T
EAM LEASE FOR ADVENTIST HEALTH ARENA
(
BASKETBALL TEAM)
B
ETWEEN
C
ITY OF STOCKTON
AND
BAS
KETBALL DEVELOPMENT LLC
D
ated as of December__, 2024
EXHIBIT 1
TAB
LE OF CONTENTS
ART
ICLE 1. BASIC LEASE PROVISIONS .................................................................... 4 Section 1.1 ........... Lease for Team Events Services and Facilities; “As Is” Conveyance 4 Section 1.2 .......................................................... Lease of Team Administrative Offices 9 Section 1.3 .............................................................................................. Term of Lease 9 ARTICLE 2. FINANCIAL PROVISIONS ....................................................................... 10 Section 2.1 ............................................................................................................ Rent 10 Section 2.2 ........................................................... Tenant Event Cost Reimbursement 10 Section 2.3 ............................................................................. Responsibility of Tenant 10 Section 2.4 ......................................................... Revenue Generation and Allocations 11 Section 2.5 ................................................................................... Tenant Luxury Suite 14 Section 2.6 ............................................................. Tenant Accounting Records; Audit 15 Section 2.7 .................................................................. City Accounting Records; Audit 16 ARTICLE 3. OPERATIONAL PROVISIONS ................................................................ 16 Section 3.1 ................................................................... Covenants Concerning Tenant 16 Section 3.2 .......................................................................... Arena Operation Standard 17 Section 3.3 ................................................................................ City’s Control of Arena 18 Section 3.4 ..................................................................................................... Manager 19 Section 3.5 .................................................................................. Copyrighted Material 19 Section 3.6 ............................................................................. Community Involvement 19 Section 3.7 .................................................................................................... Insurance 20 Section 3.8 ..................................... Responsibility for Equipment and Acts; Lost Items 20 Section 3.9 .............................................................................. Employees and Agents 20 Section 3.10 ..................................................................................... Hazardous Waste 20 Section 3.11 .................................................................. Equal Employment Provisions 21 Section 3.12 ................................................................................................. No Claims 21 ARTICLE 4. DAMAGE, DESTRUCTION, AND CONDEMNATION .............................. 21 Section 4.1 ............................................................................ Damage and Destruction 21 Section 4.2 ............................................................................................ Condemnation 22 Section 4.3 .................................................................. Damage to Facilities by Tenant 22 ARTICLE 5. DEFAULT AND REMEDIES ..................................................................... 22 Section 5.1 ............................................................................................ Tenant Default 22 Section 5.2 ........................................................................... City Remedies in General 23 Section 5.3 ................................................................... Specific Performance Remedy 24 Section 5.4 ................................................................................................. City Default 25 ARTICLE 6. REPRESENTATIONS AND WARRANTIES ............................................ 26 Section 6.1 ................................................ Representations and Warranties of Tenant 26 Section 6.2 ..................................................... Representations and Warranties of City 27 ARTICLE 7. GENERAL PROVISIONS ......................................................................... 28 Section 7.1 ....................................................Notices, Demands and Communications 28 Section 7.2 ............................................................................................ Force Majeure 29 Section 7.3 ........................................................................................... Indemnification 30 Section 7.4 ................................................................................Relationship of Parties 30 Section 7.5 ...................................................................................................... Waivers 30 Section 7.6 .................................................................................................... Transfers 31 EXHIBIT 1
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ection 7.7 ............................................................................................. Binding Effect 31 Section 7.8 ................................................................ Entire Agreement; Amendments 31 Section 7.9 .............................................................................................. Interpretation 32 Section 7.10 .............................................................................................. Non-Interest 32 Section 7.11 ........................................................................ Non-Liability of Individuals 32 Section 7.12 ..................................................................... No Third-Party Beneficiaries 32 Section 7.13 ......................................................................................... Applicable Law 32 Section 7.14 ............................................................................................ Legal Actions 32 Section 7.15 ............................................................................................... Severability 33 Section 7.16 ............................................................................................ City Approval 33 Section 7.17 ............................................................... Multiple Originals; Counterparts 33 Section 7.18 ........................................................................... Possessory Interest Tax 33 Section 7.19 ..............................................................................Operating Memoranda 34 Section 7.20 ...................................................................................... League Approval 34 Section 7.21 ...................................................................................... Attached Exhibits 34
Exhibit A Definition of Terms
Exhibit B City-Provided Facilities and Services
Exhibit C Insurance Requirements
Exhibit D Best Practice Guide
EXHIBIT 1
T
EAM LEASE FOR ADVENTIST HEALTH ARENA
(BASKETBALL TEAM)
This Lease (the “Lease”) is made and entered into as of December ___, 2024 (the “Effective Date”) by and between the City of Stockton (the “ City”) and Basketball Development LLC, a Delaware limited liability company (the “Tenant”). The City and the Tenant are referred to collectively as the “parties” and individually as a “party.”
RECITALS
A. Capitalized terms used in this Lease not defined herein have the meanings s
et forth in the Glossary of Defined Terms attached to this Lease as Exhibit A.
B. Tenant and City entered a Team Lease for Adventist Health Arena (formerly Stockton Arena) as of October 10, 2018, which provided for three one-year options to extend (“Original Lease”). Tenant extended the Original Lease for three additional years, and now both Tenant and City wish to enter into a new Lease for Adventist Health Arena for purposes of hosting the Stockton Kings (“Team”) NBA G-League home games, which consists of approximately 24 regular season team games (including games at the Arena, and up to two off-site games as set forth herein) with the potential for subsequent playoff games at the Adventist Health Arena located at 248 W. Fremont Street Stockton, CA 95203 (“Arena”), in accordance with the terms and conditions of this Lease.
NOW THEREFORE, incorporating the above recitals and in consideration of the mutual covenants and conditions in this Agreement, City and Tenant agree as follows:
ARTICLE 1. BASIC LEASE PROVISIONS
Section 1.1 Lease f
or Team Events Services and Facilities; “As Is” Conveyance.
(a) Lease . In accordance with the terms and conditions of this Lease, and subject to the condition set forth in Section 7.20, the City hereby leases to the Tenant, and the Tenant hereby leases from t he City, the Arena on the Team Event Dates throughout the Term for the Tenant ’s use and operation in fielding the Team and conducting Team Events. Notwithstanding the foregoing, the City may make available those portions of the Arena not required exclusively for the conduct of the Team Events (including, without limitation, adminis trative offices and dressing facilities not leased to the Tenant under this Lease) to other users and patrons of the Arena on non- Team Event Dates so long as such availability to other users and patrons does not materially impair the efficient conduct of the Team Events on such Team Event Dates. Reducing available parking and compromising security or secure entry for ticket holders and Tenant personnel shall be deemed a material impairment for the purposes hereof. The City shall make available the meeting room and conference room areas of the Arena to the Tenant as part of the Lease of premises as set forth herein.
City s
hall make the court, all services and facilities and other provisions and access EXHIBIT 1
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cribed herein available to the T eam and visiting team, their personnel, agents, representatives, visitors, guests, fans and media to the extent applicable as applicable up beginning at 9:00 am on the day of the Team Event until three (3) hours following the Team Event, or as otherwise required pursuant to NBA G -League Rules. The public cannot be admitted more than three (3)-hours prior to the game time, except as follows:
Tenant may open to the public early up to ten (10) games per Team Season for themed nights such as Court of Dreams, Sneaker night, Collectibles night, etc. Should the Tenant wish to allow small groups of fifty (50) or less members of the public in the arena prior to general public admission, Tenant will provide staff for security and safety of the public and provide prior notice to the Arena management . The Tenant shall have the right to tour prospective ticket buyers and sponsors on non- Team Event Days, provided Tenant provides 48-hour advance notice to City, and City approves, with such approval to not be withheld, conditioned, or delayed. Both parties agree if City is setting up or utilizing the Arena for another event, such approval could be reasonably withheld.
(b) Scheduling of Team Events .
The Team Event Dates shall be established
for each Team Season during the Term in accordance with the outline below. The City, and the Tenant shall cooperate with each other to implement the terms below to establish the overall schedule for use of the Arena. The Booking Policies and Procedures outlined below provide the Tenant assurance that during any Team Season:
i) T
he City shall provide Tenant with first priority for Tenant to select at least 50 dates for the next Team Season on or before February 1 st of each year (“First Hold Dates”), with 17 of these First Hold Dates between Monday – Thursday. A minimum of 14 First Hold Dates must be located between the first week of November and the second week of December. A minimum of 36 of the First Hold Dates must be between December 27 and March 29 of each year. Such dates can not include NBA All- Star Weekend, NBA G League Showcase, including the day before and day after each event and any Dark Days associated with those events, nor Thanksgiving.
ii) Any Dates not used by the Tenant may be used by City and other tenants at the Arena.
iii) Sixty percent (60%) of the submitted dates will be provided on the weekend dates defined as Thursday through Sunday. A minimum of 17 dates shall be evenly-distributed Friday through Sunday nights from November 12 to April 15 each year (or during the Regular Season timeframe as defined by the League). A minimum of 15 evenly-distributed weekdays (Mon day - Thursday) must also be submitted with a minimum of twelve (12) which are non-adjacent to other submitted dates.
iv) Once the final schedule is announced by the League, City agrees to not move game dates, unless mutually agreed upon in writing by the parties.
v) Tenant will select eleven (11) dates between April 1 and April 15 for NBA G League Playoffs. Six (6) of those eleven (11) dates must be Thursday through EXHIBIT 1
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unday nights.
In addition to the 2 4 anticipated regular season Home Games and subsequent playoff games, Tenant will receive fifteen (15) Special Events per year outside of game days booked for non -revenue generating and non-ticketed purposes, provided that Tenant need not use all 15 Special Events at its discretion. Examples include Team practices, Select-A-Seat and Fan Fest, and shall permit use of the basketball floor for Special Events. The Special Events will be rent free and will be subject to at -expense costs for production, security and other direct labor costs related to the Special Event.
Tenant shall be permitted to utilize exterior specific-need catering or food services, if food is provided for a group of fifteen (15) or less people. Food provided for groups of sixteen (16) or more must be provided by the Arena in-house caterer.
In the event the Tenant has scheduled a Team Event at the Arena and subsequently the Tenant desires to cancel such Team Event, then the Tenant shall immediately provide written notice of such cancellation of the Team Event to the Manager (the “Cancellation Notice”).
If the Tenant delivers the Cancellation Notice to the Manager, then the Manager shall cancel the date of the Team Event and the Tenant shall have no right to occupy or use the Arena on the date of the cancelled Team Event (the “Confirmed Cancellation Date”). Except as otherwise set forth herein pursuant to Force Majeure and League requirements, and unless such cancellation occurs at least eight weeks in advance, upon the Manager’s cancellation of the Team Event on the Confirmed Cancellation Date, the Tenant shall pay to the Manager incurred and non- reimbursable costs and expenses directly incurred for the benefit of such cancelled Team Event, less any rent actually collected for the Arena for such Confirmed Cancellation Date.
The Tenant shall be responsible, at its sole cost, for providing certain facilities, services, and equipment necessary for conduct of Team Events other than those expressly specified to be provided by the City under the terms of this Lease. The City, through its Manager, shall have the right to approve (in City’s reasonable discretion, not to be conditioned or delayed) any agents, contractors or other persons employed by the Tenant (including, without limitation, security personnel) other than Team person nel.
