ORIGiNAL
GROVE OF ANAHEIM
CONCESSIONS AGREEMENT
This Concessions Agreement (this "Agreement") dated for reference purposes as of October 24, 2002, is entered into between THE CITY OF ANAHEIM, a municipal corporation and charter city under the laws of the State of California ("Owner") and NEDERLANDER GROVE LLC, a California limited liability company ("Manager") with reference to the following facts:
RECITALS
A. Owner is in escrow to acquire the real property and improvements commonly known as the "Grove of Anaheim," located at 2200 East Katella Avenue, in the City of Anaheim, County of Orange, California (collectively with the Personal Property, the "Facility"). Owner anticipates that escrow will close on this acquisition on or about November 5, 2002 (the "Closing"). Following the Closing, Owner intends to make the Facility available for concerts, corporate and private events, and other uses.
B. Owner holds fee title to portions of that certain real property located within the City of Anaheim, California, generally known as the "Sportstown Site", within which the Facility is located.
C. Manager has expertise in all aspects of managing live theater venues comparable to the Facility, including coordinating concerts, events and entertainment productions, booking and promoting acts and events, coordinating events with food and beverage operators and otherwise managing all theater operations.
D. Owner and Manager desire to provide for Manager's operation of that Facility on the terms set forth in this Agreement. Capitalized terms not otherwise defined in this Agreement have the meaning set forth in Exhibit "A" attached and incorporated by this reference.
AGREEMENT
1. License to Operate.
(a) Owner grants Manager, and Manager accepts, a license to operate the Facility, on the terms set forth in this Agreement. Manager shall supervise and direct the management and operation of the Facility in accordance with this Agreement . Manager shall perform its duties in a manner that maintains the Facility and its facilities, equipment and services as a first-class theater Facility. Manager shall apply prudent and reasonable business practices in Owner's and Manager's best interests in operating, renting and managing the Facility.
(b) For ninety (90) days following execution of this Agreement, and notwithstanding the definition of "Operating Expense" set forth in this Agreement, Manager IRV 122028.9
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shall be entitled to use its and its Affiliates' staff to facilitate the transition of management of the Facility to the Manager. Manager will be allowed to charge the costs of such staff as an Operating Expense at a reasonable amount as agreed by Manager and Owner for the following positions: (1) general manager, (2) operations manager, (3) production (stage) manager, (4) sales/marketing manager and (5) financelbox office personnel. Manager shall not charge the staff costs of booking staff not employed solely at the Facility
2. Term.
2.1 Initial Term . The term of this Agreement (the "Term") commences on the day this Agreement is executed on behalf of the Owner following approval of the Agreement by the City Council of the City of Anaheim (the "Effective Date") and continues in effect to and including December 31,2005, unless sooner terminated as provided in Sections 2.3 or 2.4 below.
Following the execution of this Agreement on behaif of the Owner, the parties shall attach Schedule 1 to this Agreement setting forth the actual Effective Date.
2.2 Option to Extend. So long as Manager is not in default of any of its material obligations under this Agreement, by notice delivered to Owner not less than one hundred eighty (180) days prior to the last day of the Term, Manager may extend the Term for an additional sixty (60) months, subject to all of the terms and conditions of this Agreement, specifically including Section 2.4(b) below. As so extended, and subject to Section 2.4(b) below, the Term shall then continue to and including December 31, 2010.
2.3 Manager Cancellation. At any time following the third full Year of Operation, either Manager or Owner may cancel this Agreement on ninety (90) days' prior written notice to the other in the event Operating Expenses exceed Revenues for two (2) consecutive Years of Operation.
2.4 Other Termination.
(a) This Agreement shall terminate immediately on written notice to Manager by Owner that the Closing has not occurred as expected, and shall, in any event, terminate automatically if for any reason the Closing has not occurred on or before December 31, 2002, in which event Owner shall promptly reimburse Manager for all Manager's out-of-pocket costs reasonably incurred from the Effective Date to such date of termination, but Manager shall not be entitled to receive any Management Fee for such period. (b) At any time following January 1, 2006, this Agreement may be terminated by Owner on not less than one hundred eighty (180) days written notice concurrently with the closing of the sale of the Facility by Owner to a third party only if i) the purchaser is not in the business of operating comparable venues, ii) after the closing of the sale, the Facility will be used primarily for purposes other than concerts and private events as currently used or will be demolished , and iii) on the Accounting Date following the termination, Owner pays to Manager the Early Termination Amount.
(c) In the event that Manager determines within a period of fourteen (14) calendar days following the Closing that the existing condition of the Facility is not as reasonably anticipated by the parties and that substantial expenditures will be required during the IRV 122028.9
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2 first Year of Operation to correct conditions, defects, equipment failures or operating conditions which, if not corrected during the first Year of Operation, would materially interfere with the ability of Manager to operate the Facility, Manager may give notice within such 14-day period to Owner stating with specificity, the nature of such conditions (collectively, the "Major Defects"). The Owner shall then have a period of fourteen (14) calendar days following receipt of such notice within which to advise Manager whether it will promptly commence and diligently pursue correction of any or all of the Major Defects, at its expense. If Owner does not so notify Manager that it elects to correct all of the Major Defects, Manager shall then have five (5) days following expiration of such second 14-day period within which to terminate this Agreement. In the event the Agreement is so terminated, Manager shall not be entitled to a Management Fee for the period from the Effective Date to the date of such termination, but it shall be entitled to reimbursement of out-of -pocket costs reasonably incurred by it from the Effective Date to the date of such termination under this Agreement, and shall cooperate with City in assuring an orderly transition of the Facility to another operator such that the Owner is not required to cancel any scheduled bookings at the Facility solely on account of such termination.
(d) This Agreement is subject to termination by Owner following the occurrence of an Event of Default in accordance with Section 16.2 below.
2.5 Effect of Termination. On termination of this Agreement, the Manager shall promptly deliver to Owner possession and control of the Facility and all Personal Property (or comparable property, in substitution for the Personal Property) in a condition no worse than that existing on the Effective Date, reasonable wear and tear excepted, and copies of any and all records in its custody relating to the Facility or to operations under this Agreement. Manager shall be entitled to Management Fees accrued to the date of termination (although, in that event, Owner may defer payment of Management Fees pending a final accounting), and all amounts due from either party to the other shall be paid and performed to the date of termination as otherwise provided in this Agreement. The indemnification obligations of the parties under Section IS shall survive termination of this Agreement.
3. Manager's Duties. Manager has the exclusive right and responsibility to manage and operate all aspects of the Facility and act as exclusive booking and promotion agent for the Facility subject to all terms and conditions of this Agreement. Without limiting the generality of the foregoing, Manager shall do, and shall have the right to do, the following:
(a) act as exclusive booking agent for the Facility (subject to the rights of the Food and Beverage Operator under the Food and Beverage Contract to book certain events under the Manager's direction) and enter into such other and further agreements as are usual and customary arrangements for booking, promotion, coordination, and staging of all acts and events to be held at the Facility, provided that Manager may not book any events at the Facility to occur between the hours of 2 a.m. and 6 a.m. without the express consent of the Owner, in its sole discretion (which, in reviewing any such request, may consult with the Police Department of the City of Anaheim);
(b) establish, maintain and administer all funds and accounts as provided in this Agreement;
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3 (c) cooperate with Owner with respect to corporate and private events referred by Owner or relating to functions at the Anaheim Convention Center, and Owner, on its part, shall use commercially reasonable efforts to refer private and corporate events to the Facility;
(d) coordinate the master booking calendar for all events at the Facility;
(e) maintain the Facility and the level of service provided in good condition (normal wear and tear excepted) and to a standard which is at least comparable to the standards of maintenance and service provided at each of Edison International Field of Anaheim, the Arrowhead Pond of Anaheim, and the Anaheim Convention Center, including all necessary maintenance and repairs to the Facility;
(f) operate the Facility in a manner generally in accordance with industry custom and practice for a first class theater, and otherwise in accordance with this Agreement;
(g) pay when due all Operating Expenses;
(h) keep the Facility free from liens and encumbrances arising out of or in connection with the acts or omissions of Manager; (i) subject to Section 12.4 below, and to the extent the Parking Area is available for use primarily by employees and patrons of the Facility, manage parking arrangements for customers of the Facility within the Parking Area in accordance with usual and customary practices in accordance with the Parking License Agreement and all applicable Restrictions, and maintain the Parking Area in a clean condition, including sweeping and trash removal, provided that Manager shall not be responsible for capital repairs to the Parking Area; but shall promptly notify Owner of conditions requiring such repairs; (j) manage and control all matters relating to food and beverage operations, including administering the contract in existence, from time to time (including approvals thereunder), between Owner and the Food and Beverage Operator (the "Food and Beverage Contract"), subject to the reserved rights of Owner as described in Section 10 below ; (k) hire such employees or contract with others for provision of services necessary or desirable for all operations of the Facility which are the responsibility of Manager under this Agreement; Manager agrees that in no event will the employees and other personnel at the Facility be considered employees of the City of Anaheim; (I) enter into agreements for provision of all goods and services necessary for all staging events at the Facility, including, but not limited to, sound, lighting, stage rigging, dressing area, stage equipment and loading in and loading out and security, provided that no contract may be entered into with an Affiliate of Manager except as set forth on Exhibit D attached or with the prior express written consent of Owner, which consent will not be unreasonably withheld, provided that the terms and conditions of all such arrangements with an IRV 122028.9
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4 • Affiliate shall be competitive with the market and shall not be binding on Owner for any period following the expiration of the Term;
(m) make arrangements for sponsorship and naming rights as otherwise provided in this Agreement;
(n) supervise sales personnel and manage advertising and marketing operations to promote the maximum possible amount of profitable use of the Facility; (0) maintain business-like relations with all vendors, suppliers and other persons and entities that do business with the Facility, and report any complaint of a serious nature directly to Owner with Manager's recommendations for resolving the complaint; (p) manage and supervise the effective delivery of quality services to customers and licensees of the Facility, including facilitating delivery of all services ancillary to rental of the Facility;
(q) apply for and obtain all licenses and permits required to conduct the business of the Facility; and
(r) preserve and maintain all Personal Property and all other personal property, furniture, fixtures and equipment acquired for use at the Facility from time to time; (s) cause the Facility to operate in compliance with all applicable laws and regulations and all customs and practices of a first class Facility in the industries that the Facility serves, and immediately notify Owner in writing of the following: any demand or claim of breach or violation by Owner or Manager of any agreement or law or regulation affecting the Facility; any notice, demand or summons regarding any actual or threatened legal or regulatory action relating to Owner or the Facility; or any notice or communication of any nature, written or oral, that may have a material adverse effect on Owner or any of the Facility, and immediately inform Owner of the remedial action needed for compliance .
