreement, the Collection Account and the Debt Service Account for the benefit
of the Banks and for use in connection with the administration of collections
with respect to the Rights and Revenues and other collateral thereunder.
NOW, THEREFORE, for and in consideration of the acceptance by
the MLB Trust of the Indians Club Trust, as a borrower under the Club Trust
Credit Agreement, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. DEFINITIONS. Unless otherwise defined herein, capitalized
terms shall have the meanings set forth in Annex A hereto. In addition, the
interpretive guidelines set forth in such Annex A shall be applicable to this
Agreement.
2. PLEDGE, ASSIGNMENT AND GRANT OF SECURITY INTEREST; CONSENT
TO ASSIGNMENT AND ENFORCEMENT. (a) SECURITY INTEREST. To secure the prompt
payment or performance in full when due, whether by lapse of time, acceleration
or otherwise, of the Club Trust Secured Obligations and, without duplication and
subject to the restrictions on cross-collateralization contained in the
Transaction Documents (including Section 2.12(d) of the Club Trust Credit
Agreement), Secured Obligations attributable to the Indians Club Trust, the
Indians Club Trust hereby assigns and pledges to the MLB Trust and hereby Grants
to the MLB Trust a security interest in and a right to setoff against (and only
against the above-described obligations of such Club Trust), and acknowledges
and agrees that the MLB Trust (and, with respect to rights of setoff, each of
the Banks under the MLB Credit Agreement) has and shall continue to have a
continuing security interest in and a right of setoff against, any and all
right, title and interest of the Indians Club Trust, whether now existing or
hereafter acquired or arising, in (all of which are herein called the "Club
Trust Collateral"):
(i) the Rights and Revenues transferred and assigned to the
Indians Club Trust by its related Participating Club pursuant to the
Transfer Agreement;
(ii) amounts on deposit from time to time in the Collection
Account and the Debt Service Account attributable to the Indians Club
Trust;
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(iii) the Club Trust Assigned Documents;
(iv) any and all other assets of the Indians Club Trust
(excluding amounts on deposit in the Indians Club Trust Distribution
Account); and
(v) all products and the proceeds of the foregoing items.
The Indians Club Trust acknowledges and agrees that, in
applying the law of any jurisdiction that has heretofore enacted or hereafter
enacts all or substantially all of the uniform revisions of Article 8 of the
Uniform Commercial Code, with new provisions added to Article 9 as contemplated
by such revision, all as approved in 1994 by the American Law Institute and the
National Conference of Commissioners on Uniform State Laws, the foregoing
definitions of Collateral and Pledged Collateral shall be deemed to include
"investment property", as applicable, as defined in such new provisions of
Article 9, it being the intent of the Indians Club Trust and the MLB Trust that
such property be included in the foregoing definition of Collateral, whether
prior to or after the effectiveness of such revision in any such jurisdiction.
(b) CONSENT TO ASSIGNMENT AND ENFORCEMENT. The Indians Club
Trust hereby acknowledges and consents to each of (i) the assignment to the
Administrative Agent pursuant to the MLB Pledge and Security Agreement of the
Grant of the MLB Trust's security interest hereunder in the Club Trust
Collateral and (ii) the delivery of any or all of the Club Trust Collateral to
the Administrative Agent. In connection with such assignment, the Indians Club
Trust acknowledges and agrees that the MLB Trust is the direct beneficiary of
certain rights and benefits hereunder and that, as the assignee pursuant to the
MLB Pledge and Security Agreement of the MLB Trust's rights hereunder, the
Administrative Agent is entitled to the benefits and protections of and may
enforce this Agreement.as if it were a party thereto.
3. GENERAL REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS. The Indians Club Trust hereby represents and warrants to, and
covenants and agrees with, the MLB Trust that:
(a) CLUB TRUST REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties as to the Rights and Revenues set forth below is
true and correct in all material respects as of the date hereof and as of the
date deemed made pursuant to the Club Trust Credit Agreement:
(i) MEMBERSHIP. The Indians Club Trust's related Participating
Club is a member in good standing of its League and Major League
Baseball.
(ii) COMPLIANCE. The Indians Club Trust's related
Participating Club is in compliance with all requirements imposed by
the Commissioner, its League or Major League Baseball, except where the
failure to do so would not materially
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adversely affect the Rights and Revenues transferred to the Indians
Club Trust pursuant to the Transfer Agreement and pledged to the MLB
Trust pursuant to this Agreement; the Indians Club Trust's related
Participating Club is in compliance with the terms of the Major League
Agreement, the Central Fund Agreement, its League Agreement, the MLB
Agreements and each of the National Media Contracts, except where the
failure to do so would not materially adversely affect the Rights and
Revenues transferred to the Indians Club Trust pursuant to the Transfer
Agreement and pledged to the MLB Trust pursuant to this Agreement.
(iii) BOUND BY AGREEMENTS. With respect to the Indians Club
Trust's related Participating Club, all the provisions of the
constitutive documents of its League and the Major League Agreement,
including any amendments from time to time, all Commissioner
resolutions and all resolutions of the Executive Council, and rules or
policies as the Executive Council or the Commissioner may issue from
time to time that are within the issuing party's jurisdiction, are,
unless the same by their terms are not applicable to such Participating
Club, binding and enforceable against such Participating Club, except
as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect affecting the enforcement of creditors' rights in
general and except as such enforceability may be limited by general
principles of equity (whether considered in a suit at law or in
equity).
(iv) NATIONAL MEDIA CONTRACTS. (A) To the best knowledge of
the Indians Club Trust, each National Media Contract is legally binding
and enforceable against the Obligor thereunder, in accordance with its
terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect affecting the enforcement of creditors'
rights in general and except as such enforceability may be limited by
general principles of equity (whether considered in a suit at law or in
equity) (B) the Indians Club Trust is the owner of a Pro Rata interest
in each National Media Contract and such Pro Rata interest is not
subject to any prior Lien (other than the Lien of this Agreement or the
MLB Pledge and Security Agreement); (C) to the best knowledge of the
Indians Club Trust, no Bankruptcy Event has occurred or is threatened
with respect to the Obligor under any material National Media Contract;
and (D) the Indians Club Trust is entitled to receive a Pro Rata
portion of the Revenues from National Media Contracts payable from time
to time.
(v) VALID TRANSFER. The transfer and assignment by the Indians
Club Trust's related Participating Club pursuant to the Transfer
Agreement constituted a true transfer, by capital contribution, of its
Rights and Revenues from such Participating Club to the Indians Club
Trust such that such Participating Club retained no interest in, or any
risk with respect to, such Rights and Revenues and such that the
beneficial interest in and title to its Rights and Revenues will not be
part of the debtor's estate in the event of the filing of a bankruptcy
petition by or
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against such Participating Club under any bankruptcy law. Immediately
prior to such transfer and assignment, such Participating Club had good
and marketable title to all its Rights and Revenues, free and clear of
all Liens (other than the Liens, if any, referred to on Schedule
3.02(b)(v) of the related Transfer Agreement), and, immediately upon
the transfer thereof, the Indians Club Trust had good and marketable
title to all such Rights and Revenues, free and clear of all Liens
(other than the Lien of this Agreement or the MLB Pledge and Security
Agreement or any Lien under any Transaction Document or the Liens, if
any, referred to in Schedule 3.02(b)(v) of the related Transfer
Agreement); and the transfer was perfected under the UCC.
(vi) LAWFUL ASSIGNMENT. None of the Participating Club's
Rights or Revenues is subject to the laws of any jurisdiction under
which the transfer and assignment of such Rights or Revenues under the
Transfer Agreement, the Club Trust Credit Agreement, the MLB Credit
Agreement, the MLB Pledge and Security Agreement or this Agreement was
or is unlawful, void or voidable.
(vii) ALL FILINGS MADE. All filings (including UCC filings)
necessary in any jurisdiction to give the Indians Club Trust a first
perfected ownership interest in the Rights and Revenues have been made.
(b) LOCATION OF OFFICES AND BUSINESS. As of the date hereof
(and, except as noted on Schedule A, for the four months immediately preceding
the date hereof), each of the Club Trust's, the MLB Trust's, the Commissioner's
and MLB Properties' chief executive office and chief place of business is as
shown on Schedule A and each of the Indians Club Trust, the MLB Trust, the
Commissioner and MLB Properties has no executive offices or places of business
other than those listed on Schedule A.
(c) PRIORITY. The Club Trust Collateral and every part thereof
is and will be free and clear of all liens, charges, excises, claims, security
interests, mortgages or other encumbrances (including, without limitation,
statutory liens) of every kind, nature and description, whether voluntary or
involuntary, on the use thereof, except for (i) the security Interest pursuant
to this Agreement, which interest pursuant to the MLB Pledge and Security
Agreement will be assigned to the Administrative Agent, (ii) the security
interest of the Administrative Agent, (iii) any lien, charge, excise, claim,
security interest, mortgage or other encumbrance and licenses permitted under
Section 5.02(b) of the Club Trust Credit Agreement (the items set forth in
clauses (i), (ii) and (iii) being, collectively, the "Permitted Liens") and (iv)
the Liens, if any, referred to in Schedule 3.02(b)(v) of the related Transfer
Agreement. The Indians Club Trust at the direction of the MLB Trust will warrant
and defend the Club Trust Collateral against any claims and demands (other than
the Permitted Liens) of all persons at any time claiming the same or any
interest in the Club Trust Collateral adverse to the MLB Trust, the
Administrative Agent or any Bank.
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(d) PAYMENT OF TAXES AND CHARGES. The Indians Club Trust will
pay promptly when due all taxes, assessments and governmental charges and levies
upon or against the Club Trust Collateral, in each case before the same become
delinquent and before penalties accrue thereon, unless and to the extent the
same are being contested in good faith by appropriate proceedings.
(e) PRESERVATION OF THE COLLATERAL. The Indians Club Trust
will not waste or destroy the Collateral or any part thereof and will not be
negligent in the care or use of any Collateral.
(f) DISPOSITION. The Indians Club Trust will not sell or
otherwise dispose of any portion of, or rights or interests in, the Club Trust
Collateral, except with the prior written consent of the MLB Trust, except for
(i) distributions to its beneficial owners and (ii) payments to the Club Trustee
pursuant to Article V and Article VIII of the Club Trust Agreement,
respectively.
(g) INSPECTION. The Indians Club Trust will allow, at all
times the MLB Trust, the Administrative Agent, the Agent Banks, any Bank or
their respective representatives free access to and right of inspection of the
Club Trust Collateral; PROVIDED, HOWEVER, that, prior to any Club Trust Event of
Default or event which, with notice, the lapse of time or both, would result in
a Club Trust Event of Default hereunder, any such access or inspection shall
only be allowed during each party's normal business hours, as appropriate.
(h) OTHER FILING; PERFECTION OF SECURITY INTEREST. The Indians
Club Trust represents and warrants that (except as may be set forth on Schedule
3.04(b)(v) of the related Transfer Agreement) no filings which may be required
to be recorded or filed in order to perfect a security interest (other than any
which may be recorded in connection with or as contemplated by the Transaction
Documents) covering any of the Club Trust Collateral are on file in any public
office. The Indians Club Trust represents that this Agreement creates a valid
security interest in the Club Trust Collateral securing payment and performance
of the Club Trust Secured Obligations and, without duplication and subject to
the restrictions on cross-collateralization contained in the Transaction
Documents (including Section 2.12(d) of the Club Trust Credit Agreement), the
Secured Obligations attributable to the Indians Club Trust and that all filings
and other actions necessary to perfect such security interest have been taken;
PROVIDED, HOWEVER, that with respect to perfection, no representation or
warranty is made with respect to Club Trust Collateral requiring possession
thereof to perfect a security interest therein. The Indians Club Trust agrees to
execute and deliver to each of the MLB Trust and the Administrative Agent such
further agreements and assignments or other instruments and to do all such other
things as either of them may reasonably deem necessary or appropriate to assure
to either of them the security interest hereunder or under the MLB Pledge and
Security Agreement, respectively, including such financing statement or
statements or amendments thereof or supplements thereto or other instruments as
either of them may from time to time
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reasonably require in order to comply with the UCC. The Indians Club Trust
hereby agrees that a carbon, photographic or other reproduction of this
Agreement or any such financing statement is sufficient for filing as a
financing statement by the MLB Trust or the Administrative Agent without notice
thereof to it or any Participating Club wherever the MLB Trust or the
Administrative Agent in its sole discretion desires to file the same. In the
event that for any reason the law of any jurisdiction other than New York and/or
Delaware becomes or is applicable to the Club Trust Collateral or any part
thereof, or to any of the Club Trust Secured Obligations or, without duplication
and subject to the restrictions on cross-collateralization contained in the
Transaction Documents (including Section 2.12(d) of the Club Trust Credit
Agreement), the Secured Obligations attributable to the Indians Club Trust
agrees to execute and deliver to each of the MLB Trust and the Administrative
Agent such instruments and to do all such other things as either of them in Its
sole discretion reasonably deems necessary or appropriate to preserve, protect
and enforce the ownership interest of the Indians Club Trust in the Club Trust
Collateral and the security interest of the MLB Trust and the Administrative
Agent therein under the law of such other jurisdiction. If any Club Trust
Collateral is in the possession or control of (x) any of the Indians Club
Trust's agents or (y) its related Participating Club and either the MLB Trust or
the Administrative Agent so requests, the Indians Club Trust agrees to, and
agrees to cause its related Participating Club to, notify such agents in writing
of the MLB Trust's and the Administrative Agent's security interest therein and,
upon the request of either of them, instruct them to hold all such Club Trust
Collateral for their account and subject to instructions. The Indians Club Trust
agrees to mark its books and records to subject its ownership interest in the
Club Trust Collateral (other than the Club Trust Note), as the same is
encumbered by the security interest of the MLB Trust and the Administrative
Agent.
(i) ADVANCES BY SECURED PARTIES. On failure of the Indians
Club Trust or the Commissioner or MLB Properties on behalf of the Indians Club
Trust to perform any of the covenants and agreements contained in the
Transaction Documents, the MLB Trust may, at its option, perform the same and in
so doing may expend such sums as the MLB Trust may reasonably deem advisable in
the performance thereof, including, without limitation, the payment of any
taxes, liens and encumbrances, expenditures made in defending against any
adverse claim and all other expenditures which the MLB Trust may be compelled to
make by operation of law or which the MLB Trust may make by agreement of
otherwise for the protection of the security hereof. All such sums and amounts
so expended shall be repayable by the Indians Club Trust immediately without
notice or demand, shall constitute additional Club Trust Secured Obligations and
shall bear interest from the date said amounts are expended at the rate per
annum provided in Section 2.06(c) Of the Club Trust Credit Agreement (such rate
per annum as so determined being hereinafter referred to as the "Default Rate").
No such performance of any covenant or agreement by the MLB Trust on behalf of
the Indians Club Trust, the Commissioner or MLB Properties, and no such advance
or expenditure therefor, shall relieve the Indians Club Trust of any default
under the terms of this Agreement. The MLB Trust, in making any Payment hereby
authorized, may do so according to any bill, statement or estimate
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procured from the appropriate public office or holder of the claim to be
discharged without inquiry into the accuracy of such bill, statement or estimate
or into the validity of any tax assessment, sale, forfeiture, tax lien, title or
claim. The MLB Trust, in performing any act hereunder, shall be the judge in its
reasonable discretion of whether the Indians Club Trust, Commissioner or MLB
Properties is required to perform the same under the terms of this Agreement or
any Transaction Document. Subject to Section 2.12 of the Club Trust Credit
Agreement, the Club Trust Credit Agreement Administrative Agent is authorized to
charge the collection Account and the Debt Service Account allocable to the
defaulting Club Trust for amounts paid or expended as described above pursuant
to Section 7 of the MLB Pledge and Security Agreement.
4. SPECIAL PROVISIONS REGARDING RIGHTS AND REVENUES: (a) CHIEF
EXECUTIVE OFFICE AND LOCATION OF COLLATERAL. The Indians Club Trust will not (i)
maintain a place of business at which any material portion of its assets or
operations is located or conducted or an executive office at a location other
than that specified on Schedule A without first providing to each of the MLB
trust and the Administrative Agent, 30 days' prior written notice of its intent
to do so; (ii) establish or maintain an executive office or place of business at
which any material portion of the Club Trust Collateral is located outside of
the United States of America or otherwise permit any material portion of the
Club Trust Collateral to be located outside of the United States of America
(except as the Administrative Agent shall prior to any such time expressly agree
in writing); or (iii) keep, maintain or permit any material portion of the Club
Trust Collateral to be kept at locations other than as shown on Schedule A
hereto without first providing to each of the MLB Trust and the Administrative
Agent 30 days' prior written notice.
(b) CHIEF EXECUTIVE OFFICE. The Indians Club Trust will keep
all its books and records relating to the Collateral (including the Rights and
Revenues) only at its chief executive office, as specified on Schedule A.
Further, the Indians Club Trust will promptly inform the MLB Trust and the
Administrative Agent of any change in the identity or location of any Rights
and/or Revenues which might require new filings or other action to assure
continued perfection of the interests granted hereby.
5. SPECIAL PROVISIONS REGARDING CERTAIN CLUB TRUST COLLATERAL,
PLEDGED COLLATERAL. (a) DELIVERY. The Indians Club Trust from time to time shall
deliver to the MLB Trust (who will deliver the same to the Administrative Agent
pursuant to the MLB Pledge and Security Agreement) any Club Trust Collateral
requested to be delivered by the MLB Trust or the Administrative Agent and, as
appropriate, such collateral shall be in suitable form for transfer by delivery,
or shall be accompanied by duly executed instruments of transfer or assignment
in blank, all in form and substance satisfactory to the MLB Trust and the
Administrative Agent.
(b) PLEDGED COLLATERAL OBLIGATIONS. Each of the MLB Trust and
the Administrative Agent shall have no duty as to the collection or protection
of the Pledged Collateral attributable to the Indians Club Trust or any income
therefrom or as to the
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preservation of any rights pertaining thereto, beyond the safe custody of any
thereof actually in its possession. To the extent permitted by law, the Indians
Club Trust releases the MLB Trust and the Administrative Agent from any claims,
causes of action and demands at any time arising out of or with respect to this
Agreement, the Pledged Collateral attributable to the Indians Club Trust and/or
any actions taken or omitted to be taken by either of them with respect thereto,
and each of the Indians Club Trust and its related participating Club through
the MLB Trust hereby agree to hold each of the MLB Trust and the Administrative
Agent harmless from and with respect to any and all such claims, causes of
action and demands other than those resulting from the gross negligence, willful
misconduct or unlawful conduct of the MLB Trust and the Administrative Agent.
6. SPECIAL PROVISIONS REGARDING CLUB TRUST ASSIGNED DOCUMENTS.
(a) INDIANS CLUB TRUST REMAINS OBLIGATED. The assignment and security interest
Granted to the MLB Trust in the Assigned Documents attributable to the Indians
Club Trust (including the Transfer Agreement, the Club Trust Note and the Club
Trust Credit Agreement) pursuant to Section 2 hereof shall not relieve the
Indians Club Trust from the performance of any term, covenant, condition or
agreement on the Indians Club Trust's part to be performed or observed under or
in respect of the Assigned Documents attributable to the Indians Club Trust or
from any liability to any Person under or in respect of the Assigned Documents
or impose any obligation on either of the MLB Trust or the Administrative Agent
to perform or observe any such term, covenant, condition or agreement on the
Indians Club Trust's part to be so performed or observed or impose any liability
on either of the MLB Trust or the Administrative Agent for any act or omission
on the part of the Indians Club Trust relative thereto or for any breach of any
representation or warranty on the part of the Indians Club Trust contained in
this Agreement or the Assigned Documents attributable to the Indians Club Trust
or made in connection herewith or therewith; and the Indians Club Trust hereby
agrees to indemnify and hold harmless each of the MLB Trust and the
Administrative Agent from and against any and all losses, liabilities (including
liabilities for penalties), claims, demands, actions, suits, judgments, costs
and expenses arising out of or resulting from the assignment and security
interest Granted pursuant to this Agreement by Virtue of any act or omission on
the part of the Indians Club Trust, including the costs, expenses and
disbursements (including reasonable attorneys' fees and expenses) incurred by
either of the MLB Trust or the Administrative Agent in enforcing this Agreement
and the obligations of any Person under or in respect of the Assigned Documents
attributable to the Indians Club Trust.
(b) AMENDMENT OF ASSIGNED DOCUMENTS; WAIVERS. Without
intending in any manner to derogate from the absolute nature of the assignment
Granted to the MLB Trust by Section 2 hereof or the rights of the MLB Trust
hereunder, the Indians Club Trust agrees that it will not, without the prior
written consent of the Administrative Agent, amend, modify, supplement,
terminate or surrender, or agree to any amendment, modification, supplement,
termination or surrender of, the Assigned
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Documents attributable to it or waive timely performance or observance by any
Person of such Person's obligations, or any default on the part of such Person,
under or in respect of the Assigned Documents. If any such amendment,
modification, supplement or waiver shall be so consented to by the
Administrative Agent, the Indians Club Trust agrees, promptly following a
request by the Administrative Agent to do so, to execute and deliver, in its own
name and at its own expense, such agreements, instruments, consents and other
documents as the Administrative Agent may deem necessary or appropriate in the
circumstances.
(c) NOTICE OF DEFAULT UNDER ASSIGNED DOCUMENTS. The Indians
Club Trust agrees at its own expense, to give each of the MLB Trust and the
Administrative Agent prompt written notice of each default on the part of any
Person in performing such prompt Person's obligations under or in respect of the
Assigned Documents attributable to the Indians Club Trust coming to the Indians
Club Trust's attention.
(d) CUSTODY OF DOCUMENTS. Simultaneously with the execution
and delivery of this Agreement, the Indians Club Trust is delivering to the MLB
Trust a counterpart of each Assigned Document attributable to it (which
documents the MLB Trust will in turn deliver to the Administrative Agent
pursuant to the MLB Pledge and Security Agreement), which at all times shall be
retained in the custody and possession of the MLB Trust or Administrative Agent
until the termination of this Agreement. In addition, the MLB Trustee shall
receive and retain (or deliver to the Administrative Agent pursuant to the MLB
Pledge and Security Agreement) a counterpart of any amendment, modification,
supplement or waiver made of or to any of such Assigned Documents and each other
related instrument, each of which counterparts shall be serially numbered.
7. SPECIAL PROVISIONS REGARDING COLLECTION ACCOUNT AND DEBT
SERVICE ACCOUNT. In addition to any other consent or agreement set forth herein,
the Indians Club Trust hereby consents to each of the provisions of Section 7 of
the MLB Pledge and Security Agreement with respect to each of the Collection
Account and the Debt Service Account, including the provisions with respect to
(i) the establishment of such accounts, (ii) the investment of amounts on
deposit in such accounts in Eligible Investments, (iii) the appointment of the
Administrative Agent as the attorney for the Indians Club Trust for the purpose
of making any withdrawal or ordering the transfer of funds on deposit in such
accounts pursuant to the terms of the MLB Pledge and Security Agreement and (iv)
the payment from amounts on deposit in such accounts of Club Trust Secured
Obligations and, without duplication and subject to the restrictions on
cross-collateralization contained in the Transaction Documents (including
Section 2.12(d) of the Club Trust Credit Agreement, Secured Obligations
attributable to such Indians Club Trust).
8. POWER OF ATTORNEY. In addition to any other powers of
attorney contained herein or in any other Transaction Documents, the Indians
Club Trust appoints the MLB Trust, its nominee or any other person whom the MLB
Trust may designate as its attorney-in-fact, with full power to endorse its name
on any checks, notes, acceptances, money orders, drafts or other forms of
payment or security that may come into the MLB Trust's possession, to sign its
name on claims, notices of assignment and on public records and to do all things
necessary to carry out this Agreement (including to effect the valid
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assignment of the Assigned Documents attributable to the Indians Club Trust to
the MLB Trust in accordance with the provisions hereof). To the extent permitted
by applicable law, the Indians Club Trust hereby ratifies and approves all acts
of any such attorney and agrees that neither the MLB Trust nor any such attorney
will be liable for any acts or omissions or for any error of judgment or mistake
of fact or law other than such party's gross negligence, willful misconduct or
unlawful misconduct. The foregoing power of attorney, being coupled with an
interest, is irrevocable until such time as this Agreement shall terminate. The
MLB Trust may file one or more financing statements disclosing its security
interest in any or all of the Club Trust Collateral without any or all of the
Club Trust Collateral with any of the Indians Club Trust's or the Participating
Clubs' signatures appearing thereon. In addition, the Indians Club Trust hereby
grants the Administrative Agent, its nominee or any other person whom it may
designate as attorney-in-fact a power of attorney (a) to execute any financing
statement, or amendments and supplements to financing statements, on behalf of
the Indians Club Trust without notice thereof to the Indians Club Trust, which
power of attorney is coupled with an interest and is irrevocable until such time
as this Agreement shall terminate and (b) to take any of the above-mentioned
actions that otherwise may be performed by the MLB Trust. To the extent
permitted by applicable law, the Indians Club Trust hereby ratifies and approves
all acts of the Administrative Agent and any such attorney and agrees that
neither the Administrative Agent nor any such attorney will be liable for any
acts or omissions nor for any error of judgment or mistake of fact or law other
than such party's gross negligence, willful misconduct or unlawful misconduct.
9. REMEDIES UPON CLUB TRUST EVENT OF DEFAULT. (a) GENERAL
REMEDIES. Subject to Section 9(c), upon the occurrence and during the
continuation of any Club Trust Event of Default the MLB Trust shall have, in
addition to all other rights provided herein or by law, the rights and remedies
of a secured party under the UCC (regardless of whether the UCC is the law of
the jurisdiction where the rights or remedies are asserted and regardless of
whether the UCC applies to the affected Club Trust Collateral or portion
thereto, and further the MLB Trust may with the prior consent of and shall at
the direction of the Administrative Agent (itself acting with the consent or at
the direction of all the Banks), without demand and without advertisement,
notice, hearing or process of law, all of which the Indians Club Trust (on its
own behalf and on behalf of its Participant Club) hereby waives, to the extent
permitted by law, at any time or times, sell and deliver Club Trust Collateral
held by or for it at public or private sale, for cash, upon credit or otherwise,
at such prices and upon such terms as the MLB Trust deems advisable, in its sole
discretion; provided that said disposition, complies with any and all mandatory
legal requirements. In addition to all other sums due the MLB Trust, the Indians
Club Trust shall pay the MLB Trust all reasonable costs and expenses incurred by
the MLB Trust, including reasonable attorneys' fees and court costs, in
obtaining or liquidating the Club Trust Collateral, in enforcing payment of the
Club Trust Secured Obligations and, without duplication and subject to the
restriction on cross-collateralization contained in the Transaction Documents
(including Section 2.12(d) of the Club Trust Credit Agreement), the Secured
Obligations attributable to such Club Trust or in the prosecution or defense of
any
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action or proceeding by or against the MLB Trust, the Administrative Agent, the
Agent Section or Banks, any Bank, the Club Trusts or the Participating Clubs
concerning any matter arising out of or connected with this Agreement, the Club
Trust Collateral or the Club Trust Secured Obligations, including, without
limitation, any of the foregoing arising in, arising under or related to a case
under the United States Bankruptcy Code. To the extent the rights of notice
cannot be legally waived hereunder, the Indians Club Trust agrees that any
requirement of reasonable notice shall be met if such notice is personally
served on or mailed, postage prepaid, to the Indians Club Trust in accordance
with Section 12(b) hereof at least 10 days before the time of sale or other
event giving rise to the requirement of such notice. The MLB Trust shall not be
obligated to make any sale or other disposition of the Club Trust Collateral
regardless of notice having been given. To the extent permitted by law, the MLB
Trust, the Administrative Agent or any Bank may be the purchaser at any such
sale. To the extent permitted by applicable law, the Indians Club Trust hereby
waives all its rights of redemption from any such sale. Subject to the
provisions of applicable law, the MLB Trust may postpone or cause the
postponement of the sale of all or any portion of the Club Trust Collateral by
announcement at the time and place of such sale, and such sale may, without
further notice, to the extent permitted by law, be made at the time and place to
which the sale was postponed or the MLB Trust may further postpone such sale by
announcement made at such time and place.