Approval of a third-party contractor or consultant (such as a security firm) shall be deemed approval of such third- party entity’s staff unless specifically withheld. The Tenant shall use its commercially reasonable efforts to cause all such persons remained or hired by the Tenant to comply with all applicable federal, state, and local laws and regulations, and with all rules and regulations established for the Arena by the Manger, on behalf of the City. The Tenant hereby assumes all risks and liability that may result from the failure by and such persons retained or hired by the Tenant to comply with such laws, rules and regulations and any material failure by such person to comply with such laws, rules and regulations shall constitute a Tenant to default if not cured within the time and in the manner outlined in this agreement. As the primary tenant, Tenant shall in no event be responsible for City costs of removing and replacing the basketball floor as needed for Team Event Dates. Tenant would be responsible for court replacement costs related to EXHIBIT 1
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pecial Events.
(c) Dressing Rooms . The City shall provide to the Tenant the following dressing and related facilities (collectively, the “Dressing Room Facilities”) during Team Events.
i) T
enant will have the use at all times of dedicated dressing rooms during all Team Event Dates. Team will need to vacate dressing room if room is in use on a non-Team Event Date;
ii) City will provide exclusive storage to Tenant in Team’s dressing room and primary Tenant space and additional space in the locations mutually agreed upon by Tenant and City in Arena storage areas (in addition to locations used pursuant to Original Lease), which storage may be used throughout the Term (not only on Team Event Dates) See Exhibit E for current layout;
iii) An auxiliary dressing room for the visiting team and a separate dressing area for referees and cheerleaders on Team Event Dates;
iv) Trainer’s facilities and laundry facilities as generally described in the arena program;
v) Weight room, training areas and coaches’ offices; and
vi) Business offices located off the mezzanine level of the area.
The Tenant acknowledges and agrees that the City will be responsible for facility maintenance for the Dressing Room Facilities in accordance with the a rena program, which includes installed lockers, toilets, and shower facilities, but that the Tenant shall be responsible at its sole cost of providing furniture, fixtures, and equipment deem necessary to make the Dressing Room Facilities consistent with Tenant’s particular manner of use.
Improvements may be made to the Dressing Room Facilities by the Tenant with the prior written approval of the City and the costs of all such improvements made by the Tenant shall be the sole responsibility of the Tenant. The Tenant acknowledges that any improvements to the Dressing Room Facilities, which result in permanent, or semi - permanent attachment to the floors, walls, or ceilings of the Dressing Room Facilities, such improvements will become property of the City. All improvements are to be approved, in writing, in advance by the City (in City’s reasonable discretion, not to be conditioned or delayed), and are subject to any reasonable conditions required by the City including, but not limited to the provision of reasonable labor and material bonds and insurance in connection with the contribution of such improvements consistent with City practices for similarly situated improvements.
(d) The Tenant shall be responsible, at its sole cost, for providing facilities, services, and equipment necessary for conduct of Team Events other than those EXHIBIT 1
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pressly specified to be provided by the City under the terms of this Lease. The City, through its Manager, shall have the right to approve any agents, contractors or other persons employed by the Tenant (including, without limitation, security personnel ) other than Team personnel. Such approval shall not be unreasonably withheld, conditioned, or delayed; and approval of third- party contractors (such as security firms) shall be deemed approval of the personnel of such contractors unless specifically withheld. The Tenant shall use its commercially reasonable efforts to cause all such persons remained or hired by the Tenant to comply with all applicable federal, state, and local laws and regulations, and with all rules and regulations reasonably established for the Arena by the Manger, on behalf of the City (provided that such regulations shall not reduce or materially and adversely affect Tenant’s rights hereunder). The Tenant hereby assumes all risks and liability that may result from the failure by and such persons retained or hired by the Tenant to comply with such laws, rules and regulations and any material failure by such person to comply with such laws, rules and regulations shall constitute a Tenant default if not cured within the time and in the manner outlined for in Sections 5.1 (a).
(e) Other City-P
rovided Facilities and Services . The City shall provide to the Tenant, during or in connection with Team Events, the services and facilities described in the attached Exhibit B. Staffing for the Services described in Exhibit B shall be the sole responsibility of the City and shall be of a first -class nature and: (i) at levels consistent with the League Standard; and (ii) consistent in compliance with the League Rules (as same may be amended from time to time). The City shall provide the servi ces and facilities at its sole cost and expense, except that City shall be entitled to reimbursement for certain services and facilities only to the extent described in Exhibit B.
(f) Box Office Facility and Ticket Sales. Except as otherwise provided below, the City, through its Manager or a reputable ticket service provider (the “Ticket Service”), shall be solely responsible for and authorized to operate the box office at the Arena and arrange for and conduct the sale of all individual game tickets for Team Events and collect funds as the agent of Tenant, whether at the box office or through remote facility sales operations.
i) T
he City shall conduct ticket sales using best practices and standards for sale of tickets to events at least equivalent to the League Standard. The City shall reasonably cooperate with the Tenant regarding the sale of tickets for Team Events; provided that Tenant shall have the sole right and responsibility to set ticket pricing for all Team Events.
ii) Notwithstanding the foregoing, the Tenant may separately control and perform the sale of season ticket packages and/or group ticket sales for Team Events. The City shall cause the Manager and Ticket Service to cooperate with the Tenant and to facilitate the sale by the Tenant of season ticket packages and/or group ticket sales. The Tenant shall provide an accurate and complete report to the City of all season ticket packages sold and group ticket sales compiled by the Tenant in a timely fashion so that City can adequately and timely perform all applicable functions under this Lease, including, without limitation, the determination and allocation to the City of the EXHIBIT 1
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acility Fee Revenue for each Home Game.
iii) The Tenant recognizes the preferred ticketing vendor for City is Ticketmaster and the City recognizes that the Tenant will utilize their own license agreement of Archtics for season ticket packages and group tickets as a secondary box office. Howev er, all individual game ticket sales will be through the City or Manager’s agreement with Ticketmaster and named primary box office.
(g) “As Is” Conv
eyance, Acceptance of Arena. By taking possession of the Arena for Team Events at the commencement of the Initial Term, the Tenant will have acknowledged that the Tenant has previously inspected the Arena and accepts the Arena “as is”; provided that such acceptance does not limit City’s obligation hereunder to maintain the Arena in compliance with the League Rules (as same may be modified from time to time), consistent with the League Standard (as defined below), and as otherwise provided herein.
(h) Services Generally. A
ll Services and facilities provided by City hereunder
shall be provided: (i) in accordance with the League Rules (as same may be amended from time to time by the League); (ii) at City’s sole cost and expense, except as specifically allocated to the Team in this Lease; and (iii) at standards equivalent to or better than the top tier of venues in the League (the “League Standard”).
Section 1.2 Lease of
Team Administrative Offices.
(a) The Tenant shall have exclusive use of office space within the Arena of not less than 1,500 square feet during the Lease. All current utility services in office space shall be included in Lease, along with the current multi -cleaning janitorial services that already regularly occur. Tenant shall be responsible for any additional janitorial or utility services beyond what currently exists for the office.
Section 1.3 Ter
m of Lease.
(a) Effectiveness of Lease Provisions . This Lease shall take effect and shall become operative upon the commencement of the Initial Term as described in Section
1.3(b).
(b) Initial Term.
The Initial Term of this Lease shall commence on initial signing of the agreement and continue through the last game at the end of the 2026-2027 Team Season.
(c) Option Terms.
i) Thr
ee (3) One-Year Options to Extend. Subject to the terms of this subsection (c, the Tenant may exercise up to three (3) options to renew this Lease, each for a period of one (1) year. The first Option Term would be for Team Season 2027-2028, the second Option term would be for Team Season 2028-2029, and the third option would EXHIBIT 1
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or Team Season 2029-2030.
ii) No D efault. To exercise any option under this Lease, there shall exist no uncured Tenant Event of Default at the time of such exercise. If an uncured default occurs at the time Tenant attempts to exercise an Option, such exercise shall be void and without any legal effect. Such occurrence shall not affect the Tenant’s right to exercise subsequent Options, so long as the subsequent exercise of the Option complies with the requirements of this subsection (c).
iii) Ex
ercise of Option. To exercise the options under this Lease, Tenant shall advise City in writing prior to January 3 1st of the final Team Season of the I nitial Term, or in the case of Options following the end of the Initial Term, not later than January 1st of the final Team Season of whatever Option Term is ending.
ART
ICLE 2. FINANCIAL PROVISIONS
Section 2.1 Rent.
In consideration for this Lease, the Tenant shall pay to the City as Rent Fourteen thousand dollars ($ 14,000.00) per Home Game with a three percent ( 3%) annual escalation on Rent. The escalation will commence at the first game of the 2025- 2026 season and will continue to escalate on the first game of each Team Season thereafter through the remainder of the Term plus all three (3) one-year options (if exercised). Rent shall be paid via deduction from Net Gate Receipts as provided below.
The premises provided by City for each Team Event and included in the Rent (as applicable) is all of the following (without limiting other facilities and services listed elsewhere in the Lease): Arena-owned equipment, house security, janitorial services, box office operations, ticket takers, guest services representatives, front -of-house medical services, front-of-house police services, an event manager, a house engineer, basketball operation services such as cleaning the court and floor security, systems, utilities, concessions operations (excluding merchandising operations), ushers, Arena public address system, Arena sound system, spot light equipment, phone and internet, reasonable cleaning of backstage and locker room areas and in-Arena storage of Team- provided court and standards package (all of which shall be deemed “Services” for the purposes of this Lease, and shall be provided consistent with the League Standard).
Section 2.2 Tenan
t Event Cost Reimbursement.
The following expenditures are reimbursable by Tenant to City for each event (collectively, the “ Reimbursable Expenses ”): spotlight operators, camera operators, production personnel as requested by Tenant, catering services, and any other miscellaneous production and/or labor expense related to Team Events, materials, or extra services furnished by City at the request of Tenant, which are not otherwise required by this Lease, including, without limitation those items specified as extra services in Exhibit B.
EXHIBIT 1
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ection 2.3 Res ponsibility of Tenant.
Tenant will be responsible for the provision and costs of A dvertising, ASCAP/BMI/SESAC/GMR, insurance, catering for team staff and media, runners, transportation, towels and soap, basketballs, game staff (ball boys/girls, medical for teams, PA announcer, statisticians, score/timekeepers, officials) and basketball court and standards package.
Despite the reference to this agreement as a Lease, Tenant does not have exclusive right and control of the Arena, and therefore is not responsible in any manner for the repair, maintenance or operation of the Arena, Arena building, Arena building systems, provision of utilities, security, property insurance (or the costs and expenses therefor), except as provided on a limited basis specifically in this Lease.
Section 2.4 Rev
enue Generation and Allocations.
This Section describes the parties’ rights and responsibilities with respect to generation of revenues in connection with the operations of the Arena and to the conduct of Team Events and sets forth the allocation of such revenues between the City and the Tenant.
(a) Ticket Rev
enue. The Tenant shall be allocated and remitted all Net Gate Receipts from each Home Game. “Net Gate Receipts” shall mean all revenue generated by Ticket Sales for each Home Game by City and the Team (the amount collected directly by City shall be deemed “Gross Gate Receipts”), less the following amounts from and related to each Home Game: (i) the Rent; (ii) Reimbursable Expenses (if any) ; (iii) the Facility Fee Revenue and three percent (3%) reimbursement for credit card fees paid by City on ticket receipts; (iv) the City’s portion of suite revenue on individual game rentals ; and (v) Ticket Fees. Nothing in this Lease shall require Tenant to pay any of (i)-(v) more than once per Team Event (i.e. deduction of Rent from Net Gate Receipts shall fulfill Tenant’s obligation to Pay Rent).