4. Business Plan and Budget.
4.1 Budget. Within ninety (90) days after the Effective Date for the initial Year of Operation (and within sixty (60) days prior to the expiration of each succeeding Year of Operation during the Term), Manager shall prepare and provide to Owner for its review and approval a proposed business plan, rate schedule for Facility rental and ancillary equipment and services, a marketing plan and an operating budget for the Facility, including estimated income and expenses and estimated Facility profit on a monthly and yearly basis. Manager shall make revisions to the business plan and budget as reasonably requested by Owner from time to time.
4.2 Budget Compliance. Manager shall operate the Facility according to the business plan and budget approved by Owner as described in Section 4.1, provided, however, Manager shall have the right, after consultation with Owner, to amend and revise the business plan and budget from time to time as necessary for the ongoing business and profitability of the Facility.
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5 5. Handling of Funds; Accounting, and Payment of Expenses.
5.1 Handling of Funds .
(a) All funds received or held by Manager in connection with the operation and management of the Facility are subject to this Agreement. (b) All Revenues, Advance Deposits and other funds received by Manager in connection with operation of the Facility shall be deposited immediately by Manager in a separate account in Manager's name at City National Bank in Los Angeles or a financial institution located within the City of Anaheim, California, acceptable to Owner (the "Operating Account").
(c) all Advance Deposits shall be separately accounted for on the books and records of the Manager and be taken into income at such time as the amounts become non-refundable in accordance with industry custom and practice and/or the specific contract under with each such Advance Deposit is made, as applicable.
5.2 Accounting Records. Manager shall keep complete and accurate books and records of the transactions and operations of the Facility. These books and records shall be kept at the Facility or kept at another location within Los Angeles or Orange Counties and made available at the Facility at Owner's request for review and copying . All books and records shall be available to Owner and its representatives at all times for any purpose and shall be delivered to Owner at any time on Owner's reasonable request. The costs incurred in delivering such records to Owner shall be treated as an Operating Expense.
5.3 Reports. Within twenty-five (25) days after the end of each calendar month, Manager shall provide Owner a month-to-date and year-to-date report, through the preceding month end, of income and expenses, accounts receivable, reserved bookings and bookings forecast for the upcoming three (3) months, a comparison of income and expenses to the budget approved by Owner, a statement of all current working capital advances made by Manager and reimbursed to Manager, a statement of Capital Expenditures, and other statements, reports and information that Owner reasonably requests from time to time.
5.4 Expenses. All Operating Expenses shall be paid as due by Manager, who shall maintain sufficient liquidity for such purposes.
5.5 Amounts Received At Closing. Owner will deposit all funds received by it at Closing from SMG, a Pennsylvania partnership, for advance deposit and ticket sales to the Operating Account and identify the sources of such funds and dates to which each relates.
Pursuant to the "Agreement of Purchase and Sale" dated September 24, 2002 between Owner as Buyer, and SMG as Seller of the Facility, SMG has agreed to pay Owner all deposits or advance payments received by SMG in connection with bookings for events following Closing, net of direct expenses paid by SMG in connection with such bookings. Owner will take appropriate steps, as it determines, in the event SMG fails to deliver such sums to Owner.
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6 6. Management Fee.
Manager shall receive a fee (the "Management Fee") in the amount of One Hundred Fifty Thousand Dollars ($150,000) per Year of Operation, payable in equal monthly installments during the Year of Operation.
7. Determination and Distribution of Profits; Allocation of Losses.
7.1 Financial Statements. Within sixty (60) days following the end of each Year of Operation, Manager will provide Owner with financial statements prepared in accordance with generally accepted accounting principles, consistently applied, in a manner with fairly presents an accurate statement of the financial operations of the Facility, containing balance sheets of Manager as of the end of such Year of Operation and statements of cash flow and income for such Year of Operation ("Financial Statements") prepared by Manager, all in reasonable detail. As soon as available and in any event within ninety (90) days after the end of each Year of Operation, Manager shall provide Owner an opinion of an independent certified public accountant selected by Manager and accepted by Owner as to such Financial Statements.
The cost of such opinion is an Operating Expense. The date such opinion is delivered to Owner shall be deemed the "Accounting Date" . Manager shall provide to the Owner at the time it provides Financial Statements, a statement of all working capital advances made by Manager and reimbursed to Manager, as well as a statement of the condition of all funds in the Operating Account and the Capital Reserve Fund held under this Agreement, and shall request the independent certified public accountant to review such statement and computation for accuracy, submitting to Owner a description of the results of such review.
7.2 Audit Rights . Owner has the right to inspect and audit all books and records of Manager relating to operations at the Facility or generation of the Financial Statements described above. In the event of a material variance between any audit conducted by the Owner pursuant to this Section and the audit conducted by an independent certified public accountant selected by Manager pursuant to Section 7.1 above, Owner shall give notice of such variance to Manager and provide access to Owner's audit report, and Manager and Owner shall then promptly meet and resolve the disputed items, and the Facility books, records and statements shall be adjusted to reflect such resolution. The cost of the Owner's audit shall be borne by the Owner, provided that if the variance in favor of the Owner is greater than the cost of the audit, the cost of the audit shall be reimbursed by Manager and constitute an Operating Expense.
7.3 Distribution of Profit and Allocation of Losses. Within ten (10) calendar days following the Accounting Date:
(a) Manager shall pay to Owner as a return to Owner on its investment in the Facility an amount equal to fifty percent (50%) of the Operating Profits for the preceding Year of Operation;
(b) If the Operating Expenses exceed Revenues, Owner shall reimburse Manager from the Convention Center Fund, as an additional contribution to the Facility, for fifty percent (50%) of the first $400,000 in Operating Losses. Manager shall be IRV 122028 .9
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7 solely responsible for the remaining fifty percent (50%) of the first $400,000 of Operating Losses and for all Operating Losses in excess of $400,000.
8. Owner's Use of the Facility.
8.1 Rights Per Year of Operation. Owner has the right to use the Facility for up to five (5) days per Year of Operation (plus set up time as is reasonably required) at no rental charge, provided that all out-of-pocket costs, including any amounts due under the Food and Beverage Contract for such use, shall be the sole responsibility of Owner. The uses described in the preceding sentence may be booked by Owner up to twelve (12) months in advance.
In addition, Owner has the right to use the Facility on the same terms from time to time, on available days not otherwise booked, which periods may be booked by Owner no more than thirty (30) days in advance. The parties recognize that the use described in this Section are uses for events of the Owner or public events, and not events, such as concerts of a touring artist, which would otherwise be in competition with the Facility.
8.2 Complimentary Tickets. For each concert and other event at the Facility for which tickets are made available for sale to the public, the Owner is entitled to eight (8) complimentary tickets, which tickets shall be for contiguous seating at a prime location reasonably agreed by Manager and Owner. In addition, Owner shaH be entitled to issue complimentary parking credentials for up to thirty (30) vehicles for use of the Parking Area from time to time.
9. Sponsorship and Advertising Rights.
9.1 Interior Sponsorship and Advertising . Manager shall have the right to enter into advertising, sponsorship and licensing arrangements with advertisers and sponsors subject to the Owner's reasonable approval of the arrangements, identity of the sponsor and nature of the interior signage. Manager has no right to enter into an agreement with respect to exterior signage or sign age clearly visible from the exterior of the Facility except as described in Section 9.2. In this respect, the parties agree that the interior of the Facility shall be maintained so that it is not offensive or objectionable to those desiring to use the Facility for corporate events and parties and private social events, such as weddings, and in entering into arrangements for interior sponsorship and advertising for products not otherwise prohibited by this Agreement, but which may be offensive or objectionable for certain uses, Manager shall maintain the right to remove or cover such sign age during such events. The parties agree that advertising and sponsorship arrangements shall not be entered into with any company which derives substantial revenues from the manufacture, sale or distribution of tobacco products, or gaming services or products or is an economic competitor of the Owner.