(b) NONEXCLUSIVE NATURE OF REMEDIES. Subject to Section 9(c),
failure by the MLB Trust to exercise any right, remedy or option under this
Agreement or any other Transaction Document or provided by law, or delay by the
MLB Trust in exercising the same, shall not operate as a waiver; no waiver
hereunder shall be effective unless it is in writing, signed by the party
against whom such waiver is sought to be enforced and then only to the extent
specifically stated, which in the case of the MLB Trust shall only be granted as
provided in Section 12(a) hereof. To the extent permitted by law, neither the
MLB Trust nor any party acting as attorney for the MLB Trust, shall be liable
hereunder for any acts or omissions or for any error of judgment or mistake of
fact or law other than such party's gross negligence, willful misconduct or
unlawful conduct hereunder. The rights and remedies of the MLB Trust under this
Agreement shall be cumulative and not exclusive of any other right or remedy
which the MLB Trust may have.
(c) SALE OF RIGHTS AND REMEDIES. Notwithstanding any other
provision of this Section 9 or any provision of the UCC which conflicts with
this Section 9(c), that portion of the Club Trust Collateral consisting of the
Indians Club Trust's Rights and Revenues shall be permitted to be sold following
a Club Trust Event of Default ONLY subject to the provisions of this Section
9(c). The Rights and Revenues of the Indians Club Trust may be sold only for a
period of time sufficient for the purchaser thereof to recover an amount equal
to the sum of (i) such Club Trust's Secured Obligations and, without duplication
and subject to the restrictions on cross-collateralization contained in the
Transaction Documents (including Section 2.12(d) of the Club Trust Credit
Agreement), the Secured obligations attributable to such Club Trust and (ii) a
per annum rate of return on the sum set forth in clause (i) equal to the Default
Rate. At the point in time in which the
12
<PAGE> 13
purchaser of such Rights and Revenues shall have received the amount to be paid
to it pursuant to the immediately preceding sentence, such Rights and Revenues
shall automatically revert to the Indians Club Trust. In connection with any
sale of such Rights and Revenues, the MLB Trust shall sell such Rights and
Revenues pursuant to an agreement, which among other things, shall (A) include a
provision consistent with this Section 9(c) and (B) contain a provision pursuant
to which the purchaser of such Rights and Revenues acknowledges and agrees that
its rights to receive payments from collections with respect to the Rights and
Revenues is subject to the provisions of Section 7(d) of the MLB Pledge and
Security Agreement (ie., the Commissioner shall be entitled to receive payments
with respect to a pro rata portion of Pension Contributions and Commissioner
Expenses (subject to the limitations set forth in Section 7(d) of the MLB Pledge
and Security Agreement) from such collections prior to any payments therefrom to
the purchaser of such Rights and Revenues).
(d) ADMINISTRATIVE AGENT ENFORCEMENT. In furtherance of the
provisions of Section 2(b), the Indians Club Trust acknowledges and agrees that,
pursuant to the provisions of the MLB Pledge and Security Agreement, the
Administrative Agent shall have the right to enforce and otherwise enjoy the
benefits of this Section 9 and each of provisions releasing the MLB Trust from
liability shall apply to the Administrative Agent and the Banks to the extent
that the same would exculpate the MLB Trust from liability; PROVIDED, HOWEVER,
that it is understood and agreed that the Administrative Agent shall not sell
the Club Trust Collateral or any portion thereof, unless it shall have obtained
the prior written consent of all the Banks to such sale or any such sale shall
be at the written direction of all the Banks.
10. APPLICATION OF PROCEEDS. The proceeds of the Club Trust
Collateral or a portion at any time received by the MLB Trust upon the
occurrence and during the continuation of any Club Trust Event of Default
hereunder shall, when received by the MLB Trust (or the Administrative Agent) in
cash or its equivalent, be deposited in the Collection Account and applied by
the Administrative Agent, subject to Section 2.12 of each of the Club Trust
Credit Agreement and the MLB Credit Agreement, in reduction of the Club Trust
Secured Obligations and, without duplication and subject to the restrictions on
cross- collateralization contained in the Transaction Documents (including
Section 2.12(d) of the Club Trust Credit Agreement), the Secured Obligations
attributable to such Club Trust as provided for in the Club Trust Credit
Agreement and the MLB Credit Agreement, respectively, and Section 7(c) of the
MLB Pledge and Security Agreement. The Indians Club Trust shall remain liable to
the MLB Trust for any deficiency. However, none of the related Participating
Club or the MLB Trust, as beneficial owners of the Indians Club Trust, shall
have any liability with respect to any deficiency; PROVIDED, HOWEVER, that the
foregoing provisions shall not relieve the Indians Club Trust's related
Participating Club of any of its obligations to it under the Transfer Agreement.
11. CONTINUING AGREEMENT. This Agreement shall be a continuing
agreement in every respect and shall remain in full force and effect until all
of the Club
13
<PAGE> 14
Trust Secured Obligations and, without duplication and subject to the
restrictions on cross- collateralization contained in the Transaction Documents
(including Section 2.12(d) of the Club Trust Credit Agreement), all Secured
Obligations attributable to such Club Trust arising prior to the time of the
satisfaction of such Club Trust Secured Obligations have been fully paid and
satisfied and the Indians Club Trust shall have caused the related participating
Club to deliver a letter, in form and substance satisfactory to the
Administrative Agent, on behalf of the Banks, that provides for the continuation
for so long as there are any outstanding Secured Obligations payable to the
Banks (other than any Secured Obligations which arise subsequent to the Final
Payment Date) of (i) such participating Club's obligations (x) pursuant to
Section 5.02, 5.03 and 5.04 of the Transfer Agreement and (y) to play baseball,
except for business interruptions during a labor dispute or where prevented by
force majeure and (ii) such Participating Club related Club Trust's obligations
pursuant to Section 2.12(d)(iii) of each of the MLB Credit Agreement and the
Club Trust Credit Agreement; PROVIDED, HOWEVER, that if any Participating Club's
Club Trust shall have terminated in accordance with the provisions of such Club
Trust's Club Trust Agreement, then such Participating Club shall also deliver to
the Administrative Agent, on behalf of the Banks and the Commissioner, a
transfer authorization, in form and substance satisfactory to the Administrative
Agent, authorizing the Commissioner, for as long as there are any outstanding
Secured Obligations payable to the Banks (other than any Secured Obligations
which arise subsequent to the Final Payment Date as in effect as of the date
hereof) to transfer from the Central Fund Custody Account to the Collection
Account when and if such Participating Club has any obligation to make any
payment to the Banks pursuant to Section 2.12(d)(iii) of the MLB Credit
Agreement and the Club Trust Credit Agreement amounts sufficient to satisfy such
obligations; PROVIDED, FURTHER, that if any Participating Club with a related
Club Trust which has fully paid and satisfied its Club Trust Secured Obligations
and which has complied with the provisions of this Section 11 sells all or
substantially all of its assets, stock or partnership interests while there are
any outstanding Secured Obligations payable to the Banks (other than any Secured
Obligations which arise subsequent to the Final Payment Date as in effect as of
the date hereof), then if (i) at least eight other Club Trusts and/or their
related Participating Clubs remain obligated to make payments to the Banks
pursuant to Section 2.12(d)(iii) of the MLB Credit Agreement and the Club Trust
Credit Agreement, such Participating Club and its related Club Trust shall be
released from the provisions of this Section 11 or (II) such Participating Club
posts a letter of credit for the benefit of the Administrative Agent on behalf
of the Banks in the amount of the product of (a) the highest Maximum Available
Amount as of such date, multiplied by (b) a fraction, the numerator of which is
the Maximum Available Amount that such Participating Club's related Club Trust
would have had as of such date and the denominator of which is the aggregate of
all Club Trust's Maximum Available Amounts as of such date, including such
Participating Club's related Club Trust's Maximum Available Amount, and with a
financial institution and in such form reasonably acceptable to the
Administrative Agent, the Banks agree to proceed solely against such Letter of
Credit to satisfy any obligations of such Participating Club and its related
Club Trust under Section 2.12(d)(iii) of the MLB Credit Agreement and Club Trust
Credit Agreement. Upon such termination of this Agreement, the MLB Trust shall,
upon the
14
<PAGE> 15
request and at the expense of the Indians Club Trust, forthwith release all its
Liens and security interests hereunder. Notwithstanding the foregoing, all
releases and indemnities provided hereunder shall survive termination of this
Agreement.
12. MISCELLANEOUS. (a) This Agreement and the provisions
hereof may be waived, amended, modified, changed, discharged or terminated only
by an instrument in writing signed by the MLB Trust and the Indians Club Trust,
which in the case of the MLB Trust shall only he provided at the direction of
the Administrative Agent. This Agreement shall create a continuing security
interest in the Club Trust Collateral and shall be binding upon the MLB Trust
and Indians Club Trusts and their successors and assigns; PROVIDED, HOWEVER,
that none of the Indians Club Trust or the MLB Trust may assign its rights or
delegate its duties hereunder without the Administrative Agent's prior written
consent. To the extent permitted by law, the Indians Club Trust (on its own
behalf and its Participating Club through the MLB Trust) hereby releases each of
the MLB Trust and the Administrative Agent from any liability for any act or
omission relating to the Club Trust Collateral or this Agreement (including
actions by the Administrative Agent as attorney in connection with purchasing
Eligible Investments pursuant to Sections 7(b) of the MLB Pledge and Security
Agreement), except for any liability arising from such party's gross negligence,
willful misconduct or unlawful conduct.
(b) All communications provided for herein shall be in
writing, except as otherwise specifically provided for hereinabove, and shall be
given in accordance with Section 8.02 of the Club Trust Credit Agreement, if to
the MLB Trust, at Wilmington Trust Company, 1100 North Market Street,
Wilmington, Delaware 19890, Attention: Corporate Trust Administration (facsimile
number (302) 651-8882); with copies to (a) Administrative Agent, at Fleet
National Bank, One Federal Street, Boston, Massachusetts 02211, Attention: Keith
J. Collar, (facsimile number (617) 346-0590 (b) Choate, Hall & Stewart, Exchange
Place, 53 State Street, Boston, Massachusetts 02109, Attention: Lyman G.
Bullard, Jr., Esq. (facsimile number (617) 248-4000, (c) the Commissioner, at
The Baseball Office of the Commissioner, 350 Park Avenue, New York, N.Y. 10022,
Attention: Jeffrey White (facsimile number (212) 888-8632), (d) Paul, Weiss,
Rifkind, Wharton & Garrison, 1285 Avenue of the Americas, New York, N.Y. 10019,
Attention: Matthew Nimetz, Esq. (facsimile number (212) 373-2042); and if to the
Indians Club Trust, at Wilmington Trust Company, 1100 North Market Street,
Wilmington, Delaware 19890, Attention: Corporate Trust Administration (facsimile
number (302 651-1576); with copies to (a) Administrative Agent, at Fleet
National Bank, One Federal Street, Boston, Massachusetts 0221 1, Attention:
Keith J. Collar, (facsimile number (617) 346-0590 (b) Choate, Hall & Stewart,
Exchange Place, 53 State Street, Boston, Massachusetts 02109, Attention: Lyman
G. Bullard, Jr., Esq. (facsimile number (617) 248- 4000, (c) the Commissioner,
at the Baseball Office of the Commissioner, 350 Park Avenue, New York, N.Y.
10022, Attention: Jeffrey White (facsimile number (212) 888-8632), and (f) Paul,
Weiss, Rifkind, Wharton & Garrison, 1285 Avenue of the Americas, New York, N.Y.
10019, Attention: Matthew Nimetz, Esq. (facsimile number (212) 373-2042).
15
<PAGE> 16
Notwithstanding any right that the Administrative Agent may
have to enforce this Agreement pursuant to the terms hereof or the MLB Pledge
and Security Agreement, no Bank shall have the right to institute any suit,
action or proceeding in equity or at law for the foreclosure of this Agreement,
for the execution of any trust or power hereof, for the appointment of a
receiver or for the enforcement of any other remedy under or upon this
Agreement; it being understood and intended that no one or more of the Banks
shall have any right in any manner whatsoever to affect, disturb or prejudice
any lien, security interest, assignment, pledge or other encumbrance created
pursuant to this Agreement by its or their action or to enforce any right
hereunder and that all proceedings at law or in equity shall be instituted and
maintained by the Administrative Agent in the manner provided for herein and in
the MLB Pledge and Security Agreement and for the ratable benefit of the Banks.
(d) In the event that any provision hereof shall be deemed to
be invalid by reason of the operation of any law or by reason of the
interpretation placed thereon by any court, this Agreement shall be construed as
not containing such provision with respect to any jurisdiction where such law or
interpretation is operative, and the invalidity of such provision shall not
affect the validity of any remaining provisions hereof, and any and all other
provisions hereof which are otherwise lawful and valid shall remain in full
force and effect.
(e) THIS AGREEMENT AND ALL MATTERS RELATING HERETO SHALL,
EXCEPT TO THE EXTENT OTHERWISE REQUIRED BY APPLICABLE LAW, BE GOVERNED BY AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES. THE INDIANS CLUB TRUST HEREBY
SUBMITS TO THE EXTENT EFFECTIVE UNDER APPLICABLE LAW TO THE JURISDICTION AND
VENUE OF THE STATE AND FEDERAL COURTS OF NEW YORK AND AGREES THAT THE MLB TRUST
MAY, AT ITS OPTION, ENFORCE ITS RIGHTS HEREUNDER IN SUCH COURTS. TO THE EXTENT
PERMITTED BY APPLICABLE LAW, THE INDIANS CLUB TRUST HEREBY IRREVOCABLY WAIVES
THE DEFENSE OF AN INCONVENIENT FORUM TO MAINTENANCE OF ANY ACTION OR PROCEEDING
BY THE MLB TRUST IN SUCH COURTS. THE INDIANS CLUB TRUST HEREBY IRREVOCABLY
WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREBY.
(f) The headings in this instrument are for convenience of
reference only and shall not limit or otherwise affect the meaning of any
provision hereof.
(g) This Agreement may be executed in any number of
counterparts and by different parties hereto on separate counterparts, each
constituting an original, but all constituting together one and the same
instrument.
16
<PAGE> 17
(h) Except as to the Commissioner and Administrative Agent, on
behalf of the Banks, no third-party beneficiary rights are intended or conferred
hereunder.
(i) All rights and remedies of the MLB Trust or the
Administrative Agent hereunder are subject to such limitations as may be imposed
by applicable law.
13. LIMITATION OF LIABILITY. It is expressly understood and agreed by
the parties hereto that (a) this Agreement is executed and delivered by
Wilmington Trust Company, not individually or personally but solely as trustee
of the MLB Trust under the MLB Trust Agreement and solely as trustee of the
Indians Club Trust under its Club Trust Agreement, in the exercise of the powers
and authority conferred and vested in it, (b) each of the representations,
undertakings and agreements herein made on the part of the MLB Trust or Indians
Club Trust, as the case may be, is made and intended not as personal
representations, undertakings and agreements by Wilmington Trust Company but is
made and intended for the purpose for binding only the MLB Trust or the Indians
Club Trust, as the case may be, (c) except as Wilmington Trust Company shall
otherwise expressly agree, nothing herein contained shall be construed as
creating any liability on Wilmington Trust Company, individually or personally,
to perform any covenant either expressed or implied contained herein, all such
liability, if any, being expressly waived by the Facilitating Agent, the Agent
Banks, the Administrative Agent and the Banks and by any Person claiming by,
through or under any of them and (d) under no circumstances shall Wilmington
Trust Company be personally liable for the payment of any indebtedness or
expense of the MLB Trust or Indians Club Trust, as the case may be, or be liable
for the breach or failure of any obligation, representation, warranty or
covenant made or undertaken by the MLB Trust, as the case may be, under this
Agreement or the other Transaction Documents.
[Signature Pages Follow]
17
<PAGE> 18
SIGNATURE PAGE FOR CLUB TRUST PLEDGE AND SECURITY AGREEMENT
INDIANS CLUB TRUST
IN WITNESS WHEREOF, each of the MLB Trust and the Indians Club
Trust and the Administrative Agent has caused this Agreement to be duly executed
as of the date first above written.
INDIANS CLUB TRUST,
BY: WILMINGTON TRUST COMPANY, not
in its individual capacity but solely as Club
Trustee,
By: /s/ David A. Vanaskey, Jr.
---------------------------------
Name: David A. Vanaskey, Jr.
Title: Senior Financial Services Officer
MAJOR LEAGUE BASEBALL CLUB TRUST,
BY: WILMINGTON TRUST COMPANY, not
in its individual capacity but solely as
MLB Trustee,
By: /s/ David A. Vanaskey, Jr.
---------------------------------
Name: David A. Vanaskey, Jr.
Title: Senior Financial Services Officer
FLEET NATIONAL BANK,
as Administrative Agent for the Banks,
By: /s/ Keith J. Collar
---------------------------------
Keith J. Collar
Vice President
<PAGE> 1
Exhibit 10.10
TRANSFER AGREEMENT
TRANSFER AGREEMENT dated as of May 22, 1992, between
Cleveland Indians Baseball Company Limited Partnership, an
Ohio limited partnership (the "Transferor"), and Indians Club
Trust, a Delaware
business trust (the "Transferee").
WHEREAS in the regular course of its business, the Transferor
has entered, and will in the future enter, into the National Media Contracts
through the commissioner, as agent, and licensing contracts through MLB
Properties, as agent, and is also a party to the League Agreement, the Major
League Agreement and the Central Fund Agreement, which agreements give rise to
certain Rights and Revenues; and
WHEREAS the Transferor and the Transferee wish to set forth
the terms pursuant to which the Rights and the Revenues belonging to the
Transferor are to be transferred by the Transferor to the Transferee, which
transfer will constitute a contribution of capital to the Transferee pursuant to
the Club Trust Agreement; and
WHEREAS the Commissioner wishes to facilitate the transactions
contemplated hereby and by the Transaction Documents; and
WHEREAS the MLB Trust is assuming the obligation of the
Transferor to pay Commissioner Expenses; and
WHEREAS the Transferee intends to borrow money on a secured
basis from the MLB Trust by pledging all the Club Trust Estate (with the
exception of funds on deposit from time to time in the Distribution Account)
pursuant to the Club Trust Credit Facility and the Club Trust Pledge and
Security Agreement.
<PAGE> 2
TRANSFER AGREEMENT 2
NOW, THEREFORE, in consideration of the foregoing, other good
and valuable consideration and the Mutual terms and covenants contained herein,
the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
-----------
SECTION 1.01. CAPITALIZED TERMS. Unless other wise defined in
this Agreement, capitalized terms shall have the meanings set forth in Annex A.
In addition, the interpretive guidelines set forth in Annex A shall be
applicable to this Agreement.
ARTICLE II
TRANSFER OF THE RIGHTS AND REVENUES
-----------------------------------
SECTION 2.01. TRANSFER OF THE RIGHTS AND REVENUES. As a
contribution of capital pursuant to the Club Trust Agreement, the Transferor
hereby agrees, pursuant to the Assignment, to transfer, assign, set over and
otherwise convey to the Transferee, without recourse (except for obligations
specifically set forth herein), all its Rights and Revenues how existing and
hereafter created and all proceeds of the foregoing. The foregoing transfer,
assignment, set-over and conveyance will not constitute, and is not intended to
result in, the creation or assumption by the Transferee of any obligations of
the Transferor or any other Person in connection with the Rights and Revenues,
including any obligations to the Obligors.
The Commissioner, to the extent that it Could be deemed to own
the Rights and Revenues purported to be conveyed pursuant to this Agreement
either as agent or on its own behalf, hereby transfers, assigns, sets over and
otherwise conveys to the Transferee any such Rights and Revenues now existing or
hereafter created.
It is understood and agreed that the Rights do not include the
rights of the Transferor to participate in any votes and decisions relating to
or regarding changes to, the enforcement of, waiver and replacements to any
agreement giving rise to the Rights, including the Major League Agreements, the
National Media Contracts and/or the MLB Properties licensing contracts.
<PAGE> 3
TRANSFER AGREEMENT 3
SECTION 2.02. THE CLOSING. The transfer of the Rights and
Revenues shall take place at a closing (the "Closing") at the offices of Paul,
Weiss, Rifkind, Wharton & Garrison, 1285 Avenue of the Americas, New York, N.Y.
10019-6064 on the Closing Date, simultaneously with the closings under the Club
Trust Agreement and each of the other Transaction Documents.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
------------------------------
SECTION 3.01. REPRESENTATIONS AND WARRANTIES OF THE
TRANSFEREE. The Transferee hereby represents and warrants to the Transferor as
of the Closing Date:
(a) ORGANIZATION AND GOOD STANDING. The Transferee has been
duly organized under the Business Trust statute and is validly existing as a
business trust in good standing under the laws of the State of Delaware, with
the trust power and authority to own its properties and to do such activities
necessary with respect to such properties as are currently owned and such
activities as are presently conducted, and had at all relevant times, and has,
the power, authority and legal right to acquire and own the Rights and the
Revenues.
(b) POWER AND AUTHORITY. The Transferee has the trust power
and authority to execute and deliver this Agreement and to carry out its terms
and the execution, delivery and performance of this Agreement has been duly
authorized by the Transferee by all necessary trust action.
(c) APPROVALS. The Transferee has obtained all necessary
licenses and approvals in all jurisdictions in which the ownership or lease of
property or the conduct of its business shall require such qualifications.
(d) NO VIOLATION. The consummation of the transactions
contemplated by this Agreement and the fulfillment of the terms hereof do not
conflict with, result in any breach of any of the terms and provisions of, nor
constitute (with or without notice or lapse of time) a default under, the Club
Trust Agreement, or any indenture, agreement or other instrument to which the
Transferee is a party or by which it is bound; nor result in the creation or
imposition of any Lien upon any of its properties pursuant to the terms
<PAGE> 4
TRANSFER AGREEMENT 4
of any such indenture, agreement or other instrument (other than any Liens
created pursuant to the Transaction Documents); nor violate any law or, to the
best of the Transferee's knowledge, any order, rule or regulation applicable to
the Transferee of any court or of any Federal or state regulatory body,
administrative agency or other governmental instrumentality having jurisdiction
over the Transferee or its properties.
(e) NO PROCEEDINGS. There are no proceedings or investigations
pending or, to the Transferee's best knowledge, threatened, before any court,
regulatory body, administrative agency or other governmental instrumentality
having jurisdiction over the Transferee or its properties: (i) asserting the
invalidity of this Agreement, (ii) seeking to prevent the consummation of any of
the transactions contemplated by this Agreement or (iii) seeking any
determination or ruling that might materially and adversely affect the
performance by the Transferee of its obligations under, or the validity or
enforceability of, this Agreement.
SECTION 3.02. REPRESENTATIONS AND WARRANTIES OF THE
TRANSFEROR. (a) The Transferor hereby represents and warrants to the Transferee
as of the Closing Date:
(i) ORGANIZATION AND GOOD STANDING. The Transferor is a duly
organized and validly existing limited partnership and is in good
standing under the laws of the jurisdiction of its organization with
the limited partnership power and authority to own its properties and
to conduct its business as such properties are currently owned and such
business is presently conducted.
(ii) DUE QUALIFICATION. The Transferor has obtained all
necessary licenses and approvals in all jurisdictions in which the
ownership or lease of property or the conduct of its business shall
require such qualifications and is duly qualified to do business as a
foreign limited partnership in good standing in all such jurisdictions
except where the failure to so qualify would not have a material
adverse effect on the Rights and Revenues.
(iii) DUE AUTHORIZATION. The Transferor has the requisite
limited partnership power and authority to execute and deliver this
Agreement and to carry out its terms; the Transferor has full power and
authority to
<PAGE> 5
TRANSFER AGREEMENT 5
transfer and assign the property to be transferred and assigned to the
Transferee and the Transferor shall have duly authorized such transfer
and assignment to the Transferee by all necessary corporate or
partnership actions, as the case may be; and the execution, delivery
and performance of this Agreement has been duly authorized by the
Transferor by all necessary corporate or partnership action, as the
case may be.
(iv) NO CONFLICT OR VIOLATION. The consummation of the
transactions contemplated by this Agreement and the Transaction
Documents and the fulfillment of the terms hereof do not conflict with,
result in any breach of any of the terms and provisions of, or
constitute (with or without notice or lapse of time) a default under,
the constitutive documents of the Transferor, or any material
indenture, agreement or other instrument to which the Transferor is a
party or by which it or any of its properties are bound (including the
League Agreement and the major League Agreement); nor result in the
creation or imposition of any Lien upon any of its properties pursuant
to the terms of any such indenture, agreement or other instrument
(other than pursuant to the Transaction Documents); nor violate any law
or, to the best of the Transferor's knowledge, any order, rule or
regulation applicable to the Transferor of any court or of any Federal
or state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Transferor or its
properties.
(v) NO PROCEEDINGS. There are no proceedings or investigations
pending or, to the Transferor's best knowledge, threatened, before any
court, regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Transferor or its
properties: (i) asserting the invalidity of this Agreement or any other
of the Transaction Documents, (ii) seeking to prevent the consummation
of any of the transactions contemplated by this Agreement or any other
of the Transaction Documents or (iii) seeking any determination or
ruling that might materially and adversely affect the Rights and
Revenues or the performance by the Transferor of its obligations under,
or the validity or enforceability of, this Agreement or any other of
the Transaction Documents.
<PAGE> 6
TRANSFER AGREEMENT 6
(vi) ALL CONSENTS REQUIRED. All appraisals, authorizations,
consents, orders, approvals or other actions of any Person (including
the commissioner) or of any governmental body or official required in
connection with the execution and delivery of the Transaction Documents
to which the Transferor is a party and the performance of the
transactions contemplated by such Transaction Documents, have been
obtained.