(b) Tenant is Res
ponsible for Shortfall. If, following a Team Event, there is a shortfall between the amount that is determined by the Manager to be owed to the City with respect to such Team Event for the items described above and the amount of Gross Gate Receipts then received by the Manager and the Arena Ticket Service for such Team Event, the Manager shall so notify the Tenant and inform the Tenant of the amount of such shortfall (a “S hortfall Amount”). The Tenant shall deposit the Shortfall Amount for such Team Event with the Manager within seven (7) business days of receipt of such notice.
(c) Concession and Catering Services .
The City, through its Manager, shall
have the exclusive right to operate the Concession Services for food and beverages at Team Events, and shall cause the Concessions Services to be operated at all Home Games according to the League Standard for services provided herein. As between the EXHIBIT 1
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ity and the Tenant, an amount equal to twenty percent (20%) of all revenue generated by Concessions Services and catering at all Team Events less sales tax shall be allocated and paid to the Tenant, and the balance of all Concessions Services and catering revenue shall be allocated and paid to the City. Such amounts shall be paid to the Tenant at the time of settlement in accordance with subsection (k) below. City shall cooperate with Team on the Concession Services to maximize revenues and enhance the fan experience consistent with the best venues in the League. Tenant shall not receive commission on food and beverage discounted by more than ten percent (10%) for the purposes of promoting ticket sales (e.g., Family Fest night promotions, etc.).
(d) Merchandise.
Tenant shall be permitted to operate its primary team store at the Arena and other locations in the Arena for all T eam Merchandise, souvenir, and related concessions at Team Events and other reasonable times while the Arena is open to the public, subject to City approval, which approval shall not be unreasonably withheld, conditioned or delayed. Tenant is responsible for all costs and expenses incurred in its merchandising program and shall retain one hundred percent ( 100%) of the revenues generated thereby . City shall provide Tenant with sufficient locations in the Arena dedicated for such merchandise sales, including the primary store location.
(e) Advertising.
i) Advertising. Tenant will receive the rights and one hundred percent (100%) of the revenue from any temporary game day Advertising desired and instituted by the Tenant, including but not limited to, the on-court logos, courtside signage, center- hung scoreboard, ribbon boards, concourse tables, sponsorship packages and events, and game-day banners. This Lease shall include the right of Tenant to conduct such Advertising and sponsorships on Tenant Event Dates. No space in the Arena currently available for temporary game day advertising shall be sold by City as permanent advertising (or otherwise made unavailable for Tenant), without Tenant’s written approval.
In addition, during the Term of this Lease, Tenant shall have the following exclusive rights:
(A)
Prior to offering any opportunity (via agreement, term sheet or otherwise) to third parties to sell or market advertising in or about the Arena or otherwise share in or profit from the Arena advertising revenues , whether as agents of City, commissioned sellers or otherwise (an “Offer”), City shall first make such Offer available exclusively to Tenant for a period of thirty ( 30) days by providing written notice of the proposed Offer to Tenant (“First Offer Notice”). Tenant shall have the right in its sole and absolute discretion to accept the Offer, or decline. If Tenant declines an Offer, City shall have ninety (90) days to enter into an agreement with a third party under terms equivalent to the Offer; however, City must give Tenant another First Offer Notice and make another Offer available exclusively to Tenant if: (i) City does not enter into a third-party agreement equivalent to the Offer within such ninety (90) day period; (ii) City materially changes the terms of the Offer; or (iii) City makes a different Offer available (the election to accept or reject any Offer does not affect Tenant’s rights hereunder with respect to future Offers).
Acceptance of an Offer shall automatically be deemed a binding agreement. If Tenant accepts any Offer, City and Tenant shall work in good faith to enter into a formal contract; EXHIBIT 1
13 however, failure to enter into a formal contract shall not invalidate City and Tenant’s rights pursuant to the accepted Offer. In the event City or its agents secure a deal (via term sheet or otherwise) for Secondary Naming Ri ghts inside the Arena, the deal shall be offered to Tenant in writing upon the same terms and conditions for a period of seventy- two (72) hours prior to executing a formal agreement with a third-party client/sponsor. The City or its agents will provide the category for which the prospective third party identifies with but does not need to provide third party name to Tenant. Tenant may exercise such right of first refusal by affi rmatively accepting such opportunity in writing (which may be by electronic mail) within such seventy-two (72) hour period; other wise, the right shall expire with respect to such opportunity, and Cit y may proceed to enter into its proposed transaction with a third-party under the terms offered to Tenant.
ii) In Game Promotions. City will receive the right to advertise the current (as of execution of th is Agreement) annual Arena sponsors with not less than two rotations of fifteen (15) seconds each to run during the following: 1) betw een doors and tip-off, 2) during intermission and 3) again immediately following the game; for a total of six (6) rotations per game, per sponsor at no charge. No other sponsors may be included without t he prior written approval of Tenant. The Current sponsorships include the following:
1. Tia Linda’s
2. El Cejas
3. Hammer Head Security
4. Just Enough Wines
5. Adventist Health Arena- naming sponsor
6. Adventist Health Arena Event s- advertising upcoming Arena events
iii) Promotion. City will promote Tenant’s events on its website, social media, City of Stockton mar quee and other means with at leas t as much visibility and frequency as the other events playing at the Arena. All use of Tenant’s, and its affiliates, names, marks, and logos shall be subject to the approval and direction of Tenant, and City shall not control or otherwise acquire any interest in such names, marks or logos or other intellectual property of the Team, the Sacramento Kings, the League, or the NBA.
All such use of intellectual property shall be subject to the League Rules, including any necessary League or NBA G-League approvals. T enant agrees that any references to the Arena in marketing or promotional materials that identify the location of an activity at the Arena, shall identify the Arena as the “Adventist Health Arena.”
(f) Luxury Suite. In t he event that any Luxury Suites have not been otherwise licensed by the City, the City and Tenant shall have the right to sell the right to use such Luxury Suites for individual Team Events. In such event, the revenues from such rental shall be allocated as follows:
i) Suite rental fee on individual game rentals will be mutually agreed by Tenant and City, and the fees will be shared eighty percent (80%) to Tenant and twenty percent EXHIBIT 1
(20%)
to City on gross sales net of commission and food and beverage included in the package (“F&B”), with the F&B to be charged to Tenant less the standard 20% F&B administrative fee.
(g) Facility Fee. Facility Fee will be collected on each paid ticket and paid to the City per the following schedule:
i) Ful
l Season Tickets – $0.00
ii) Partial Season Plans and Group Tickets – $1.50
iii) Individual Game Tickets - $3.00
iv) Facility fees for Partial Season/Group and Individual tickets will escalate annually by $0.25 beginning in the 2025/26 season. No facility fee will be charged on full season tickets.
(h) Complimentary Tickets .
Manager shall be entitled to twelve ( 12) tickets
located in Row A of Club Sections 1, 2, 5 or 6 and ten ( 10) tickets located in the lower bowl at no charge per Home Game.
(i) Parking.
City will provide Tenant with seventy (70) parking spots for Team Events at no charge to Tenant, which will include approximately thirty (30) spots located in the loading dock. The Tenant will be given parking passes for the approximately forty (40) remaining spots. The parking passes will be valid in the North Lot, Arena Garage, East and West Fremont Lots. In addition, Tenant may offer pre- paid parking passes to its season ticket members (“STMs”) at the City’s current rate (currently $15 for garage parking per game). All revenue on such pre-paid passes would be retained by City.
(j) Broadcast and Television Opportunities . T
he City shall provide broadcast
and television facilities to the Tenant for Team Events in the form and manner set forth in the attached Exhibit B, and the Tenant shall pay the City the amount specified in Exhibit B for such facilities and services. The Tenant shall have the exclusive right to conduct or cause the conduct of broadcast and/or television operations , and radio and internet streaming relating to or arising from the Team Events at its sole cost. The Tenant shall have the right to retain all revenue in connection with such broadcast and/or television operation.
(k) Settlement. T
he Manager, on behalf of the City, shall collect and serve as the repository of all revenue with respect to each Team Event derived from the sources described in subsections (a) and (b) above. Within three (3) days after each Team Event, the Manager shall complete the settlement of revenues for such Team Event by paying to the Tenant the portion of the revenues to which the Tenant is entitled pursuant to, and by providing the Tenant with a settlement statement in form and content consistent w ith standard industry practice for the settlement of event revenue.
EXHIBIT 1
S
ection 2.5 Tenan t Luxury Suite.
Tenant will be allocated one L uxury Suite (Suite 12) per Team Event for the Tenant’s use, free of use charge. Any catering (F&B) requested will be an additional charge. Tenant will receive a waiver on the twenty percent ( 20%) Administrative Fee on the catering invoice for this suite.
Section 2.6 Tenan
t Accounting Records; Audit.
The Tenant shall maintain accurate accounting records and other written documentation pertaining to all revenue received by it, which is required to be taken into account in allocating revenues between the City and the Tenant under this Lease. Such records and documentation shall be kept at the Tenant’ s office during the term of this Lease, and for a period of three (3) years from the date of the final payment hereunder and said records shall be made available to City Manager, or designee upon reasonable request at any time during regular business hours.
Once every year during the Term of this lease, the City or any reputable designated agent or employee of the City with requisite experience, and not working for a commission, shall be entitled to audit all the books, records and accounts of the Tenant pertaining to the Arena and its operations at the Arena exclusively for the purpose of ensuring that the appropriate amounts have been paid to the City pursuant to this Lease.
Such audit shall be conducted during normal business hours upon sev enty-two (72) hours’ notice at the principal place of business of the Tenant and other places where records are kept. Any audit undertaken under this Section shall be completed within sixty (60) days of the commencement thereof, subject to the extensions of time for any periods of delay due to no fault of the City or its auditors. Tenant shall have the right and opportunity to contest the results of such audit, at Tenant’s discretion, as set forth below.
If it shall be determined as result of such audit (following any such contest) that there has been an underpayment to the City under this Lease, such underpayment shall become immediately due and payable with interest at the then applicable Local Agency Investment Fund interest rate, determined as of and accruing f rom the date that said payment should have been made. In addition, if the underpayment shall be found to have understated payments due to the entitled City by five percent (5%) or more of the actual payment due to the City, and the City is entitled to additional payments from the Tenant as result thereof, then the Tenant shall pay, in addition to the interest charges referenced hereinabove, all of the City’s reasonable costs and expenses connected with any audit or review of Tenant’s accounts and records. All such payments shall be paid within ten (10) days of receipts of written notice to the Tenant of such underpayment. If the Tenant disputes such findings, the parties agree to meet and confer for a period of thirty (30) days to resolve such dispute, and no payments for any disputed amounts shall be due during such meet and confer period. City acknowledges that all financial information, data and reports provided by Tenant pursuant to this Lease is proprietary information.
Therefore, to the fullest extent permitted by law, the information and results obtained in any audit performed hereunder shall be kept confidential by City and its consultants, and EXHIBIT 1
not
disclosed to third parties or in any public forum . City shall take any and all actions reasonably required to protect and enforce such confidentiality. If City determines that any such information and/or results are required to be disclosed by law, City shall inform Tenant in advance of disclosure to give Tenant the opportunity to challenge such disclosure requirements.
Section 2.7 City
Accounting Records; Audit.
The City and Manager shall maintain accurate accounting records and other written documentation pertaining to all revenue received by it, which is required to be considered in allocating revenues between the City and the Tenant under this Lease.
Such records and documentation shall be kept at the City’s office during the term of this Lease, and for a period of three (3) years from the date of the final payment hereunder and said records shall be made available to the Tenant, or its designee upon reasonable request at any time during regular business hours. Tenant shall have the identical, reciprocal right to conduct an audit of City’s revenues hereunder (as provided to City in Section 2.6) to ensure that the appropriate amounts have been paid to Tenant under this Lease.
ARTICLE 3. OPERATIONAL PROVISIONS
Section 3.1 Cov
enants Concerning Tenant.