9.2 Sponsorship of Sportstown Site; Naming Rights. Owner has the right, subject to the Restrictions, to sell one (I) exterior sponsorship and/or naming right with respect to the overall Sportstown Site, in the Owner's discretion, which sponsorship rights may include exterior signage at the Facility. Owner anticipates the future development of remaining portions of the Sportstown Site, and has identified such sponsorship and naming rights as a valuable asset in connection with such future development. In the interim, pending such further development, IRV 122028.9
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8 the Owner has agreed that Manager may market such exterior sponsorship and/or naming right for a period not to extend past December 31, 2005, on terms and to a sponsor approved by Owner ("Naming Rights"). The parties agree that Naming Rights shall not be granted to any company (a) which derives substantial revenues from the manufacture, sale or distribution of tobacco products or gaming services or products, (b) which is an economic competitor of Owner, or (c) if such grant is in violation of the terms of the Stadium Lease. Any agreement by Manager granting Naming Rights to a third party shall terminate on or before December 31, 2005, provided that Owner agrees it will extend the term of such grant of Naming Rights for successive six (6) month periods (but otherwise on the same terms as set forth above) during such periods that this Agreement is in effect and the portions of the Sportstown Site owned by Owner as of the Closing remain in Owner's name and possession and are, other than the Facility and other improvements existing on the Effective Date, undeveloped. All amounts received in connection with the Naming Rights (including all rights relating to such name sponsor's exterior and interior signage and related rights, net of costs and commissions which may not, in the aggregate, exceed fifteen percent [15%] of the gross proceeds) shall not be included in Revenue but shall be shared fifty percent (50%) with Owner, payable by Manager to Owner within three (3) business days of receipt. Owner does not, by this Agreement, authorize any increase in the number of signs at the Facility or on the Sportstown Site, or approve a free-standing sign of any type other than in replacement of signs currently existing at the Facility and then only with Owner's prior written approval.
9.3 Name and Naming Rights of the Facility. The parties agree that the name of the Facility may be changed as described in Section 9.2 above . The Owner has the right to approve the new name, not to be unreasonably withheld , and at all times has the right to use the name in all public promotions and other public uses without further consent of any person.
Novelties containing the name of the project or of the Sportstown Site may be manufactured domestically under licensing arrangements reasonably acceptable to the Owner, with all proceeds included in Revenues. Any new sign for use on the exterior with the new name of the Facility and all new logos for the Facility are subject to Owner's prior written consent, in its sole discretion . Owner and not Manager will have all property rights to such logos.
10. Assumption of Contracts . Manager shall enter into an Assignment and Assumption Agreement in a form reasonably acceptable to Manager and Owner pursuant to which Manager assumes the operating contracts set forth on Exhibit "B" and the booking agreements set forth on Exhibit "C," each incorporated by this reference, provided that, with respect to the Food and Beverage Contract, Ca) Owner reserves the right, to be exercised reasonably, to approve all pricing under that agreement, Cb) Manager shall take no action to amend or extend the Food and Beverage Contract without the express written consent of Owner, in its sole discretion, and Cc) Manager may cause the Food and Beverage Contract to be terminated for breach' of a material obligation of the Food and Beverage Operator in accordance with its terms and exercise other remedies for cause, but only after consultation with Owner.
11. Capital Reserve Fund and Capital Expenditure.
*' 11.1 Capital Reserve Contribution. The budget established under Section 4.1 above, shall provide, on an annual basis, for funding of a capital reserve amount in accordance with this Section. The Manager shall deposit with Owner, to be held by Owner in a fund for the tRV 122028,9
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9 uses and purposes described in this Agreement (the "Capital Reserve Fund") the Capital Reserve Contribution in respect of each Year of Operation. All withdrawals from the Capital Reserve Fund shall be for capital expenditures or repair andlor maintenance of capital equipment at the Facility (including equipment owned by Owner and used by the Food and Beverage Operator), approved in writing by the Owner (each, a "Capital Expenditure"). For any Year of Operation in which operating profits are insufficient to fund the Capital Reserve Contribution, Owner and Manager may by mutual agreement waive all or a portion of the required Capital Reserve Contribution for that Year of Operation, and if it is not so waived, shall be paid by Manager. Manager shall be entitled to reimbursement from funds available in the Operating Account for all contributions made by Manager during the current Year of Operation to the Capital Reserve Fund. In addition, all Capital Expenditures made in excess of funds available in the Capital Reserve Fund at any time shall reduce the Capital Reserve Contribution required to be made by Manager for the subsequent Year of Operation on a dollar-for-dollar basis.
Subject to the preceding, the Capital Reserve Fund shall be funded as follows (each, a "Capital Reserve Contribution"):
(a) For the first Year of Operation, the Capital Reserve Contribution will be Fifty Thousand Dollars ($50,000), to be funded in full within three (3) calendar days following the Effective Date.
(b) For the second Year of Operation, the Capital Reserve Contribution will be Seventy-five Thousand Dollars ($75,000), one-twelfth (l/12th) of which shall be funded on the first day of each month during the second Year of Operation. (c) For the third and all subsequent Years of Operation, the Capital Reserve Contribution will be One Hundred Thousand Dollars ($100,000) , one-twelfth (l/12th) of which shall be funded on the first day of each month during each such Year of Operation. -¥- 11.2 Capital Expense. In the event that Manager, with the consent of Owner, makes a Capital Expenditure for the Facility which, under GAAP, may not be expensed in a single year but must be amortized over a period of years, then to the extent there remains an unamortized balance for such Capital Expenditure on expiration of the Term, Owner shall either (at its election, made not less than one hundred eighty [180] days prior to the expiration of the Term) (a) extend the Term by the number of years determined by dividing the unamortized balance remaining as of the last day of the Term by $100,000 (prorated to the nearest month end), or (b) on the Accounting Date following expiration of the Term, pay the unamortized balance to Manager.
11.3 Use of Capital Reserve Fund. All amounts held in the Capital Reserve Fund on the date of termination or expiration of this Agreement shall remain the property of the Owner, to be used for such purposes as Owner determines, subject, however, to Owner's obligation to reimburse Manager as specifically provided in Section 11.2.
12. Sportstown Site.
12.1 Restrictions. The Sportstown Site is contiguous to the facility known as "Edison International Field of Anaheim" and certain parking facilities which are subject to that lR V 122028.9
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10 certain "Amended and Restated Lease Agreement", dated as of May 15, 1996 by and between the Owner and the Anaheim Angels L.P., a California limited partnership (formerly known as California Angels L.P., referred to as the "Stadium Tenant" as clarified by that certain letter agreement dated as of August 1, 1998 between the landlord and tenant thereunder (the "Stadium Lease"). Environmental Impact Report No. 320 (the "EIR") has been certified, and Area Development Plan No. 120 has been approved by the City Council of the City of Anaheim for the Sportstown Site, each describing uses which may include a stadium for professional football, office buildings, hotel and exhibition facilities and retail dining and entertainment facilities. The Sportstown Site is subject to the provisions of the Redevelopment Plan for the Anaheim Stadium Disaster Recovery Redevelopment Project (hereinafter defined as the "Redevelopment Plan"), which plan was approved and adopted in August of 1994 by the Agency. Copies of the Stadium Lease Agreement, the EIR, the ADP, the Redevelopment Plan and other documents affecting the Sportstown Site are available as public records on file with the City Clerk at 200 South Anaheim Boulevard, Anaheim, California. Manager acknowledges that the Sportstown Site is subject to the Restrictions and agrees to cause the Facility and related parking arrangements to be operated in compliance with the Restrictions.
12.2 Compliance. Manager will take no action and agrees to take no action which would cause Manager or Owner to fail to comply with the Restrictions. Manager acknowledges that it has read and understands the limitations and conditions imposed by the Stadium Lease and the Restrictions, and that certain aspects of development and operations, including shared parking arrangements and operations, signage and placement of food and beverage facilities may be subject to controls imposed by the terms of the Stadium Lease and the Restrictions. The covenants of the Manager set forth in this Section 12 shall run with the land and be binding on all successors and assigns of Manager for the benefit of Owner.
12.3 Nondiscrimination. Manager covenants that it will not discriminate against or cause segregation of any Person or group of Persons on account of race, color, creed, religion, sex, marital status, ancestry, national origin or physical handicap in the use, occupancy, tenure or enjoyment of the Facility, nor shall Manager establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of licensees or vendees of the Facility.
12.4 Sportstown Site Parking . Notwithstanding Clauses (i) and (m) of Section 3 above, in the event that, pursuant to the Restrictions, the parking facilities at the Sportstown Site, including the Parking Area, are operated as a collective parking facility by the Owner, the Sports town Owners Association, a California non-profit mutual benefit corporation, or otherwise, then Manager shall not have the right to determine pricing for parking at the Parking Area. In that event, the Owner covenants it will use commercially reasonable efforts to cause the applicable Restrictions to be amended to provide for payment to Manager (or retention by Manager, as applicable) of net parking proceeds received from patrons of the Facility parking within the Sportstown Site, and parking arrangements for the Parking Area shall be as otherwise provided in the Parking License Agreement and the Restrictions. During any period in which Manager does not have the right to operate and manage the Parking Area and does not have the right to include in Revenues the parking fees paid by patrons of the Facility, the Manager's obligations to pay the "Annual License Fee" under the Parking License Agreement shall be waived by Owner.