(vii) ENFORCEABILITY. This Agreement constitutes a legal,
valid and binding obligation of the Transferor enforceable against the
Transferor in accordance with its terms, except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect affecting
the enforcement of creditors' rights in general and except as such
enforceability may be limited by general principles of equity (whether
considered in a suit at law or in equity).
(viii) SOLVENCY. The Transferor is not entering into this
Agreement with the actual intent to hinder, delay or defraud its
current or future creditors, nor does the Transferor intend to or
believe that it will incur, as a result of entering into this
Agreement, debts beyond its ability to repay. The Transferor is not as
of the date of this Agreement "insolvent" as that term is defined in 11
U.S.C. ss. 101(32) or under the fraudulent conveyance laws of the State
of Ohio, nor will the consummation of the transactions contemplated by
this Agreement render the Transferor insolvent (giving effect to the
fair valuation of its assets) or result in the Transferor having
unreasonably small capital for the conduct of its business.
(ix) FINANCIAL STATEMENTS. The financial statements furnished
by or on behalf of the Transferor to the commissioner pursuant to the
Commissioner Letter present fairly (and all future financial statements
when delivered will present fairly), in all material respects, the
financial condition and the results of operations of the Transferor as
of the date thereof in accordance with generally accepted accounting
principles. There have been no material adverse changes in the
financial condition of the Transferor subsequent to the date of the
most recent financial statements and prior to the Closing Date. All
financial statements
<PAGE> 7
TRANSFER AGREEMENT 7
prepared by the Transferor after the date of this Agreement shall
clearly indicate that the Rights and Revenues have been transferred to
the Club Trust.
(x) BENEFIT PLANS. (A) Schedule 3.02(a)(x) sets forth a list
and brief description of all "employee pension benefit plans" (as
defined in Section 3(2) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA")), exclusive of any such plans not subject
to ERISA Section 302 and any multiemployer plans maintained, or
contributed to, by the Transferor for the benefit of any officers or
employees of the Transferor (sometimes referred to herein, exclusive of
any multiemployer plan, as the "Pension Plans").
(B) Except as set forth on Schedule 3.02(a)(x), there are no
termination proceedings, suits or other proceedings against or
involving any Pension Plan that could give rise to any material
liability to the Transferor.
(C) Except as set forth on Schedule 3.02(a)(x), (x) all
material contributions to the Pension Plans that have been required to
be made in accordance with the Pension Plans and Section 302 of ERISA
or Section 412 of the Code, have been timely made, (y) no Pension Plan
has applied for or received a waiver of the minimum funding standards
imposed by Section 412 of the Code and (z) no Pension Plan has an
"accumulated funding deficiency" within the meaning of Section 412(a)
of the Code as of the most recent plan year.
(D) Except as set forth on Schedule 3.02(a)(x), none of the
Pension Plans has been terminated in a "distress termination" (as
defined in Section 4041(c) of ERISA) nor have there been any
"reportable events" (as defined in Section 4043 of ERISA and the
regulations thereunder) within the last two years with respect to any
Pension Plan the assets of which, as of the most recent actuarial
report, were less than 100% of the Plan's present value of accrued
benefits (as described in such report).
(E) No Pension Plan subject to Title IV of ERISA (including
for the purposes of this paragraph (E) and the following paragraph (F)
any Pension Plan maintained
<PAGE> 8
TRANSFER AGREEMENT 8
or contributed to by any subsidiary or any other affiliate of the
Transferor) has incurred any material liability to the Pension Benefit
Guaranty Corporation other than for the payment of premiums, all of
which have been paid when due.
(F) As of the most recent valuation date for each Pension Plan
that is a defined benefit pension plan, the present value of the
current liabilities (as defined in Section 412(l)(7) of the Code and as
computed by the actuaries for such Pension Plan using the actuarial
assumptions in effect for such purposes as reflected in the most recent
actuarial report or valuation for such Pension Plan) of all
participants and former participants in such Pension Plan did not
exceed the fair market value of its assets.
(G) Except as set forth on Schedule 3.02(a)(X), the Transferor
has not been required to contribute any material amount to any
"multiemployer plan" (as defined in Section 4001(a)(3) of ERISA), other
than the Major League Baseball Players Pension Plan, or incurred any
material withdrawal liability, within the meaning of Section 4201 of
ERISA, which liability has not either been fully paid as of the date
hereof or reflected on the Transferor's books, or announced an
intention to withdraw, but not yet completed such withdrawal, from any
multiemployer plan which withdrawal could give rise to a material
liability. If the Transferor were to make a complete withdrawal from
each such multiemployer plan, other than the Major League Baseball
Players Pension Plan, within the meaning of Section 4203 of ERISA, the
withdrawal liability of the Transferor would not be material.
(b) The Transferor makes the following representations and
warranties as to its Rights and Revenues on which the Transferee relies in
accepting such Rights and Revenues. Such representations and warranties are made
as of the execution and delivery of this Agreement, but shall survive the
transfer and assignment of such Rights and Revenues to the Transferee and the
subsequent assignment and transfer of such Rights and Revenues pursuant to the
Club Trust Pledge and Security Agreement and the MLB Pledge and Security
Agreement:
(i) MEMBERSHIP. The Transferor is a member in good. standing
of its League and Major League Baseball.
<PAGE> 9
TRANSFER AGREEMENT 9
(ii) COMPLIANCE. Compliance with all requirements imposed by
the Commissioner, its League or Major League Baseball, except where the
failure to do so would not materially adversely affect the Rights and
Revenues to be transferred pursuant to this Agreement; the Transferor
is in compliance with the terms of the Major League Agreement, the
Central Fund Agreement, its League Agreement, the MLBP Agreements and
each of the National Media Contracts, except where the failure to do so
would not materially adversely affect the Rights and Revenues to be
transferred pursuant to this Agreement.
(iii) BOUND BY AGREEMENTS. All the provisions of the
constitutive documents of its League and the Major League Agreement,
including any amendments from time to time, all Commissioner
resolutions and all resolutions of the Executive Council, and rules or
policies as the Executive Council or the Commissioner may issue from
time to time that are within the issuing party's jurisdiction and that
relate to the Rights and Revenues, are, unless the same by their terms
are not applicable to the Transferor, binding and enforceable against
the Transferor, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect affecting the enforcement of
creditors' rights in general and except as such enforceability may be
limited by general principles of equity (whether considered in a suit
at law or in equity).
(iv) NATIONAL MEDIA CONTRACTS. (A) To the best knowledge of
the Transferor, each National Media Contract is legally binding and
enforceable against the Obligor thereunder; (B) the Transferor, along
with the other Major League Clubs, is the owner of an undivided Pro
Rata interest in each National Media contract and such Pro Rata
interest is not subject to any prior Lien; (C) to the best knowledge of
the Transferor, no Bankruptcy Event has occurred or is threatened with
respect to the Obligor under any National Media Contract; and (D) the
Transferor is entitled to receive a Pro Rata portion of the Revenues
from National Media Contracts payable from time to time.
(v) VALID TRANSFER. The transfer and assignment herein
contemplated constitutes a true
<PAGE> 10
TRANSFER AGREEMENT 10
transfer, by capital contribution, Of its Rights and Revenues from the
Transferor to the Transferee such that the Transferor retains no
interest in, or any risk with respect to, such Rights and Revenues and
such that the beneficial interest in and title to its Rights and
Revenues not be part of the debtor's estate in the event of the filing
of a bankruptcy petition by or against the Transferor under any
bankruptcy law. Other than as set forth on Schedule 3.02(b)(v),
immediately prior to the transfer and assignment herein contemplated,
the Transferor had good and marketable title to all its Rights and
Revenues free and clear of all Liens and, immediately upon the transfer
thereof, the Transferee shall have good and marketable title to all
such Rights and Revenues, free and clear of all Liens (other than Liens
pursuant to the Transaction Documents); and the transfer has been
perfected under the UCC.
(vi) LAWFUL ASSIGNMENT. None of the Transferor's Rights or
Revenues is subject to the laws of any jurisdiction under which the
transfer and assignment of such Rights or Revenues under this
Agreement, the Club Trust Credit Facility, the MLB Credit Agreement,
the MLB Pledge and Security Agreement or the Club Trust Pledge and
Security Agreement is unlawful, void or voidable.
(vii) ALL FILINGS MADE. All filings (including UCC filings)
necessary in any Jurisdiction to give the Transferee a first perfected
ownership interest in the Transferor's Rights and Revenues have been
made.
ARTICLE IV
CONDITIONS
----------
SECTION 4.01. CONDITIONS TO OBLIGATION OF THE TRANSFEREE. The
obligation of the Transferee to accept the Rights and Revenues of the Transferor
is subject to the satisfaction of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE. The representations
and warranties of the Transferor set forth in Section 3.02 shall be true and
correct in all material respects on the Closing Date and the Transferor shall
have
<PAGE> 11
TRANSFER AGREEMENT 11
performed all obligations to be performed by it hereunder on or prior to the
Closing Date.
(b) DOCUMENTS TO BE DELIVERED BY THE TRANSFEROR AT THE
CLOSING.
(i) THE ASSIGNMENT. At the Closing, the Transferor will
execute and deliver an Assignment in the form of Exhibit A hereto.
(ii) EVIDENCE OF UCC FILING. On or prior to the Closing Date,
the Transferor shall deliver and shall cause the Commissioner to
deliver, at its own expense, an executed UCC-1 financing statement in
each jurisdiction in which required by applicable law, executed by the
Transferor (or, as necessary, the Commissioner), as seller and debtor,
and naming the Transferee, as purchaser and secured party, describing
the Rights and Revenues as collateral, meeting the requirements of the
laws of each such jurisdiction and in such manner as is necessary to
perfect the transfer, assignment and conveyance of such Rights and
Revenues to the Transferee.
(iii) DUE AUTHORIZATION AND GOOD STANDING. On or prior to the
Closing Date, the Administrative Agent, on behalf of the Transferee,
shall have received from the Transferor, as appropriate, (a) corporate,
partnership or other authorizing resolutions, approving and adopting
the Transfer Agreement and authorizing the execution and delivery
thereof, in form and substance satisfactory to the Administrative
Agent, (b) the charter documents and by-laws or the agreement or other
formative documents of the Transferor and (c) certificates of good
standing for the Transferor from the jurisdiction of the Transferor's
organization and each other jurisdiction where the failure of the
Transferor to be qualified and/or in good standing could have a
material adverse effect- on the Rights and Revenues.
(iv) LEGAL OPINIONS. On the Closing Date, the Administrative
Agent, on behalf of the Transferee, shall have received (a) the legal
opinion of counsel to the Transferor, in substantially the form
attached hereto as Exhibit B, (b) the legal opinion of the Counsel to
the Club Trust and the MLB Trust in substantially the form attached
hereto as Exhibit C and (c) the legal opinion of Counsel to the
Transferee and
<PAGE> 12
TRANSFER AGREEMENT 12
the Commissioner in substantially the form attached hereto as Exhibit
D.
(v) OFFICERS CERTIFICATE. The Administrative Agent shall have
received a certificate in the form attached hereto as Exhibit E dated
the Closing Date of an authorized officer or partner of the Transferor
in which such officer or partner shall state that, to the best of their
knowledge after reasonable investigation, the representations and
warranties of the Transferor contained herein and in the Club Trust
Agreement are true and correct, and that the Transferor has complied
with all agreements and satisfied all conditions on its part to be
performed or satisfied under the Transaction Documents on or prior to
the Closing Date.
(vi) OTHER DOCUMENTS. Such other documents as the Transferee
may reasonably request.
(c) OTHER TRANSACTIONS. The transactions contemplated by the
Transaction Documents to be consummated on the Closing Date, shall be
consummated on such date.
SECTION 4.02. CONDITIONS TO OBLIGATION OF THE TRANSFEROR;
REPRESENTATIONS AND WARRANTIES TRUE. The obligation of the Transferor to
transfer its Rights and Revenues to the Transferee is subject to the
satisfaction of the condition that the representations and warranties of the
Transferee hereunder shall be true and correct in all material respects on the
Closing Date and the Transferee shall have performed all obligations to be
performed by it hereunder on or prior to the Closing Date.
ARTICLE V
COVENANTS OF THE TRANSFEROR
---------------------------
SECTION 5.01. PERFORMANCE OF OBLIGATIONS; CONDUCT OF BUSINESS.
The Transferor agrees to perform all its obligations necessary to maintain the
Rights and create the Revenues. Without limiting the generality of the
foregoing, the Transferor agrees (a) to conduct its business in a manner
consistent with past practice to the extent that failure to do so would have an
adverse effect on the Rights and Revenues, (b) to continue to play baseball,
except for business interruptions during a labor dispute or where prevented by
force majeure and to perform all its oblig-
<PAGE> 13
TRANSFER AGREEMENT 13
ations under the League Agreement, the Major League Agreement, the Central Fund
Agreement, the MLB Agreement and the National Media Contracts in all material
respects, (c) to use its best efforts to preserve intact its business
organization. The Transferor will promptly notify the Administrative Agent on
behalf of the Transferee of any change in the financial condition, results of
operations, properties or prospects of Transferor's business which could have a
material adverse effect on the Rights or the Revenues.
SECTION 5.02. FUTURE NATIONAL MEDIA CONTRACTS AND SUPERSTATION
AGREEMENTS. The Transferor agrees not to enter into any National Media Contracts
or superstation Agreements other than through the Commissioner and pursuant to
the Central Fund Agreement. The Transferor agrees to request that the
Commissioner include a provision in any National Media Contract or Superstation
Agreement entered into subsequent to the date hereof to the effect that the
rights of the Transferor to receive revenues under such agreements have been
transferred to the Transferee pursuant to this Agreement. The Transferor agrees
that all rights to receive revenues benefitting it under any future National
Media Contracts and Superstation Agreements will be part of the Rights
transferred pursuant to this Agreement.
SECTION 5.03. FUTURE LICENSING CONTRACTS. The Transferor
agrees not to enter into any licensing agreements or replacements to the MLB
Properties Agreement other than through MLB Properties (except as permitted by
the MLB Properties Agreement). The Transferor agrees to request that the
Commissioner include a provision in any future MLB Properties Agreement to the
effect that the rights of the Transferor to receive revenues under such
agreement have been transferred to the Transferee pursuant to this Agreement.
The Transferor agrees that all rights to receive payments benefitting it under
any future MLB Properties Agreement will be part of the Rights transferred
pursuant to this Agreement.
SECTION 5.04. OPPOSE CHANGE. (i) The Transferor agrees not to
recommend, vote in favor of or advocate and to oppose and vote against any
action to change in any way the terms of any of the Major League Agreements in a
manner which is or may be materially adverse to the Rights or the Revenues
transferred pursuant to this Agreement (including, without limitation, any
change in the authorization of the Commissioner to negotiate and enter into
National Media Contracts) and (ii) the Transferor also agrees not to
<PAGE> 14
TRANSFER AGREEMENT 14
recommend, vote in favor of or advocate and to oppose and vote against any
action to eliminate or reduce under any circumstances (including without
limitation, the bankruptcy or insolvency of any Participating Club or the
withdrawal or expulsion of any Participating Club, but excluding any Pro Rata
reduction resulting from the expansion in the number of Clubs) each Club Trust's
right to a Pro Rata share of Revenues (which is being transferred to the
respective Club Trusts pursuant to this Agreement and the other Transfer
Agreements).
SECTION 5.05. VOTING. It is the intention of the Transferee
and the Transferor that the Transferor be free to exercise its reasonable
business judgment with respect to the administration of the Rights (including
decisions on waivers, enforcement, renegotiations or exercise of options with
respect to all agreements or contracts relating to the Rights); PROVIDED,
HOWEVER, that the Transferor (i) agrees to act in a manner consistent with the
covenants and purposes of this Agreement and (ii) not to take any actions that
are intended or have the effect of depriving the Transferee of the benefits
intended to be conveyed by this Agreement or contravening the purposes of the
Transaction Documents.
SECTION 5.06. PROTECTION OF RIGHT, TITLE AND INTEREST. The
Transferor shall, at the request of the Administrative Agent acting on behalf of
the Transferee, cause this Agreement, all amendments hereto, the Assignment, and
all financing statements and continuation statements and any other necessary
documents covering the right, title and interest of the Transferee in and to the
Rights and Revenues and the other property included in the Club Trust Estate to
be promptly filed, and at all times to be kept recorded, registered and filed,
all in such manner and in such places as may be required by law fully to
preserve and protect the right, title and interest of the Transferee hereunder
to the Rights and Revenues and the other property included in the Club Trust
Estate. The Transferor shall, at the request of the Administrative Agent acting
on behalf of the Transferee, deliver to the Administrative Agent file stamped
copies of, or filing receipts for, any document recorded, registered or filed as
provided above, as soon as available following such recordation, registration or
filing and such other documents or instruments as the Administrative Agent shall
request to evidence a transfer or protect and preserve the Transferee's right,
title and interest in the Club Trust Estate. The Transferee shall cooperate
fully with the Transferor in
<PAGE> 15
TRANSFER AGREEMENT 15
connection with the obligations set forth above and will execute any and all
documents reasonably required to fulfill the intent of this paragraph.
SECTION 5.07. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF,
THE OBLIGATIONS OF THE TRANSFEROR. The Transferor shall not consolidate with or
merge into any other corporation or entity or convey or transfer substantially
all of its assets as an entirety or its ownership interest in the MLB Trust or
the Club Trust to any Person, unless:
(a) the corporation or entity formed by such consolidation or
into which the Transferor is merged or the Person which acquires by
conveyance or transfer the properties and assets of the Transferor or
substantially as an entirety (or the ownership interest in the MLB
Trust or the Club Trust) shall be duly organized and validly existing
under the laws of the jurisdiction of its organization and, if the
Transferor is not the surviving entity, such corporation or entity, or
such Person which so acquires such properties and assets shall
expressly assume all obligations under this Agreement, by an agreement
supplemental hereto, in form satisfactory to the Transferee and the
Administrative Agent, executed and delivered to the Transferee and the
Administrative Agent; and
(b) the Transferor has delivered to the Transferee and the
Administrative Agent an officers' certificate and an opinion of Counsel
each stating that such consolidation, merger, conveyance or transfer
comply with this Section 5.07 and that all conditions precedent herein
provided for relating to such transaction have been complied with and
as to such other matters as the Administrative Agent shall reasonably
request.
SECTION 5.08. NAME CHANGE. Within 15 days after the Transferor
makes any change in its name, identity or corporate or partnership structure
which would make any financing statement or continuation statement filed in
connection with this Agreement misleading within the applicable provisions of
the UCC or any title statute, the Transferor shall give the Administrative Agent
notice of any such change, and no later than 5 days after the effective date
thereof, shall file such financing statements or amendments as may be necessary
to continue the perfection of
<PAGE> 16
TRANSFER AGREEMENT 16
the Transferee's interest in the property included in the Club Trust Estate.
SECTION 5.09. POWER OF ATTORNEY. (a) Effective on the Closing
Date, the Transferor hereby constitutes and appoints the Administrative Agent on
behalf of the Transferor and its successors, legal representatives and assigns
the true and lawful attorneys of the Transferor, with full power of
substitution, in the name of the Transferor or the Transferee, but on behalf of
and for the benefit of the Transferee and its successors, legal representatives
and assigns, and at the expense of the Transferee: (i) to demand and receive
from time to time any and all of the Rights and Revenues and to make
endorsements and give receipts and releases for and in respect of the same and
any part thereof; (ii) to institute, prosecute, compromise and settle any and
all proceedings at law, in equity or otherwise that the Transferee and its
successors, legal representatives or assigns may deem proper in order to
collect, assert or enforce any claim, right or title of any kind in or to the
Rights and Revenues; (iii) to defend or compromise any or all actions, suits or
proceedings in respect of any of the Rights and Revenues; and (iv) to do all
such acts and things in relation to the matters set forth in the preceding
clause (i) through (iii) as the Transferee and its successors, legal
representatives or assigns shall deem desirable; Provided, however, that nothing
set forth in this Section 5.09 shall, or be deemed to, deprive the Commissioner
of his exclusive rights under the Major League Agreements and the National Media
Contracts to administer and enforce the National Media Contracts. The Transferor
hereby agrees that the appointment hereby made and the powers hereby granted are
coupled with an interest and are not and shall not be revocable by it in any
manner or for any reason. The Transferor shall deliver to the Transferee at
Closing an acknowledged power of attorney to the foregoing effect executed by
the Transferor.
SECTION 5.10. OTHER LIENS OR INTERESTS. Except for the
conveyances hereunder and pursuant to the Club Trust Pledge and Security
Agreement and the other Transaction Documents, the Transferor will not sell,
pledge, assign or transfer to any Person, or grant, create, incur, assume or
suffer to exist any Lien on, any interest in, to and under the Rights and
Revenues, and the Transferor shall defend, at its own cost and expense, the
right, title and interest of the Transferee in, to and under the Rights and
Revenues, whether now existing or hereafter created, against all
<PAGE> 17
TRANSFER AGREEMENT 17
claims of third parties claiming through or under the Transferor. The Transferor
shall notify the Administrative Agent on behalf of the Transferee promptly after
becoming aware of any Lien on any Rights and Revenues other than as a result of
the conveyances hereunder or under the other Transaction Documents.
SECTION 5.11. INDEMNIFICATION. If subsequent to the date of
this Agreement, the Club Trust's Rights and Revenues are reduced or eliminated
(other than on a Pro Rata ,basis amongst all Clubs) as a result of (i) the
modification of any of the Major League Agreement, the League Agreement, the
Central Fund Agreement or the MLB Properties Agreement or (ii) the Transferor no
longer being a member of its League or Major League Baseball, the Transferee
shall be indemnified to the extent of any amounts owed by the Transferee under
the Note and the Club Trust Pledge and Security Agreement.
SECTION 5.12. FURTHER ASSURANCES. From and after the Closing,
upon the request of the Administrative-Agent acting on behalf of the Transferee,
the Transferor shall, and shall cause any Affiliate of the Transferor having any
interest in the Rights and Revenues to execute, acknowledge and deliver all such
further acts, assurances, deeds, assignments, transfers, conveyances and other
instruments and papers as may be required to transfer, assign, convey and
deliver to and vest in the Transferee, and protect its right, title and interest
in and employment of, all the Rights and Revenues intended to be transferred,
assigned, conveyed and delivered to the Transferee pursuant to this Agreement,
and as otherwise appropriate to carry out the transactions contemplated by the
Transaction Documents.
SECTION 5.13. PLACE OF BUSINESS. The Transferor will promptly
inform the Administrative Agent, on behalf of the Transferee, of any change in
the name or location of the Transferor (including without limitation as a result
of the relocation of the Club owned and operated by the Transferor) which might
require new filings or other actions to protect the ownership interest of the
Transferee in the Rights and Revenues.
SECTION 5.14. PROHIBITION AGAINST TRANSFER OF CERTAIN RIGHTS.
For so long as the Transferee has outstanding any obligations under the Club
Trust Credit Facility and its Club Trust Pledge and Security Agreement, the
Transferor will not sell, assign, convey, pledge or
<PAGE> 18
TRANSFER AGREEMENT 18
otherwise transfer all or any part of its right, title and interest in and to
the National Media Contracts, the MLBP Agreements or the Major League Agreements
(that are not transferred pursuant to this Agreement) to any other Person other
than in a merger, consolidation or conveyance or transfer of its properties and
assets substantially as an entirety in a transaction meeting the requirements of
Section 5.07; PROVIDED, HOWEVER, that notwithstanding the foregoing, the
Transferor may transfer, pledge or assign any of its right, title and interest
in and to the National Media Contracts, the MLBP Agreements or the Major League
Agreements to secure any obligations of the Transferor to any Person; PROVIDED,
FURTHER, that any such Person acknowledges in writing addressed to the
Administrative Agent its obligations to take subject to the terns of this
Agreement in the event such Person exercises its right as a secured creditor and
forecloses on such collateral.
SECTION 5.15 ACCESS TO INFORMATION. The Transferor shall, and
shall use its reasonable best efforts to cause the Commissioner to, provide
reasonable access, during normal business hours, to the Administrative Agent on
behalf of the Transferee to inspect the offices, books and records of the
Transferor and the Commissioner relating to the Rights and Revenues transferred
pursuant to this Agreement.
ARTICLE VI
MISCELLANEOUS PROVISIONS
------------------------
SECTION 6.01. OBLIGATIONS OF TRANSFEROR. The obligations of
the Transferor under this Agreement shall not be affected by reason of any
invalidity, illegality or irregularity of any of the property consisting of the
Club Trust Estate.
SECTION 6.02. MLB TRUST. The Transferor acknowledges and
agrees that (a) the Transferee will, pursuant to the Club Trust Pledge and
Security Agreement, pledge the Rights and Revenues to the MLB Trust and assign
its rights under this Agreement to the MLB Trust, (b) the MLB Trust will,
pursuant to the MLB Credit Agreement and the MLB Pledge and Security Agreement,
assign such rights to the Administrative Agent for the ratable benefit of the
Banks and (c) the representations, warranties and covenants contained in this
Agreement and the rights of the Transferee under this Agreement are intended to
benefit the MLB Trust
<PAGE> 19
TRANSFER AGREEMENT 19
and the Banks. The Transferor hereby consents to all such pledges and
assignments and agrees that the Administrative Agent may enforce all provisions
of this Agreement on behalf of any of the Transferee, the MLB Trust or the Banks
directly against the Transferor without any request to have the Transferee, the
MLB Trust or the Banks join in such action and without any of them joining in
such action.
SECTION 6.03. AMENDMENT. This Agreement may be amended by the
Transferor and the Transferee, but only with the written consent of the Required
Banks.
SECTION 6.04. WAIVERS. No failure or delay on the part of the
Transferee in exercising any power, right or remedy under this Agreement or the
Assignment shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power, right or remedy preclude any other or further
exercise thereof or the exercise of any other power, right or remedy.
SECTION 6.05. NOTICES. All demands, notices and communications
under this Agreement shall be in writing, personally delivered or mailed by
certified mail, return receipt requested, and shall be deemed to have been duly
given upon receipt (a) in the case of the Transferor, to Cleveland Indians
Baseball Company Limited Partnership, Municipal Stadium, Cleveland, OH 44144,
Attention: Mr. Gregg Olson, with a copy to Baker & Hostetler, 3200 National City
Center, Cleveland, OH 44144, Attention: Edward Ptaszek, Esq.; (b) in the case of
the Transferee, addressed to Wilmington Trust Company, Corporate Financial
Services Division, Rodney Square North, Wilmington, Delaware 19890; (c) in the
case of the Administrative Agent, to Citibank, N.A., 641 Lexington Avenue, New
York, N.Y. 10043, Attention: Bank Loan Syndication or as to each of the
foregoing, at such other address as shall be designated by written notice to the
other parties.