In consideration for the City ’s execution of this Lease, the Tenant covenants and agrees as follows:
(a) Ownership.
The Tenant shall own the Te am and has full right and
permission under the League Rules to operate the Team in the Arena as a fu ll-fledged team member of the League throughout the Term, subject to Force Majeure.
(b) Continuous Use.
Throughout the Term, the Tenant shall cause the Team
to play between 22 to 24 of its Home Games at the Arena each season, subject to Force Majeure, and shall not take any action that would result, with the passage of ti me, in the failure to cause the Team to play all of its Home Games at the Arena. Notwithstanding anything else set forth herein, the City and Tenant agree that this does not preclude the Tenant from participating in the League’s annual showcase and playing two additional preseason or regular season Home Games per season offsite, including in Sacramento at the Golden 1 Center.
(c) No Relocation of the Team.
During the Term, the Tenant shall not relocate
the Team to any facility other than the Arena nor shall the Tenant file an application or other formal request for relocation with the League (or any successor thereto) for approval to allow the Team to play more than two Home Games per season anywhere other than, the Arena; provided, however, that the Tenant may file an application or other formal request for a relocation of the Team to occur after the end of the Term.
EXHIBIT 1
(d
) Maintain Good Standing of Team . During the Term, the Tenant shall maintain the Team as a professional basketball team of the character and standing required by the League Rules and the League and shall n ot do or suffer anything to be done which could cause the rights of the Team to be lost, impaired, or diminished in any material respect, subject to Force Majeure.
(e) Maintain Membership in League. Du
ring the Term, the Tenant shall use its
commercially reasonable efforts to cause the Team to maintain its membership in good standing in the League (or any successor thereto) under the League Rules, subject to Force Majeure.
(f) Maintain Territorial Rights .
During the Term, the Tenant shall take all
commercially reasonable actions required to maintain its territorial rights under the League Rules as related to the Arena.
(g) Arena Name . W
hen referring to the Arena during the term of this
Agreement, Tenant shall use the name “ Adventist Health Arena” (or such replacement name, as reasonably designated by City with reasonable prior advance notice to Tenant) and no other name and shall use reasonable efforts to require third parties that Tenant contracts within connection with the Arena to do the same. The use and designation of the A rena’s name by Tenant shall, to the extent applicable, include without limitation printed materials, advertising, admission tickets, television, internet, and other broadcasting methods, and public relations or promotional press releases but only to the extent the name or address of the Arena is referenced. Without limiting the generality of the foregoing, Tenant shall have the right to use the name and logo of: (i) The Arena and (ii) such party(ies) as may be given naming rights to the Arena (collectively, the “Arena Logos”) in all advertising controlled by or done on behalf of Tenant in relation to a Home Game, including, but not limited to, television, internet, newspaper, magazine, and outdoor advertising. Tenant’s right to use the Arena Logo shall be limited to the specific, express purpose set forth in the foregoing sentence and/or as otherwise authorized by Tenant in writing prior to the use thereof. In connection with Tenant’s use of the Arena Logos as permitted in this Lease; Tenant shall use only the form of the A rena Logos as provided by City to Tenant in any artwork or other depiction thereof and shall not alter the design, color, or quality of such logo.
Section 3.2 Ar
ena Operation Standard.
Throughout the Term, the City shall cause the Arena, Arena facilities and services, and building systems to be operated and maintained in a first class, safe, good working, and commercially reasonable manner, in the same or better condition existing as of the date of this Lease. City acknowledges that Tenant has chosen to play in the Arena and entered into this Lease in consideration for the representation of City that the Arena will provide a safe, quality, enjoyable venue for its fans, players, and employees, such that the covenants set forth in this Section are material covenants of City under this Lease.
Without limiting the foregoing, such operation and maintenance with be consistent with EXHIBIT 1
and
equivalent to or better than the League Standard.
All capital repairs and improvements required to provide the Arena and all other services and facilities consistent with all laws and regulations, and the League Standard, shall be at the sole cost and expense of City; provided that if the City is unable to pay for capital repairs of existing improvements which Tenant reasonably deems necessary to conduct Team Events, City shall promptly meet with Tenant to discuss funding options.
If, following such meeting, the Parties cannot agree on the timing and payment for such capital repairs, Tenant, in addition to its other remedies, may terminate this Lease upon no less than 30 days written notice to City.
Arena will provide, operate and utilize magnetometers, or equivalent technology, at Arena entry points for all Team Events held by Tenant pursuant to this Lease.
Section 3.3 City’s
Control of Arena.
Subject to the terms of this Lease and Tenant’s operational rights provided herein, the City shall otherwise retain the complete control of the operation, management, and maintenance of the Arena, including, without limitation, the right to book and conduct other sports and entertainment events consistent with the Booking Policies and Procedures.
Without limiting the generality of the foregoing grant of control to the City, the City reserves the exclusive right, at its sole cost and expense, to do the following, as long as such actions do not materially interfere with the Tenant’s ability to conduct, schedule and operate Team Events at the Arena consistent with this Lease, and such actions are consistent with the League Standard and other standards provided herein:
(a) Change, in any manner whatsoever, the number, appearance, dimension, and locations of Arena walks, buildings, landscaping, parking and service areas.
(b) Regulate all traffic within and related to the Arena , including the Arena Parking Facilities.
(c) Promulgate, from time to time, reasonable rules, and regulations regarding the use of Arena for the purpose of ensuring that Arena operations are in keeping with the community standards and the family atmosphere of Arena or to provide for public safety.
(d) Regulate the days and hours the Arena and various business operations within the Arena will be open to the public; provided, however, that the Arena box office shall be opened for business during hours that are comparable to the business hours maintained at box offices serving comparable public arenas; and provided, further, however, that the City shall establish and implement a system whereby authorized personnel of the Tenant will have access to Arena.
EXHIBIT 1
(e
) Determine the size, number, quality, and type and identity of concessions, stores, businesses, and operations being conducted or undertaken at the Arena.
Section 3.4 Manag er.
The City has designated the Manager to serve as, and the Tenant acknowledges that the Manager is, the City’s authorized representative for operation, management, and maintenance of the Arena, with authority to represent the City in performing the City ’s duties and responsibilities and to exercise the City ’s rights and authorities under this Lease. As the City’s authorized representative, the Manager is responsible, on behalf of the City, for the day-to-day operation, management, and maintenance of the Arena. The Tenant shall direct any questions or matters needing the City’s approval or input and any other matters requiring communication with the City under this Lease only to the Manager, with a copy to the City as provided in Section 7.1.
(a) The Manager is under separate obligation to the City to regularly report to the City, and to obtain input and decisions from the City regarding all matters arising in connection with the operation, management and maintenance of the Arena and the performance of this Lease that require City approval or action. The Manager on behalf of the City will report all decisions and actions of the City under this Lease to the Tenant.
(b) Subject to any separate agreement with the Manager, the City may change the entity and/or individual acting as the Manager, or delegate one or more specific operations, management, or maintenance functions to one or more specific other representatives, at any time with notice and without liability to the Tenant. Any Manager of the Arena is the beneficiary of all the Tenant’s obligations to the City under this Lease, including without limitation, all releases, and indemnities. However, Manager’s failure to perform shall not relieve City’s obligations to Tenant hereunder.
Section 3.5 Copy
righted Material.
Each party hereto warrants and covenants, in its own behalf and in the Team’s (or City’s as applicable) and any applicable artist/performer ’s behalf, that all copyrighted material to be performed or otherwise used at Team Events has been or shall be duly licensed or authorized by the copyright owner or their representatives, and that any and all royalty fees arising from the use of copyrighted material in the performance has been or shall be paid in full when due.
Section 3.6 Com
munity Involvement.
The Tenant shall endeavor to seek and encourage involvement and participation of the Team ’s players and coaches in civic endeavors such as a Team booster club, community projects, school appearances, developing youth basketball, television, press, and radio interviews, charities, and civic functions when reasonably requested; however, provided that Tenant acts in good faith, no particular failure of participation under this Section shall be deemed a Tenant Event of Default under this Lease.
EXHIBIT 1
S
ection 3.7 Ins urance.
Tenant is r
esponsible for proof of insurance as set forth in Exhibit C.
City shall carry full replacement property insurance during the Term of this Lease for the Arena (or self-insure for such replacement using best industry standard practices).
At Tenant’s request, City shall promptly provide evidence of such insurance or self - insurance program.
Section 3.8 Res
ponsibility for Equipment and Acts; Lost Items.
As between Tenant and City under this Lease, the Tenant assumes full responsibility for equipment brought or used by it, and for the acts and conduct of players, officials, and all others participating in any Team Event. Lost articles of the public discovered by Tenant shall be given promptly to the Manager, who shall thereafter have full custody of such articles.
Section 3.9 Em
ployees and Agents.
The Tenant agrees that its agents and employees involved in the preparation for, or presentation of, Team Events, shall not be considered employees or agents of the City for any purposes, including, but not limited to, worker’s compensation. The Tenant further agrees that in the event of a claim for any benefits against the City made by one of the Tenant’s employees, the Tenant shall indemnify, defend and hold harmless the City from any and all damages as an employer under the California Workers’ Compensation Insurance Act, and for any independent contractors or companies claiming City benefits or works ’ compensation coverage. The provisions of this Section shall survive the expiration of the Team and the termination of the Lease.
The City agrees that its agents and employees involved in the preparation for, or presentation of, Team Events, shall not be considered employees or agents of the Tenant or Team for any purposes, including, but not limited to, worker’s compensation. The City further agrees that in the event of a claim for any benefits against the Tenant or Team made by one of the City’s employees, contractors or agents , the City shall indemnify, defend and hold harmless the Tenant from any and all damages as an employer u nder the California Workers ’ Compensation Insurance Act, and for any independent contractors or companies claim in benefits or works ’ compensation coverage. The provisions of this Section shall survive the expiration of the Team and the termination of the Lease.
Section 3.10 Haz
ardous Waste.
The Tenant shall comply, in all material respects, with every applicable law and regulation regulating hazardous substances brought into the Arena by the Tenant, and shall not cause to occur upon, in, or about the Arena, or use the Arena to generate, EXHIBIT 1
pr
oduce, manufacture, refine, transport, treat, store, handle, dispose, transfer, or process hazardous substances, except in compliance with all applicable laws and regulations.
The Tenant shall provide, upon request, the City with copies of all Material Safety Data Sheets ( “MSDS”), environmentally related regulatory permits or approvals (including revisions or renewals), and any correspondence the Tenant receives from, or provides to, any governmental unit or agency in connection with the Tenant ’s handlin g of hazardous substances or the presence, or possible presence, of any hazardous substance in or about the Arena.
As Landlord, City shall be responsible for all hazardous substances at the Arena not introduced by Tenant and represents and warrants to Tenant that it operates and maintains the Arena consistent with all laws related to the environment and hazardous substances.
Section 3.11 Equal
Employment Provisions.
During the Term of this Lease, the Tenant shall not discriminate against any employee or applicant for employment because of race, age, color, religion, sex, national origin, or handicap in a manner that violates any applicable federal or state law.
Section 3.12 No Claim
s.
Nothing contained in this Lease shall create or justify any claim against the City by any person that the Tenant may have employed or with whom the Tenant may have contracted relative to the purchase of materials, supplies or equipment, or the furnishing or the performance of any work or services with respect to the Tenant ’s use and occupancy of the Arena.
ARTICLE 4. DAMAGE, DESTRUCTION, AND CONDEMNATION
Section 4.1 Dam
age and Destruction.