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11 13. Non-Competition By Owner. Owner agrees that during the term of this Agreement, it will not cause to be constructed on property owned by it a theater facility which competes with the Facility. Manager acknowledges that the City of Anaheim, in its Master Plan for the Anaheim Convention Center, has planned for a theater to be used in conjunction with activities at the Anaheim Convention Center and agrees that the theater component as described in such Master Plan (as the same may be revised, from time to time) does not constitute a breach of this Agreement, but that in the event such a theater is constructed at the Anaheim Convention Center and commences operation, Manager has the right to terminate this Agreement on ninety (90) days' prior notice. Owner states that it has no present plans to construct such theater prior to the year 2010. Manager agrees that the existing "Arena" operated at the Convention Center does not compete with the Facility as currently operated . Manager recognizes that privately owned theaters requiring discretionary approvals or entitlements from the Owner in its governmental regulatory capacity may be approved and constructed from time to time within the City of Anaheim. Neither the approval of such entitlements by the Owner nor the construction and operation of any such theater by any private party shall constitute a breach of this Agreement, or constitute cause for termination of this Agreement by Manager.
14. Insurance to be Maintained by Manager.
14.1 Insurance. Without limiting Owner's right to indemnification, during the Term, Manager shall at all times maintain the following policies of insurance . (a) Insurance which shall comply with all applicable worker's compensation and occupational disease laws and which shall cover all employees of Manager engaged in connection with the Facility or any improvements thereon; (b) Employer's Liability Insurance with a limit of not less than $500,000 per accident;
(c) Commercial General Liability Insurance in an amount not less than $! ,000,000 per occurrence, $! ,000,000 general aggregate, covering all premises and operations, which policy shall include, without limitation, coverage for (i) contractual liability for Manager's indemnification obligations under this Agreement, (ii) products and completed operations, (iii) liquor liability, (iv) personal injury, and (v) independent contractors; (d) Comprehensive Automobile Liability Insurance applicable to all owned, non-owned , and hired vehicles used on Anaheim Stadium or Sportstown Site property in conjunction with work under this Agreement, in an amount not less than $1,000,000 per occurrence, combined single limit;
(e) Umbrella Liability Insurance in excess of the coverage set forth in clauses (b), (c) and (d) above, with limits of not less than $10,000,000 per occurrence, $! 0,000,000 annual aggregate;
(f) All Risk Property Insurance (including Flood and excluding Earthquake coverage), and Boiler and Machinery Insurance, providing (i) Full Replacement Cost and Consequential Loss coverage on the Improvements, contents, furnishings and equipment. and operating equipment and (ii) combined Profits from Business Interruption and Extra Expense IRV 122028.9
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12 coverage, including continuing charges, expenses and payroll for a twelve (12) month period of indemnity; and
(g) In the event that Manager implements valet parking services, Manager will secure and maintain Garage Keeper's Direct Primary Legal Liability for all parking operations with adequate limits to cover fire and theft to all automobiles, or any portion or the contents thereof, including, without limitation, loss caused by riot, civil commotion, vandalism, malicious mischief and collision.
If at any time during the Term the amount and/or coverage of insurance which Manager is required to carry under this Section is, in Owner's reasonable judgment, materially less than the amount and/or type of insurance coverage typically carried by owners or Managers of properties located in Orange County which are similar to and operated for similar purposes as the Facility, Owner shall have the right to require Manager to increase the amount and/or change the types of insurance coverage required under this Section.
14.2 Policy Standards. All policies of insurance to be provided hereunder shall be written by companies of nationally-recognized financial standing satisfactory to Owner, which are legally admitted to write such insurance in California, and which have a Best Services rating of at least A- VII. Each policy of insurance required under Sections 14.1 (a) and (b) shall be written on a primary basis without a deductible or self-insured retention. Should Manager desire to carry a deductible or self-insured retention in excess of $25,000 per occurrence on the policies required in 14.1 (c) or (d), Manager may make such request in writing to Owner and Owner's Risk Manager shall determine, in Owner's sole discretion, whether to grant such request.
Should Manager elect to carry a self-insured retention on the policies required in 14.1 (c) or (d), such election shall be subject to the following provision: as respects any rights or coverage issues which may effect the City of Anaheim, or any of the additional insureds set forth herein ("Additional Insureds"), such self-insurance programs must operate in the same manner as a typical commercial insurance policy, including, but not limited to, agreement that the Additional Insureds (including the City of Anaheim and the Sportstown Owners' Association, a California non-profit mutual benefit corporation) shall have the same rights as additional insureds as they would have had if coverage had been provided under a typical commercial insurance policy issued by a typical commercial insurance company. Each policy of insurance required under Sections 14.1 (f) and (g) may contain a deductible in an amount not greater than (i) $50,000 for property damage, and (ii) $100,000 for Flood. Should Manager desire to carry a deductible on one or more of these policies in excess of these amounts, Manager may make such request in writing to Owner, and Owner's Risk Manager shall determine, in Owner's sole discretion, whether to grant such request. Each policy of insurance required in Sections 14.1 (b), (c), ( d), (e) and (g) shall (i) name Owner, Owner Indemnified Parties and the Sportstown Owners' Association, a California non-profit mutual benefit corporation as Additional Insureds; (ii) be non-contributing with, and shall apply only as primary and not excess to, any other insurance or self-insurance available to the Additional Insureds; and (iii) provide that it shall not be canceled or amended or its coverage reduced except upon thirty (30) days' prior written notice by certified or registered mail to Owner, except in the case of non-payment of premium which shall allow for. ten (10) days prior written notice. Each policy of insurance required under Section 14.1 (f) shall (i) name Owner as Landlord, Loss Payee, and Additional Insured, as Owner's interest may appear. (ii) provide that such insurance shall not be invalidated' by an action or inaction of IRY 122028.9
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13 Manager, and (iii) insure Owner regardless of any breach or violation by Manager of any warranty, declaration or condition contained in such Insurance. Manager shall not obtain or carry separate insurance concurrent in form or contributing, in the event of loss, with that required by this Section unless Owner is an Additional Insured therein, with loss payable as herein provided. Manager shall immediately notify Owner whenever any such separate insurance is obtained and shall deliver to Owner certificates evidencing the same. Any insurance required hereunder may be provided under blanket policies provided that the coverage afforded shall not be reduced or diminished by reason of the use of a blanket policy. Each policy of insurance required under Sections 14.1 (b ), (c), (d), (e), and (g) shall provide that the insurers shall have no recourse against the Additional Insureds for payment of any insurance premium.
The provisions to be added to insurance required hereunder shall be added by endorsement, and Owner shall promptly receive a copy of such endorsement. The Risk Manager of Owner may accept, at his sale discretion, lower insurance limits, or less restrictive insurance terms and conditions, than those set forth in this paragraph.
14.3 Protection of Proceeds. Every policy referred to in Section 14.1 above shall provide that it shall not be invalidated by any act or neglect of Owner or Manager, by occupancy of the Facility for purposes more hazardous than permitted by such policy, by any termination of this Agreement, or by change in title to the Facility.
14.4 Cost of Insurance. The cost of all insurance provided in accordance with this Agreement is an Operating Expense. The cost of any charges or payments for deductibles or self-insured retentions, as provided for herein, shall be considered an Operating Expense, provided that Manager submits documentation reasonably acceptable to Owner for such charges or payments. At Owner's option, Owner, as an Operating Expense, may provide for any insurance policies or self-insurance arrangements in lieu thereof, as determined by the Risk Manager of Owner.
14.5 Certificates of Insurance. Manager shall deliver to Owner certificates of insurance evidencing the existence of aU insurance, with specific limits and reflecting the provisions required herein to be added to such insurance, which is required to be maintained by Manager under this Agreement. Delivery shall be made (i) promptly after the Effective Date and (ii) no later than fifteen (15) days prior to the expiration of any insurance. Endorsements required herein shall be delivered within one hundred eighty (180) days of policy inception.
14.6 Waiver of Subrogation!. Manager hereby waives any claim against Owner for any loss covered by property insurance of the type specified in Section 14.1 above to the extent of proceeds recoverable thereunder. Owner hereby waives any claim against Manager for any loss covered by any property insurance which Owner may elect to maintain on the Facility or any improvements thereon to the extent of proceeds recoverable by Owner thereunder.
Subject to the limitations set forth above in this Section 14, Manager and Owner shall each obtain from its respective insurance company or companies a waiver of any right of subrogation that such company may have against Owner or Manager, as applicable, and Manager shall further obtain from its insurance company or companies a waiver of any right of subrogation that such company may have against each trustee and beneficiary under any security instruments affecting the Facility or any improvements thereon.
IR V 122028.9
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14 14.7 Damage and Destruction . In the event of damage or destruction to the Facility during the Term which materially affects the ability of Owner and Manager to operate the Facility, as determined by Owner (whether or not caused by events for which insurance is maintained under this Agreement), Owner may, but has no obligation to, cause the Facility to be rebuilt. In the event that the Owner determines to rebuild and the process of repair and reconstruction is not expected to exceed one hundred eighty (180) days, the Term shall be extended so that the number of months remaining following re-opening is the same as the number of months remaining in the Term immediately prior to such damage or destruction. No Management Fee is due with respect to any period during which the Facility is not operated due to such damage or destruction and reconstruction .