SECTION 6.06. COSTS AND EXPENSES. The Transferor will pay all
expenses incident to the performance of its obligations under this Agreement and
the Transferor agrees to Pay all reasonable out-of-pocket costs and expenses of
the Transferee, including fees and expenses of counsel, in connection with the
perfection as against third parties of the Transferee's right, title and
interest in and to the Rights and Revenues and the enforcement of any obligation
of the Transferor hereunder.
<PAGE> 20
TRANSFER AGREEMENT 20
SECTION 6.07. REPRESENTATIONS AND COVENANTS TO SURVIVE. The
respective agreements, representations, ,warranties and other statements by the
Transferor and the Transferee set forth in or made pursuant to this Agreement
shall remain in full force and effect and will survive the closing under Section
2.02.
SECTION 6.08. HEADINGS AND CROSS-REFERENCES. The various
headings in this Agreement are included for convenience only and shall not
affect the meaning or interpretation of any provision of this Agreement.
References in this Agreement to Section names or numbers are to such Sections of
this Agreement.
SECTION 6.09. GOVERNING LAW. THIS AGREEMENT AND THE
ASSIGNMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS.
SECTION 6.10. COUNTERPARTS. This Agreement may be executed in
two or more counterparts and by different parties on separate counterparts, each
of which shall be an original, but all of which together shall constitute one
and the same instrument.
SECTION 6.11. SECURITY INTEREST. If for any reason this
Agreement and the Assignment fail to convey good title to all or a portion of
the Rights and Revenues to the Transferee, the Transferor hereby sells, assigns,
conveys, transfers, delivers and sets over unto the Transferee and hereby grants
the Transferee a first priority perfected "security interest" (as defined in the
UCC) in, all right, title
<PAGE> 21
TRANSFER AGREEMENT 21
and interest of the Transferor in, under and to such rights and Revenues and the
proceeds thereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers duly authorized as of the
date and year first above written.
INDIANS CLUB TRUST,
by WILMINGTON TRUST COMPANY,
not in its individual
capacity by solely as Club
Trustee,
by /s/ illegible
-------------------------
Name:
Title:
CLEVELAND INDIANS BASEBALL
COMPANY LIMITED PARTNERSHIP,
by CLEVELAND BASEBALL CORPORATION,
GENERAL PARTNER
by /s/ Richard E. Jacobs
-------------------------
Richard E. Jacobs, Chairman and
Chief Executive Officer
Acknowledged and Agreed:
OFFICE OF THE COMMISSIONER
OF BASEBALL, on its own
behalf and as Agent for
the Transferor under the
Central Fund Agreement
by /s/ Stephen D. Greenberg
-------------------------
Name: Stephen D. Greenberg
Title: Deputy Commissioner
<PAGE> 22
AMENDMENT NO. 1 dated as of December 20, 1993, to ASSIGNMENT
dated as of May 22, 1992 (the "Assignment"), by CLEVELAND
INDIANS BASEBALL COMPANY LIMITED PARTNERSHIP, an Ohio limited
partnership (the "Transferor"), and OFFICE OF THE COMMISSIONER
OF BASEBALL, on its own behalf and as Agent for the Transferor
under the Central Fund Agreement (the "Commissioner").
WHEREAS on May 22, 1992, the Transferor and the Commissioner delivered
the Assignment pursuant to which they transferred to the Transferee (as defined,
together with each capitalized term used herein and not defined herein, as
provided in the Assignment) all of their respective right, title and interest in
and to the Rights and Revenues;
WHEREAS concurrently herewith, the parties to the Transfer Agreement
are entering into Amendment No. 1 dated as of December 20, 1993 ("Amendment No.
1 to Transfer Agreement"), to Transfer Agreement dated as of May 22, 1992; and
WHEREAS, the Transferor and the Commissioner now desire to amend the
Assignment as follows:
1. REFERENCES TO TRANSFER AGREEMENT. The Assignment is hereby amended
such that all references therein to the Transfer Agreement shall be references
to the Transfer Agreement, as amended by Amendment No. 1 to Transfer Agreement.
2. EFFECT OF AMENDMENT. Except as specifically amended hereby, the
Assignment shall continue in full force and effect in accordance with the
provisions thereof as in existence on the date hereof.
<PAGE> 23
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
duly executed as of the day and year this Amendment to be duly executed as of
the day and year first above written.
CLEVELAND INDIANS BASEBALL COMPANY
LIMITED PARTNERSHIP,
By: CLEVELAND BASEBALL
CORPORATION, General Partner,
By: /s/ M. Cleary
----------------------------
Name:
Title:
OFFICE OF THE COMMISSIONER OF
BASEBALL, on its own behalf and as
Agent for the Transferor under the
Central Fund Agreement,
By: /s/ illegible
----------------------------
Name:
Title:
<PAGE> 1
Exhibit 10.11
CLEVELAND INDIANS
JUNE 28, 1996
AMENDMENT AND CONFIRMATION OF TRANSFER AGREEMENT
------------------------------------------------
This AMENDMENT AND CONFIRMATION OF TRANSFER AGREEMENT is dated as of
June 28, 1996, by and between Cleveland Indians Baseball Company, Limited
Partnership, an Ohio limited partnership (the "Transferor"), and Indians Club
Trust, a Delaware business trust (the "Transferee"), and amends and confirms
that certain Transfer Agreement dated as of May 22, 1992 between the Transferor
and the Transferee (as amended by Amendment No. 1 thereto dated as of December
20, 1993, and as further amended from time to time, the "Transfer Agreement").
Capitalized terms used herein and not otherwise defined shall have the same
meanings herein as in the Revised Annex A referred to below.
W I T N E S S E H:
------------------
WHEREAS, by execution of the Transfer Agreement and the Assignment
dated the date thereof (the "Original Assignment"), the Transferor has
bargained, sold, transferred, assigned, set over and otherwise conveyed to the
Transferee the Rights and Revenues; and
WHEREAS, concurrently with the execution of the Transfer Agreement and
the Original Assignment, the Transferee incurred certain indebtedness for
borrowed money (the "Existing Indebtedness") and, in connection therewith,
granted certain liens on the Rights and Revenues as collateral security for such
Existing Indebtedness; and
WHEREAS, as of the date hereof, the Transferee and certain other
parties thereto are entering into the Club Trust Credit Agreement and the MLB
Credit Agreement pursuant to which the Banks will make certain loans for the
benefit of the Transferee (collectively, the "MLB Credit Agreement Loans"),
certain proceeds of which MLB Credit Agreement Loans will be used by the
Transferee to refinance the Existing Indebtedness; and
WHEREAS, the Transferee and the MLB Trust have entered into the MLB
Pledge and Security Agreement dated the date hereof pursuant to which, among
other things, the Transferee has granted to the Administrative Agent for the
benefit of the Banks a lien on the Rights and Revenues, as such terms are
defined in Annex A attached to the MLB Credit Agreement (such Annex A attached
to the MLB Credit Agreement being referred to herein as the "Revised Annex A"),
as collateral security for the MLB Credit Agreement Loans; and
WHEREAS, it is a condition precedent to the obligations of the Banks to
enter into the Club Trust Credit Agreement and the MLB Credit Agreement, and to
make the MLB
<PAGE> 2
Credit Agreement Loans for the benefit of the Transferee pursuant thereto, that
the Transferor execute this Amendment and Confirmation of Transfer Agreement and
the form of Confirmatory Assignment attached hereto as Exhibit A, and deliver
certain other documents in the forms attached hereto;
NOW THEREFORE, in consideration of the foregoing, and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. ACKNOWLEDGEMENT OF MLB CREDIT AGREEMENT AND MLB PLEDGE AND SECURITY
AGREEMENT; ASSIGNMENT. The Transferor acknowledges that, as of the date hereof,
the Transferee, the Banks and the other parties thereto have entered into the
MLB Credit Agreement and MLB Pledge and Security Agreement. The Transferor
acknowledges that the Banks have been induced to enter into said Agreements by,
among other things, (i) the representations, warranties and covenants of the
Transferor set forth in the Transfer Agreement and in this Amendment and
Confirmation thereof and (ii) the liens on the Rights and Revenues (as such
terms are defined in the Revised Annex A) granted to the Administrative Agent
for the benefit of the Banks by the Transferee pursuant to the MLB Pledge and
Security Agreement. The Transferor has reviewed the Revised Annex A to the MLB
Credit Agreement, and is familiar with the definitional provisions contained
therein. It is the intention of the Transferor and the Transferee that all
Rights and Revenues (as such terms are defined in the Revised Annex A) were
bargained, sold, transferred, assigned, set over and otherwise conveyed from the
Transferor to the Transferee pursuant to the Transfer Agreement. Accordingly, by
way of confirming such transfer and transferring any assets constituting Rights
and Revenues (as defined in the Revised Annex A) which were not transferred
pursuant to the Transfer Agreement and the Original Assignment, the Transferor
and the Transferee will execute, at or before the Closing, a Confirmatory
Assignment in the form of Exhibit A hereto.
2. CONFIRMATION OF REPRESENTATIONS AND WARRANTIES OF TRANSFEREE AND
TRANSFEROR. The Transferee confirms that the representations and warranties set
forth in Section 3.01 of the Transfer Agreement are true and correct in all
material respects as of the date hereof. The Transferor confirms that the
representations and warranties set forth in Section 3.02 of the Transfer
Agreement and the information contained in Schedule 3.02(a)(x) as amended on the
date hereof is true and correct in all material respects as of the date hereof
except for the representations and warranties in Sections 3.02(b)(iv), (v), (vi)
and (vii) which were true and correct in all material respects as of May 20,
1992.
3. AMENDMENTS TO TRANSFER AGREEMENT. (a) The Transfer Agreement is
hereby amended by (i) deleting Exhibits A through E attached to the Transfer
Agreement and substituting therefor the forms of Exhibits A through E attached
hereto, respectively and (ii) deleting Annex A attached to the Transfer
Agreement and substituting therefor the Revised Annex A in the form attached to
the MLB Credit Agreement. For all purposes of the
2
<PAGE> 3
Transfer Agreement, unless otherwise defined therein, capitalized terms shall
have the meanings set forth in the Revised Annex A.
(b) AMENDMENTS TO SECTION 3.02.
(a) Section 3.02(a)(x) of the Transfer Agreement is hereby
amended by deleting Schedule 3.02(a)(x) and replacing it in its entirety with
Schedule 3.02(a)(x) dated as of the date hereof and attached hereto.
(b) Section 3.02(b)(v) of the Transfer Agreement is hereby
amended by deleting Schedule 3.02(b)(v) and replacing it in its entirety with
Schedule 3.02(b)(v) dated as of the date hereof and attached hereto.
(c) Section 3.02(b)(vi) of the Transfer Agreement is hereby
amended by deleting references therein to "Club Trust Credit Facilities" and
"MLB Credit Agreements" and inserting in place thereof references to "Club Trust
Credit Agreement" and "MLB Credit Agreement," respectively.
(d) Section 3.02 of the Transfer Agreement is hereby amended
by adding the following representations and warranties of the Transferor as
clause (c) thereto.
"(c) (i) The Transferor has at all times given effect to, and
will continue to give effect to, all the arrangements described in this
Agreement and the other Transaction Documents.
(ii) The financial and business affairs of the
Transferee have at all times been, and will continue to be, segregated
and readily distinguishable from those of the Transferor so that the
assets and liabilities of the Transferee and the Transferor will be
readily ascertainable.
(iii) The Transferor has observed all procedures
required by this Agreement and by the Transferor's Certificate of
Incorporation and By-laws, or its partnership agreement and certificate
of limited partnership, as the case may be, and the laws of the state
of its incorporation or organization, except where the failure to do so
would not have a material adverse effect on the Rights and Revenues or
the transactions contemplated by this Agreement.
(iv) The Transferor has not commingled its assets with
the assets of the Transferee, any other Participating Club, any Club
Trust or the MLB Trust (each an "Entity").
(v) Neither the assets nor the creditworthiness of the
Transferor is generally held out as being available for the payment of
any liability of any Entity. The Transferor has at all times since
execution of the Transfer Agreement and will
3
<PAGE> 4
at all times hereafter continue to treat each Entity as a separate
legal entity, and not as a division or department of the Transferor.
The Transferor maintains an arms'-length relationship with each Entity.
The Transferor has transferred the Rights and Revenues to the
Transferee free and clear of any lien, encumbrance, counterclaim,
defense, right of recoupment or similar claim.
(vi) The Transferor, by execution of this Agreement,
transferred to the Transferee the legal right to receive
one-twenty-eighth (1/28) of the Revenues.
(c) AMENDMENT TO SECTIONS 4.01(b)(iii), (iv) AND (v) OF THE TRANSFER
AGREEMENT. Sections 4.01(b)(iii), (iv) and (v) of the Transfer Agreement are
hereby amended by deleting references therein to "Series A Administrative Agent"
and inserting in lieu thereof references to "Administrative Agent".
(d) AMENDMENT TO SECTION 5.01 OF THE TRANSFER AGREEMENT. Section 5.01
of the Transfer Agreement is hereby amended by deleting the reference therein to
"Collateral Agent" and inserting in place thereof a reference to "Administrative
Agent".
(e) AMENDMENT TO SECTION 5.06 OF THE TRANSFER AGREEMENT. Section 5.06
of the Transfer Agreement is hereby amended by deleting the references therein
to "Collateral Agent" and inserting in place thereof references to
"Administrative Agent".
(f) AMENDMENTS TO SECTION 5.07(a) AND (b) OF THE TRANSFER AGREEMENT.
Section 5.07(a) and (b) of the Transfer Agreement are hereby amended by deleting
the references therein to "Collateral Agent" and inserting in place thereof
references to "Administrative Agent".
(g) AMENDMENT TO SECTION 5.08 OF THE TRANSFER AGREEMENT. Section 5.08
of the Transfer Agreement is hereby amended by deleting the references therein
to "Collateral Agent" and inserting in place thereof references to
"Administrative Agent".
(h) AMENDMENT TO SECTION 5.09 OF THE TRANSFER AGREEMENT. Section 5.09
of the Transfer Agreement is hereby amended by deleting references therein to
"Collateral Agent" and inserting in place thereof references to "Administrative
Agent".
(i) AMENDMENT TO SECTION 5.10 OF THE TRANSFER AGREEMENT. Section 5.10
of the Transfer Agreement is hereby amended by deleting references therein to
"Collateral Agent" and inserting in place thereof references to "Administrative
Agent".
(j) AMENDMENT TO SECTION 5.12 OF THE TRANSFER AGREEMENT. Section 5.12
of the Transfer Agreement is hereby amended by deleting references therein to
"Collateral Agent" and inserting in place thereof references to "Administrative
Agent".
4
<PAGE> 5
(k) AMENDMENT TO SECTION 5.13 OF THE TRANSFER AGREEMENT. Section 5.13
of the Transfer Agreement is hereby amended by deleting references therein to
"Collateral Agent" and inserting in place thereof references to "Administrative
Agent".
(l) AMENDMENT TO SECTION 5.14 OF THE TRANSFER AGREEMENT. Section 5.14
of the Transfer Agreement is hereby amended by deleting such Section in its
entirety and inserting in place thereof the following:
"Section 5.14. RETAINED VOTING RIGHTS. Notwithstanding
anything to the contrary set forth herein, it is understood and agreed
that the Rights do not include (a) any voting, consensual or similar
rights of the Transferor, whether arising under the National Media
Contracts, the Superstation Agreements, the International Broadcast
Contracts, the Major League Agreements, the MLB Properties Agreement or
otherwise, including, without limitation, any rights of the Transferor
to participate in any votes and decisions relating to or regarding the
creation of, changes to, the enforcement of, waivers, replacements to
or the exercise of any rights or options or other administration
(including decisions on waivers, enforcement, renegotiations or
exercise of options) under any agreement giving rise to the Rights,
including the National Media Contracts, the Superstation Agreements,
the International Broadcast Contracts, the MLB Properties Agreement,
and the Major League Agreements, (b) any rights, powers or options of
the Transferor, however arising, to institute proceedings to collect or
file claims for payment due from any obligor in respect of the National
Media Contracts, Superstation Agreements or International Broadcast
Contracts, to give and receive notices and other communications from or
to any obligor under any such agreement, to make waivers or other
agreements with respect to, or to exercise any rights or options under,
the National Media Contracts, Superstation Agreements or International
Broadcast Contracts or to bring proceedings against any Person with
respect thereto, or (c) any rights, powers or options of the
Transferor, however arising, to institute proceedings to collect or
file claims for Expansion Fees, to give and receive notices and other
communications from or to any Person with respect thereto, to make
waivers or other agreements or to exercise any rights or options or
otherwise administer any agreement with respect to Expansion Fees or to
bring proceedings against any Person with respect thereto.
(m) AMENDMENT TO SECTION 5.15 OF THE TRANSFER AGREEMENT. Section 5.15
of the Transfer Agreement is hereby amended by deleting references therein to
"Collateral Agent" and inserting in place thereof references to "Administrative
Agent".
(n) AMENDMENT TO ARTICLE V. Amendment to Article V is hereby amended by
adding the following covenants of the Transferor thereto:
"SECTION 5.16 ADDITIONAL COVENANTS OF THE TRANSFEROR.
5
<PAGE> 6
(a) The Transferor will observe all procedures required by
its certificate of incorporation and bylaws, or its partnership agreement
and certificate of limited partnership, as the case may be, and the laws of
the state of its incorporation or organization, as the case may be, except
where the failure to do so would not have a material adverse effect on the
Rights and Revenues or the transactions contemplated by this Agreement. The
Transferor will at all times maintain its corporate or partnership
existence, as the case may be, in good standing to the extent required under
the laws of the state of its creation, incorporation or organization. The
Transferor will remain qualified to do business in each jurisdiction in
which the conduct of its business so requires, except where the failure to
do so would not have a material adverse effect on the transactions
contemplated by this Agreement.
(b) The Transferor will not commingle any of its assets with
the assets of any Entity.
(c) The Transferor will not at any time conduct its business
in the name of any Entity. In that regard, no written or oral communications
including, without limitation, letters, invoices, purchase orders and
contracts, will be made in the name of any Entity. The Transferor will at
all times maintain a telephone number and stationery and business forms
separate from each Entity.
(d) The Transferor will not at any time provide for its
expenses and liabilities from the funds of any Entity other than
distributions from the Transferee permitted under the Club Trust Agreement.
(e) No employee of the Transferor will be an employee of a
Club Trust or of the MLB Trust.
(f) None of the assets or the creditworthiness of the
Transferor will be generally held out as being available for the payment of
any liability of any Entity. Assets will not be transferred to or from the
Transferor from or to any Entity without fair consideration or with the
intent to hinder, delay or defraud the creditors of any of them (provided
that distributions [Expos only - or loans] shall be made to the Transferor
in accordance with the terms of the Transaction Documents).
(o) AMENDMENT TO SECTION 6.03 OF THE TRANSFER AGREEMENT. Section 6.3
of the Transfer Agreement is hereby amended by deleting such Section 6.03 in its
entirety and inserting in place thereof:
"Section 6.3. AMENDMENT. This Agreement may be
amended by the Transferor and the Transferee, but only
with the written consent of the Required Banks, which
consent shall not be unreasonably withheld."
6
<PAGE> 7
(p) AMENDMENT TO SECTION 6.05 OF THE TRANSFER AGREEMENT. Section 6.05
of the Transfer Agreement is hereby amended by deleting the reference therein to
"Administrative Rights or the Collateral Agent" and inserting in place thereof a
reference to "Administrative Agent" and by deleting clause (c) thereof in its
entirety and inserting in place thereof the following:
"(c) In the case of the Administrative Agent, to
Fleet National Bank One, Federal Street, Boston, MA
02211, Attention: Keith J. Collar".
4. REPRESENTATIONS AND WARRANTIES OF TRANSFEROR AND TRANSFEREE. The
Transferor and Transferee jointly and severally represent and warrant to the
other party and to each Bank as follows:
(a) Such party is a business trust, corporation or partnership, as
applicable, duly organized, validly existing and in good standing under the laws
of the jurisdiction of its organization.
(b) The execution, delivery and performance by such party of this
Amendment and Confirmation of Transfer Agreement are within such party's trust,
corporate or partnership powers, as applicable, have been duly authorized by all
necessary trust, corporate or partnership action, as applicable, and do not
contravene such party's constitutive documents or any law or any contractual
restriction binding on or affecting such party.
(c) No authorization or approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body is required for
the due execution, delivery and performance by such party of this Amendment and
Confirmation of Transfer Agreement.
(d) This Amendment and Confirmation of Transfer Agreement is a legal,
valid and binding obligation of such party, enforceable against such party in
accordance with its terms, except as such enforceability may be limited by
appropriate bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect affecting the enforcement of creditors' rights
in general and except as such enforceability may be limited by general
principles of equity (whether considered in a suit at law or in equity).
5. VOTING. The Transferor acknowledges and agrees that the MLB Trust,
the Administrative Agent and the Banks are entering into the MLB Credit
Agreement and the MLB Pledge and Security Agreement in reliance upon, among
other things, the covenants of the Transferor set forth herein and in the
Transfer Agreement including, without limitation, the provisions of Section 5.05
of the Transfer Agreement.
6. EFFECTIVENESS. This Amendment and Confirmation of
Transfer Agreement shall become effective upon satisfaction of
the following conditions:
7
<PAGE> 8
(a) The Transferee and the Administrative Agent shall have received the
following documents (each in form and substance satisfactory to the
Administrative Agent in its sole discretion):
(i) An executed copy of this Amendment and
Confirmation of Transfer Agreement;
(ii) Executed Uniform Commercial Code financing statements
filed or to be filed in each jurisdiction determined by the
Administrative Agent, executed by (x) any party holding a lien on the
Rights and/or Revenues and (y) by the Transferor (or, as necessary, the
Commissioner), as seller and debtor, and naming the Transferee, as
purchaser and secured party, meeting the requirements of the laws of
each such jurisdiction, and as is necessary to maintain the
Transferee's perfected ownership status of the Rights and Revenues; and
(iii) Such other documents as Transferee or the Administrative
Agent may reasonably request.
7. TRANSACTION DOCUMENT. This Amendment and any other document and
certificate delivered in connection herewith shall be a Transaction Document
for all purposes.
8. NOTICES. All notice hereunder shall be given in accordance with
the provisions of Section 6.05 of the Transfer Agreement as amended hereby.
9. APPLICABLE LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO ITS
CHOICE OF LAW PROVISIONS.
10. CONFIRMATION; NO NOVATION. Except as expressly set forth herein,
this Amendment and Confirmation of Transfer Agreement shall not by implication
or otherwise limit, impair, constitute a waiver of, or otherwise affect the
rights and remedies of either party under the Transfer Agreement, nor alter,
modify, amend or in any way affect any of the terms, conditions, obligations,
covenants or agreements contained in the Transfer Agreement, all of which are
ratified and affirmed in all respects and shall continue in full force and
effect. This Amendment and Confirmation of Transfer Agreement shall apply and be
effective only with respect to the provisions of the Transfer Agreement
specifically referred to herein.
11. COUNTERPARTS. This Amendment and Confirmation of Transfer Agreement
may be executed in two or more counterparts, each of which shall constitute an
original but all of which when taken together shall constitute but one contract.
8
<PAGE> 9
12. HEADINGS. Section headings used herein are for convenience of
reference only, are not part of this Amendment and Confirmation of Transfer
Agreement and are not to affect the construction of, or to be taken into
consideration in interpreting, this Amendment and Confirmation of Transfer
Agreement.
[Remainder of This Page Intentionally Left Blank and Signature Pages Follow]
9
<PAGE> 10
SIGNATURE PAGE FOR AMENDMENT AND CONFIRMATION OF TRANSFER AGREEMENT
CLEVELAND INDIANS
EXECUTED as a sealed instrument as of the date first above written.
TRANSFEROR:
CLEVELAND INDIANS BASEBALL
COMPANY, LIMITED PARTNERSHIP
By: Cleveland Baseball Corporation,
its general partner
By: /s/ Richard E. Jacobs
-------------------------------
Richard E. Jacobs
Chairman, Chief Executive Officer and
President
Acknowledged and Agreed:
TRANSFEREE:
INDIANS CLUB TRUST
By: WILMINGTON TRUST COMPANY,
not in its individual capacity
but solely as Club Trustee
By: /s/ David A. Vanaskey, Jr.
----------------------------------
DAVID A. VANASKEY, JR.
Senior Financial Services Officer
FLEET NATIONAL BANK, as Administrative Agent
By:
----------------------------------
Keith J. Collar
Vice President
OFFICE OF THE COMMISSIONER OF BASEBALL,
on its own behalf and as Agent for the
Transferor under the Central Fund Agreement
By:
----------------------------------
Jeffrey White
Chief Financial Officer
<PAGE> 1
Exhibit 10.12
CREDIT AGREEMENT
Credit agreement, effective as of the 1st day of September, 1994, among
THE CLEVELAND INDIANS BASEBALL COMPANY LIMITED PARTNERSHIP, an Ohio limited
partnership ("Baseball") and BALLPARK MANAGEMENT COMPANY, an Ohio corporation
("Management") (Ballpark and Management are hereinafter sometimes collectively
called the "Borrowers"; individually, a "Borrower") and SOCIETY NATIONAL BANK, a
national banking association (hereinafter sometimes called the "Bank").
W I T N E S S E T H:
--------------------
WHEREAS, the Borrowers and Bank desire to contract for the
establishment of a credit in the aggregate principal amount of Nine Million
Dollars ($9,000,000.00), to be made available to the Borrowers, jointly and
severally, upon the terms and subject to the conditions hereinafter set forth;
NOW, THEREFORE, it is mutually agreed as follows:
ARTICLE 1. DEFINITIONS
-----------
As used in this Credit Agreement, the following terms shall have the
following meanings:
"ADJUSTED LIBOR" shall mean a rate per annum equal to the quotient
obtained (rounded upwards, if necessary, to the nearest 1/100th of 1%) by
dividing (i) the applicable LIBOR rate by (ii) 1.00 minus the Reserve
Percentage.
"BANKING DAY" shall mean a day on which the main office of Bank is open
for the transaction of business.
"COMMITMENT" shall mean the obligation hereunder of Bank to make loans
up to an aggregate principal amount of $9,000,000.00 during calendar months
March through November, inclusive, in each year and $2,000,000.00 in the months
of December, January and February of each year, during the Commitment Period (or
such lesser amount as shall be determined pursuant to Section 2.5 hereof).
"COMMITMENT PERIOD" shall mean the period from September 1, 1994 to
August 31, 1996.
"DEBT" shall mean, collectively, all indebtedness incurred by Borrowers
or either Borrower to Bank pursuant to this Credit Agreement and includes the
principal of and interest on all Notes and each extension, renewal or
refinancing thereof in whole or in part, the commitment fees and any prepayment
premium payable hereunder.
<PAGE> 2
"EUROCURRENCY LIABILITIES" has the meaning assigned to that term in
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
"EXPIRATION DATE" shall mean August 31, 1996.