In the event of any damage or destruction of the Arena that renders the Arena unusable, or in case of emergency, which in the City’s reasonable discretion prevents the Arena from being used for Team Events, this Lease shall be suspended for such time until such damage or destruction has been repaired or until the emergency has passed, and the Tenant’s payments to the City shall also be suspended (provided that if Tenant is reimbursed for such payments such as via insurance, and the reimbursed funds are not needed to pay for alternate facilities, then payments shall continue unabated). During such period, the Tenant may play Home Games at a site other than the Arena.
(a) If the City fails to begin to repair or restore the Arena, or if the emergency has not passed, within ninety (90) days following the date of such damage or destruction or emergency, this Lease, at the option of Tenant, shall terminate as of the date of suc h damage, destruction, or emergency.
EXHIBIT 1
Sec
tion 4.2 Condem nation.
If
the whole or any substantial part of the Arena shall be taken by any paramount public authority under the power of eminent domain which renders the Arena unavailable or unusable in the manner contemplated hereby, then this Lease shall be terminated from the day when the possession of that part shall be taken for said public purpose.
Al
l damages awarded for this taking with respect to the value of the Arena and the parcel upon which it is located shall belong to and be the property of the City, subject to the terms of the sale of the b onds which partially funded the construction of the Arena and all agreements pertaining to that sale. Subject to the terms of the sale of the bonds, nothing herein shall preclude or prevent the Tenant from bringing an action or otherwise seeking to recover from the condemning public authority the value of its leasehold interest in this Lease, the loss of goodwill related to operation of the Team, or other similar damage to the Tenant attributable to such condemnation.
Sec
tion 4.3 Dama ge to Facilities by Tenant.
The T
enant’s employees and agents shall not damage the Arena or other City property other than typical wear and tear and the Tenant shall, upon demand and at the Tenant’s sole cost and expense, repair or replace any and all Arena property or other property damaged by its employees or agents, provided however, that property damaged during normal Team play shall not be considered damaged under this S ection and shall be considered normal wear and tear and shall be repaired or replaced by City at its sole cost and expense.
ART
ICLE 5. DEFAULT AND REMEDIES
Sec
tion 5.1 Tenant Default.
The f
ollowing events each constitute a “ Tenant Event of Default ” and a basis for the City to take action against the Tenant:
(a) T
eam Withdrawal from League or Relocation. T he Tenant causes or permits the withdrawal or removal of the team from the League or other professional basketball league which may replace the League, or the Tenant causes or permits the relocation of the Team from the Arena, provided that the Tenant shall not be in default under this paragraph (ii) if it acquires and operates a r eplacement team, otherwise in compliance with the provisions of Section 3.1; or
(b) F
ailure to Pay. Th e failure by the Tenant to make any payment under this Lease when and if due, and the continuance of such failure for a period of ten (10) days after written notice thereof from the City to the Tenant; or (c) F
ailure to Use Arena. S ubject to Force Majeure, the failure by the Tenant EXHIBIT 1
t
o use and occupy the Arena for Team Events as set forth in this Lease, including, without limitation, the failure of the Team to play more than two of its Home Games at the Arena; or
(d) U
nauthorized Transfer. A Transfer occurs, either voluntarily or involuntarily, in violation of Section 7.6; or
(e) F
ailure to Perform. T he failure by the Tenant to observe or perform any material covenant, condition, or provision of this Lease not already specifically mentioned in this subsection (a), where such failure continues for thirty (30) days after written notice from the City notifying the Tenant of such failure, provided, however that if the nature of the Tenant’s failure is such that more than thirty (30) days are reasonably required to cure, then the Tenant shall not be in default if Tenant begins such cure with in the thirty (30) day period described above and thereafter diligently prosecutes such cure to complete; or
(f) M
isrepresentation. Any misrepresentation or warranty contained in this Lease proves to have been incorrect in any material and adverse respects when made; or
(g) S
uspension; Dissolution. T he Tenant, or the Team, shall have voluntarily suspended its business, or the Tenant shall have been dissolved or terminated; or (h) O
ther Defaults.
i) The
making by the Tenant of any general assignment or general arrangement of the benefit of creditors;
ii) The f
iling by or against the Tenant of a petition to have the Tenants adjured bankrupt or a portion of reorganization or arrangement under any law relating to bankruptcy (unless, in the case of a petition filed against the Tenant, the same is dismissed with sixty (60) days);
iii) The t
aking of any action at the corpo rate level by the Tenant to authorize any of the foregoing actions on behalf of the Tenants; or iv) The ap
pointment to a group or receiver to take possession of the Tenant’s interest in this Lease, where such seizure is not discharged within sixty (60) days.
Sec
tion 5.2 Cit y Remedies in General.
If
a Tenant Event of Default shall occur the City at any time thereafter may fi le a written termination notice to Tenant, and on the date specified in such notice (which shall not be less than the time required by applicable law or as otherwise provided in this Lease and which may be the day of the notice for defaults under Section 5.1, (above), the EXHIBIT 1
T
enant’s right to possession shall terminate and this Lease shall terminate, unless on or before such date all arrears of sums payable by Tenant under this Lease and all costs and expenses incurred by or on behalf of the City hereunder, of which Tenant has been given notice in accordance with subsection (b) above shall have been paid by Tenant and all other breaches of this Lease by Tenant at the time existing, of which Tenant has been given notice in accordance with subsection (e), (above), shall have been cured. In the event the City terminates this Lea se pursuant to the provisions of this S ection, the City may pursue all remedies available under law or in equity, including recovery of damages (which shall consist of all actual damages). The remedies provided for in this Lease are in addition to any other remedies available to City by law or in equity by statue or otherwise. Notwithstanding the foregoing, City shall not terminate this Lease during a League season in the event that the Tenant Event of Default is contested in good faith by Tenant; provided that this tolling of the termination right shall not otherwise limit City’s remedies hereunder.
Sec
tion 5.3 Speci fic Performance Remedy.
NOT
WITHSTANDING ANY OF THE FOREG OING, THE PARTIES
ACKNOWLEDGE THAT THE GAME P LAYED BY THE TEAM (S) ARE UNIQUE AND
PLAYED WITH PARTICULAR SKILL SUCH THAT THERE IS NO SUBST ITUTE THEREFORE. BASED ON THE FOREGOING, THE PARTIES ACKNOWLEDGE THAT
THE DAMAGES SUFFERED BY THE CIT Y OR TENANT FOR CERTAIN EVENTS OF
DEFAULT HEREUNDER CANNOT BE ES TIMATED WITH ANY DEGREE OF
CERTAINTY AND THAT MONETARY DAMAGES CANNOT FAIRLY AND
ADEQUATELY COMPENSATE THE OTHER FOR A BREACH OF SAID COVENANTS;
THEREFORE, THE PARTIES AGREE THAT THE Y SHALL HAVE THE RIGHT, IN
ADDITION TO ANY OTHER APPLICABLE RIGHTS OR REM EDIES, TO SEEK TO
COMPEL THE OTHER TO COMPLY WITH THE AFORESAID COVE NANTS BY
APPROPRIATE SPECIFIC PERFORMANCE, INJUNCTIVE OR EQUI TABLE PROCEEDINGS WITHOUT POSTING ANY BOND. ADDITIONALLY, ANY PROVISION
OF LAW OR THIS LEASE TO THE CONTRA RY NOTWITHSTANDING, THE PARTIES
ACKNOWLEDGE AND AGREE THAT IF THE PARTIES WERE TO FAIL TO OBSERVE
OR TO PERFORM CERTAIN OF THE MATERIAL PROVISIONS IN THIS LEASE, THE
AWARD OF DAMAGES ARISING FROM SUCH EVENT OF DEFAULT MAY NOT BE
AN ADEQUATE REMEDY, IN THAT THE SUBJECT MATTER O F THIS LEASE IS
UNIQUE, AND THE BREACH OF SUCH OBLIGATIONS COULD CREATE IRREPARABLE HARM INCAPA BLE OF CALCU LATION BY MONET ARY DAMAGES.
THEREFORE, THE PARTIES ACKNOWLEDGE AND AGREE THAT EACH PARTY HAS
THE ABS OLUTE RIGHT TO SEEK SPECIFIC PERF ORMANCE, ANY OTHER
INJUNCTIVE RELIEF, A ND/OR ANY OTHER COURT ORDER TO ENFORCE THE COVENANTS AND OBLIGATIONS UNDERTAKEN UNDER THIS LEASE; AND
NOTWITHSTANDING ANY OTHER PROVISION IN THIS LEASE, A CURE PERIOD
SHALL BE A CONDITION TO THE RIGH T TO OB TAIN SUCH SPECIFIC
PERFORMANCE, OTHER INJUNCTIVE RELI EF OR ANY COURT ORDER ENFORCING PERFORMANCE OF THIS LEASE.
EXHIBIT 1
S
ection 5.4 Cit y Default.
The following events each constitute a “ City Event of Default” and a basis for the Tenants to take action against the City:
(a) Failure to Pay .
The failure by the City to make any payment under this
Lease when and if due, and the continuance of such failure for period of ten (10) days after written notice thereof from the Tenant to the City; or
(b) Failure to Perform . T
he failure by the City to observe or perform any
material covenant, condition, or provision of this Lease or otherwise specifically mentioned in this subsection (a), where such failure continues for thirty (30) days after written notice form the Tenant notifying the City of such failure, provided, however, if the nature of the City’s failure is such that more than thirty (30) days are reasonably required to cure, then the City shall not be in default if it begins such cure within the thirty (30) day period described above and diligently prosecutes such cure to completion; or
(c) Failure to Make Arena Available. S
ubject to Force Majeure, the failure by
the City to provide the Arena for Team Events as set forth in this Lease, subject to Article 1, Section 1.1 (b); or
(d) Misrepresentation.
Any representation or warranty of the City contained in this Lease proves to have been incorrect in any material and adverse respect when made.
(e) Tenant Remedies. If a
City Event of Default shall occur the Tenant at any
time thereafter may file a written termination notice to Tenant, and on the date specified in such notice (which shall not be less than the time required by applicable law or as otherwise provided in this Lease and which may be the day of the notice for defaults under Section 5.1), the Tenant’s right to possession shall terminate and this Lease shall terminate, unless on or before such date all arrears of sums payable by City under t his Lease and all costs and expenses incurred by or on behalf of the Tenant hereunder, of which City has been given notice in accordance with subsection (a) above shall have been paid by City and all other breaches of this Lease by City at the time existin g, of which City has been given notice, shall have been cured. In the event the Tenant terminates this Lease pursuant to the provisions of this S ection, the Tenant may pursue all remedies available under law or in equity, including recovery of damages (which shall consist of all actual damages). The remedies provided for in this Lease are in addition to any other remedies available to Tenant by law or in equity by statue or otherwise.
Notwithstanding the foregoing, Tenant shall not terminate this Lease during a League season in the event that the City Event of Default is contested in good faith by Tenant; provided that this tolling of the termination right shall not otherwise limit Tenant’s remedies hereunder.
(f) League Rules.
City acknowledges that failure of the Arena to comply with the standards and regulations set forth in the League Rules may render Tenant’s use and EXHIBIT 1
oc
cupancy of the Arena as contemplated by the parties hereunder prohibited or discouraged by the League. In such event, Tenant shall immediately notify City of the failure (and the League action) and shall not be responsible for any Rent for Tenant Event Dates which must be abandoned. This Lease is subject to the League Rules. In the event of any conflict between the terms of this Lease and the League Rules in effect from time to time, the League Rules shall govern and control in all respects. The City acknowledges that it shall have no recourse against, and hereby covenants not to bring any claim against the NBA, any of its member teams (excluding the Tenant), any of their respective affiliates, or any of the employees, directors, shareholders, partners, members, governors, agents or representative of any of the foregoing as a result of any breach by Tenant of this Lease, or any other act or omission by Tenant. If any change in the League Rules after the Effective Date materially and adversely impacts the rights of the City under this Lease, then the parties shall negotiate in good faith to mutually agree upon an equitable adjustment to the provisions of this Lease to compensate the City for the value of the rights it does not received as a result of such change in the League Rules.