15. Indemnification.
15.1 Indemnification of Owner. Manager hereby agrees to indemnify, defend (at Owner's option) and hold Owner and the Owner Indemnified Parties harmless from and against all claims, defense costs, liabilities, and demands for loss or damage (including, without limitation, bodily injury, property damage, personal injury and wrongful death, hereinafter collectively referred to in this Section 15.1 as "Claims") arising from any of the following and to the extent not directly resulting from the negligence or willful misconduct of the Owner or the Owner Indemnified Parties: (i) the use or occupancy of the Facility or any parking areas of the Sportstown Site by Manager, its vendors, customers, or invitees; (ii) any activity, work, or thing done, permitted or suffered by Manager on, in or about the Facility or any parking areas of the Sportstown Site, (iii) arising from any breach or default in the performance of any provision of this Agreement or from the occurrence of any event pursuant to which Owner exercises any right to terminate this Agreement; (iv) Manager's operation of such improvements or the conduct of Manager's business or any act, neglect, fault, or omission of Manager or any persona acting on its behalf (including, without limitation, negligence); (v) any nuisance made or suffered on the Facility or any parking areas of the Sportstown Site under Manager's control, or the failure to keep the same in a safe condition, or (vi) Manager's . failure to comply with any Hazardous Substances Laws. In case any action or proceeding shall be brought against Owner or the Owner Indemnified Parties by reason of any of the foregoing, Manager, upon notice from Owner, shall defend the same at Manager's expense with counsel previously approved in writing by Owner.
Manager shall reimburse Owner and the Owner Indemnified Parties for all reasonable costs, expenses and liabilities (including, without limitation, reasonable attorneys' fees) incurred as a consequence of or in connection with the defense of any such claims, actions or proceedings.
Manager, as a material part of the consideration to Owner, hereby assumes all risk of damage to the business carried out at the Facility, or injury to any person, in or upon the Facility or any improvements thereon, except for bodily injury or property damage which is caused by the failure of Owner to observe any of the material provisions of this Agreement (and such failure persists for an unreasonable period of time after notice of such failure from Manager to Owner).
The parties agree that the indemnification described in this Section 15.1 is not intended to indemnify the Owner (i) for activities of Owner not typically arising from the owner-manager relationship, including the acts of the Owner through its police and fire departments (unless police or fire personnel are specially contracted for by Manager for work at the Facility), municipal electric utility operations, code enforcement and planning and zoning functions, nor to the extent that such Claims arise directly from the negligent acts of Owner during Owner's use of the Facility as provided for in Section 8 of this Agreement. Nothing in this Section is intended IRV 122028.9
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15 nor shall it operate to supersede or restrict any immunity or other protection available to the Owner by statute or other applicable law.
15.2 Indemnification of Manager. At Manager's request, Owner shall assign to Manager (and/or cause to be exercised, as Owner reasonably determines), Owner's rights of indemnification from SMG, a Pennsylvania partnership, for liability relating to acts or events occurring prior to Closing. Nothing in this Agreement is intended to abrogate any rights of Manager to obtain equitable indemnity under all applicable law.
15.3 Third Party Conduct. Neither party shall be liable to the other for (i) any unauthorized or criminal entry of third parties onto the Facility or any Improvements thereon or (ii) any damage to persons or property, or loss of property, in and about the Facility or the parking areas. of the Sportstown Site, and the approaches, entrances, streets, sidewalks or corridors thereto, by or from any unauthorized or criminal acts of third parties, regardless of any breakdown, malfunction or insufficiency of any security measures, practices or equipment provided by Owner or Manager, unless such breakdown, malfunction or insufficiency is the result of gross negligence or intentional misconduct on the part of Owner or any of the Owner Indemnified Parties or on the part of Manager or anyone acting on its behalf, as the case may be.
Manager shall immediately notify Owner in writing of any breakdown or malfunction of any security measures, practices or equipment provided by Owner as to which Manager has knowledge. Neither party shall be liable to the other for conditions caused or created by any prior owner or operator of the Facility. Nothing contained herein shall increase the Owner's liability to Manager which may arise from any acts or omissions of the Anaheim Police Department, beyond that which would accrue to any citizen of or business in the Owner of Anaheim.
16. Default and Remedid.
16.1 Defaults of Manager. Each of the following shall constitute an event of default on the part of Manager (each, a "Potential Default," and following the expiration of the applicable cure period, an "Event of Default").
(a) Failure to pay any amounts required to by paid by Manager to Owner under this Agreement within five (5) calendar days following notice from Owner. (b) Except as provided in clause (a) above, the failure to cure, after thirty (30) days' notice to Manager, any other breach or default by Manager under this Agreement. provided that in the event the cure cannot be completed within such thirty (30) day period, the cure period shall be extended so long as is reasonably required to complete such cure, to a maximum of an additional one hundred and eighty (180) days, so long as the cure has been commenced within such thirty (30) day period and is diligently carried out to completion.
Notwithstanding the preceding. Manager shall not be in default under this Agreement in the event of a bona fide dispute with a vendor or other third party as to amounts payable by Manager so long as Manager continues to use commercially reasonable efforts to diligently resolve the dispute and has paid all undisputed amounts, unless clause (d) below otherwise applies.
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16 (c) Manager's becoming insolvent or bankrupt or becoming unable or ceasing to pay its debts as they mature, or making an arrangement with or for the benefit of its creditors, or consenting to or acquiescing in the appointment of a receiver, trustee or liquidator for its obligations under this Agreement or for any substantial part of its property, or any bankruptcy, reorganization or insolvency or similar arrangement or proceeding instituted by or against the Manager under the laws of any jurisdiction which has not been stayed or dismissed within ninety (90) days.
(d) Manager's causing or allowing a lien or encumbrance not existing as of the Effective Date or relating to operations at the Facility prior to the Effective Date to be imposed against all or any portion of the Facility unless the same is removed or expunged within ten (10) days of Manager's becoming aware of the existence of such lien or encumbrance.
16.2 Remedies of Owner. On the occurrence of an Event of Default as described above, Owner may terminate this Agreement effective on the date specified in a written Notice of Termination delivered by Owner to Manager in accordance with Section 19.2 below and exercise all other remedies available to it at law or in equity on account of such default.
16.3 Owner Default; Remedies of Manager t In the event Owner fails to pay any amount due under this Agreement from Owner to Manager within five (5) calendar days following notice from Manager fails to cure any other breach or default by Owner under this Agreement after thirty (30) days notice to Owner (or, if such cure cannot be completed within such thirty (30) day period, within such period of time as is reasonably required to complete such cure, to a maximum of an additional one hundred eighty days, so long as the cure has been commenced within such thirty (30) days period and diligently carried out to completion, or Owner becoming insolvent or unable to pay its obligations when due), Manager may terminate this Agreement by written notice given to Owner and exercise all other remedies available to it at law or in equity on account of such default.
17. Representations .
17.1 Representations of Managen .
representations:
Manager makes the following
(a) Duly Organized. Manager is a limited liability company duly organized and existing in good standing under the laws of the State of California, has made all required filings to effect and maintain such status, and holds a valid business license from the City of Anaheim.
(b) Power and Authority. Manager has full power and authority to execute this Agreement and to carry out its obligations under this Agreement, without the consent of any other Person, and the persons or parties signing this Agreement on behalf of Manager have the power and authority to enter into this Agreement and to comply with the obligations of Manager under this Agreement.
(c) No Conflict. The execution and delivery of this Agreement and the performance by Manager of its obligations under this Agreement will not conflict with, result in IRV 122028 .9
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17 a breach of or cause a default or loss of any benefit under any provision of any of Manager's governing documents or any material agreement, instrument or obligation by which it is bound. (d) Binding Effect. This Agreement constitutes the legal, valid and binding obligation of Manager enforceable in accordance with its terms, subject to laws applicable generally to applicable bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles affecting or limiting the rights of contracting parties generally.
17.2 Representations of Owner. Owner makes the following representations:
(a) No Conflict. The execution and delivery of this Agreement and the performance by Owner of its obligations under this Agreement will not conflict with, result in a breach of or cause a default or loss of any benefit under any provision of any of Owner's governing documents or any material agreement, instrument or obligation by which it is bound. (b) Power and Authority . Prior to the Effective Date, this Agreement has been duly authorized by binding minute action of the City Council of Anaheim. Owner has full power and authority to execute this Agreement and to carry out its obligations under this Agreement, without the consent of any other Person, and the persons or parties signing this Agreement on behalf of Owner have the power and authority to enter into this Agreement and to comply with the obligations of Owner under this Agreement. (c) Binding Effect. This Agreement constitutes the legal, valid and binding obligation of Owner enforceable in accordance with its terms, subject to laws applicable generally to applicable bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles affecting or limiting the rights of contracting parties generally. (d) Contracts. To Owner's knowledge, without investigation of any kind, Owner has disclosed to Manager all contracts presently in effect at the Facility. (e) Capacity. The City of Anaheim Fire Department has determined that the maximum (standing) number of persons at the Facility (theater area) is 1,743, including all staff, employees, and entertainment personnel, as well as guests. (f) Parking. The Parking License Agreement is in full force and effect.
(g) Condition of Facility. Owner did not construct and has not owned or operated the Facility prior to the Closing, and makes no representation as to the condition of the Facility or any property at the Facility, including the Personal Property, or the compliance of the Facility with applicable law.