"GUARANTOR" shall mean Richard E. Jacobs, individually, and The David
H. Jacobs Trust under the Declaration of Trust dated August 24, 1987, Richard E.
Jacobs, Trustee.
"INTEREST ADJUSTMENT DATE" shall mean the last day of each Interest
Period.
"INTEREST PERIOD" shall mean a period of 1, 3 or 6 months (as selected
by the Borrower) commencing on the applicable borrowing date of each LIBOR Loan
and on each Interest Adjustment Date with respect thereto; provided, however,
that if any such period would be affected by a reduction in Commitment as
provided in Section 2.5 hereof, prepayment or conversion rights as provided in
Sections 2.1B and 3.5 hereof or maturity of LIBOR Loans as provided in Section
2.1A or 2.1B hereof, such period shall be shortened to end on such date. If the
Borrowers fail to select a new Interest Period with respect to an outstanding
LIBOR Loan at least three (3) London banking days prior to any Interest
Adjustment Date, the Borrowers shall be deemed to have selected an Interest
Period of the same duration as the immediately preceding Interest Period
(subject to the proviso of the preceding sentence). With respect only to that
portion of the LIBOR Loans (as described in Section 2.1B hereof) during the term
loan period which represents a mandatory quarter-annual installment of
principal, the Borrowers may not select an Interest Period the maturity of which
would extend beyond the due date of such installment payment without becoming
subject to the provisions of Section 2.4 hereof.
"LIBOR" shall mean the average (rounded upward to the nearest 1/16th of
1%) of the per annum rates at which deposits in immediately available funds in
United States dollars for the relevant Interest Period and in the amount of the
LIBOR Loan to be disbursed or to remain outstanding during such Interest Period,
as the case may be, are offered to the Reference Bank by prime banks in any
Eurodollar market reasonably selected by the Reference Bank, determined as of
11:00 a.m. London time (or as soon thereafter as practicable), two (2) London
banking days prior to the beginning of the relevant Interest Period pertaining
to a LIBOR Loan hereunder.
"LIBOR LOANS" shall mean those loans described in Sections 2.1A and
2.1B hereof on which the Borrowers shall pay interest at a rate based on LIBOR.
"LONDON BANKING DAY" shall mean a day on which banks are open for
business in London, England, and quoting deposit rates for dollar deposits.
"NOTE" or "NOTES" shall mean a note or notes executed and delivered
pursuant to Sections 2.1A and 2.1B hereof.
<PAGE> 3
"POSSIBLE DEFAULT" shall mean an event, condition or thing which
constitutes, or which with the lapse of any applicable grace period or the
giving of notice or both would constitute, any event of default referred to in
Article VII hereof and which has not been appropriately waived by Bank in
writing or fully corrected prior to becoming an actual event of default.
"PRIME RATE" shall mean the interest rate established from time to time
by Bank as Bank's Prime Rate, whether or not such rate is publicly announced;
the Prime Rate may not be the lowest interest rate charged by Bank for
commercial or other extensions of credit.
"PRIME RATE LOANS" shall mean those loans described in Sections 2.1A
and 2.1B hereof on which the Borrowers shall pay interest at a rate based on the
Prime Rate.
"REFERENCE BANK" shall mean the Cayman Islands branch office of Society
National Bank.
"RELATED WRITING" shall mean any Note, assignment, mortgage, security
agreement, guaranty agreement, subordination agreement, financial statement,
audit report or other writing furnished by a Borrower or any of its respective
officers or representatives to Bank pursuant to or otherwise in connection with
this Credit Agreement.
"RESERVE PERCENTAGE" shall mean for any day that percentage (expressed
as a decimal) which is in effect on such day, as prescribed by the Board of
Governors of the Federal Reserve System (or any successor) for determining the
maximum reserve requirement (including, without limitation, all basic,
supplemental, marginal and other reserves and taking into account any
transitional adjustments or other scheduled changes in reserve requirements) for
a member bank of the Federal Reserve System in Cleveland, Ohio, in respect of
"Eurocurrency Liabilities". The Adjusted LIBOR shall be adjusted automatically
on and as of the effective date of any change in the Reserve Percentage.
"REVOLVING CREDIT NOTE" shall mean a note executed and delivered
pursuant to Section 2.1A hereof in the form of Exhibit A attached hereto.
"TERM LOAN NOTE" shall mean a note executed and delivered pursuant to
Section 2.1B hereof in the form of Exhibit B attached hereto.
Any accounting term not specifically defined in this Article I shall
have the meaning ascribed thereto by generally accepted accounting principles
not inconsistent with Borrowers' present accounting procedures.
The foregoing definitions shall be applicable to the singulars and
plurals of the foregoing defined terms.
<PAGE> 4
ARTICLE II. AMOUNT AND TERMS OF CREDIT
SECTION 2.1. AMOUNT AND NATURE OF CREDIT. Subject to the terms and
provisions of this Credit Agreement, Bank shall grant loans to the Borrowers,
jointly and severally, in such aggregate amount as the Borrowers shall request;
provided, however, that in no event shall the aggregate principal amount of all
loans outstanding under this Credit Agreement during the Commitment Period be in
excess of Nine Million Dollars ($9,000,000.00) during the period of March
through November 30, inclusive, in each year or Two Million Dollars
($2,000,000.00) during the period of December 1 through February 28 of the next
succeeding year, inclusive.
The aforementioned loans may be made as a revolving credit and as a term loan,
as follows:
A. REVOLVING CREDIT. Subject to the terms and conditions of this
Credit Agreement, during the Commitment Period, Bank will make
a loan or loans to the Borrowers, jointly and severally, in
such amount or amounts as the Borrowers may from time to time
request but not exceeding in aggregate principal amount at any
one time outstanding hereunder the Commitment of Bank. The
Borrowers shall have the option, subject to the terms and
conditions set forth herein, to borrow hereunder up to the
Commitment by means of any combination of (i) Prime Rate Loans
maturing on the Expiration Date, or (ii) LIBOR Loans maturing
on the Expiration Date, it being understood that any LIBOR
Loan obtained under this Section 2.1A shall be in the
aggregate principal sum of Five Hundred Thousand Dollars
($500,000.00) or any integral multiple thereof the Borrowers
shall pay interest (based on a year having 360 days and
calculated for the actual number of days elapsed) on the
unpaid principal amount of Prime Rate Loans outstanding from
time to time from the date thereof until paid, payable on the
first day of each month of each year and at the maturity
thereof, commencing October 1, 1994, at a rate per annum which
shall be the Prime Rate from time to time in effect. Any
change in such Prime Rate shall be effective immediately from
and after such change in the Prime Rate. The Borrowers shall
pay interest (based on a year having 360 days and calculated
for the actual number of days elapsed) at a fixed rate for
each Interest Period on the unpaid principal amount of LIBOR
Loans outstanding from time to time from the date thereof
until paid, payable on each Interest Adjustment Date with
respect to an Interest Period [provided that if an Interest
Period exceeds three months, the interest must be paid every
three months from the beginning of such Interest Period], at
the rate per annum of one and three-quarters percent (1-3/4%)
in excess of Adjusted LIBOR, fixed in advance of each Interest
Period as herein provided for each such Interest Period. At
the request of the Borrowers, the Bank shall convert Prime
Rate Loans to LIBOR Loans at any time and shall convert LIBOR
Loans to Prime Rate Loans on any Interest Adjustment Date
applicable to the LIBOR Loan. The obligation of the Borrowers
to repay both the Prime Rate Loans and the LIBOR Loans made by
Bank and to pay interest thereon shall be evidenced by a
Revolving Credit Note of the Borrowers substantially in the
form of Exhibit A hereto, with appropriate
<PAGE> 5
insertions, dated the date of this Credit Agreement
and payable to the order of Bank on the Expiration Date, in
the principal amount of the Commitment, or, if less, the
aggregate unpaid principal amount of revolving credit loans
made hereunder by Bank. The principal amount of the Prime Rate
Loans and the LIBOR Loans made by Bank and all prepayments
thereof and the applicable dates with respect thereto shall be
recorded by Bank from time to time on the records of the Bank
by such method as Bank may generally employ; PROVIDED,
however, that failure to make any such entry shall in no way
detract from Borrowers' obligations under such Note. The
aggregate unpaid amount of Prime Rate Loans and LIBOR Loans
set forth on the records of the Bank shall be rebuttably
presumptive evidence of the principal amount owing and unpaid
on such Revolving Credit Note. If the Revolving Credit Note
shall not be paid at maturity, whether such maturity occurs by
reason of lapse of time or by operation of any provision of
acceleration of maturity therein contained, the principal
thereof and the unpaid interest thereon shall bear interest,
until paid, for Prime Rate Loans at a rate per annum which
shall be two percent (2 %) in excess of the Prime Rate from
time to time in effect and for LIBOR Loans at a rate per annum
three and three-quarters percent (3 3/4%) in excess of
Adjusted LIBOR for the relevant Interest Period. Subject to
the provisions of this Credit Agreement the Borrowers shall be
entitled under this Paragraph A to borrow funds, repay the
same in whole or in part and reborrow hereunder at any time
and from time to time. On November 30 of each year Borrowers
shall pay to Bank the amount necessary to reduce the aggregate
principal amount of the loans to $2,000,000.00 in principal
amount. The outstanding principal amount of loans under this
subparagraph 2.1(A) shall be reduced to zero for a period of
thirty (30) consecutive days in each of 1995 and 1996.
B. TERM LOAN. Subject to the terms and conditions of this Credit
Agreement. on the Expiration Date, Bank will make a four (4)
year term loan to the Borrowers, jointly and severally, in an
amount equal to the principal amount of all revolving credit
loans outstanding under Paragraph A on such date. The
Borrowers shall notify Bank at the time of the request whether
the four (4) year term loan will be a Prime Rate Loan or a
LIBOR Loan. The term loan must be either a Prime Rate Loan or
a LIBOR Loan, and may not be a mixture of a Prime Rate Loan
and a LIBOR Loan; but Bank, at the request of the Borrowers,
shall convert a Prime Rate Loan to a LIBOR Loan at any time
and shall convert a LIBOR Loan to a Prime Rate Loan on any
Interest Adjustment Date applicable to the LIBOR Loan. If the
Borrowers' shall fail to select a Prime Rate Loan or a LIBOR
Rate Loan, the Borrowers shall be deemed to have selected a
Prime Rate Loan. If the loan is a Prime Rate Loan, the
Borrower shall pay interest (based on a year having 360 days
and calculated for the actual number of days elapsed) on the
unpaid principal amount thereof outstanding from time to time
from the date thereof until paid, payable on the first day of
each month of each year and at the maturity thereof,
commencing the first such date from the date of the promissory
note evidencing such term loan, at the Prime Rate per annum.
Any change in such rate resulting
<PAGE> 6
from a change in the Prime Rate shall be effective immediately
from and after such change in the Prime Rate. If the loan is a
LIBOR Loan, the Borrowers shall pay interest (based on a year
having 360 days and calculated for the actual number of days
elapsed) at a fixed rate for each Interest Period on the
unpaid principal amount of the LIBOR Loan outstanding from
time to time from the date thereof until paid, payable on each
Interest Adjustment Date with respect to an Interest Period
[provided that if an Interest Period exceeds three months, the
interest must be paid ever-y three months, commencing three
months from the beginning of such Interest Period], at one and
three-quarters percent (1 3/4%) in excess of Adjusted LIBOR
per annum, fixed in advance of each Interest Period as herein
provided for each such Interest Period. The obligation of
Borrowers to repay any Prime Rate Loan or LIBOR Loan made by
Bank pursuant to this Section 2.1B and to pay interest thereon
shall be evidenced by a Term Loan Note of the Borrowers
substantially in the form in of Exhibit B hereto, with
appropriate insertions, dated the date of the first borrowing
hereunder and payable to the order of Bank in the principal
amount of its Commitment, or, if less, the unpaid principal
amount of any loan made hereunder by Bank, in forty-eight (48)
equal consecutive monthly principal installments, commencing
the first day of the first month after the date thereof. The
principal amount of any Prime Rate Loan or LIBOR Loan made by
Bank and all prepayments thereof and the applicable dates with
respect thereto shall be recorded by Bank from time to time on
the records of the Bank by such method as Bank may generally
employ; PROVIDED, however, that failure to make any such entry
shall in no way detract from the Borrower's obligations under
this Note. the unpaid amount of any Prime Rate Loan or LIBOR
Loan set forth on the records of the Bank shall be rebuttably
presumptive evidence of the principal amount owing and unpaid
on such Term Loan Note. If such Term Loan Note shall not be
paid at maturity, whether such maturity occurs by reason of
lapse of time or by operation of any provision for
acceleration of maturity therein contained, the principal
thereto and the unpaid interest thereon shall bear interest,
until paid, for a Prime Rate Loan at a rate per annum which
shall be two percent (2%) in excess of the Prime Rate from
time to time in effect and for a LIBOR Loan at a rate per
annum which shall be three and three-quarters percent (3 3/4%)
in excess of Adjusted LIBOR for the relevant Interest Period.
If at the time the borrowing shall be made under this
sub-paragraph 2.1(B) there shall.be outstanding any Revolving
Credit Note issued under sub-paragraph 2.1(A) hereof, then the
proceeds of the term loan made under this sub-paragraph 2.1(B)
shall be applied in full or to the extent necessary, as the
case may be, to the payment in full of the principal of
and interest on the Revolving Credit Note issued under
sub-paragraph 2.1(A). The next preceding sentence shall
constitute an authorization and direction by the Borrowers to
Bank to so apply the proceeds of such term loan so made by
Bank under this Paragraph B to the payment in full of the
principal of and interest on any Revolving Credit Note issued
under subparagraph 2.1(A) hereof.
<PAGE> 7
SECTION 2.2. CONDITIONS TO LOANS. The obligation of Bank to make the
loans hereunder is conditioned, in the case of each borrowing hereunder, upon
(i) receipt by the Bank of two (2) Banking Days' notice from the Borrowers of
the proposed date and aggregate amount of the borrowing of any Prime Rate Loans
and three (3) London banking days' notice from the Borrowers of the proposed
date, aggregate amount and initial Interest Period of any LIBOR Loans; (ii) the
fact that no Possible Default shall then exist or immediately after the loan
would exist; and (iii) the fact that the representations and warranties
contained in Article V hereof shall be true and correct in all material respects
with the same force and effect as if made on and as of the date of such
borrowing except to the extent that any thereof expressly relate to an earlier
date. Each borrowing by the Borrowers hereunder shall be deemed to be a
representation and warranty by the Borrowers as of the date of such borrowing as
to the facts specified in (ii) and (iii) above.
SECTION 2.3. PAYMENT ON NOTES, ETC. All payments of principal, interest
and commitment fees shall be made to Bank in immediately available funds.
Whenever any payment to be made hereunder, including without limitation any
payment to be made on any Note, shall be stated to be due on a day which is not
a Banking Day, such payment shall be made on the next succeeding Banking Day and
such extension of time shall in each case be included in the computation of the
interest payable on such Note; provided, however, that with respect to any LIBOR
Loan, if the next succeeding Banking Day falls in the succeeding calendar month,
such payment shall be made on the preceding Banking Day and the relevant
Interest Period shall be adjusted accordingly.
SECTION 2.4. PREPAYMENT. The Borrowers shall have the right at any time
or from time to time, upon two (2) Banking Days' prior written notice to Bank in
the case of Prime Rate Loans, without the payment of any premium or penalty, or
four (4) London banking days' prior written notice in the case of LIBOR Loans
(subject to the payment of a prepayment penalty as hereinafter described in this
Section 2.4), to prepay all or any part of the principal amount of the Note then
outstanding as designated by the Borrowers, plus interest accrued on the amount
so prepaid to the date of such prepayment. In any case of prepayment of any
LIBOR Loans, the Borrowers agree that if Adjusted LIBOR as determined as of
11:00 a.m. London time two London banking days prior to the date of prepayment
of any LIBOR Loans (hereinafter, "Prepayment LIBOR") shall be lower than the
last Adjusted LIBOR previously determined for those LIBOR Loans with respect to
which prepayment is intended to be made (hereinafter, "Last LIBOR"), then the
Borrowers shall, upon written notice by Bank, promptly pay to Bank in
immediately available funds, a prepayment penalty measured by a rate (the
"Prepayment Penalty Rate") which shall be equal to the difference between the
Last LIBOR and the Prepayment LIBOR. In determining the Prepayment LIBOR, Bank
shall apply a rate equal to Adjusted LIBOR for a deposit approximately equal to
the amount of such prepayment which would be applicable to an Interest Period
commencing on the date of such prepayment and having a duration as nearly equal
as practicable to the remaining duration of the actual Interest Period during
which such prepayment is to be made. The Prepayment Penalty Rate shall be
applied to all or such part of the principal amounts of the applicable Note as
related to the LIBOR Loans to be prepaid, and the prepayment penalty shall be
computed for the period commencing with the date on which such prepayment is to
be made to that date
<PAGE> 8
which coincides with the last day of the Interest Period previously established
when the LIBOR Loans, which are to be prepaid, were made. Each prepayment of a
LIBOR Loan shall be in the aggregate principal sum of not less Five Hundred
Thousand Dollars ($500,000.00). In the event the Borrowers cancel a proposed
LIBOR Loan subsequent to the delivery to Bank of the proposed date, aggregate
amount and initial Interest Period of such loan, but prior to the draw down of
funds thereunder, such cancellation shall be treated as a prepayment subject to
the aforementioned prepayment penalty. Each prepayment of the Note evidencing
the term loan shall be applied to the principal installments thereof in the
inverse order of their respective maturities. Any payment made in connection
with the reduction of the commitment from $9,000,000.00 to $2,000,000.00 on
November 30 of each year, as provided in sub-paragraph 2.1(A) shall be deemed to
be a prepayment of any LIBOR Loan then outstanding for an Interest Period
extending past November 30.
SECTION 2.5. COMMITMENT FEES; TERMINATION OR REDUCTION OF COMMITMENTS.
Borrower agrees to pay to Bank as a consideration for its Commitment hereunder,
a commitment fee calculated at the rate of one-quarter percent (1/4 %) per annum
(based on a year having 360 days and calculated for the actual number of days
elapsed) from the date hereof to and including August 31, 1996, on the average
daily unborrowed amount of Bank's Commitment hereunder, payable on January 1,
1995, and quarter-annually thereafter. Borrower may at any time or from time to
time terminate in whole or ratably in part the Commitment of Bank hereunder to
an amount not less than the aggregate principal amount of the loans then
outstanding, by giving Bank not less than two (2) Banking Days' notice, provided
that any such partial termination shall be in an amount of $500,000.00 or any
integral multiple thereof. After each such termination, the commitment fees
payable hereunder shall be calculated upon the Commitment of Bank as so reduced.
If the Borrowers terminate in whole the Commitment of Bank, on the effective
date of such termination (the Borrowers having prepaid in full the unpaid
principal balance, if any, of the Note then outstanding together with all
interest (if any) and commitment fees accrued and unpaid) the Note then
outstanding shall be marked "Canceled" and delivered to the Borrowers. Any
partial reduction in the Commitment of Bank shall be effective during the
remainder of the Commitment Period.
ARTICLE III. ADDITIONAL PROVISIONS RELATING TO LIBOR LOANS
---------------------------------------------
SECTION 3.1. RESERVES OR DEPOSIT REQUIREMENTS, ETC. If at any time any
law, treaty or regulation (including, without limitation, Regulation D of the
Board of Governors of the Federal Reserve System) or the interpretation thereof
by any governmental authority charged with the administration thereof or any
central bank or other fiscal, monetary or other authority shall impose (whether
or not having the force of law), modify or deem applicable any reserve and/or
special deposit requirement (other than reserves included in the Reserve
Percentage, the effect of which is reflected in the interest rate(s) of the
LIBOR Loan(s) in question) against assets held by, or deposits in or for the
amount of any loans by, Bank, and the result of the foregoing is to increase the
cost (whether by incurring a cost or adding to a cost) to Bank of making or
maintaining hereunder LIBOR Loans or to reduce the amount of principal or
interest received by Bank with respect to such LIBOR Loans, then upon
<PAGE> 9
demand by Bank the Borrowers shall pay to Bank from time to time on Interest
Adjustment Dates with respect to such loans, as additional consideration
hereunder, additional amounts sufficient to fully compensate and indemnify Bank
for such increased cost or reduced amount, assuming (which assumption Bank need
not corroborate) such additional cost or reduced amount were allocable to such
LIBOR Loans. A certificate as to the increased cost or reduced amount as a
result of any event mentioned in this Section 3.1, setting forth the
calculations therefor, shall be promptly submitted by Bank to the Borrowers and
shall, in the absence of manifest error, be conclusive and binding as to the
amount thereof. Notwithstanding any other provision of this Credit Agreement,
after any such demand for compensation by Bank, Borrowers, upon at least three
(3) Banking Days' prior written notice to Bank, may prepay the affected LIBOR
Loans in full or convert all LIBOR Loans to Prime Rate Loans regardless of the
Interest Period of any thereof. Any such prepayment or conversion shall be
subject to the prepayment penalties set forth in Section 2.4 hereof. Bank will
notify Borrowers as promptly as practicable of the existence of any event which
will likely require the payment by Borrowers of any such additional amount under
this Section.
SECTION 3.2. TAX LAW, ETC. In the event that by reason of any law,
regulation or requirement or in the interpretation thereof by an official
authority, or the imposition of any requirement of any central bank whether or
not having the force of law, Bank shall, with respect to this Credit Agreement
or any transaction under this Credit Agreement, be subjected to any tax, levy,
impost, charge, fee, duty, deduction or withholding of any kind whatsoever
(other than any tax imposed upon the total net income of Bank) and if any such
measures or any other similar measure shall result in an increase in the cost to
Bank of making or maintaining any LIBOR Loan or in a reduction in the amount of
principal, interest or commitment fee receivable by Bank in respect thereof,
then Bank shall promptly notify the Borrowers stating the reasons therefor. The
Borrowers shall thereafter pay to Bank upon demand from time to time on Interest
Adjustment Dates with respect to such LIBOR Loans, as additional consideration
hereunder, such additional amounts as will fully compensate Bank for such
increased cost or reduced amount. A certificate as to any such increased cost or
reduced amount, setting forth the calculations therefor, shall be submitted by
Bank to the Borrowers and shall, in the absence of manifest error, be conclusive
and binding as to the amount thereof.
If Bank receives such additional consideration from the Borrowers
pursuant to this Section 3.2, Bank shall use its best efforts to obtain the
benefits of any refund, deduction or credit for any taxes or other amounts on
account of which such additional consideration has been paid and shall reimburse
the Borrowers to the extent, but only to the extent, that Bank shall receive a
refund of such taxes or other amounts together with any interest thereon or an
effective net reduction in taxes or other governmental, charges (including any
taxes imposed on or measured by the total net income of Bank) of the United
States or any state or subdivision thereof by virtue of any such deduction or
credit, after first giving effect to all other deductions and credits otherwise
available to Bank. If, at the time any audit of Bank's income tax return is
completed, Bank determines, based on such audit, that it was not entitled to the
full amount of any refund reimbursed to the Borrower as aforesaid or that its
net income taxes are not reduced by a credit or deduction for the full amount of
taxes reimbursed to the Borrowers as aforesaid, the Borrowers, upon demand of
Bank, will promptly pay to Bank the
<PAGE> 10
amount so refunded to which Bank was not so entitled, or the amount by which the
net income taxes of Bank were not so reduced, as the case may be.
Notwithstanding any other provision of this Credit Agreement, after any
such demand for compensation by Bank, Borrowers, upon at least three (3) Banking
Days' prior written notice to Bank, may prepay the affected LIBOR Loans in full
or convert all LIBOR Loans to Prime Rate Loans regardless of the Interest Period
of any thereof. Any such prepayment or conversion shall be subject to the
prepayment penalties set forth in Section 2.4 hereof.
SECTION 3.3. EURODOLLAR DEPOSITS UNAVAILABLE OR INTEREST RATE
UNASCERTAINABLE. In respect of any LIBOR Loans, in the event that Bank shaft
have determined that dollar deposits of the relevant amount for the relevant
Interest Period for such LIBOR Loans are not available to the Reference Bank in
the applicable Eurodollar market or that, by reason of circumstances affecting
such market, adequate and reasonable means do not exist for ascertaining the
LIBOR rate applicable to such Interest Period, as the case may be, Bank shall
promptly give notice of such determination to the Borrower and (i) any notice of
new LIBOR Loans previously given by the Borrowers and not yet borrowed shall be
deemed a notice to make Prime Rate Loans, and (ii) the Borrowers shall be
obligated either to prepay or to convert any outstanding LIBOR Loans on the last
day of the then current Interest Period or Periods with respect thereto.
SECTION 3.4. INDEMNITY. Without prejudice to any other provisions of
this Article III, the Borrower hereby agrees to indemnify Bank against any loss
or expense which Bank may sustain or incur as a consequence of any default by
the Borrowers in payment when due of any amount due hereunder in respect of any
LIBOR Loan, including, but not limited to, any loss of profit, premium or
penalty incurred by Bank in respect of funds borrowed by it for the purpose of
making or maintaining such LIBOR Loan, as determined by Bank in the exercise of
its sole but reasonable discretion. A certificate as to any such loss or expense
shall be promptly submitted by Bank to the Borrowers and shall, in the absence
of manifest error, be conclusive and binding as to the amount thereof.
SECTION 3.5. CHANGES IN LAW RENDERING LIBOR LOANS UNLAWFUL. If at any
time any new law, treaty or regulation, or any change in any existing law,
treaty or regulation, or any interpretation thereof by any governmental or other
regulatory authority charged with the administration thereof, shall make it
unlawful for Bank to fund any LIBOR Loans which it is committed to make
hereunder with moneys obtained in the Eurodollar market, the Commitment of Bank
to fund LIBOR Loans shall, upon the happening of such event forthwith be
suspended for the duration of such illegality, and Bank shall by written notice
to the Borrowers declare that its Commitment with respect to such Loans has been
so suspended and, if and when such illegality ceases to exist, such suspension
shall cease and Bank shall similarly notify the Borrowers. If any such change
shall make it unlawful for Bank to continue in effect the funding in the
applicable Eurodollar market of any LIBOR Loan previously made by it hereunder,
Bank shall, upon the happening of such event, notify the Borrowers thereof in
writing stating the reasons therefor, and the Borrowers shall, on the earlier of
(i) the last day of the then current Interest Period or (ii) if required by such
law,
<PAGE> 11
regulation or interpretation, on such date as shall be specified in such notice,
either convert all LIBOR Loans to Prime Rate Loans or prepay all LIBOR Loans to
Bank in full. Any such prepayment or conversion shall be subject to the
prepayment penalties prescribed in Section 2.4 hereof.
SECTION 3.6. FUNDING. Bank may, but shall not be required to, make
LIBOR Loans hereunder with funds obtained outside the United States.