ART
ICLE 6. REPRESENTATIONS AND WARRANTIES
Sec
tion 6.1 Repres entations and Warranties of Tenant.
The T
enant hereby represents and warrants to the City as follows:
(a) D
ue Organization and Existence . T he Tenant is a duly organized, validly existing Nevada limited liability company , and is in good standing, and is entitled to do business in California under the laws of the State of California and has the power an authority to carry on its business as now being conducted. (b) A
pprovals. Ex cept as previously obtained, no consent, approval, order, or authorization of, or registration, declaration, or fi ling is required in connection with the execution and delivery of this Lease by the Tenant.
(c) A
uthority of Tenant. T he Tenant has full power an authority to execute and deliver this Lease and to accept the property contemplated hereunder, to execute and deliver all other documents or instruments executed and delivered, or to be executed and delivered, pursuant to this Lease, and to perform and observe the term and provis ion of all the above.
(d) A
uthority of Persons Executing Documents . T his Lease and all other documents or instruments executed and delivered, or to be executed and delivered by the Tenant, pursuant to his Lease have been executed and delivered by persons who are duly authorized to execute an deliver the same for and on behalf of the Tenants, and all actions required under the Tenant’s organizational documents and applicable governing law for the authorization, execution, delivery and performance of this Lease and all other documents or instruments executed and delivered, or to be executed and delivered, EXHIBIT 1
pur
suant this Lease, have been duly taken (to the extent such actions are required as of the date of execution and delivery of the above-named documents). (e) V
alid Binding Agreement. Thi s Lease constitutes a legal, valid, and binding obligation of the Tenant enforceable by and in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium, and other similar laws affecting the right of creditors generally and general principles of equity. (f) N
o Breach of Law or Agreement. N either the execution nor delivery of this Lease by the Tenant or of any other documents or instruments executed a nd delivered, or to be executed or delivered by the Tenant, pursuant to this Lease, nor the performance by the Tenant of any provision, during the term hereof or thereof, will conflict with or result in a breach of any statue, rule or regulation or any judgment, decree or order of any court, board, commission or agency whatsoever binding on the Tenant, or any pers on of the organizational dockets of the Tenants, or will conflict with or constitute a breach of or a default under any restriction, agreement or instrument to which Tenant is a party. (g) P
ending Proceedings . T he Tenant is not in default under any laws or regulation or under any order of any court, board, commission or agency whatsoever and there are no claims, action, suites or proceedings pending or, to the knowledge of Tenant, threatened against or affecting the Tenant or the Team at law or in equity, before or by any court, board, commission or agency whatsoever which might, if determined adversely to the Tenant, materially and adversely affect the Tenant’s ability to perform its obligations under this Lease.
(h) Lea
gue Rules. T he terms and provisions of this L ease do not violate any League Rules to which the tenant or the Team is party or subject to. The Arena Best Practice Guide attached hereto as Exhibit D contain many of the current League Rules; provided, however, that the League Rules are not limited to those set forth in Exhibit D and may change from time to time.
Sec
tion 6.2 Repres entations and Warranties of City.
The C
ity represents covenants and warrants to the Tenant as follows:
(a) D
ue organization and Existence. T he City is a charter city and has the power to enter into this Lease.
(b) A
pprovals. Ex cept as previously obtained, no consent, approval, order, or authorization of, or registration, declaration, or filing is required in connection to the execution and delivery of the Lease by the City.
(c) A
uthority of the City . T he City has full power an authority to execute and deliver this Lease and to accept the property contemplated hereunder, to execute and deliver all other documents or instrument secured and delivered, or to be executed and leased pursuant to his Lease, and to perform and observe the terms and provision of the EXHIBIT 1
abov
e.
(d) Authority of Person Executing Documents . This Lease and all other documents or instruments executed and delivered, or to be executed and delivered by the City, pursuant to this lease have been executed and delivered b y person(s) who are duly authorized to execute a nd deliver the same and on behalf of City, and all actions required under the City’s organizational documents and applicable governing law for the authorization, execution, delivery an d performance of this Lease and all of their documents or instruments executed and delivered, or to be executed and delivered, pursuant to this Lease, have been duly taken (to the extent such actions are required as of the date of execution and delivery of the above-named documents).
(e) Valid Binding Agreement. T
his Lease constitutes a legal, valid, and binding
obligation of the City ; enforceable by and against it in accordance with i ts respective terms, subject to bankruptcy, insolvency, reorganization, moratorium, a note similar laws affecting the right so creditors generally and general principles of equity.
(f) No Breach of Law or Agreement.
Neither the execution nor delivery of this
Lease by the City or of any other documents or instruments executed a nd delivered, or to be executed or delivered by the City, pursuant to this Lease, nor the performance by the City of any provision during the term hereof or thereof, will conflict with or result in a breach of any statue, rule or regulation or any judgment, decree or order of any court, board, commission or agency whatsoever binding on the City, or any p erson of the organizational dockets of the City, or will conflict with or constitute a breach of or a default under any restriction, agreement or instrument to which City is a party.
(g) Pending Proceedings .
The City is not in default under any laws or
regulation or under any order of any court, board, commission or agency whatsoever and there are no claims, action, suites or proceedings pending or, to the knowledge of City , threatened against or affecting the City at law or in equity, before or by any court, board, commission or agency whatsoever which might, if determined adversely to the Tenant, materially and adversely affect the Tenant ’s ability to perform its obligations under this Lease.
ART
ICLE 7. GENERAL PROVISIONS
Section 7.1 Not
ices. Demands and Communications.
Formal notices, requests for consents, demands, and communications between the City and the Tenant shall be sufficiently given if and shall not be deemed given unless dispatched by registered or certified mail, postage prepaid, return receipt requested, or delivered by express delivery service, return receipt requested, or delivered by email , or delivered personally, to the principal office of the parties as follows:
City: City of Stockton
425 North El Dorado Street
EXHIBIT 1
S
tockton, CA 95202
Attn: City Manager
With a copy to: City of Stockton
Office of City Attorney
425 North El Dorado Street
Stockton, CA 95202
Tenant: c/o Basketball Development LLC
500 J Street, 4th Floor
Sacramento, CA 95814
Attn: Jeff Dorso, Senior Vice President/General Counsel j
[email protected]
With a copy to: c/o Basketball Development LLC
500 J Street, 4th Floor
Sacramento, CA 95814
Attn: John Rinehart, P
resident, Business Operations
[email protected]
Such written notices , demands and communications may be sent in the same manner to such other addresses as the affected party may from time to time designate by mail as provided in this S ection. Receipt shall be deemed to have occurred on the date shown on a written receipt as the date of delivery or refusal of delivery (or attempted delivery if undeliverable).
Section 7.2 For
ce Majeure.
In addition to specific provisions of this Lease, performance by either party shall not be deemed to be in default where delays or defaults are due to war; insurrection; acts of terrorism; epidemics /pandemics; strikes; lock- outs; riots; floods; earthquakes; fires; quarantine restrictions; freight embargoes; energy shortages; energy rationing; discovery of previously unknown Hazardous Materials or archeological or historical resources; lack of transportation; court order preventing action; pending litigation that presents a material financial risk to a party if it proceeds with action under this Lease while the outcome of such litigation is pending; delays in processing approvals caused by any governmental entity (other than the City); government emergency orders; or any other similar causes (other than lack of funds of Tenant) beyond the control or without the fault of the party claiming an extension of time to perform (“Force Majeure”). An extension of time for any cause will be deemed granted if notice by the party claiming such extension is sent to the other within ten (10) days from the commencement of the cause and such extension of time is not rejected in writing by the other party within ten (10) days of receipt of the notice.
In no event shall the City or the Tenant be required to agree to cumulative delays in excess of one hundred eighty (180) days.
Without limiting the foregoing, in the event the Tenant is forced to cancel or EXHIBIT 1
r
eschedule Home Game(s) due to such Force Majeure events, including, without limitation, League –wide issues (strikes, lock- outs, reorganization) or public protests, Tenant will not be in default hereunder and shall not be obligated to pay Rent for such Team Event Date; provided, however, that (a) upon notice from Tenant of such cancellation or rescheduling, City cooperate with Tenant to potentially reschedule such Team Event Date, and shall immediately cancel and mitigate to the extent possible any costs to be incurred by City with respect to the original date; and (b) Tenant shall promptly reimburse City for any unmitigated out -of-pocket costs incurred by City for each such original Team Event Date.
Sec
tion 7.3 Indem nification.
(a) B
y Tenant. T he Tenant shall indemnify, defend and hold the City, the City’s council members, the Manager, and the City ’s and the Manager ’s respective officers, employees, agents successors and assigns harmless against all claims made against it and expenses (including reasonable attorneys’ fees) which arise out of or in connection with the Tenants use and occupancy of the Arena, except to the extent such claim arises from the negligent or willful misconduct of the City or the Manager. (b) B
y City. T he City shall indemnify, defend and hold the Tenant, and the Tenant’s respective officers, employees, agents , successors and assigns harmless against all claims made against it an d expenses (including reasonable attorneys ’ fees) which arise out of or in connection with the City’s operation and management of the Arena, except to the extent such claim arises from the negligent or willful misconduct of the Tenant.
(c) S
urvival. T he provisions of this Section shall survive the expiration of the Term and the termination of the Lease.
Sec
tion 7.4 Relat ionship of Parties.
Not
hing contained in this Lease shall be interpreted or understood by either of the parties, or by any third persons as creating the relationship of employer an employee, principal, and agent, limited or general partnership, or joint venture between the City and the Tenant or its agency, employees, or contractors. The Tenant has and retains the right to exercise full control of employment, direction, compensation, and discharge of all persons assisting in the performance of services under this Lease. The Tenant shall be solely responsible for its own acts and those of its agents and employees.
Sec
tion 7.5 Waiv ers.
Any
waiver by either party of any obligation or condition in this Lease must be in writing. No waiver will be implied from any delay or failure by a party to take action on any breach or default of the other or to pursue any remedy allowed under this Lease or applicable law. Any extension of time granted to a party to perform any obligation under this Lease shall not operate as a waiver or release from any of its obligations under this EXHIBIT 1
Leas
e. Consent by the City to any act or omission by the Tenant shall not be construed to be a consent to any other or subsequent act or omission or to waive the requirement for the City’s written consent to future waivers.
Sec
tion 7.6 Trans fers.
(a) P
rohibited Transfers . Ex cept as expressly permitted in this Lease, the Tenant represents and agrees that the Tenant has not made or created and will not make or create or suffer to be made or created during the Term, any Transfer of any nature whatsoever in the Arena or this Lease, either voluntarily or by operations of law without the prior written approval of the City.
(b) T
ransfers with City Consent. T he Tenant is permitted to Transfer this Lease with the City’s prior written consent which shall not be unreasonably withheld or delayed, and which shall be given if: ( i) the transferee has been approved pursuant to the applicable League Rules; and (ii) the transferee possesses financial capability and management expertise reasonably sufficient to operate the Team and perform the obligations of the tenant under this Lease.