18. Hazardous Substances.
18.1 Covenant Regarding Hazardous Substances Handling. Manager hereby agrees that it and its agents, employees, contractors, affiliates, licensees or invitees shaH not generate, manufacture, store, dispose of or otherwise use or hold on, under or about the Facility or transport to, from or across the Sports town Site any Hazardous Substances, without IRV 122028.9
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18 the prior consent of Owner other than office supplies and cleaning products, all as used in the ordinary course of business and all of which shall be used in strict compliance with all applicable Hazardous Laws . In the event Manager receives notice from any governmental agency of any proposed action against Manager under or violation of any Hazardous Substance Law pertaining to the Facility or any improvements thereon, Manager shall promptly notify Owner of the same.
18.2 Hazardous Substances Handling . Upon the expiration of the Term or earlier termination of this Agreement, Manager shall, at its sole cost and expense, cause all Hazardous Substances to be removed from the Facility and transported for use, storage or disposal in compliance with all Hazardous Substance Laws.
19. Miscellaneous Provisions.
19.1 Relationship. Owner is the sole and exclusive owner of the Facility.
Nothing in this Agreement shall be construed to create a partnership or joint venture. Manager acknowledges that Manager has no possessory or property interest in the Facility, nor any interest in its business or assets, except for the interest of Manager in profits strictly as described in this Agreement.
19.2 Notices. Any notices required or desirable under this Agreement shall be made in writing and delivered personally or by certified mail, postage prepaid, return receipt requested, or be recognized overnight courier, such as Federal Express or UPS, address to the applicable party at the address stated in the introductory paragraph to this Agreement, and shall be deemed to be delivered on the third business day after positing in a U.S. Post Office or when actually delivered in person or by overnight courier. Any and all notices or other communications required or permitted by this Agreement, or by law, to be delivered to, served on, or given to either party to this Agreement, by the other party to this Agreement, or to Escrow Holder, shall be in writing and shall be deemed properly delivered, given or served when personally delivered to such party, or in lieu of personal delivery, when mailed by United States mail, first class or express, certified or registered, postage prepaid (or other overnight delivery service , charges prepaid), return receipt requested, or sent by courier, or by facsimile transmission provided that the original, hard copy is delivered on the next day, addressed as follows :
Owner :
With a Copy to:
Manager :
IRV 122028.9
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City of Anaheim
Attn: Jack White, City Attorney
200 South Anaheim Blvd., Suite 356
Anaheim, CA 92805
Facsimile : 714-765-5123
Arter & Hadden LLP
Attn: Jill M. Draffin
Five Park Plaza, Suite 1000
Irvine , CA 92614
Facsimile: 949-833-9604
Nederlander-Grove LLC
19 Attn: David Green
6233 Hollywood Blvd.
Los Angeles, CA 90028
Facsimile: 323-468-9636
With a Copy to: Iverson, Yoakum, Papiano & Hatch
Attn: Adam F. Burke
624 South Grand Avenue, 27th Floor
Los Angeles, CA 90017
Facsimile: 213-629-4563
19.3 Possessory Interest Tax.
Manager recognizes and understands that this Agreement may create a possessory interest subject to property taxation, and in such a case , Manager shall be entitled to treat the actual cost of any property or possessory interest taxes as an Operating Expense. On Manager 's request, Owner shall cooperate with Manager in challenging an assessment which the parties agree is properly subject to a protest, with all costs incurred constituting an Operating Expense.
19.4 No Third Party Beneficiaries. This Agreement is solely for the benefit of the parties and is not intended to benefit any person or entity that is not a party hereto.
19.5 Successors and Assigns. Manager shall have no right or power to assign any rights, obligations or interest in this Agreement to any other person or entity without Owner's prior written consent, excluding a transfer to James L. Nederlander or the heirs of a member of the Manager. Owner shall have the right to withhold consent in Owner's sale discretion, for any reason or no reason whatsoever. Anyone or more transfers of ownership of any ownership interest of Manager shall be deemed to be an assignment of the Agreement requiring Owner's consent. This Agreement may be transferred by Owner to any subsequent owner of the Facility. Subject to the foregoing, this Agreement shall be binding on and benefit the parties and their respective successors and assigns.
19.6 Attorneys' Fees. If a party institutes legal action against the other party to interpret or enforce this Agreement or to obtain damages for any alleged breach, the prevailing party shall be entitled to an award of reasonable attorneys' fees.
19.7 Force Majeure. If the performance by either Owner or Manager of any act required under this Agreement is prevented, materially impaired, or delayed by reason of terrorism, acts of public enemy, war, strikes, lockouts, labor disputes, governmental delays, acts of God, fires, floods, earthquakes, epidemics, freight embargo, or any other cause , beyond their reasonable control, either Owner or Manager shall be excused from such performance for so long as such condition continues to exist.
19.8 Interpretation. This Agreement shall be governed by California law.
The provisions of this Agreement shall be interpreted an construed according to their fair meanings and not strictly for or against either party. Headings in this Agreement are inserted only for convenient reference and are not part of this Agreement and do not limit, define, IRV 122028.9
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20 interpret, construe or otherwise affect the meaning of the provIsions of this Agreement.
References in this Agreement to "months" refer to calendar months.
19.9 Entire Agreement. This is the parties' entire Agreement on its subject, and merges and supercedes all prior negotiations, discussions and agreements. This Agreement cannot be amended or modified except by an instrument in writing signed by both parties. No waiver of the breach of any term of this Agreement shall waive any other breach.
Executed as of the date first written above.
IRV 122028.9
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(signatures onfollowing page)
21 Dated: _ L-l !..../ _-_S.,--- _f!)_<3..l....-_
Attest:
Approved as to Form:
"OWNER"
CITY OF ANAHEIM, a municipal corporation
and charter city
B, m~~
Name: __ Tan __ Dal----'y"--_______ _
Title: Mayor
"
{signatures continued on following page}
IRY 122028.9
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22 IRV 122028.9
67097n4071
''MANAGER'':
NEDERLANDER-GROVE LLC, a California
limited liability company
By: _....tr-~A~_ ~~~::::::..:...:~-=~ __
N arne: _----'=D:...:~:>:"~\J.~k=::::.=,,,~t~G-I-~~=_'l.=_V\.:......___ Title:
23 EXIflBIT "A"
Definitions
"Accounting Date" is defined in Section 7.1.
"ADP" means Area Development Plan No. 120 as approved by the City Council of Owner, as amended from time to time, and any replacement plan adopted in accordance with the applicable law.
"Advance Deposits" means all refundable deposits and advances and proceeds of advance ticket sales accepted by Manager in connection with future bookings, including the funds received by Owner at Closing from SMG; a Pennsylvania partnership for advance deposit and ticket sales. "Affiliate" shall mean any Person, directly or indirectly, though one or more intermediaries, controlling, controlled by or under common control with the Manager. The term "control" , as used in the immediately-preceding sentence, shall mean with respect to a corporation or limited liability company the right to exercise, directly or indirectly, more than fifty-percent (50%) of the voting rights attributable to the controlled corporation or limited liability company and, with respect to any individual, partnership, trust , other entity or association, the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of the controlled entity .
"Capital Expenditure" is defined in Section 11.1.
"Capital Reserve Fund" and "Capital Reserve Contribution" are defined in Section 11. "City Manager" means the City Manager of the City of Anaheim, or such person's designee.
The City Manager or hislher designee shall represent the Owner in all matters pertaining to this Agreement. Whenever a reference is made herein to an action or approval to be undertaken by the Owner, the City Manager is authorized to act unless this Agreement specifically provides otherwise or the context should otherwise require. The Manager acknowledges and agrees that in reviewing and approving matters under this Agreement, the Owner is acting as a property landlord under this Agreement and that the Owner's actions in this regard are separate and distinct from the Owner's conduct of its typical governmental functions and exercise of its police powers in its governmental capacity.
"Closing" is defined in Recital A.
"Early Termination Amount" means the amount payable only in the circumstance described in Section 2.4(b), determined as fifty percent (50%) of all Operating Losses in excess of $400,000 per Year of Operation in the first three (3) Years of Operation reduced by fifty percent (50%) of Operating Profits for all Years of Operation during the Term (including the Year of Operation in which the termination occurs) . An example of the calculation is set forth below.
IRV 122028.9
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24 Sample Calculation:
first Year of Operation:
second Year of Operation:
third Year of Operation:
fourth Year of Operation:
fifth Year of Operation:
Operating Losses =$600,000 ($200,000 excess)
Operating Losses =$300,000 (0 excess)
Operating Profits =$100,000
Operating Profits =$200,000
Operating Losses =$450,000 (agreement terminates under_ Section 2.4(b))
Early Termination Amount = 50% x ($200,000 - (50% x [$200,000 + $100,000]))= 50% x ($200,000 - (50% x $300,000»=
50% x ($200,000 - $150,000)=
$25.000
"EIR" is defined in Section 12.1
"Effective Date" is defined in Section 2.1.
"Event of Default" is defined in Section 16.1.
"Facility" is defined in Recital A.
"Financial Statements" is defined in Section 7.1.