ARTICLE IV. COVENANTS
---------
Borrowers agree that so long as the Commitment remains in effect and
thereafter until the principal of and interest on all Notes and all other
payments due hereunder shall have been paid in full, Borrowers will each perform
and observe all of the following provisions, namely:
SECTION 4.1. INSURANCE. Each Borrower will (a) maintain insurance to
such extent and against such hazards and liabilities as is commonly maintained
by companies similarly situated, and (b) forthwith upon Bank's written request,
furnish to Bank such information about any such company's insurance as Bank may
from time to time reasonably request, which information shall be prepared in
form and detail satisfactory to Bank and certified by an officer of such
company.
SECTION 4.2. MONEY OBLIGATION. Each Borrower will pay in full (a) prior
in each case to the date when penalties would attach, all taxes, assessments and
governmental charges and levies (except only those so long as and to the extent
that the same shall be contested in good faith by appropriate and timely
proceedings) for which they may be or become liable or to which any or all of
their properties may be or become subject, (b) all of their wage obligations to
their employees in compliance with the Fair Labor Standards Act (29 U.S.C.
ss.206-207) or any comparable provisions, and (c) all of their other obligations
calling for the payment of money (except only those so long as and to the extent
that the same shall be contested in good faith) before such payment becomes
overdue.
SECTION 4.3. FINANCIAL STATEMENTS. Each Borrower will furnish to Bank
(a) by March 1 of each year a cash flow projection of each
Borrower, in form and detail satisfactory to the Bank;
(b) within one hundred eighty (180) days after the end of each of
its fiscal years, an annual audit report of each Borrower for
that year in form and detail satisfactory to Bank and
certified by an independent public accountant satisfactory to
Bank, which report shall include a balance sheet, a profit and
loss statement and an analysis of surplus, together with a
certificate by the accountant setting forth the Possible
Defaults coming to its attention during the course of its
audit or, if none, a statement to that effect;
<PAGE> 12
(c) within one hundred eighty (180) days after the end of each
year (and, in any event, in each case as soon as prepared) the
annual audit of each of Richard E. Jacobs, the David H. Jacobs
Trust, and the Richard E. Jacobs Group, all prepared in form
and detail satisfactory to Bank; provided, however, that in
the event Jacobs Properties, Inc. is established as a Real
Estate Investment Trust (the "REIT"), the audited financial
statements of the REIT shall be substituted for those of the
Richard E. Jacobs Group; and
(d) forthwith upon Bank's written request, such other information
about the financial condition, properties and operations of
either Borrower as Bank may from time to time reasonably
request, which information shall be submitted in form and
detail satisfactory to Bank and certified by an officer of the
company or companies in question.
SECTION 4.4. FINANCIAL RECORDS. Each Borrower will at all times
maintain true and complete records and books of account including, without
limiting the generality of the foregoing, appropriate reserves for possible
losses and liabilities, all in accordance with generally accepted accounting
principles consistently applied, and at all reasonable times permit Bank to
examine that company's books and records and to make excerpts therefrom and
transcripts thereof.
SECTION 4.5. FRANCHISES. Each Borrower will preserve and maintain at
all times its existence, rights and franchises.
SECTION 4.6. LIENS. Neither Borrower will create, assume or suffer to
exist any lien upon any of its property or assets whether now owned or hereafter
acquired; PROVIDED that this Section shall not apply to the following:
(i) liens for taxes not yet due or which are being actively
contested in good faith by appropriate proceedings,
(ii) other liens incidental to the conduct of its business or the
ownership of its property and assets which were not incurred
in connection with the borrowing of money or the obtaining of
advances or credit, and which do not in the aggregate
materially detract from the value of its property or assets or
materially impair the use thereof in the operation of its
business,
(iii) liens on property or assets of the Borrower existing on the
date hereof,
SECTION 4.7. REGULATIONS U AND X. Neither Borrower will take any action
that would result in any non-compliance of the loans made hereunder with
Regulations U and X of the Board of Governors of the Federal Reserve System.
SECTION 4.8. LOANS, ADVANCES AND INVESTMENTS. Neither Borrower will
make or permit to remain outstanding any loan or advance to, or own, purchase or
acquire
<PAGE> 13
any stock, obligations or securities of, or any other interest in, or make any
capital contribution to, any person or entity, except that the Borrower may own,
purchase, or acquire bankers acceptances or certificates of deposit in United
States commercial banks (having capital resources in excess of One Billion
Dollars ($1,000,000,000.00)), commercial paper rated P-1 or A-1, obligations of
the United States Government or any agency thereof and obligations guaranteed by
the United States Government, in each case due within one year from the date of
purchase.
SECTION 4.9. NOTICE. Each Borrower will cause its treasurer, or in his
or her absence another officer designated by the treasurer, to promptly notify
Bank whenever any Possible Default may occur hereunder or any other
representation or warranty made in Article V hereof or elsewhere in this Credit
Agreement or in any Related Writing may for any reason cease in any material
respect to be true and complete.
ARTICLE V. WARRANTIES
----------
Subject only to such exceptions, if any, as may be fully disclosed in
an officer's certificate or written opinion of counsel furnished by Borrowers to
Bank prior to the execution and delivery hereof, each Borrower represents and
warrants as follows:
SECTION 5.1. EXISTENCE. Each Borrower is duly organized, and validly
existing, and is in good standing under the laws of the State of Ohio.
SECTION 5.2. RIGHT TO ACT. No registration with or approval of any
governmental agency of any kind is required for the due execution and delivery
or for the enforceability of this Credit Agreement and any Note issued pursuant
to this Credit Agreement. Each Borrower has legal power and right to execute and
deliver this Credit Agreement and any Note issued pursuant to this Credit
Agreement and to perform and observe the provisions of this Credit Agreement and
any Note issued pursuant hereto. By executing and delivering this Credit
Agreement and any Note issued pursuant to this Credit Agreement and by
performing and observing the provisions of this Credit Agreement and any Note
issued pursuant hereto, neither Borrower will violate any existing provision of
its articles of incorporation, code of regulations or by-laws or partnership
agreement, as the case may be, or any applicable law or violate or otherwise
become in default under any existing contract or other obligation binding upon
such Borrower. The officer or general partner of Borrowers, as the case may be,
executing and delivering this Credit Agreement on behalf of Borrowers have been
duly authorized to do so, and this Credit Agreement and any Note, when executed,
are legally binding upon Borrowers in every respect.
SECTION 5.3. LITIGATION AND LIENS. No litigation or proceeding is
pending or threatened which might, if successful, adversely affect either
Borrower to a substantial extent. The Internal Revenue Service has not alleged
any default by a Borrower in the payment of any tax or threatened to make any
assessment in respect thereof.
<PAGE> 14
SECTION 5.4. SOLVENCY. Each Borrower has received consideration which
is the reasonable equivalent value of the obligations and liabilities that
Borrower has incurred to Bank. Neither Borrower is insolvent as defined in any
applicable state or federal statute, nor will either Borrower be rendered
insolvent by the execution and delivery of this Credit Agreement or any Note to
Bank. Neither Borrower is engaged or about to engage in any business or
transaction for which the assets retained by it shall be an unreasonably small
capital, taking into consideration the obligations to Bank incurred hereunder.
Neither Borrower intends to, nor does it believe that it will, incur debts
beyond its ability to pay them as they mature.
SECTION 5.5. FINANCIAL STATEMENTS. Each Borrower's most current
financial statements heretofore furnished to Bank are true and complete, have
been prepared in accordance with generally accepted accounting principles
applied on a basis consistent with those used by such Borrower during Borrower's
immediately preceding full fiscal year and fairly present Borrower's financial
condition as of that date and the results of its operations for the interim
period then ending. Since that date there has been no material adverse change in
such Borrower's financial condition, properties or business nor any change in
their accounting procedures.
SECTION 5.6. REGULATIONS. Neither Borrower is engaged principally or as
one of its important activities, in the business of extending credit for the
purpose of purchasing or carrying any "margin stock" (within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System of the
United States of America). Neither the granting of any loans hereunder (or any
conversion thereof) nor the use of the proceeds of such loans will violate, or
be inconsistent with, the provisions of Regulation U or X of said Board of
Governors.
ARTICLE VI. EVENTS OF DEFAULT
-----------------
Each of the following shall constitute an event of default hereunder:
SECTION 6.1. PAYMENTS. If the principal of or interest on any Note or
any commitment fee shall not be paid in full punctually when due and payable and
shall remain unpaid for a period of ten (10) consecutive days.
SECTION 6.2. COVENANTS. If either Borrower shall fail or omit to
perform and observe any agreement or other provision (other than those referred
to in Section 6.1 hereof) contained or referred to in this Credit Agreement or
any Related Writing that is on such Borrower's part to be complied with, and
that Possible Default shall not have been fully corrected to Bank's full
satisfaction within ten (10) days after the giving of written notice thereof to
Borrowers by Bank that the specified Possible Default is to be remedied.
SECTION 6.3. WARRANTIES. If any representation, warranty or statement
made in or pursuant to this Credit Agreement or any Related Writing or any other
material
<PAGE> 15
information furnished by a Borrower to Bank or any other holder of any Note,
shall be false or erroneous in any material respect.
SECTION 6.4. CROSS DEFAULT. If either Borrower defaults in the payment
of principal or interest due and owing upon any other obligation for borrowed
money beyond any period of grace provided with respect thereto or in the
performance of any other agreement, term or condition contained in any agreement
under which such obligation is created, if the effect of such default is to
accelerate the maturity of such indebtedness or to permit the holder thereof to
cause such indebtedness to become due prior to its stated maturity.
SECTION 6.5. SOLVENCY. If either Borrower or any Guarantor shall (a)
discontinue business, or (b) generally not pay its debts as such debts become
due, or (c) make a general assignment for the benefit of creditors, or (d) apply
for or consent to the appointment of a receiver, a custodian, a trustee, an
interim trustee or liquidator of all or a substantial part of its assets, or (e)
be adjudicated a debtor or have entered against it an order for relief under
Title 11 of the United States Code, as the same may be amended from time to
time, or (f) file a voluntary petition in bankruptcy or file a petition or an
answer seeking reorganization or an arrangement with creditors or seeking to
take advantage of any other law (whether federal or state) relating to relief of
debtors, or admit (by answer, by default or otherwise) the material allegations
of a petition filed against it in any bankruptcy, reorganization, insolvency or
other proceeding (whether federal or state) relating to relief of debtors, or
(g) suffer or permit to continue unstayed and in effect for thirty (30)
consecutive days any judgment, decree or order entered by a court of competent
jurisdiction, which approves a petition seeking its reorganization or appoints a
receiver, custodian, trustee, interim trustee or liquidator of all or a
substantial part of its assets, or (h) take, or omit to take, any action in
order thereby to effect any of the foregoing.
ARTICLE VII. REMEDIES UPON DEFAULT
---------------------
Notwithstanding any contrary provision or inference herein or
elsewhere,
SECTION 7.1. OPTIONAL DEFAULTS. If any event of default referred to in
Section 6.1, 6.2, 6.3 or 6.4 hereof shall occur, Bank, upon written notice to
Borrowers, may
(a) terminate the Commitment and the credit hereby established, if
not theretofore terminated, and forthwith upon such election
the obligations of Bank to make any further loan or loans
hereunder immediately shall be terminated, and/or
(b) accelerate the maturity of all of Borrowers' Debt to Bank (if
it be not already due and payable), whereupon all of
Borrowers' Debt to Bank shall become and thereafter be
immediately due and payable in full without any presentment or
demand and without any further or other notice of any kind,
all of which are hereby waived by Borrowers.
<PAGE> 16
SECTION 7.2. AUTOMATIC DEFAULTS. If any event of default referred to in
Section 6.5 hereof shall occur,
(a) the Commitment and the credit hereby established shall
automatically and forthwith terminate, if not theretofore
terminated, and Bank thereafter shall be under no obligation
to grant any further loan or loans hereunder, and
(b) the principal of and interest on any Note, then outstanding,
and all of Borrowers' aggregate Debt to Bank shall thereupon
become and thereafter be immediately due and payable in full
(if it be not already due and payable), all without any
presentment, demand or notice of any kind, which are hereby
waived by Borrowers.
SECTION 7.3. OFFSETS. If there shall occur or exist any Possible
Default referred to in Section 6.5 hereof or if the maturity of any Note is
accelerated pursuant to Section 7.1 or 7.2 hereof, Bank shall have the right at
any time to set off against, and to appropriate and apply toward the payment of,
any and all debt then owing by Borrowers to Bank, whether or not the same shall
then have matured, any and all deposit balances and all other indebtedness then
held or owing by Bank to or for the credit or account of Borrowers, all without
notice to or demand upon Borrowers or any other person, all such notices and
demands being hereby expressly waived by Borrowers.
ARTICLE VIII. MISCELLANEOUS
-------------
SECTION 8.1. INTERPRETATION. Each right, power or privilege specified
or referred to in Article VII or elsewhere in this Credit Agreement or in any
Related Writing is in addition to any other rights, powers or privileges that
Bank may otherwise have or acquire by operation of law, by other contract or
otherwise. No course of dealing in respect of, nor any omission or delay in the
exercise of, any right, power or privilege by Bank shall operate as a waiver
thereof, nor shall any single or partial exercise thereof preclude any further
or other exercise thereof or of any other, as each right, power or privilege may
be exercised independently or concurrently with others and as often and in such
order as Bank may deem expedient. It is of the essence to Bank's granting the
financial accommodations contemplated by this Credit Agreement that Borrowers
duly perform and observe every covenant, condition, restriction or agreement on
its part to be compiled with under this Credit Agreement or any Related Writing
and that every representation, warranty or certification made in or pursuant to
this Credit Agreement be true and complete in every material respect. Bank in
its discretion may from time to time grant Borrowers waivers and consents in
respect of this Credit Agreement and the Related Writings, but no such waiver or
consent shall bind Bank unless specifically granted in writing, which writing
shall be strictly construed. The provisions of this Credit Agreement shall bind
and benefit Borrowers and Bank and their respective successors and assigns
including (without limitation) each subsequent holder, if any, of the Notes or
any thereof; PROVIDED, that no subsequent holder of any Note shall by reason of
acquiring that Note become obligated to make any loan hereunder and no successor
to or assignee of Borrowers may borrow hereunder without Bank's written assent.
The relationship
<PAGE> 17
between Borrowers and Bank with respect to this Credit Agreement, any Note and
any Related Writing is and shall be solely that of debtor and creditor,
respectively, and Bank has no fiduciary obligation toward Borrowers with respect
to any such documents or the transactions contemplated thereby. Any provision of
this Credit Agreement which is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such prohibition
or unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction. The several captions to different sections and subsections of this
Credit Agreement are inserted for convenience only and shall be ignored in
interpreting the provisions hereof. This Credit Agreement and each Related
Writing shall be interpreted in accordance with Ohio law and the respective
rights and obligations of Bank and Borrower shall be governed by Ohio law,
without regard to principles of conflict of laws.
SECTION 8.2. NOTICE. A notice to or request of Borrowers shall be
deemed to have been given or made hereunder when a writing to that effect shall
have been delivered to an officer of Borrowers or forty-eight (48) hours after a
writing to that effect shall have been deposited in the United States mail with
postage prepaid by registered or certified mail to Borrowers or delivered to a
telegraph company at the address set forth below (or to such other address as
Borrowers may hereafter furnish to Bank in writing for that purpose). No other
method of giving notice to or making a request of Borrowers is hereby precluded.
Every notice required to be given to Bank pursuant to this Credit Agreement
shall be delivered to Bank at its address set forth below or at such other
address as Bank may furnish to Borrowers in writing for that purpose.
SECTION 8.3. STAMP TAXES; COSTS OF COLLECTION. Borrowers agree to
defend, indemnify and save harmless Bank from and against all documentary stamp
taxes, if any, including any penalty or interest, levied on the Notes or any
thereof, which agreement shall survive the payment of the Notes. Borrowers also
agree to promptly reimburse Bank for all costs and expenses, including
attorney's fees, incurred by Bank in connection with any restructurings of this
Credit Agreement and any Related Writing and in connection with any collection
proceedings as a result of nonpayment of any Debt as and when due and payable.
SECTION 8.4. CAPITAL ADEQUACY. If Bank shall determine, after the date
hereof, that the adoption of any applicable law, rule, regulation or guideline
regarding capital adequacy, or any change therein, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by Bank (or its lending office) with any request or
directive regarding capital adequacy (whether or not having the force of law) of
any such authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on Bank's capital (or on the capital of
Bank's holding company) as a consequence of its obligations hereunder to a level
below that which Bank (or its holding company) could have achieved but for such
adoption, change or compliance (taking into consideration Bank's policies or the
policies of its holding company with respect to capital adequacy) by an amount
deemed by Bank to be material, then from time to time, within 15 days after
demand by Bank, the Borrower shall pay to Bank such additional amount or
<PAGE> 18
amounts as will compensate Bank (or its holding company) for such reduction.
Bank will designate a different lending office if such designation will avoid
the need for, or reduce the amount of, such compensation and will not, in the
judgment of Bank, be otherwise disadvantageous to Bank. A certificate of Bank
claiming compensation under this section and setting forth the additional amount
or amounts to be paid to it hereunder shall be conclusive in the absence of
manifest error. In determining such amount, Bank may use any reasonable
averaging and attribution methods. Failure on the part of Bank to demand
compensation for any reduction in return on capital with respect to any period
shall not constitute a waiver of Bank's rights to demand compensation for any
reduction in return on capital in such period or in any other period. The
protection of this section shall be available to Bank regardless of any possible
contention of the invalidity or inapplicability of the law, regulation or other
condition which shall have been imposed.
SECTION 8.5. DEATH OF GUARANTOR. Notwithstanding anything in this
Credit Agreement to the contrary, if Richard E. Jacobs shall become deceased,
Bank may, upon written notice, suspend the Commitment and the credit hereby
established and forthwith upon such election the obligations of Bank to make any
further loan or loans hereunder immediately shall be suspended pending
assumption as set forth below. The personal representative or trustee of Richard
E. Jacobs shall promptly, and in any event prior to any distribution of assets
from the estate or trust (as the case may be), arrange for the agreement of the
heirs, devisees and beneficiaries (and for appropriate court order in the case
of an estate) not to receive any distribution of Richard E. Jacob's assets until
an assumption as described below has been arranged. Prior to the earlier to
occur of 120 days after the death or 60 days prior to the last day a claim may
be properly filed against the estate or trust (as the case may be), the personal
representative or trustee shall arrange for the assumption by the estate or
trust (as the case may be) of full, direct and enforceable liability for the
obligations of Richard E. Jacobs under that certain Guaranty by Richard E.
Jacobs to the Bank dated of even date herewith (the "Guaranty") (which
assumption shall be evidenced by documentation in form and substance
satisfactory to Bank), which liability shall be direct, recourse liability for
such obligations. If such assumption shall not be accomplished within the
foregoing period of time, the Commitment shall be terminated and Bank may
accelerate the maturity of any Note whereupon all of the principal of any Note
and all interest thereon shall become and thereafter be immediately due and
payable in full without any presentment or demand and without any further or
other notice of any kind.
SECTION 8.6. ENTIRE AGREEMENT. This Credit Agreement, any Note and any
other agreement, document or instrument attached hereto or referred to herein or
executed on or as of the date hereof integrate all the terms and conditions
mentioned herein or incidental hereto and supersede all oral representations and
negotiations and prior writings with respect to the subject matter hereof.
SECTION 8.7. JURY TRIAL WAIVER. BORROWERS AND BANK EACH WAIVE ANY RIGHT
TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE, BETWEEN BANK AND BORROWERS ARISING OUT OF, IN
CONNECTION WITH,
<PAGE> 19
RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN
CONNECTION WITH THIS CREDIT AGREEMENT OR ANY NOTE OR OTHER INSTRUMENT, DOCUMENT
OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS
RELATED THERETO. THIS WARNING SHALL NOT IN ANY WAY AFFECT, WAIVE, LIMIT, AMEND
OR MODIFY BANK' S ABILITY TO PURSUE REMEDIES PURSUANT TO ANY CONFESSION OF
JUDGMENT OR COGNOVIT PROVISION CONTAINED IN ANY NOTE OR OTHER INSTRUMENT,
DOCUMENT OR AGREEMENT AMONG BANK AND BORROWERS.
Address: 25425 Center Ridge Road THE CLEVELAND INDIANS BASEBALL
Westlake, Ohio 44145 COMPANY LIMITED PARTNERSHIP
CLEVELAND BASEBALL CORPORATION, its
General Partner
By: /s/ Richard E. Jacobs
--------------------------------
Richard E. Jacobs, President
BALLPARK MANAGEMENT COMPANY
By: /s/ Richard E. Jacobs
--------------------------------
Richard E. Jacobs, President
Address: 127 Public Square SOCIETY NATIONAL BANK
Cleveland, Ohio 44114
By: /s/ David C. Paisley
--------------------------------
Its: Vice President
--------------------------------
<PAGE> 20
AMENDMENT TO LOAN AGREEMENT ("AMENDMENT")
---------------------------
WHEREAS, THE CLEVELAND INDIANS BASEBALL COMPANY LIMITED PARTNERSHIP
("Baseball") and BALLPARK MANAGEMENT COMPANY ("Management") (Baseball and
Management are hereinafter referred to collectively as the "Borrowers") and
KEYBANK NATIONAL ASSOCIATION (formerly known as Society National Bank) ("Bank")
are parties to a certain Credit Agreement dated as of September 1, 1994 (the
"Loan Agreement"); and
WHEREAS, the Borrowers and Bank have agreed to amend the Loan
Agreement.
NOW, THEREFORE, for valuable consideration received to their
satisfaction, Company and Bank mutually agree as follows:
1. The Definition of "Expiration Date" appearing in Article One of the
Loan Agreement shall hereinafter be November 1, 1996.
2. Except as otherwise specifically provided in this Amendment, the
provisions of this Amendment shall be effective as of August 31, 1996.
3. Except as amended hereby, all provisions of the Loan Agreement are
ratified and confirmed and shall remain in full force and effect.
4. This Amendment shall be construed in accordance with the laws of the
State of Ohio, without regard to principles of conflict of laws.
IN WITNESS WHEREOF, Borrowers and Bank have caused this Amendment to be
executed by their duly authorized officers as of the 31st day of August, 1996.
THE CLEVELAND INDIANS BASEBALL BALLPARK MANAGEMENT COMPANY
LIMITED PARTNERSHIP COMPANY
CLEVELAND BASEBALL CORPORATION By: /s/ Richard E. Jacobs
its General Partner ------------------------------
Richard E. Jacobs, President
By: /s/ Richard E. Jacobs
------------------------------
Richard E. Jacobs, President
KEYBANK NATIONAL ASSOCIATION
By: /s/ illegible
--------------------------------
Its: Vice President
-------------------------------
-1-
<PAGE> 21
SECOND AMENDMENT TO LOAN AGREEMENT ("AMENDMENT")
----------------------------------
WHEREAS, THE CLEVELAND INDIANS BASEBALL COMPANY LIMITED PARTNERSHIP
("Baseball") and BALLPARK MANAGEMENT COMPANY ("Management") (Baseball and
Management are hereinafter referred to collectively as the "Borrowers") and
KEYBANK NATIONAL ASSOCIATION (formerly known as Society National Bank) ("Bank")
are parties to a certain Credit Agreement dated as of September 1, 1994 (as
amended by instrument dated as of August 31, 1996) (collectively, the "Loan
Agreement"); and
WHEREAS, the Borrowers and Bank have agreed to amend the Loan
Agreement.
NOW, THEREFORE, for valuable consideration received to their
satisfaction, Company and Bank mutually agree as follows:
1. The Definition of "Expiration Date" appearing in Article One of the
Loan Agreement shall hereinafter be November 1, 1998.
2. Except as otherwise specifically provided in this Amendment, the
provisions of this Amendment shall be effective as of October 31, 1996.
3. The maturity date of the Revolving Credit Note (as described in
Section 2.1A of the Agreement) shall hereinafter be November 1, 1998.
4. Except as amended hereby, all provisions of the Loan Agreement are
ratified and confirmed and shall remain in full force and effect.
5. This Amendment shall be construed in accordance with the laws of the
State of Ohio, without regard to principles of conflict of laws.
IN WITNESS WHEREOF, Borrowers and Bank have caused this Amendment to be
executed by their duly authorized officers as of the 31st day of October, 1996.
THE CLEVELAND INDIANS BASEBALL BALLPARK MANAGEMENT COMPANY
LIMITED PARTNERSHIP COMPANY
CLEVELAND BASEBALL CORPORATION By: /s/ Richard E. Jacobs
its General Partner ------------------------------
Richard E. Jacobs, President
By: /s/ Richard E. Jacobs
------------------------------
Richard E. Jacobs, President
KEYBANK NATIONAL ASSOCIATION
By: /s/ illegible
--------------------------------
Its: Vice President
-------------------------------
-1-
<PAGE> 1
Exhibit 10.14
INDEMNIFICATION AGREEMENT
-------------------------
This Indemnification Agreement (this "Agreement") is made ___________
___, 1998, at Cleveland, Ohio, between Cleveland Indians Baseball Company, Inc.,
an Ohio corporation (the "Company"), and ____________ (the "Director").
Background Information
----------------------
A. The Director is a member of the Company's Board of Directors (the "Board")
and, in that capacity, is performing valuable services for the Company.
B. The shareholders of the Company have adopted a Code of Regulations, as
amended (the "Regulations"), providing for indemnification of the directors of
the Company in accordance with Section 1701.13 of the Ohio Revised Code (the
"Statute"). The Regulations and the Statute specifically provide that they are
not exclusive, and contemplate that contracts may be entered into between the
Company and directors with respect to indemnification of directors.
C. The Company and Director recognize the substantial cost of carrying directors
and officers liability insurance ("D&O Insurance") and that the Company may
elect not to carry D&O Insurance from time to time.
D. The Company and Director further recognize that officers and directors may be
exposed to certain risks not covered by D&O Insurance.
E. These factors with respect to the coverage and cost to the Company of D&O
Insurance and issues concerning the scope of indemnity under the Statute and
Regulations generally have raised questions concerning the adequacy and
reliability of the protection presently afforded to directors.
F. In order to address such issues and induce the Director to serve and continue
to serve as a member of the Board, the Company has determined to enter into this
Agreement with the Director.
Statement of Agreement
----------------------
In consideration of the Director's continued service as a member of the
Board after the date of this Agreement, the Company and the Director hereby
agree as follows:
Section 1. INDEMNITY OF DIRECTOR. Subject only to the limitations set
forth in Section 2 below, the Company shall indemnify the Director to the full
extent not otherwise prohibited by the Statute or other applicable law,
including without limitation indemnity:
(a) Against any and all costs and expenses (including legal,
expert, and other professional fees and expenses), judgments, damages,
fines (including excise taxes with respect to employee benefit plans),
penalties, and amounts paid in settlement actually and reasonably
incurred by the Director (collectively, "Expenses"), in connection with
any threatened, pending, or completed action, suit or proceeding, or
arbitration or other
<PAGE> 2
alternative dispute resolution mechanism (whether civil, criminal,
administrative, or investigative and including without limitation an
action by or in the right of the Company) (each a "Proceeding") to
which the Director is or at any time becomes a party, or is threatened
to be made a party as a result, directly or indirectly, of serving at
any time: (i) as a director, officer, employee, or agent of the
Company; or (ii) at the request of the Company as a director, officer,
employee, trustee, fiduciary, manager, member, or agent of a
corporation, partnership, trust, limited liability company, employee
benefit plan, or other enterprise or entity; and
(b) Otherwise to the fullest extent that the Director may be
indemnified by the Company under the Regulations and the Statute,
including without limitation the non-exclusivity provisions thereof.