(c) To
Eff ectuate an Approved Transfer. The Tenant shall submit to the City, for the City’s review and approval and entrustment in writing reasonably satisfactory of the city executed by the person or entity to which such Transfer is made expressly assuming the obligations of the Tenant term of this Lease and agreeing to be subjected to the conditions and obligations to which the Tenant is subject under this Lease, to the fullest extent and that such obligations are applicable to the particular portion of or interest in the Lease, that the Tenant conveyed in such Transfer. If a recurred Transfer is approved by the City, such approval shall be indicated to the Tenant in writing. Such approval shall be granted or denied by the City within twenty-one (21) days of receipt by the City, unless Council authorization is required for approval of a Transfer. If such authorization is required, City must take appropriate action to move the request to completion within twenty-one (21) days.
(d) T
ransfers Not Re quiring City’s C onsent. Notwithstanding anything to the contrary set forth herein, Tenant may Transfer this Lease without City’s consent, but with written notice to City, to any parent, subsidiary or affiliate entity which is under common control with the named Tenant, which is approved by the League pursuant to the applicable League Rules. Such Transfer shall not relieve Tenant of liability hereunder, unless approved by City in City’s reasonable discretion.
Sec
tion 7.7 Bindi ng Effect.
The r
ights and obligations of this Lease shall inure to the benefit of, and be binding upon, the parties to the Lease and their heirs, administrators, executors, personal representatives, successors, and assigns.
Sec
tion 7.8 Enti re Agreement; Amendments.
EXHIBIT 1
Th
is Lease constitutes the entire understanding and agreement of the parties with respect to the matters set forth herein and supersedes any prior written or oral statement and understandings. The parties may amend this Lease only by means of a writing signed by the parties expressly stating its intention to amend this Lease.
Sec
tion 7.9 Inter pretation.
Eac
h reference in this Lease to this Lease, or any other agreement, plan, or document shall refer to the named agreement, plan or document as such agreement, plan or document may be amended from time to time.
(a) S
tatutory references include any amendments to or renumbering of the referenced statutes.
(b) A
s used in this Lease, the singular shall include the plural; the masculine gender shall include the feminine; “shall” is mandatory; “may” is permissive.
Sec
tion 7.10 Non-Int erest.
No of
ficer or employee of City shall hold any interest in this Lease (California Government Code section 1090).
Sec
tion 7.11 Non-Lia bility of Individuals.
No m
ember, official, employee or agent of the City shall be personally liable to the Tenant in the event of any default or breach by the City or for any amount, which may become due to the Tenant or its successor or on any obligation under the terms of thi s Lease. No member, official, employee or agent of the Tenant shall be personally liable to the City in the event of any default or breach by the Tenant or for any amount, which may become due to the City or its successor or on any obligation under the terms of this Lease.
Sec
tion 7.12 No Th ird-Party Beneficiaries.
Ther
e shall be no third -party beneficiaries to this Lease with the exception of the rights created for the benefit of the Manager as described in Section 3.4 herein.
Sec
tion 7.13 Appli cable Law.
Thi
s Lease shall be governed by California law.
Sec
tion 7.14 Legal A ctions.
(a) A
ttorneys’ F ees. In the event any legal action is commenced to interpret or to enforce the terms of this Lease or to collect damages as a result of any Tenant Event of Default or City Event of Default, the party prevailing in any such action shall be entitled EXHIBIT 1
t
o recover against the party not prevailing all reasonable attorneys ’ fees and costs incurred in such action (including any appeal of such action). The provisions of this subsection shall survive expiration of the Term or any earlier termination of this Lease. (b) T
hird Party Litigation. In t he event legal action is commenced by a third party or parties, the effect of which is to directly or indirectly challenge or compromise the enforceability, validity, or legality of this Lease and/or the power of the City or the Tenant to enter into this Lease or perform its obligations hereunder, either the City or the Tenant may (but shall have no obligation to) defend such action. Upon commencement of any such action, the City and the Tenant shall meet in good faith and seek to establish a mutually acceptable method of defending such action.
(c) F
orum. A ny lawsuit pertaining to any matter arising under, or growing out of, this Lease shall be instituted in San Joaquin County, California.
Sec
tion 7.15 Sev erability.
If
any term of this Lease is held by a court of competent jurisdiction to be invalid, void, or unenforceable, the remainder of the provisions shall continue in full force and effect unless the rights and obligations of the parties have been materially altered or abridged by such invalidation, voiding or unenforceability.
Sec
tion 7.16 Cit y Approval.
Whe
never this Lease calls for City approval, consent, or waiver, the written approval, consent, or waiver of the City Manager or his or her designee, as designated in writing signed by the City Manager, shall constitute the approval, consent, or waiver of the City, without further authorization required from the City. The City hereby authorizes the City Manager or his or her designee, as designated in writing signed by the City Manager, to deliver such approvals or consents as are required by this Lease, or to waive requirements under this Lease, on behalf of the City. Any consents or approvals required under this Lease shall not be unreasonably withheld or made, except where it is specifically provided that a sole discretion standard applies. The City Manager or his or her designee, as designated in writing signed by the City Manager, is also hereby authorized to approve, on behalf of the City, requests by the Tenant for reasonable extensions of time deadlines set forth in this Lease.
Sec
tion 7.17 Mult iple Originals; Counterparts.
Thi
s Lease may be executed in multiple original counterparts, each of which is deemed to be an original, and all such counterparts shall constitute one and the same instrument.
Sec
tion 7.18 Posse ssory Interest Tax.
As
Tenant shall never have exclusive control of the Arena, Tenant believes that EXHIBIT 1
T
enant shall not owe possessory interest tax on its interest in the Arena. In the event that such taxes are levied, Tenant and City shall cooperate to dispute any such proposed levy, but ultimately, Tenant is solely responsible for such taxes as may be deemed appropriate.
The Tenant shall have the right to contest in good faith, any such taxes or assessments.
In the event it is determined by the appropriate body that such taxes are due, the Tenant shall immediately pay such taxes or assessments. If any such taxes or assessments are not paid when due, then the City may, in addition to any other remedy granted to the City under this Lease, withhold the amount of such unpaid taxes or assessments from the Net Gate Receipts otherwise payable to the Tenant, and apply the wi thheld amount toward the payment of such unpaid taxes and assessments.
Sec
tion 7.19 Operat ing Memoranda.
The
parties acknowledge that the provisions of this Lease require a close degree of cooperation and coordination, and that new information and future events may demonstrate that changes are appropriate with respect to the details of performance of the parties under this Lease. The parties desire, therefore, to retain reasonable flexibility with respect to the details of performance for those items covered in general terms under this Lease. If and when, from time to time during the Term of this Lease, the parties find that refinements or adjustments regarding details of performance are necessary or appropriate, they may effectuate such refinements or adjustments through o perating memoranda approved by the parties which, after execution, shall be attached to this Lease as addenda and become a part hereof. This Lease describes some, but not all, of the circumstances in which the preparation and execution of Operating Memoranda may be appropriate.
Oper
ating Memoranda may be executed on the City’s behalf by the City Manager and shall not require prior notice or hearing, or other action of the City Council. Any significant modification to the terms of performance under this Lease shall be processed as an amendment of this Lease in accordance with Section 7.8 and must be approved by the City Council.
Sec
tion 7.20 League A pproval.
The P
arties acknowledge that the effectiveness of this Lease is subject in all respects to the written approval of the League. Following execution by both Parties, Tenant shall promptly submit this Lease to the League for approval, and notify City once same is received (or rejected).
Sec
tion 7.21 Att ached Exhibits.
The f
ollowing exhibits are (or upon completion shall be) attached to and incorporated in this Lease by this reference:
Ex
hibit A – Definition of Terms
Exhibit B – City- Provided Facilities and Services
EXHIBIT 1
EXHIBIT 1
EXH
IBIT A
GL
OSSARY OF DEFINED TERMS
Unl
ess the context otherwise requires, the following terms shall have the following respective meanings when used in this Lease. The following definitions are equally applicable both to the singular and plural forms and the feminine, masculine and neuter forms of the terms defined. Any agreement, instrument, or other document defined or referred to below shall include each amendment, modification, and supplement thereto and waiver thereof entered into from time to time in compliance therewith. Any term defined below by reference to any agreement instrument or other document shall have such meaning where or not such agreement, instrument or other document is in effect.
Al
l initially capitalized terms used and not otherwise defined herein shall have the meanings ascribed to them in this Lease to which this Glossary is attached. Exhibits reference herein and not otherwise defined are exhibits to this Lease. Unless otherw ise indicated, section references are to sections of this Lease.
Ad
ventist Health Arena has the meaning set forth in Section 3.1(g).
Ad
vertising means all announcements, acknowledgements, banners, signs, panels, court side panels, show -bills, promotional materials, handouts and promotional product sampling give-a-ways, and other printed material, audio or visual commercial messages displayed, announced or otherwise presented at the Arena, including without limitation, video messages.
Are
na means the multipurpose indoor arena located at 248 West Fremont Street Stockton, CA 95203.
Ar
ena Logos has the meaning as set forth in Section 3.1 (g).
Book
ing Policies and Procedures has the meaning as set forth in Section 1.1 (b).
Cal
ifornia Workers’ Compensation Insurance Act means California Labor Code Section 3700 et. seq.
Can
cellation Notice means in the event Tenant has scheduled Team Event at Arena and subsequently Tenant desires to cancel such Team Event, Tenant shall immediately provide written notice of cancellation of the Team Event to the Manager.
Cat
ering Revenue means revenue generated from food and beverage sales located in the Suite Level.
Ci
ty means the City of Stockton, a charter city of the State of California, acting through the City Council and the City Manager.
EXHIBIT 1
C
ity Council means the City Council of the City.
City Event of Default has the meaning set forth in Section 5.2 (a).
City Manager means the City Manager of the City.
Concession Services means all revenue generated from food and beverage sales located on the Main Concourse, Mezzanine Level and Fan Deck (and all other locations in or about the Arena that are not deemed Catering Revenue).
Confirmed Cancellation Date has the meaning set forth in Section 1.1 (b).
Core Facilities and Services has t
he meaning given in Exhibit B.
Dark Days means any day (or partial day) the Arena is not in use for another event or any black out days due to maintenance, which in either case that would prohibit traffic through the Arena.
Dressing Room Facilities means the facilities within the Arena defined and described in Section 1.1 (c).
Effective Date has the meaning set forth in the Preamble to this Lease.
Extra Facilities and Services has
the meaning set forth in Exhibit B.
F&B means food and beverage.
Facility Fee Amount means the agreed upon fee applied to each ticket. For season tickets this is $1.00 fee, for partial season ticket plans and group tickets a fee of $ 2.00 and for individual tickets a fee of $3.00.
Facility Fee Revenue means the product of the applicable Facility Fee Amount multiplied by the Paid Attendance for each Home Game.
First Offer Notice has the meaning set forth in Section 2.4 (e) (B).
Force Majeure has the meaning set forth in Section 7.2
Gross Gate Receipts means the amount collected directly by the City.
Hazardous Materials means any material, substance or waste designated as hazardous, toxic, radioactive, injurious or potentially injurious to human health or the environment, or as a pollutant or contaminant, or words of similar import, under any Hazardous Materials Law (as defined below). As used herein, “Hazardous Materials Law” means any federal, state or local law, statute, regulation or ordinance now or hereafter in force, as amended from time to time, pertaining to materials, substances or wastes which are injurious or EXHIBIT 1
pot
entially injurious to human health or the environment or the release, disposal or transportation of which is otherwise regulated by any agency of the federal, state or any local government with jurisdiction over the Arena or any such material, substance or waste removed therefrom, or in any way pertaining to pollution or contamination of the air, soil, surface water or groundwater.
Ho
me Games collectively means any game, regardless of pre- season, regular season, and playoff home games.
Init
ial Term has the meaning set forth in Section 1.3(b).