"Food and Beverage Contract" is defined in Section 3(g). "Food and Beverage Operator" means Aramark Sports and Entertainment, Inc., a Delaware corporation or such other company with whom Owner, from time to time, contracts for the provision of food and beverage services at the Facility. "Hazardous Substance" means an unlawful quantity of any hazardous substance, hazardous waste, hazardous constituent, toxic substance, pollutant, contaminant, or chemical known to the State of California to cause cancer or reproductive toxicity, as such or similar terms are defined by or otherwise subject to regulation by any local governmental authority, the State of California or the United States Government. The term "Hazardous Substance" includes, but is not limited to, an unlawful quantity of any material or substance which is (i) defined as a "hazardous waste" under Section 25115 of the California Health & Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law), (ii) defined as a "hazardous substance" under Section 25316 of the California Health & Safety Code, Division 20, Chapter 6.8 (Carpenter-Presley-Tanner Hazardous Substance Account Act), (iii) defined as a "hazardous waste" under Section 25501 of the California Health & Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release Response Plans and Inventory), (iv) defined as a "hazardous substance" under Section 25281 of the California Health & Safety Code, Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances), (v) petroleum product, (vi) asbestos, (vii) polychlorinated byphenyls, (viii) methyl-tert butyl ether, (ix) designated as a "hazardous substance" pursuant to Section 311 of the Federal Water Pollution Control Act (33 U.S.C. Section 1317), ex) defined as a "hazardous waste" pursuant to Section 1004 of the Federal Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq. (42 U.S.C. Section 6903), or (xi) defined as a "hazardous substance" pursuant to Section 10.1 of the Comprehensive Environmental Response, Compensation and IRV 122028.9
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25 Liability Act, 42 U.S.C. Section 9801, et seq. (42 U.S.C. Section 9801), as each of the foregoing may be amended, supplemented or replaced from time to time. "Hazardous Substance Laws" means any governmental law, ordinance or regulation relating to industrial hygiene, environmental protection, or the use, analysis, generation, manufacture, storage or transportation of Hazardous Substances.
"Major Defects" is defined in Section 2.4(c).
"Manager" is defined in the opening paragraph of this Agreement. "Naming Rights" is defined in Section 9.2.
"Operating Accounf' is defined in Section S.I(b).
"Operating Expenses" means collectively, on an accrual basis, all expenses of operating, maintaining, repairing and replacing portions of the Facility and of maintaining and operating the Parking Area (except as described in Section 12.4), including utilities, costs of insurance, amounts payable to the City of Anaheim under the Parking License Agreement, wages of employees of the Facility and related payroll expense and all costs of entering into service and other contracts as contemplated by this Agreement; costs of materials and supplies; talent expense; advertising and promotional cost and other direct expenses; the Management Fee; amounts actually paid to or held back by the Food and Beverage Operator; all charges and taxes which may now at any future time be imposed by any governmental body having jurisdiction on the uses and operation of the Facility provided in this Agreement; legal and other professional fees incurred in the ordinary course of operation of the Facility not specifically excluded below, and any Capital Reserve Contribution made pursuant to Section 11, but specifically excluding legal fees of either party in connection with negotiation, documentation, interpretation or enforcement of this Agreement, indirect costs or overhead of Manager or Owner (in particular, any salary allocation of management of Manager or an Affiliate of Manager, and legal, accounting, and human resources expenses of Manager or an Affiliate of Manager shall not be allocated to the Facility), nor may the cost of insurance or advertising which are attributable to this Facility and any other facility owned, operated or managed by Manager or an Affiliate of Manager be charged as an Operating Expense except to the extent such allocated share does not exceed the lesser of the pro rata share of such costs attributable to the Facility on the basis of its actual uses of such services (if determinable) or the cost of such services if purchased, at a market rate, for the Facility alone.
"Operating Losses" means the excess of Operating Expenses over Revenues for any Year of Operation.
"Operating Profits" means the excess of Revenues over Operating Expenses for any Year of Operation.
"Owner" is defined in the opening paragraph of this Agreement. "Owner Indemnified Parties" means Owner and its elected and appointed officials, officers, employees, contractors, agents, heirs, successors, and assigns. lRV 122028.9
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26 "Parking Area" means the approximately 550-space portion of the Sportstown Site described in the Parking License Agreement.
"Parking License Agreement" means the Parking License Agreement dated September I, 1997 recorded December 30, 1997 in the Official Records of Orange County, California as Document NO.19970672348 originally entered into between Ogden Entertainment Services, Inc., a Delaware corporation and Owner in connection with the acquisition and development of the Facility as amended from time to time, the licensee's rights and obligations thereunder having been assumed by Manager, as amended to provide that "Identified Audience Participation Shows" as used in Section 2.3(b) thereof shall mean the uses contemplated by this Agreement, and "Identified Use Period' as used in Section 2.3(b) thereof shall mean the periods during which, on a regular basis during the Term, the Facility is used for such purposes . "Person" means an individual, partnership, limited liability company, corporation, trust, estate, association or any other entity.
"Personal Property" is the certain personal property listed on Schedule 2 attached to this Agreement.
"Potential Default" is defined in Section 16.1.
"Redevelopment Plan" is defined in Section 12.1
"Restrictions" means, collectively, (a) the ADP, (b) the Redevelopment Plan, (c) the EIR, (d) the covenants, conditions and restrictions set forth in the Grant Deed from the Owner to Ogden Entertainment Services, Inc. recorded December 30, 1997 in the Official Records of Orange County, California as Document No. 19970672347 ,( e) the "Declaration of Restrictions (Anaheim Stadium Property)" dated as of September 17, 1999 recorded in the Official Records of Orange County, California on March 22, 2000, as Document No. 20000146812 and re-recorded to correct the legal description attached thereto as Exhibit "B" on March 30, 2000 in the Official Records or Orange County, California as Document No. 20000164061, relating to the Stadium Lease, (0 the Declaration of Covenants, Conditions and Restrictions and Grant of Reciprocal Easements for Sportstown Anaheim dated recorded April 10, 2000 in the Official Records of Orange County, California, as Document No. 20000183505, and (g) such additional covenants, conditions, restrictions, reciprocal easement agreements, and other agreements to which all or any portion of the Facility, as applicable, is bound, whether presently existing or subsequently recorded.
"Revenue" means, collectively, on an accrual basis, any and all payments, fees and deposits of every nature received for use of the Facility or services at the Facility, including revenues derived under the Food and Beverage Contract; Advance Deposits when taken into income as described in Section 5.1; parking fees; vendor refunds; membership fees; sponsorship and licensing fees received pursuant to Sections 9.1 and 9.3; proceeds from the sale of programs, novelties; proceeds of insurance policies, other than amounts received following casualty or destruction, if any); and all funds received from any other source in connection with events held at the Facility including rebates or rights fees paid by third parties to the extent attributable to IRV 122028.9
61097124011
27 operations at the Facility directly or indirectly and allocated in a manner which equitably compensates the Facility for its proportionate contribution to such rebates or rights fees. "Stadium Lease" is defined in Section 12.1
''Term'' is defined in Section 2.1.
"Year of Operation" means the calendar year, except that the first Year of Operation begins on the Effective Date and continues to December 31, 2003, and the last Year of Operation terminates on the last day of the Term.
IRV 122028.9
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28 EXIDBIT "B"
Assumed Operating Contracts
1) The Food and Beverage Contract
2) The following contracts, assumed by Owner at Closing from SMG, a Pennsylvania partnership:
ASCAP License Agreement
BMI Music Performance Agreement
Armored Car Service
Mobile Modular Units
Parking License Agreement
Harvest Ministries 2002 Events
JMG Security Systems
Martin Professional Inc.
Terminex
Hobart Corporation Service
IRV 122028.9
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29 •
IRV 122028.9
67097124071
EXHffiIT "C"
Assumed Booking Contracts
[to follow]
30 EXHIBIT "D"
Contracts with Affiliates
Advertising: Services provided by Center Stage Advertising at its standard 15% commission.
Sponsorship: Services provided by Trafalgar Productions, Inc., or Nederlander Entertainment, Inc. (commission capped at 15%).
Payroll: Services provided by Cal Ned, Inc., under the same master payroll as all Nederlander staff. The Facility would be charged actual payroll, taxes and a processing fee.
Insurance: Services will be provided through the master Nederlander policy purchased by the New York office. A service charge of 3% on the premium is included to cover the cost of an insurance consultant retained by Nederlander. lRV 122028.9
67097124071
31 mv 122028.9
67097n4071
SCHEDULE!
Effective Date
The Effective Date of this Agreement is _______ , 2002. 32 \ ,
lRV 122028.9
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SCHEDULE 2
Personal Property
[inventory to follow 1
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IlGJe. /J'Id.tJ.3d.1 {!j
AMENDMENT TO AGREEMENT
THIS FIRST AMENDMENT TO AGREEMENT, dated for purposes of identification only thiwiOay of /YIFly ,2009, is made and entered into by and between the CITY OF ANAHEIM, a municipal corporation, hereinafter
referred to as "Owner,"
A
N
D
NEDERLANDER-GROVE, LLC, a California limited
liability company, hereinafter referred to as "Manager." WHEREAS, the parties have previously entered into a written agreement dated October 24,2002 (hereinafter, the "Agreement"); and
WHEREAS, the parties desire to amend the Agreement to extend the Term thereof and amend the provisions relating to i) management fee, ii) distribution of profit and allocation of losses, and iii) naming rights.
NOW, THEREFORE, FOR AND IN CONSIDERATION OF THE MUTUAL
PROMISES, COVENANTS AND CONDITIONS HEREIN CONTAINED, THE PARTIES HERETO AGREE AS FOLLOWS:
1. Section 2.1 of the Agreement is hereby amended to extend the term of the Agreement to and including December 31, 2015.
2. Section 2.2 of the Agreement is hereby amended to read as follows:
"By notice delivered to Manager not less than one hundred eighty (180) days prior to the last day of the Term, and upon mutual written consent of Manager and Owner, the Term may be extended for an additional sixty (60) months, subject to all of the terms and conditions of this Agreement, specifically, including Section 2A(b) below. As so extended, and subject to Section 2.4(b) below, the Term shall then continue to and including December 31,2020."