Section 2. LIMITATIONS ON INDEMNITY. No indemnity pursuant to Section 1
shall be paid by the Company:
(a) Except to the extent that the aggregate amount of losses
to be indemnified exceed the aggregate amount of such losses for which
the Director is actually paid or reimbursed pursuant to D&O Insurance,
if any, which may be purchased and maintained by the Company or any of
its subsidiaries;
(b) On account of any Proceeding in which judgment is rendered
against the Director for an accounting of profits made from the
purchase or sale of securities of the Company pursuant to the
provisions of Section 16(b) of the Securities Exchange Act of 1934, as
amended;
(c) On account of the Director's conduct which is determined
(pursuant to the Statute) to have been knowingly fraudulent,
deliberately dishonest, or willful misconduct, except to the extent
such indemnity is otherwise permitted under the Statute;
(d) With respect to any remuneration paid to the Director
determined, by a court having jurisdiction in the matter in a final
adjudication from which there is no further right of appeal, to have
been in violation of law;
(e) If it shall have been determined by a court having
jurisdiction in the matter, in a final adjudication from which there is
no further right of appeal, that indemnification is not lawful;
(f) On account of the Director's conduct to the extent it
relates to any matter that occurred prior to the time such individual
became a director of the Company; provided, however, that this
limitation shall not apply to the extent such matter occurred while the
Director was a director, officer, employee or agent of the Company or
its subsidiaries (other than prior to the time such entity became a
subsidiary of the Company); or
(g) With respect to Proceedings initiated or brought
voluntarily by the Director and not by way of defense, except pursuant
to Section 8 with respect to proceedings brought
-2-
<PAGE> 3
to enforce rights or to collect money due under this Agreement;
provided however that indemnity may be provided by the Company in
specific cases if the Board finds it to be appropriate.
In no event shall the Company be obligated to indemnify the Director
pursuant to this Agreement to the extent such indemnification is prohibited by
applicable law.
Section 3. ADVANCEMENT OF EXPENSES. Subject to Section 7 of this
Agreement, the Expenses incurred by the Director in connection with any
Proceeding shall be promptly reimbursed or paid by the Company as they become
due; provided the Director submits a written request to the Company for such
payment together with reasonable supporting documentation for such Expenses; and
provided further that the Director, at the request of the Company, submits to
the Company an undertaking to the effect stated in Section 7 below, and to
reasonably cooperate with the Company concerning such Proceeding.
Section 4. INSURANCE AND SELF INSURANCE. The Company shall not be
required to maintain D&O Insurance in effect if and to the extent that such
insurance is not reasonably available or if, in the reasonable business judgment
of the Board, either (a) the premium cost of such insurance is disproportionate
to the amount of coverage, or (b) the coverage provided by such insurance is so
limited by exclusions that there is insufficient benefit from such insurance. To
the extent the Company determines not to maintain D&O Insurance, the Company
shall be deemed to be self-insured within the meaning of Section 1701.13(E)(7)
of the Statute and shall, in addition to the Director's other rights hereunder,
provide protection to the Director similar to that which otherwise would have
been available to the Director under such insurance.
Section 5. CONTINUATION OF OBLIGATIONS. All obligations of the Company
under this Agreement shall apply retroactively beginning on the date the
Director commenced as, and shall continue during the period that the Director
remains, a director of the Company or is, as described above, a director,
officer, employee, trustee, fiduciary, manager, member, or agent of another
corporation, partnership, limited liability company, trust, employee benefit
plan, or other enterprise and shall continue thereafter as long as the Director
may be subject to any possible claim or any threatened, pending or completed
Proceeding as a result, directly or indirectly, of being such a director,
officer, employee, trustee, fiduciary, manager, member, or agent.
Section 6. NOTIFICATION AND DEFENSE OF CLAIM. Promptly after receipt by
the Director of notice of the commencement of any Proceeding, if a claim is to
be made against the Company under this Agreement, the Director shall notify the
Company of the commencement thereof, but the delay or omission to so notify the
Company shall not relieve the Company from any liability which it may have to
the Director under this Agreement, except to the extent the Company is
materially prejudiced by such delay or omission. With respect to any such
Proceeding of which the Director notifies the Company of the commencement:
(a) The Company shall be entitled to participate therein at
its own expense;
(b) The Company shall be entitled to assume the defense
thereof, jointly with any other indemnifying party similarly notified,
with counsel selected by the Company and
-3-
<PAGE> 4
approved by the Director, which approval shall not unreasonably be
withheld. After notice from the Company to the Director of the
Company's election to assume such defense, the Company shall not be
liable to the Director under this Agreement for any legal or other
Expenses subsequently incurred by the Director in connection with the
defense thereof except as otherwise provided below. The Director shall
have the right to employ his own counsel in such Proceeding, but the
fees and expenses of such counsel incurred after notice from the
Company of its assumption of such defense shall be the expenses of the
Director unless (i) the employment of such counsel by the Director has
been authorized by the Company, (ii) the Director, upon the advice of
counsel, shall have reasonably concluded that there may be a conflict
of interest between the Company and the Director in the conduct of such
defense, or (iii) the Company has not in fact employed counsel to
assume such defense, in any of which cases the fees and expenses of
such counsel shall be the expense of the Company. The Company shall not
be entitled to assume the defense of any Proceeding brought by or on
behalf of the Company or as to which the Director, upon the advice of
counsel, shall have made the conclusion described in (ii), above. In
the event the Company assumes the defense of any Proceeding as provided
in this Section 6(b), the Company may defend or settle such Proceeding
as it deems appropriate; provided, however, the Company shall not
settle any Proceeding in any manner which would impose any penalty or
limitation on the Director without the Director's written consent,
which consent shall not be unreasonably withheld.
(c) The Company shall not be required to indemnify the
Director under this Agreement for any amounts paid in settlement of any
Proceeding without the Company's written consent, which consent shall
not be unreasonably withheld.
(d) The Director shall cooperate with the Company in all ways
reasonably requested by it in connection with the Company fulfilling
its obligations under this Agreement.
Section 7. REPAYMENT OF EXPENSES. The Director shall reimburse the
Company for all Expenses paid by the Company pursuant to Section 3 of this
Agreement or otherwise in defending any Proceeding against the Director if and
only to the extent that a determination shall have been made by a court in a
final adjudication from which there is no further right of appeal that it has
been shown by clear and convincing evidence that the Director's action or
failure to act involved an act or omission undertaken with deliberate intent to
cause injury to the Company or undertaken with reckless disregard for the best
interests of the Company.
Section 8. ENFORCEMENT. The Company expressly confirms that it has
entered into this Agreement and has assumed the obligations of this Agreement in
order to induce the Director to serve or continue to serve as a director of the
Company and acknowledges that the Director is relying upon this Agreement in
continuing in that capacity. If the Director is required to bring an action to
enforce rights or to collect money due under this Agreement, the Company shall
reimburse the Director for all of the Director's reasonable fees and expenses
(including legal, expert, and other professional fees and expenses) in bringing
and pursuing such action, unless the court determines that each of the material
assertions made by the Director as a basis for such action were not made in good
faith or were frivolous. The Company shall have the burden of proving that
-4-
<PAGE> 5
indemnification is not required under this Agreement, unless a prior
determination has been made by the shareholders of the Company or a court of
competent jurisdiction that indemnification is not required hereunder.
Section 9. RIGHTS NOT EXCLUSIVE. The indemnification provided by this
Agreement shall not be deemed exclusive of any other rights to which the
Director may be entitled under the Company's articles of incorporation,
Regulations, any vote of the shareholders or disinterested directors of the
Company, the Statute, or otherwise, both as to action in his official capacity
and as to action in another capacity while holding such office.
Section 10. SEPARABILITY. Each of the provisions of this Agreement is a
separate and distinct Agreement and independent of the others so that, if any
provisions of this Agreement shall be held to be invalid and unenforceable for
any reason, such invalidity or unenforceability shall not affect the validity or
enforceability of the other provisions of this Agreement.
Section 11. MODIFICATION TO APPLICABLE LAW. In the event there is a
change, after the date of this Agreement, in any applicable law (including
without limitation the Statute) which: (a) expands the right of an Ohio
corporation to indemnify a member of its board of directors or an officer, such
change shall be automatically included within the scope of the Director's rights
and Company's obligations under this Agreement; or (b) narrows the right of an
Ohio corporation to indemnify a member of its board of directors or an officer,
such change, to the extent not otherwise required by such law, shall have no
effect on this Agreement or the parties' rights and obligations hereunder.
Section 12. PARTIAL INDEMNITY. If the Director is entitled under any
provision of this Agreement to indemnity by the Company for some or a portion of
the Expenses actually or reasonably incurred by him in the investigation,
defense, appeal, or settlement of any Proceeding, but not for the total amount
thereof, the Company shall nevertheless indemnify the Director for the portion
of such Expenses to which the Director is entitled.
Section 13. GOVERNING LAW. This Agreement shall be interpreted and
enforced in accordance with the laws of the State of Ohio, without regard to
choice of law principles.
Section 14. SUCCESSORS. This Agreement shall be binding upon, inure to
the benefit of, and be enforceable by and against the Director and the Company
and their respective heirs, successors, and assigns. The Company shall require
any successor or assign (whether direct or indirect, by purchase, merger,
consolidation, or otherwise) to all or substantially all of the business and/or
assets of the Company, expressly, absolutely, and unconditionally to assume and
agree to perform this Agreement in the same manner and to the same extent that
the Company would be required to perform it if no such succession or assignment
had taken place.
Section 15. PRIOR AGREEMENTS. This Agreement shall supersede any other
agreements entered into prior to the date of this Agreement between the Company
and the Director concerning the subject matter of this Agreement.
Section 16. CONSENT TO JURISDICTION. The Company and the Director each
hereby
<PAGE> 6
irrevocably consents to the jurisdiction of the courts of the State of Ohio for
all purposes in connection with any action or proceeding which arises out of or
relates to this Agreement and hereby waives any objections or defenses relating
to jurisdiction with respect to any lawsuit or other legal proceeding initiated
in or transferred to such courts.
CLEVELAND INDIANS BASEBALL
COMPANY, INC.
By:
-----------------------------------------
Richard E. Jacobs, Chairman of
the Board and Chief Executive Officer
DIRECTOR:
-----------------------------------------
Printed Name
----------------------------
-6-
<PAGE> 1
Exhibit 10.15
INDEMNIFICATION AGREEMENT
-------------------------
This Indemnification Agreement (this "Agreement") is made _____________
___, 1998, at Cleveland, Ohio, between Cleveland Indians Baseball Company, Inc.,
an Ohio corporation (the "Company"), and _______________ (the "Officer").
Background Information
----------------------
A. The Officer is an officer and employee of the Company and/or one or more of
its subsidiaries and, in that capacity, is performing valuable services for the
Company.
B. The shareholders of the Company have adopted a Code of Regulations, as
amended (the "Regulations"), providing for indemnification of the officers of
the Company in accordance with Section 1701.13 of the Ohio Revised Code (the
"Statute"). The Regulations and the Statute specifically provide that they are
not exclusive, and contemplate that contracts may be entered into between the
Company and officers with respect to indemnification of officers,
C. The Company and Officer recognize the substantial cost of carrying directors
and officers liability insurance ("D&O Insurance") and that the Company may
elect not to carry D&O Insurance from time to time.
D. The Company and Officer further recognize that officers and directors may be
exposed to certain risks not covered by D&O Insurance.
E. These factors with respect to the coverage and cost to the Company of D&O
Insurance and issues concerning the scope of indemnity under the Statute and
Regulations generally have raised questions concerning the adequacy and
reliability of the protection presently afforded to officers.
F. In order to address such issues and induce the Officer to serve and continue
to serve as an officer and employee of the Company or one of its subsidiaries,
the Company has determined to enter into this Agreement with the Officer.
Statement of Agreement
----------------------
In consideration of the Officer's continued service as an officer of
the Company or one of its subsidiaries after the date of this Agreement, the
Company and the Officer hereby agree as follows:
Section 1. INDEMNITY OF OFFICER. Subject only to the limitations set
forth in Section 2 below, the Company shall indemnify the Officer to the full
extent not otherwise prohibited by the Statute or other applicable law,
including without limitation indemnity:
(a) Against any and all costs and expenses (including legal,
expert, and other professional fees and expenses), judgments, damages,
fines (including excise taxes with respect to employee benefit plans),
penalties, and amounts paid in settlement actually and
<PAGE> 2
reasonably incurred by the Officer (collectively, "Expenses"), in
connection with any threatened, pending, or completed action, suit or
proceeding, or arbitration or other alternative dispute resolution
mechanism (whether civil, criminal, administrative, or investigative
and including without limitation an action by or in the right of the
Company) (each a "Proceeding") to which the Officer is or at any time
becomes a party, or is threatened to be made a party, as a result,
directly or indirectly, of serving at any time: (i) as an officer,
employee, or agent of the Company; or (ii) at the request of the
Company as a director, officer, employee, trustee, fiduciary, manager,
member, or agent of a corporation, partnership, trust, limited
liability company, employee benefit plan, or other enterprise or
entity; and
(b) Otherwise to the fullest extent that the Officer may be
indemnified by the Company under the Regulations and the Statute,
including without limitation the non-exclusivity provisions thereof.
Section 2. LIMITATIONS ON INDEMNITY. No indemnity pursuant to Section 1
shall be paid by the Company:
(a) Except to the extent that the aggregate amount of losses
to be indemnified exceed the aggregate amount of such losses for which
the Officer is actually paid or reimbursed pursuant to D&O Insurance,
if any, which may be purchased and maintained by the Company or any of
its subsidiaries;
(b) On account of any Proceeding in which judgment is rendered
against the Officer for an accounting of profits made from the purchase
or sale of securities of the Company pursuant to the provisions of
Section 16(b) of the Securities Exchange Act of 1934, as amended;
(c) On account of the Officer's conduct which is determined
(pursuant to the Statute) to have been knowingly fraudulent,
deliberately dishonest, or willful misconduct, except to the extent
such indemnity is otherwise permitted under the Statute;
(d) With respect to any remuneration paid to the Officer
determined, by a court having jurisdiction in the matter in a final
adjudication from which there is no further right of appeal, to have
been in violation of law;
(e) If it shall have been determined by a court having
jurisdiction in the matter, in a final adjudication from which there is
no further right of appeal, that indemnification is not lawful;
(f) On account of the Officer's conduct to the extent it
relates to any matter that occurred prior to the time such individual
became an officer of the Company; provided, however, that this
limitation shall not apply to the extent such matter occurred while the
Officer was an employee or agent of the Company or its subsidiaries
(other than prior to the time such entity became a subsidiary of the
Company); or
-2-
<PAGE> 3
(g) With respect to Proceedings initiated or brought
voluntarily by the Officer and not by way of defense, except pursuant
to Section 8 with respect to proceedings brought to enforce rights or
to collect money due under this Agreement; provided however that
indemnity may be provided by the Company in specific cases if the Board
finds it to be appropriate.
In no event shall the Company be obligated to indemnify the Officer
pursuant to this Agreement to the extent such indemnification is prohibited by
applicable law.
Section 3. ADVANCEMENT OF EXPENSES. Subject to Section 7 of this
Agreement, the Expenses incurred by the Officer in connection with any
Proceeding shall be promptly reimbursed or paid by the Company as they become
due; provided the Officer submits a written request to the Company for such
payment together with reasonable supporting documentation for such Expenses; and
provided further that the Officer, at the request of the Company, submits to the
Company an undertaking to the effect stated in Section 7 below.
Section 4. INSURANCE AND SELF INSURANCE. The Company shall not be
required to maintain D&O Insurance in effect if and to the extent that such
insurance is not reasonably available or if, in the reasonable business judgment
of the Board, either (a) the premium cost of such insurance is disproportionate
to the amount of coverage, or (b) the coverage provided by such insurance is so
limited by exclusions that there is insufficient benefit from such insurance. To
the extent the Company determines not to maintain D&O Insurance, the Company
shall be deemed to be self-insured within the meaning of Section 1701.13(E)(7)
of the Statute and shall, in addition to the Officer's other rights hereunder,
provide protection to the Officer similar to that which otherwise would have
been available to the Officer under such insurance.
Section 5. CONTINUATION OF OBLIGATIONS. All obligations of the Company
under this Agreement shall apply retroactively beginning on the date the Officer
commenced as, and shall continue during the period that the Officer remains, an
officer, employee, or agent of the Company or is, as described above, a
director, officer, employee, trustee, fiduciary, manager, member, or agent of
another corporation, partnership, limited liability company, trust, employee
benefit plan, or other enterprise and shall continue thereafter as long as the
Officer may be subject to any possible claim or any threatened, pending or
completed Proceeding as a result, directly or indirectly, of being such a
director, officer, employee, trustee, fiduciary, manager, member, or agent.
Section 6. NOTIFICATION AND DEFENSE OF CLAIM. Promptly after receipt by
the Officer of notice of the commencement of any Proceeding, if a claim is to be
made against the Company under this Agreement, the Officer shall notify the
Company of the commencement thereof, but the delay or omission to so notify the
Company shall not relieve the Company from any liability which it may have to
the Officer under this Agreement, except to the extent the Company is materially
prejudiced by such delay or omission. With respect to any such Proceeding of
which the Officer notifies the Company of the commencement:
(a) The Company shall be entitled to participate therein at
its own expense;
-3-
<PAGE> 4
(b) The Company shall be entitled to assume the defense
thereof, jointly with any other indemnifying party similarly notified,
with counsel selected by the Company and approved by the Officer, which
approval shall not unreasonably be withheld. After notice from the
Company to the Officer of the Company's election to assume such
defense, the Company shall not be liable to the Officer under this
Agreement for any legal or other Expenses subsequently incurred by the
Officer in connection with the defense thereof except as otherwise
provided below. The Officer shall have the right to employ his own
counsel in such Proceeding, but the fees and expenses of such counsel
incurred after notice from the Company of its assumption of such
defense shall be the expenses of the Officer unless (i) the employment
of such counsel by the Officer has been authorized by the Company, (ii)
the Officer, upon the advice of counsel, shall have reasonably
concluded that there may be a conflict of interest between the Company
and the Officer in the conduct of such defense, or (iii) the Company
has not in fact employed counsel to assume such defense, in any of
which cases the fees and expenses of such counsel shall be the expense
of the Company. The Company shall not be entitled to assume the defense
of any Proceeding brought by or on behalf of the Company or as to which
the Officer, upon the advice of counsel, shall have made the conclusion
described in (ii), above. In the event the Company assumes the defense
of any Proceeding as provided in this Section 6(b), the Company may
defend or settle such Proceeding as it deems appropriate; provided,
however, the Company shall not settle any Proceeding in any manner
which would impose any penalty or limitation on the Officer without the
Officer's written consent, which consent shall not be unreasonably
withheld.
(c) The Company shall not be required to indemnify the Officer
under this Agreement for any amounts paid in settlement of any
Proceeding without the Company's written consent, which consent shall
not be unreasonably withheld.
(d) The Officer shall cooperate with the Company in all ways
reasonably requested by it in connection with the Company fulfilling
its obligations under this Agreement.
Section 7. REPAYMENT OF EXPENSES. The Officer shall reimburse the
Company for all Expenses paid by the Company pursuant to Section 3 of this
Agreement or otherwise in defending any Proceeding against the Officer if and
only to the extent that a determination shall have been made by a court in a
final adjudication from which there is no further right of appeal that the
Officer is not entitled to indemnification by the Company for such Expenses
under the Statute, the Regulations, this Agreement, or otherwise.
Section 8. ENFORCEMENT. The Company expressly confirms that it has
entered into this Agreement and has assumed the obligations of this Agreement in
order to induce the Officer to serve or continue to serve as an officer and
employee of the Company and acknowledges that the Officer is relying upon this
Agreement in continuing in that capacity. If the Officer is required to bring an
action to enforce rights or to collect money due under this Agreement, the
Company shall reimburse the Officer for all of the Officer's reasonable fees and
expenses (including legal, expert, and other professional fees and expenses) in
bringing and pursuing such action, unless the court determines that each of the
material assertions made by the Officer as a basis for such action were
-4-
<PAGE> 5
not made in good faith or were frivolous. The Company shall have the burden of
proving that indemnification is not required under this Agreement, unless a
prior determination has been made by the shareholders of the Company or a court
of competent jurisdiction that indemnification is not required hereunder.
Section 9. RIGHTS NOT EXCLUSIVE. The indemnification provided by this
Agreement shall not be deemed exclusive of any other rights to which the Officer
may be entitled under the Company's articles of incorporation, Regulations, any
vote of the shareholders or disinterested directors of the Company, the Statute,
or otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office.
Section 10. SEPARABILITY. Each of the provisions of this Agreement is a
separate and distinct Agreement and independent of the others so that, if any
provisions of this Agreement shall be held to be invalid and unenforceable for
any reason, such invalidity or unenforceability shall not affect the validity or
enforceability of the other provisions of this Agreement.
Section 11. MODIFICATION TO APPLICABLE LAW. In the event there is a
change, after the date of this Agreement, in any applicable law (including
without limitation the Statute) which: (a) expands the right of an Ohio
corporation to indemnify a member of its board of directors or an officer, such
change shall be automatically included within the scope of the Officer's rights
and Company's obligations under this Agreement; or (b) narrows the right of an
Ohio corporation to indemnify a member of its board of directors or an officer,
such change, to the extent not otherwise required by such law, shall have no
effect on this Agreement or the parties' rights and obligations hereunder.
Section 12. PARTIAL INDEMNITY. If the Officer is entitled under any
provision of this Agreement to indemnity by the Company for some or a portion of
the Expenses actually or reasonably incurred by him in the investigation,
defense, appeal, or settlement of any Proceeding, but not for the total amount
thereof, the Company shall nevertheless indemnify the Officer for the portion of
such Expenses to which the Officer is entitled.
Section 13. GOVERNING LAW. This Agreement shall be interpreted and
enforced in accordance with the laws of the State of Ohio, without regard to
choice of law principles.
Section 14. SUCCESSORS. This Agreement shall be binding upon, inure to
the benefit of, and be enforceable by and against the Officer and the Company
and their respective heirs, successors, and assigns. The Company shall require
any successor or assign (whether direct or indirect, by purchase, merger,
consolidation, or otherwise) to all or substantially all of the business and/or
assets of the Company, expressly, absolutely, and unconditionally to assume and
agree to perform this Agreement in the same manner and to the same extent that
the Company would be required to perform it if no such succession or assignment
had taken place.
Section 15. PRIOR AGREEMENTS. This Agreement shall supersede any other
agreements entered into prior to the date of this Agreement between the Company
and the Officer concerning the subject matter of this Agreement.
-5-
<PAGE> 6
Section 16. CONSENT TO JURISDICTION. The Company and the Officer each
hereby irrevocably consents to the jurisdiction of the courts of the State of
Ohio for all purposes in connection with any action or proceeding which arises
out of or relates to this Agreement and hereby waives any objections or defenses
relating to jurisdiction with respect to any lawsuit or other legal proceeding
initiated in or transferred to such courts.
CLEVELAND INDIANS BASEBALL
COMPANY, INC.
By:
----------------------------------------
Richard E. Jacobs, Chairman of the
Board and Chief Executive Officer
OFFICER
----------------------------------------
Printed Name
---------------------------
-6-
<PAGE> 1
Exhibit 10.18
SECOND AMENDMENT
----------------
Reference is hereby made to (i) the Reducing Revolving Credit Agreement
dated as of June 28, 1996, as amended by a First Amendment dated as of November
7, 1996 (the "MLB Credit Agreement") among Major League Baseball Trust (the
"Borrower"), Fleet National Bank (the "Administrative Agent"), Bank of America,
The Chase Manhattan Bank (formerly known as Chemical Bank), Morgan Guaranty
Trust Company of New York and the Banks signatory thereto, (ii) the Club Trust
Reducing Revolving Credit Agreement dated as of June 28, 1996, as amended by a
First Amendment dated as of November 7, 1996 (the "Club Trust Credit Agreement")
among Major League Baseball Trust (the "MLB Trust"), Fleet National Bank (the
"Facilitating Agent") and the Club Trusts deemed to be parties thereto and (iii)
the Pledge and Security Agreement dated as of June 28, 1996 (the "MLB Pledge and
Security Agreement") between the Borrower and the Administrative Agent. The
parties now desire to amend the MLB Credit Agreement, the Club Trust Credit
Agreement and the MLB Pledge and Security Agreement as set forth in this Second
Amendment and hereby agree as follows:
I. DEFINITIONS.
------------
Capitalized terms used herein which are not otherwise defined herein and
which are defined in Annex A to the MLB Credit Agreement have the same meanings
herein as therein.
II. BACKGROUND.
-----------
A Collective Bargaining Agreement with a Collective Bargaining Agreement
Effective Date as of March 13, 1997 has been executed and delivered to the
Administrative Agent. The Borrower has requested that the LIBO Rate spread
pricing be reduced, that the scheduled reductions of the Maximum Available
Amount be modified and that funds be permitted to be distributed by each Club
Trust to its related Participating Club during each fiscal year prior to the
accumulation in the Debt Service Account of sufficient funds to pay all
scheduled payments of principal, periodic interest and fees for such fiscal
year. The Banks are willing to permit such modifications subject to the terms
and conditions of this Second Amendment. In addition, the Indians Club Trust has
requested that it be permitted to change its election under the Club Trust
Credit Agreement from Option A to Option B and to increase its Maximum Available
Amount under its Club Trust Sub-Facility to $35,500,000. The Borrower has
correspondingly requested that the Total Commitment be increased to $305,000,000
and that certain Banks increase their respective Commitments. The Banks and the
MLB Trust are willing to permit
<PAGE> 2
such increases subject to the terms and conditions of this Second Amendment.
III. AMENDMENTS.
-----------
(A) REFERENCES TO TOTAL COMMITMENT IN THE MLB CREDIT AGREEMENT AND THE
CLUB TRUST CREDIT AGREEMENT.
As used in the MLB Credit Agreement and the Club Trust Credit Agreement,
the term "Total Commitment" shall mean $305,000,000, as such amount shall be
reduced pursuant to Section 2.04 of each of the MLB Credit Agreement and the
Club Trust Credit Agreement and increased pursuant to Sections 2.15 and 8.01(b)
of the MLB Credit Agreement and Sections 2.14 and 8.01 of the Club Trust Credit
Agreement.