Lea
gue Rules means all rules, regulations, policies, procedures, guidelines, and other written documents of any nature governing the conduct of professional teams in the League promulgated by the National Basketball Association (NBA) from time to time. The Arena Best Practice Guide set forth in Exhibit D represent s a portion of such League Rules as of the date hereof.
Lea
gue Standard means standards equivalent to or better than the top tier of venues in the League.
Lea
gue means the National Basketball Association’s developmental G League.
Lease m
eans this Lease.
Luxur
y Suites means the 24 luxury suites located in the Arena.
Man
ager means SMG or City’s designated operator.
Mat
erial Safety Data Sheets means any detailed informational document prepared by the manufacturer or importer of a Hazardous Material.
NBA means t
he National Basketball Association.
Net
Gate Receipts means all revenue generated by Ticket Sales for each Home Game by City and the Team.
Offe
r has the meaning set forth in Section 2.4 (e) (B).
Opt
ion Term means the three (3), one-year option terms that may be exercised for this Lease, as further defined and described in Section 1.3 (c).
Par
ties means the City and Tenant.
Pa
rty means the City or Tenant individually.
Rei
mbursable Expense has the meaning set forth in Section 2.2.
EXHIBIT 1
Ren
t means the Rent to be paid by the Tenant to the City under this Lease, as further defined and described in Section 2.1.
Se
condary Naming Rights means advertising that is used as identification marks and sponsorships within the Arena, including for entrances, rooms or levels within the Arena.
Ser
vices has the meaning set forth in Section 2.1.
Shor
tfall Amount has the meaning set forth in Section 2.4(b).
Sp
ecial Events means up to ten (10) non- gate revenue and non -ticketed events the Tenant can book annually with no rent for the first three and at half-rent for any additional Special Event per year, except for production and specialty security needs.
Tea
m means the organization with full rights to play professional basketball games within the League at the Arena. The Team is owned by the Tenant.
Te
am Administrative Offices means the administrative offices designated for use by the Team outside the Arena.
Te
am Event Dates means the dates (and time periods within each date) scheduled for conduct of the Team Events in accordance with the provisions of Section 1.1 (b).
Te
am Events means the Home Games held at the Arena and the Special Events and Team Minor Events.
Te
am Minor Events means up to 10 meetings (including employee meetings), luncheons, banquets, seminars, and other substantially similar events as described in Section 1.1(b).
Te
am Merchandise means all novelties, souvenirs, merchandise and programs and similar goods related to the Team and sold at Team Events.
Te
am Season means any one-year playing season of the Team as established by the League (including pre-season exhibition, regular season and playoff games during such Team Season.) which occurs during the Term.
Ten
ant means Basketball Development LLC.
Ten
ant Event of Default has the meaning set forth in Section 5.1.
Ten
ant Exclusive Categories means sponsorship categories as selected in writing by Tenant for advertising during Team Events.
Te
nant Luxury Suite means the Luxury Suite designated for exclusive use at the Team EXHIBIT 1
E
vents by the Tenant and its invitees.
Te
rm means the term of this Lease, which shall consist of the I nitial Term and any exercised Option Term.
Ti
cket Fees mean the rebates received from individual game tickets sold directly through Ticketing Service.
Ti
cket Service means Ticketmaster.
Tr
ansfer means an assignment, sublease, license or other similar transfer of the rights and benefits set forth in this Lease.
Weeken
d Dates means Thursday through Sunday.
EXHIBIT 1
EXH
IBIT B
ADVEN
TIST HEALTH ARENA CORE FACILITIES AND SERVICES SUMMARY
Cor
e Facilities and Services. The C ity shall provide the following facilities and services (collectively, the “Core Facilities and Services”) for each Team Event, unless the Tenant requests that any particular Core Facilities or Services not be provided. The City shall provide the Core Facilities and Services without charge to the Tenant (other than payment of Rent in accordance with Section 2.1).
Fa
cilities. The C ity shall provide the following facilities, which are included at no additional charge with the Rent:
Hom
e Tea
m Locker Room
Locker Room 2
Auxiliary Locker Room
Dressing Rooms 1 -4
Media Room
Laundry Facilities
Training Room
Conference Room D
Conference Rooms A and B
Fan Deck
Club
Weight Room
Storage Areas
Offices
Se
rvices. The Ci ty shall provide air conditioning, heating, lighting, janitorial supplies, maintenance supplies and equipment, including electrical, gas, water & sewer utilities and other similar miscellaneous goods and services during each Team Event and during periods of set-up and tear-down of the of the Team Event. The City shall provide all items as outlined in Section 1.1 (d) consistent with the League Standard.
Publ
ic Address and Scoreboard. The Ci ty shall furnish the Arena public address and scoreboard systems on an exclusive basis for each Team Event.
Mai
ntenance and Quality Standard. The City shall cause the Core Facilities and Services described in this part to be provided to the Tenant and shall cause the Arena to be operated and maintained in connection with Team Events consistent with the League Standard.
Cent
er-Hung Scoreboard – Use. I f requested by the Tenant, the City, shall make available to the Tenant the use of the Arena’s Center-Hung Scoreboard at no cost to the Tenant. The Tenant shall pay the costs of the Center-Hung Scoreboard personnel utilized during Team events, as provided below.
EXHIBIT 1
Ex
tra Facilities and Services. At the Tenant’s request to the City, no less than forty-eight (48) hours prior to the scheduled start of a particular Team Event, the City, shall provide the following facilities and services (collectively, the “Extra Facilities and Services ”) for the specified Team Event. The Tenant shall pay the City the amount specified below for the provision of Extra Facilities and Services for each applicable Team Event, as provided in Section 2.2 and 2.3 (a).
A. Center Hung Scoreboard - Personnel. If requested by the Tenant, the City, shall make available to the Tenant the use of the Arena’s Center Hung Scoreboard system as set forth above. The Tenant shall pay the C ity the costs of the necessary personnel.
B. Broadcast and Television Personnel. If requested by the Tenant, the City shall provide the personnel necessary to assist the Tenant, or its agents, to plug into the existing in-arena broadcast cable wiring. The Tenant shall pay the City for such services per cable feed connection from the Arena used by the Tenant for each Team Event.
C. Rental Equipment. If requested by the Tenant, the City will rent additional equipment necessary for a specified Team Event, which is not already included in the Lease. The Tenant shall pay the city all rental charges, delivery and pick up charges and any damages or loss charges made with respect to such equipment rental, unless such damages or loses arrive from any negligence or willful misconduct on the part of the City, the Manager, or their respective agents, representatives, or employees.
Box
Office and Ticket Sales Service. Th e City shall provide the box office and ticket sales services for Team Events as set forth in Section 1.1 (e).
EXHIBIT 1
EXH
IBIT C
INS
URANCE REQUIREMENTS
Tenan
t shall procure and maintain for the duration of the Lease insurance against claims for injuries to persons or damages to property which may arise from or in connection with the Tenant’s operation and use of the leased premises. The cost of such insurance shall be borne by the Tenant.
MI
NIMUM SCOPE AND LIMIT OF INSURANCE
Cov
erage shall be at least as broad as:
1. Com
mercial General Liability (CGL): Ins urance Services Office Form CG 0001 covering CGL on an “occurrence” basis, including products and completed operations, property damage, bodily injury, and personal & advertising injury with limits no less than $ 1,000,000 per occurrence and $2,000,000 aggregate, with a $4,000,000 umbrella policy.
2. Au
tomobile Liability: IS O Form Number CA 00 01 covering any auto (Code 1), or if Tenant has no owned autos, hired, (Code 8) and non-owned autos (Code 9), with limit no less than $1,000,000 per accident for bodily injury and property damage.
3. Wor
kers Compensation: Work ers’ Compensation insurance as required by the State of California, with Statutory Limits, and Employer’s Liability Insurance with limits of no less than $1,000,000 per accident for bodily injury or disease. (for Tenants with employees).
If the
T
enant maintains broader coverage and/or higher limits than the minimums shown above, the City of Stockton requires and shall be entitled to the broader coverage and/or higher limits maintained. Any available insurance proceeds in excess of the specified minimum limits of insurance and coverage shall be available to the City of Stockton.
Ot
her Insurance Provisions:
The i
nsurance policies are to contain, or be endorsed to contain, the following provisions:
Addi
tional Insured Status:
Th
e City of Stockton, its officers, officials, employees, and volunteers are to be covered as additional insureds on the CGL policy with respect to liability arising out of work or operations performed by or on behalf of the Tenant including materials, parts, or equipment furnished in connection with such work or operations. General liability coverage can be provided in the form of an endorsement to the Tenant’ s insurance (at EXHIBIT 1
l
east as broad as ISO Form CG 20 10.) Additional insured Name of Organization shall read “City of Stockton, its officers, officials, employees, and volunteers.” Policy shall cover City of Stockton, its officers, officials, employees, and volunteers for all locations work is done under this contract.
Pr
imary Coverage:
For
any claims related to this contract, the Tenant’ s insurance coverage shall be endorsed as primary insurance coverage at least as broad as ISO CG 20 01 04 13 as respects the City of Stockton, its officers, officials, employees, and volunteers. Any insurance or self -insurance maintained by the City of Stockton, its officers, officials, employees, or volunteers shall be excess of the Tenant’ s insurance and shall not contribute with it. The City of Stockton does not accept endorsements limiting the Tenant’s insurance coverage to the sole negligence of the Named Insured.
Not
ice of Cancellation:
Eac
h insurance policy required above shall provide that coverage shall not be canceled, except with notice to the City of Stockton.
Wai
ver of Subrogation:
Tenan
t hereby grants to City of Stockton a waiver of any right to subrogation which any insurer of said Tenant may acquire against the City of Stockton by virtue of the payment of any loss under such insurance. Tenant agrees to obtain any endorsement that may be necessary to affect this waiver of subrogation, but this provision applies regardless of whether or not the City of Stockton has received a waiver of subrogation endorsement from the insurer.
Ac
ceptability of Insurers:
Ins
urance is to be placed with insurers with a current A.M. Best’s rating of no less than A-: VII, unless otherwise acceptable to the City of Stockton.
Se
lf-Insured Retentions:
Se
lf-insured retentions must be declared to and approved by the City of Stockton Risk Services. At the option of the City of Stockton, either: (i) the Tenant shall obtain coverage to reduce or eliminate such self -insured retentions as respects the City of Stockton, its officers, officials, employees, and volunteers; or (ii) the Tenant shall provide a financial guarantee satisfactory to the City of Stockton guaranteeing payment of losses and related investigations, claim administration, and defense expenses. The policy language shall provide, or be endorsed to provide, that the self-insured retention may be satisfied by either the named insured or City of Stockton.
Ver
ification of Coverage:
EXHIBIT 1
Tenan
t shall furnish the City of Stockton with certificates and amendatory endorsements or copies of the applicable policy language providing the insurance coverage required above. All certificates and endorsements are to be received and approved by the City of Stockton Risk Services before work commences. However, failure to obtain the required documents prior to the work beginning shall not waive the Tenant’s obligation to provide them. The City of Stockton reserves the right to require complete, certified copies of all required insurance policies, including endorsements, required by these specifications, at any time.
Tenan
t shall, prior to the commencement of work under this Agreement, provide the City of Stockton with a copy of its declarations page(s) for each of the required policies.
Cer
tificate Holder Address:
Pr
oper address for mailing certificates, endorsements and notices shall be:
Ci
ty of Stockton
Attn: City Risk Services
400 E Main Street, 3rd Floor
Stockton, CA 95202
EXHIBIT 1
EXHIBIT D
46 EXHIBIT 1
47 EXHIBIT 1
48 EXHIBIT 1
49 EXHIBIT 1
50 EXHIBIT 1
51 EXHIBIT 1
52 EXHIBIT 1