II
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3. Section 2.4(b) of the Agreement is hereby amended to read as follows:
"At any time following January 1,2006, this Agreement may be terminated by Owner on not less than eighteen (18) months written notice concurrently with the closing of the sale, or the lease or re-purpose of the Facility by Owner only if i) the purchaser or lessee is not in the business of operating comparable venues, ii) the Facility will be used primarily for purposes other than concerts and private events as currently used or will be demolished, and iii) on the Accounting Date following the termination, Owner pays to Manager the Early Termination Amount."
4. Section 2.5 of the Agreement is hereby amended to read as follows:
"On termination of this Agreement, the Manager shall promptly deliver to Owner possession and control of the Facility and all Personal Property (or comparable property, in substitution for the Personal Property) in a condition no worse than that existing on the Effective Date, reasonable wear and tear excepted, and copies of any and all records in its custody relating to the Facility or to operations under this Agreement. All amounts due from either party to the other shall be paid and performed to the date of termination as otherwise provided in this Agreement. The indemnification obligations ofthe parties under Section 15 shall survive termination of this Agreement."
5. Section 3 of the Agreement is hereby amended to add clauses (t) and (u), to read as follows:
"( t) consult with the Anaheim Police Department regarding mutually agreed Anaheim Police Department staffing levels at certain Facility events; and (u) during the Term, in the eventthat smoking occurs in the Facility, and there is resulting damage to the Facility's carpet from such smoking, be solely responsible for the repair of the resulting damage to the Facility carpet."
6. Section 6 of the Agreement is hereby deleted in its entirety.
7. Section 7.3 ofthe Agreement is hereby amended to read as follows:
"Within ten (10) calendar days following the Accounting Date:
(a) Manager shall pay to Owner as a return to Owner on its investment in -2-
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the Facility an amount equal to sixty percent (60%) of the Operating Profits for the preceding year of Operation. Manager shall retain forty percent (40%) of the Operating Profits. (b) If the Operating Expenses exceed Revenue, Owner shall reimburse Manager from the Convention Center Fund, as an additional Contribution to the Facility, for sixty percent (60%) of the first $400,000 in Operating Losses. Manager shall be solely responsible for the remaining forty percent ( 40%) ofthe first $400,000 of Operating Losses and for all the Operating Losses in excess of $400,000."
8. Section 9.2 is hereby amended to read as follows:
"Owner has the right, subject to the Restrictions, to sell one (1) exterior sponsorship and/or naming right with respect to the overall Sportstown Site, in the Owner's discretion, which sponsorship rights may include exterior signage at the Facility. Owner anticipates the future development of remaining portions of the Sportstown Site, and has identified such sponsorship and naming rights as a valuable asset in connection with such future development. In the interim, pending such further development, the Owner has agreed that Manager may market such exterior sponsorship and/or naming right on terms and to a sponsor approved by Owner ("Naming Rights"). The parties agree that Naming Rights shall not be granted to any company (a) which derives substantial revenues from the manufacture, sale or distribution of tobacco products or gaming services or products, (b) which is an economic competitor of Owner, or (c) if such grant is in violation of the terms of the Stadium Lease. Any agreement by Manager granting Naming Rights to a third party shall terminate on or before December 31, 2015, provided that Owner agrees it will extend the term of such grant of Naming Rights for successive six (6) month periods (but otherwise on the same terms as set forth above) during such periods that this Agreement is in effect and the portions of the Sportstown Site owned by Owner as of the Closing remain in Owner's name and possession and are, other than the Facility and other improvements existing on the Effective Date, undeveloped, but no later than December 31, 2020 except as Owner and Manager expressly agree in writing. All amounts received in connection with the Naming Rights (including all rights relating to such name sponsor's exterior and interior signage and related rights, net of -3 -
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costs and commissions which may not, in the aggregate, exceed fifteen percent [15%] of the gross proceeds) shall not be included in Revenue but shall be shared fifty percent (50%) with Owner, payable by Manager to Owner within three (3) business days of receipt. Owner does not, by this Agreement, authorize any increase in the number of signs at the Facility or on the Sportstown Site, or approve a free-standing sign of any type other than in replacement of signs currently existing at the Facility and then only with Owner's prior written approval."
9. Except as expressly amended hereby, all the remaining provisions of the Agreement shall remain in full force and effect.
10. Manager and Manager's signators represent that the signators hold the positions set forth below their signatures and that the signators are authorized to execute this First Amendment to Agreement on behalf of Manager and to bind Manager hereto.
11. Upon the execution of this First Amendment to Agreement by both parties, the amended terms set forth in this Amendment shall become effective as of January 1,2009.
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to Agreement to be executed on the dates hereinafter respectively set forth.
DATE OF EXECUTION:
&-1- 0 9
By __ ~~ __ ~ ____ ~ ______ __
ATTE~4cW
City Clerk
"Owner"
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DATE OF EXECUTION:
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APPROVED AS TO FORM:
Nederlander-Grove, LLC a California
limited liability company
~ JJ;;J--By _____________________ __
Printed Name Da.V\d.. G.tt..~1A
Title ~ ~"Ui"\Jr l c:...'t=o
"Manager"
CRISTINA L. TALLEY, CI ¥j\IfORNEY
.. ,'/" ,
Date-----.:..:~-"o:::::"~~--L----
#968133v3<LADATA> -CITY OF ANAHEIM.First Amendment to Agreement v3 -5-
ORISI
~. 18~3. 0.&1.'Z..
SECOND AMENDMENT TO AGREEMENT
THIS SECOND AMENDMENT TO AGREEMENT, dated for purposes of identification only this IOT\"l day of Jua..,y ,2012, is made and entered into by and between the CITY OF ANAHEIM, a municipal corporation, hereinafter referred to as "Owner," and NEDERLANDER-GROVE, LLC, a California limited liability company, hereinafter referred to as '"Manager."
" RECITALS:
WHEREAS, the parties have previously entered into a written agreement dated October 24, 2002, as amended by Amendment to Agreement dated May 26, 2009 (hereinafter, as so amended, the "Original Agreement"); and
WHEREAS, the parties desire to amend the Original Agreement.
NOW, THEREFORE, FOR AND IN CONSIDERATION OF THE MUTUAL
PROMISES, COVENANTS AND CONDITIONS HEREIN CONTAINED, THE PARTIES HERETO AGREE AS FOLLOWS: ::
1. Food and Beverage Contract. Section 30) of the Original Agreement is hereby amended to read in its entirety as follows:
"0) enter into agreements for all necessary and appropriate food and beverage services at the Facility (the "Food and Beverage Concessions Contract") comparable to such services provided under the existing Food and Beverage Contract with the Food and Beverage Operator and administer such agreements as are in existence, from time to time, subject to the reserved rights of Owner as described in Section 20 below;"
2. Release of Reserved Rights. The reserved rights stated in clauses (a) through (c) of Section 10 of the Original Agreement are hereby deleted.
3. Reserved Rights. Section 20 is added to the Agreement, to read as follows:
"20. Reserved Rights. Owner's approval shall be required prior to Manager entering into or amending a Food and Beverage Concessions Contract, provided that Owner's approval shall not be required for the entering into or amending of a Food and Beverage Concessions Contract so long as (i) Manager has provided Owner ten (10) business days' advance notice of the proposed form of such contract and, on Owner's request made within three (3) business days of Owner's receipt of such contract, has provided to Owner reasonable evidence that (a) such contract has been awarded through a competitive bid process and (b) is on terms consistent with those extended to other comparable entertainment facilities in the State of California, and (ii) the term of such new or amended Food and Beverage Concessions Contract does not extend beyond the Term under this Agreement as in effect from time to time. All rights of Owner pursuant to this Section 20 may be exercised by the City Manager of the City of Anaheim or the City Manager's designee. Initially, the Executive Director, Convention, Sports & Entertainment, is named as City Manager's designee for purposes of exercising the reserved rights of Owner under this Agreement."
1662016.2
17815-904 1
4. Representation. Manager and Manager's signators represent that the signators hold the positions set forth below their signatures and that the signators are authorized to execute this First Amendment to Agreement on behalf of Manager and to bind Manager hereto.
5. Effect of Amendment. Except as expressly amended hereby, all the remaining provisions of the Original Agreement shall remain in full force and effect. The Original Agreement, as amended hereby, is the "Agreement" .
6. Effective Date. Foll~wing the execution of this Second Amendment to Agreement by both parties, the amended terms set forth in this Amendment shall become effective as of the date of execution by Owner .
7. CounterParts. This Amendment may be executed and delivered in any number of counterparts, each of which, when executed and delivered shall be deemed an original and all of which together shall constitute the same agreement. Facsimile signatures shall be permitted .
DATE OF EXECUTION:
APPROVED AS TO FORM:
Cristina L. Talley,
City Attorney
By:
Date: ____ ~~ __ _L ____ ~ __ __
1662016.2
17815-904
CITY OF ANAHEIM,
a municipal corporation
By: b ?? IOI11Thit>
Mayor
"OWNER"
2 DATE OF EXECUTION:
-::J -.-.a- \....\, \ "l-o \"L
1662016.2
17815·904
....
NEDERLANDER-GROVE, LLC,
a California limited liability company
By:
Printed Name:
Title:
"MANAGER"
3