(B) AMENDMENT TO SECTION 2.06(a)(iv) OF THE MLB CREDIT AGREEMENT. Section
2.06(a)(iv) of the MLB Credit Agreement is hereby amended by deleting the
sub-paragraph in its entirety and substituting therefor the following:
"(iv) On and after any Collective Bargaining Agreement Effective Date, and
prior to any subsequent Collective Bargaining Agreement Expiration Date, the
rate for any LIBO Rate Portion of any Club Trust Related Advance shall be
computed at a rate equal to the LIBO Rate, plus .8750% per annum."
(C) AMENDMENT TO SECTION 5.01 OF THE MLB CREDIT AGREEMENT. Section 5.01 of
the MLB Credit Agreement is hereby amended by adding thereto paragraph (f) as
follows:
"(f) REVENUE FORECAST AND DEBT SERVICE AND DISTRIBUTION SCHEDULE. Cause to
be delivered to the Administrative Agent, on an annual basis (i) on or before
December 1 of each year, commencing December 1, 1997, in respect of the
immediately succeeding calendar year, the Revenue Forecast and the proposed Debt
Service and Distribution Schedule for such calendar year and (ii) upon its
finalization by the Commissioner and the Administrative Agent, the final Debt
Service and Distribution Schedule for such calendar year."
(D) AMENDMENT TO SCHEDULES I AND II TO THE MLB CREDIT AGREEMENT.
Schedules I and II to the MLB Credit Agreement are hereby amended by
deleting Schedules I and II in their entirety and replacing them with Schedules
I and II attached hereto.
(E) AMENDMENT TO SECTION 2.04 (b)(i) OF THE CLUB TRUST CREDIT AGREEMENT.
Section 2.04(b)(i) of the Club Trust Credit
2
<PAGE> 3
Agreement is hereby amended by deleting the sub-paragraph in its entirety and
substituting therefore the following:
"(i) The Maximum Available Amount under each Club Trust's
Sub-Facility shall be reduced, on or prior to each of the dates set forth
below, to the corresponding amounts set forth below for a Club Trust that
has elected option A or Option B, as the case may be:
<TABLE>
<CAPTION>
Maximum Available
Amount Per Club Trust
---------------------
Date Option A Option B
---- -------- --------
<S> <C> <C>
December 15, 1997 $25,000,000 $35,500,000
December 15, 1998 $25,000,000 $30,750,000
December 15, 1999 $24,500,000 $24,500,000
December 15, 2000 $18,000,000 $18,000,000
December 31, 2000 Balance Due Balance Due
</TABLE>
PROVIDED, that if the National Media Contract with a joint venture between Fox
Broadcasting Company and Liberty substantially in the form previously delivered
to the Administrative Agent is not fully executed on or before July 15, 1997,
the Maximum Available Amount per Club Trust under Option B in 1997 and 1998 and
under Option A and Option B in 1999 and 2000 shall be reduced by an additional
$1,650,000 per Club Trust per year."
(F) AMENDMENT TO SCHEDULE I TO THE CLUB TRUST CREDIT AGREEMENT. Schedule I
to the Club Trust Credit Agreement is hereby amended by deleting Schedule I in
its entirety and replacing it with Schedule I attached hereto.
(G) AMENDMENTS TO ANNEX A TO THE MLB CREDIT AGREEMENT.
(i) Annex A to the MLB Credit Agreement is hereby amended by deleting
the definition of "Commissioner Expenses" in its entirety and substituting
therefor the following:
"COMMISSIONER EXPENSES" means the expenses of the Commissioner and the
office of the Commissioner paid pursuant to Sections 5(b) and (c) of the
Central Fund Agreement by the Major League Clubs as in effect on the
Closing Date; PROVIDED however, that with respect to each
3
<PAGE> 4
Participating Club, aggregate annual payments of such Participating Club's
Pro Rata share of Commissioner Expenses made by the Commissioner on behalf
of such Participating Club out of the Central Fund Custody Account shall be
limited to (i) $1,600,000 in 1996, and (ii) an aggregate annual amount in
each succeeding year equal to the sum of (x) the prior year's maximum
amount, plus (y) the product of the amount of any increase in the Consumer
Price Index (expressed as a percentage) multiplied times the prior year's
maximum amount, plus (z) the product of five percent (5%) multiplied times
the prior year's maximum amount; PROVIDED, further, that each Participating
Club will remain materially liable for its share of any Commissioner
Expenses in any year which exceed such permitted payments; and PROVIDED,
further, that in 1997, in addition to the amounts set forth above, the
Commissioner will be permitted, on a one-time non-recurring basis, to
withdraw an additional aggregate amount of up to $37,000,000 (up to
$1,321,429 per Participating Club) comprising (A) up to $25,000,000 in
revenue sharing expenses and (B) up to $12,000,000 in payments to a
non-qualified pension plan for Major League Baseball players playing before
1947."
(ii) Annex A to the MLB Credit Agreement is hereby further amended by
adding thereto in the proper alphabetical order the following definitions:
""DEBT SERVICE AND DISTRIBUTION SCHEDULE" means a schedule prepared by
the Commissioner and promptly approved by the Administrative Agent in its
reasonable discretion for each calendar year setting forth in reasonable
detail with respect to each distribution to be made in such fiscal year
from the Central Fund, MLB Properties and Expansion Fees into the
Collection Account for the account of each Club Trust (a) the proposed
amounts to be transferred into the Debt Service Account in respect of
scheduled payments of principal, interest, fees and expenses due from such
Club Trust to the MLB Trust and collectively from the Borrower to the Banks
and (b) the proposed amounts to be transferred into the Distribution
Account for distribution to such Club Trust's related Participating Club;
PROVIDED, that such schedule shall provide at a minimum that there shall be
transferred into the Debt Service Account from each distribution sufficient
amounts to maintain (after giving effect to amounts then on deposit in the
Debt Service Account and scheduled payments of principal, interest, fees
and expenses prior to the next Distribution Date) (i) an amount equal to at
least one fiscal quarter of projected interest for each Club Trust based on
its then prevailing interest rate plus 2% (or if such Club Trust has
capped its interest rate with an Agent or selected an Interest Period
4
<PAGE> 5
which equals or exceeds the applicable period from the applicable
distribution date to the next distribution date, then based on its capped
rate or LIBO Rate plus the applicable margin), and (ii) amounts in respect
of scheduled payments of principal and payments of fees and expenses by
such Club Trust during such year sufficient in the reasonable judgment of
the Administrative Agent to permit such Club Trust and the Borrower to make
such payments in full in a timely manner; PROVIDED, further, that upon the
submission of a proposed version of such schedule by the Commissioner to
the Administrative Agent on or before December 1 of each year in respect of
the immediately succeeding calendar year in accordance with Section 5.01(f)
of the MLB Credit Agreement, the Administrative Agent shall reasonably
promptly either approve the proposed schedule in its reasonable discretion
or modify it in consultation with the Commissioner until it is acceptable
to the Administrative Agent in its reasonable discretion; and PROVIDED,
further, that in the event that, due to changed circumstances in any
calendar year, the Commissioner determines that a material change will be
required to the schedule for such calendar year, such change shall require
the written approval of three of the Agent Banks including the
Administrative Agent."
"DISTRIBUTION ACCOUNT PAYMENT DIRECTIVE" means a payment directive
executed by the MLB Trust and each Club Trust's related Participating Club
directing the Administrative Agent to transfer all amounts in a Club
Trust's allocable portion of the Distribution Account directly to such Club
Trust's Participating Club rather than 90% to such Participating Club and
10% to the MLB Trust for the account of such Participating Club.
"DISTRIBUTION INTERRUPTION EVENT" means (i) an Event of Default or
Club Trust Event of Default, (ii) a Business Interruption Event, (iii) the
payment of any distribution from the Commissioner to the Collection Account
which is materially less in amount or more than ten (10) days later than
the corresponding amount or date set forth in the Debt Service and
Distribution Schedule for such calendar year, or (iv) if at any time, the
cash balance (including cash equivalents and short-term investments) in the
Central Fund Custody Account is less than $5,000,000; PROVIDED, that in the
case of a Club Trust Event of Default, such term shall only apply to the
affected Club Trust or Club Trusts.
"REVENUE FORECAST" means a revenue forecast prepared by the
Commissioner and approved by the Administrative Agent in its reasonable
discretion for each calendar year setting forth in reasonable detail the
projected date and amount of
5
<PAGE> 6
each distribution from the Central Fund, MLB Properties and Expansion Fees
into the Collection Account allocable to each Club Trust."
(H) AMENDMENT TO SECTION 7(c) OF THE MLB PLEDGE AND SECURITY AGREEMENT.
Section 7(c) of the MLB Pledge and Security Agreement is hereby amended by
deleting the provision in its entirety and substituting therefor the following:
"(c) WITHDRAWALS AND TRANSFERS. The MLB Trust (on its own behalf and on
behalf of the Club Trusts) hereby appoints the Administrative Agent the true and
lawful attorney of the MLB Trust and the Club Trusts, with full power of
substitution, for the purpose of making any withdrawal or ordering any transfer
of deposited funds from the Collection Account and the Debt Service Account,
which appointment is coupled with an interest and is irrevocable.
(i) Subject to the provisions of Section 2.12(d) of the MLB Credit
Agreement, at such times and in such amounts as are specified below, the
Administrative Agent shall withdraw or transfer amounts on deposit in the
Collection Account in the following priority:
(A) on each Distribution Date and any other date on which amounts are
deposited in or shall be on deposit in the Collection Account the Administrative
Agent shall deposit in the Debt Service Account such amounts, without
duplication, as are required or necessary (I) to make payments of principal and
interest under the MLB Credit Agreement or the Club Trust Credit Agreement then
due and owing, (II) to make unscheduled payments of principal in connection with
any Prepayment Event (including any voluntary principal prepayment by a Club
Trust and any required principal payment in connection with any Club Trust Event
of Default), Event of Default or Club Trust Event of Default, (III) to pay the
fees and expenses of the Banks and the Administrative Agent under this
Agreement, the Club Trust Pledge and Security Agreement, the MLB Credit
Agreement and the Club Trust Credit Agreement or any related agreement
(including the Club Trust Administration Fee Letter, and without duplication,
the MLB Trust Administration Fee Letter) then due and owing, (IV) PROVIDED that
no Distribution Interruption Event has occurred and is continuing, to comply
with the Debt Service and Distribution Schedule with respect to such
distribution and cover payments of principal, interest, fees and expenses under
the MLB Credit Agreement or the Club Trust Credit Agreement, (V) upon the
occurrence of a Distribution Interruption Event until the written approval of a
revised Debt Service and Distribution Schedule by three of the Agent Banks
including the Administrative Agent, to
6
<PAGE> 7
cover payments of interest under the MLB Credit Agreement or the Club Trust
Credit Agreement that will be due and owing on or before the next Distribution
Date at a rate per annum equal to 2% per annum above the rate per annum
required to be paid on Borrowings under the MLB Credit Agreement or Loans under
the Club Trust Credit Agreement on such date; PROVIDED, HOWEVER, that with
respect to any Borrowing (or portion thereof) which has been used to make Loans
(or portions thereof) to a Club Trust that has entered into an interest cap
agreement with an Agent Bank which extends through the next Distribution Date or
has selected an Interest Period for a LIBO Rate Portion which extends through
the next Distribution Date, interest on such amount will be computed at the
maximum interest rate provided for in such agreement or at the LIBO Rate (plus
the applicable margin) then in effect, as applicable, (VI) upon the occurrence
of a Distribution Interruption Event, until the written approval of a revised
Debt Service and Distribution Schedule by three of the Agent Banks including the
Administrative Agent, to cover principal payments or reductions that will be due
and owing on or before December 15 of such year (or, in the case of the year
2000, to cover principal payments or reductions that will be due and owing on or
before the Final Payment Date) and (VII) to pay any other amount that may be
payable to the Banks or the Administrative Agent as a Secured Obligation
(including amounts payable with respect to any financial hedge with respect to
any Club Trust's obligations to the MLB Trust) that is then due and owing;
(B) on each Distribution Date (subject to the availability of funds
therefor and after giving effect to any transfers therefrom on such date or any
previous date pursuant to (A) above), the Administrative Agent shall credit to
each Club Trust's Distribution Account, from amounts on deposit in the
Collection Account attributable to such Club Trust, a per Club Trust amount
equal to either the balance in the Collection Account attributable to such Club
Trust or such lesser amount as designated in the Debt Service and Distribution
Schedule or as otherwise designated in writing on such date by the Commissioner
or the Chief Operating Officer of MLB Properties, as the case may be, which
amount is intended generally to equal the amount distributed to each of the
non-Participating Clubs on such Distribution Date (before giving effect to any
deposits to the Debt Service Account therefrom); PROVIDED, HOWEVER, that the
Administrative Agent shall be entitled to withhold from the amount of any such
distribution and deposit to the Debt Service Account any amounts it would have
been permitted to deposit to the Debt Service Account pursuant to (A) above;
PROVIDED, FURTHER, that upon the occurrence of a Distribution Interruption
Event, the Administrative Agent shall retain all amounts that would otherwise
have been credited to each Club Trust's Distribution Account in accordance with
this paragraph (B) in the Collection Account for application, if needed, as set
forth in
7
<PAGE> 8
paragraph (A) above until (w) in the case of an Event of Default or Club Trust
Event of Default, such Event of Default or Club Trust Event of Default is either
cured or waived in accordance with the provisions of the MLB Credit Agreement or
Club Trust Credit Agreement, as applicable, (x) in the case of a Business
Interruption Event, the earlier of the termination of the strike or other labor
dispute which gave rise to the Business Interruption Event or the resumption of
games involving players of Major League Baseball and not replacement players,
(y) in the case of the payment of any distribution from the Commissioner to the
Collection Account which is materially less in amount or more than ten (10) days
later than the corresponding amount or date set forth in the Debt Service and
Distribution Schedule for such calendar year, amounts become available in the
Collection Account under the applicable provisions of Section 7(c)(i)(A) and (z)
in the case of a cash balance (including cash equivalents and short-term
investments) of less than $5,000,000 in the Central Fund Custody Account, such
cash balance is (including cash equivalents and short-term investments) restored
to at least $5,000,000; and PROVIDED, further, that if any Club Trust has
directed the Administrative Agent in writing to prepay scheduled payments of
principal owed by such Club Trust on an ongoing basis in minimum amounts of
$100,000 without penalty or premium (except LIBO breakage fees) from amounts
deposited in the Collection Account attributable to such Club Trust which would
otherwise be available for transfer to such Club Trust's Distribution Account,
the Administrative Agent shall instead transfer such amounts to the Debt Service
Account and apply such amounts to prepay such Club Trust's and the Borrower's
scheduled payments of principal during such calendar year.
(ii) Subject to the restrictions on cross-collateralization set forth in
the Transaction Documents (including the provisions of Section 2.12(d) of the
MLB Credit Agreement), on any date on which any amounts are due to the Banks
hereunder or under the MLB Credit Agreement (including in connection with any
voluntary or required payment or prepayment of principal), the Administrative
Agent shall withdraw such amounts from the Debt Service Account and distribute
such amounts ratably to the Banks in the priority set forth in (iii) below. In
connection with such distribution, the Administrative Agent shall, as
contemplated in Section 2.12 of the MLB Credit Agreement, determine the specific
Club Trusts with respect to which such distribution was made and the amount paid
to each Bank with respect to each such Club Trust. Amounts distributed to the
Banks with respect to a specific Club Trust shall also constitute payment of
such Club Trust's obligation to the MLB Trust under the Club Trust Credit
Agreement.
(iii) Amounts distributed from the Debt Service Account to the Banks, with
respect to each Club Trust and the related Club
8
<PAGE> 9
Trust Related Advances and Loans, shall be applied in the following order to pay
(A) all fees owed to the Administrative Agent and the Banks (and/or including
fees payable with respect to any financial hedge), (B) all current interest due
(including amounts payable with respect to any financial hedge) and then any
past due interest, (C) all current scheduled principal payments or reductions
and then any past due principal payments or reductions, (D) all required
principal prepayments and (E) all voluntary principal prepayments.
IV. CONDITIONS.
-----------
The obligation of the Banks and the MLB Trust to enter into this Second
Amendment, and the effectiveness of the amendments set forth herein, are subject
to the Borrower delivering the fully executed $305,000,000 Promissory Note, the
Indians Club Trust delivering the fully executed Election of Borrowing Option B
and $35,500,000 Promissory Note and counsel to the Borrower and each Club Trust
delivering opinions satisfactory in form and substance to the Banks and the MLB
Trust with respect to the Second Amendment and the transactions contemplated
hereby. The Banks will concurrently deliver the original $303,500,000 Promissory
Note dated November 7, 1996 of the Borrower and the original $25,000,000
Promissory Note dated June 28, 1996 of the Indians Club Trust to the MLB Trust
and the Indians Club Trust, respectively for cancellation.
V. NO DEFAULT; REPRESENTATIONS AND WARRANTIES, ETC.
------------------------------------------------
The Borrower and the Indians Club Trust hereby represent and warrant to the
Banks and the MLB Trust that all of the conditions of lending specified in
Section 3.02 of each of the MLB Credit Agreement and the Club Trust Credit
Agreement and Section IV of this Second Amendment have been satisfied in all
material respects as of the date hereof. In addition, and without limiting the
generality of the foregoing, the Borrower and each Club Trust hereby confirm
that: (i) the representations and warranties of the Borrower and each Club Trust
contained in Section 4.01 of each of the MLB Credit Agreement and the Club Trust
Credit Agreement, as amended by and through the Second Amendment, are true in
all material respects on and as of the date hereof as if made on such date
(except to the extent that such representations and warranties expressly relate
to an earlier date); (ii) the Borrower and each Club Trust are in compliance in
all material respects with all of the terms and provisions set forth in the MLB
Credit Agreement and the Club Trust Credit Agreement, as amended by and through
the Second Amendment, on its part to be observed or performed on or prior to the
date hereof; and (iii) no Event of Default or Club Trust Event of Default
specified in Article VI of each of the MLB Credit Agreement and the Club Trust
Credit Agreement, nor any
9
<PAGE> 10
event which with the giving of notice or expiration of any applicable grace
period or both would constitute such an Event of Default or Club Trust Event of
Default has occurred and is continuing.
VI. CONFIRMATION OF SECURED OBLIGATIONS.
------------------------------------
Each of the Borrower and each Club Trust hereby confirm that all
indebtedness of the Borrower and each Club Trust to the Banks and the MLB Trust
under the MLB Credit Agreement and the Club Trust Credit Agreement as amended by
and through the Second Amendment, whether now existing or hereafter arising,
constitutes "Secured Obligations" and "Club Trust Secured Obligations" as such
terms are defined in Annex A to the MLB Credit Agreement.
VII. MISCELLANEOUS.
--------------
Except to the extent specifically amended hereby, the MLB Credit Agreement
and the Club Trust Credit Agreement, as amended by and through the Second
Amendment, and all related documents shall be unaffected hereby and shall remain
in full force and effect. This Second Amendment may be executed in any number of
counterparts, all of which together shall constitute one and the same
instrument. This Second Amendment shall be governed by the laws of The State of
New York and shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
10
<PAGE> 11
IN WITNESS WHEREOF, the parties hereto have executed this Second Amendment
as a sealed instrument as of May 27, 1997.
MAJOR LEAGUE BASEBALL
TRUST, as Borrower,
By
WILMINGTON TRUST COMPANY,
not in its individual capacity
but solely as MLB Trustee,
By /s/ David A. Vanskey, Jr.
----------------------------
Name: David A. Vanskey, Jr.
Title:
Commitment
----------
$44,000,000 FLEET NATIONAL BANK,
in its capacity as Agent Bank,
Administrative Agent and as a Bank,
By /s/ Keith J. Collar
----------------------------
Name: Keith J. Collar
Title:
$38,000,000 BANK OF AMERICA,
in its capacity as Agent Bank
and as a Bank,
By /s/ Madeline W. Lee
----------------------------
Name: Madeline W. Lee
Title:
11
<PAGE> 12
$36,000,000 THE CHASE MANHATTAN BANK
in its capacity as Agent Bank
and as a Bank,
By /s/ David L. Kelly
----------------------------
Name: David L. Kelly
Title:
$36,000,000 MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
in its capacity as Agent Bank
and as a Bank,
By /s/ Jeffery B. Wescott
----------------------------
Name: Jeffery B. Wescott
Title:
$19,000,000 BANK OF TOKYO - MITSUBISHI TRUST
COMPANY
By: /s/ Paula Mueller
----------------------------
Name: Paula Mueller
Title:
$16,000,000 THE BANK OF NOVA SCOTIA
By: /s/ illegible
----------------------------
Name:
Title:
12
<PAGE> 13
$15,000,000 BANK OF MONTREAL
By: /s/ R. J. McClorey
---------------------------
Name: R. J. McClorey
Title:
$13,500,000 BANK OF IRELAND
By: /s/ R. H. Wyer
---------------------------
Name: R. H. Wyer
Title:
$13,500,000 FUJI BANK LIMITED
By: /s/ Kazuaki Kitabatake
---------------------------
Name: Kazuaki Kitabatake
Title:
$13,500,000 IBJ SCHRODER BANK & TRUST
COMPANY
By: /s/ Mark H. Minter
---------------------------
Name: Mark H. Minter
Title:
$13,500,000 MITSUBISHI TRUST & BANKING CORP.
By: /s/ Masaaki Yamagrshi
---------------------------
Name: Masaaki Yamagrshi
Title:
13
<PAGE> 14
$13,500,000 SUMITOMO BANK LIMITED
By: /s/ John Kemper
-----------------------------------
Name: John Kemper
Title:
$13,500,000 YASUDA TRUST & BANKING
By: /s/ R. M. Laudenschlager
-----------------------------------
Name: R. M. Laudenschlager
Title:
$10,000,000 BANCO POPULAR DE PUERTO RICO
By: /s/ John Cunco
-----------------------------------
Name: John Cunco
Title:
$10,000,000 LaSALLE NATIONAL BANK
By: /s/ James M. Feldman
-----------------------------------
Name: James M. Feldman
Title:
MAJOR LEAGUE BASEBALL TRUST,
as Lender,
By: WILMINGTON TRUST COMPANY,
not in its individual capacity but
solely as MLB Trustee
By: /s/ David A. Vanaskey, Jr.
------------------------------------
Name: David A. Vanaskey, Jr.
Title:
FLEET NATIONAL BANK, as Facilitating Agent
14
<PAGE> 15
By: /s/ Keith J. Collar
------------------------------------
Keith J. Collar
Vice President
ASTROS CLUB TRUST
By
WILMINGTON TRUST COMPANY,
not in its individual capacity but
solely as MLB Trustee,
By /s/ David A. Vanaskey, Jr.
-------------------------------------
Name: David A. Vanaskey, Jr.
Title:
BREWERS CLUB TRUST
By
WILMINGTON TRUST COMPANY,
not in its individual capacity but
solely as MLB Trustee,
By /s/ David A. Vanaskey, Jr.
-------------------------------------
Name: David A. Vanaskey, Jr.
Title:
EXPOS CLUB TRUST
By
WILMINGTON TRUST COMPANY,
not in its individual capacity but
solely as MLB Trustee,
By /s/ David A. Vanaskey, Jr.
-------------------------------------
Name: David A. Vanaskey, Jr.
Title:
INDIANS CLUB TRUST
15
<PAGE> 16
By
WILMINGTON TRUST COMPANY,
not in its individual capacity but
solely as MLB Trustee,
By /s/ David A. Vanaskey, Jr.
--------------------------------
Name: David A. Vanaskey, Jr.
Title:
PHILLIES CLUB TRUST
By
WILMINGTON TRUST COMPANY,
not in its individual capacity but
solely as MLB Trustee,
By /s/ David A. Vanaskey, Jr.
--------------------------------
Name: David A. Vanaskey, Jr.
Title:
PIRATES CLUB TRUST
By
WILMINGTON TRUST COMPANY,
not in its individual capacity but
solely as MLB Trustee,
By /s/ David A. Vanaskey, Jr.
--------------------------------
Name: David A. Vanaskey, Jr.
Title:
RANGERS CLUB TRUST
By
WILMINGTON TRUST COMPANY,
not in its individual capacity but
solely as MLB Trustee,
16
<PAGE> 17
By /s/ David A. Vanaskey, Jr.
--------------------------------
Name: David A. Vanaskey, Jr.
Title:
YANKEES CLUB TRUST
By
WILMINGTON TRUST COMPANY,
not in its individual capacity but
solely as MLB Trustee,
By /s/ David A. Vanaskey, Jr.
--------------------------------
Name: David A. Vanaskey, Jr.
Title:
ACCEPTED AND AGREED TO
BY WITHDRAWING BANK:
MITSUI LEASING USA, INC.
By: /s/ illegible
--------------------------
Name:
Title:
17
<PAGE> 1
Exhibit 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement of Cleveland Indians
Baseball Company, Inc. on Form S-1 of our report dated February 14, 1998 (March
31, 1998 as to Note 17) on the combined financial statements of Cleveland
Indians Baseball Company Limited Partnership and Ballpark Management Company
and of our report dated April 1, 1998 on Cleveland Indians Baseball Company,
Inc., appearing in the Prospectus, which is part of this Registration Statement.
We also consent to the reference to us under the heading "Experts" in such
Prospectus.
DELOITTE & TOUCHE LLP
Cleveland, Ohio
April 3, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMBINED
FINANCIAL STATEMENTS OF CLEVELAND INDIANS BASEBALL COMPANY LIMITED PARTNERSHIP
AND BALLPARK MANAGEMENT COMPANY AS OF AND FOR THE YEAR ENDED DECEMBER 31, 1997
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 3,732
<SECURITIES> 57,909
<RECEIVABLES> 7,867
<ALLOWANCES> 0
<INVENTORY> 1,568
<CURRENT-ASSETS> 85,195
<PP&E> 7,685
<DEPRECIATION> 2,757
<TOTAL-ASSETS> 118,152
<CURRENT-LIABILITIES> 76,891
<BONDS> 43,811
0
0
<COMMON> 0
<OTHER-SE> (2,550)
<TOTAL-LIABILITY-AND-EQUITY> 118,152
<SALES> 0
<TOTAL-REVENUES> 140,030
<CGS> 0
<TOTAL-COSTS> 131,813
<OTHER-EXPENSES> (16,654)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,301
<INCOME-PRETAX> 22,570
<INCOME-TAX> 0
<INCOME-CONTINUING> 22,570
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 22,570
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<PAGE> 1
Exhibit 99.1
CONSENT OF PROPOSED DIRECTOR
I hereby consent to being named in this Registration Statement on Form
S-1 as a proposed director of Cleveland Indians Baseball Company, Inc. (the
"Company") and have agreed to serve as a director of the Company if elected.
April 3, 1998 /s/ Edward G. Ptaszek, Jr.
-----------------------------
Edward G. Ptaszek, Jr.
