Exhibit 10.12
WESTERN PROFESSIONAL HOCKEY LEAGUE, INC.
LICENSE AGREEMENT
-------------------------------
(Owner)
-------------------------------
(Home City)
<PAGE>
WPHLI LICENSE AGREEMENT
TABLE OF CONTENTS
1.
DEFINITIONS..............................................................
1
1.1.
System............................................................
1
1.2.
Governing Documents...............................................
1
1.3.
Marks.............................................................
1
2. GRANT, PROTECTED TERRITORY,
TERM......................................... 1
2.1.
Grant.............................................................
1
2.2.
Protected Territory...............................................
1
2.3.
Term..............................................................
2
3. WPHLI's
OBLIGATIONS......................................................
2
3.1.
Pre-Operational Obligations.......................................
2
3.1.1. System License.............................................
2
3.1.2. Governing Documents........................................
2
3.1.3. Arena Contract Assistance..................................
2
3.1.4. System Products............................................
3
3.1.5. Training Manual............................................
3
3.1.6. Recruitment................................................
3
3.1.7. Initial Training...........................................
3
3.1.8. Uniforms...................................................
4
3.1.9. On-Site Pre-Opening Assistance.............................
4
3.2.
Post-Operational Obligations......................................
4
3.2.1. System
Benefits........................................... 4
3.2.2. Scheduling
League Games................................... 4
3.2.3. Officiate
Games........................................... 4
i
<PAGE>
3.2.4. On-Site Opening
Assistance................................ 4
3.2.5. On-Going
Consultation..................................... 5
3.2.6. Additional
Training and Updates........................... 5
3.2.7.
Standards.................................................
5
3.2.8. Board of
Governors........................................ 5
3.2.9. Additional
Assistance..................................... 5
3.2.10. Marketing Assistance......................................
6
3.2.11. Advertising Associations..................................
6
3.2.12. Rule Enforcement..........................................
6
3.2.13. Salary Cap................................................
6
4. HOME
ARENA...............................................................
7
4.1.
Home Arena Contract...............................................
7
4.1.1. [ ] OPTION 1: Pre-Agreed Lease.............................
7
4.1.2. [ ] OPTION 2: Obtain Own Lease.............................
7
4.2.
Home Arena Operation..............................................
8
4.3.
Change of Home Arena..............................................
8
5. OWNER'S
OBLIGATIONS......................................................
9
5.1. Team
Operation....................................................
9
5.2.
Personnel.........................................................
9
5.2.1. Personnel Generally........................................
9
5.2.2. Management Personnel.......................................
9
5.2.3. Players....................................................
10
5.3.
Training..........................................................
10
5.4.
Minimum Ticket Sales..............................................
11
5.5.
Best Efforts......................................................
11
ii
<PAGE>
6. LEAGUE
MANAGEMENT........................................................
12
6.1.
Board of Governors................................................
12
6.2.
Membership........................................................
12
6.3.
Powers of the Board of Governors..................................
12
6.3.1. Schedule...................................................
12
6.3.2. League Rules...............................................
12
6.3.3. Playoffs...................................................
12
6.3.4. Player's Contract..........................................
12
6.3.5. Advertising Fund...........................................
12
6.3.6. Marketing..................................................
13
6.3.7. Administration.............................................
13
6.4. Attendance...................................................
13
7. OWNER'S
PAYMENTS.........................................................
13
7.1.
Initial Fee.......................................................
13
7.2.
Assessment Fee....................................................
13
7.3.
Letter of Credit..................................................
14
7.4.
Training and Assistance...........................................
14
7.5.
Advertising.......................................................
15
7.5.1. Local Advertising..........................................
15
7.5.2. Advertising Associations...................................
15
7.5.3. Advertising Fund...........................................
15
7.6.
Transfer Fee......................................................
16
7.7.
Revenue...........................................................
16
7.8.
Payment Terms.....................................................
17
iii
<PAGE>
8.
RESTRICTIONS.............................................................
17
8.1.
Business..........................................................
17
8.2.
Standards.........................................................
18
8.3.
Supplies..........................................................
19
8.4.
Finances and Records..............................................
19
8.4.1. Finances...................................................
19
8.4.2. Reporting..................................................
20
8.4.3. Records....................................................
20
8.4.4. Computer...................................................
21
8.5.
Ethical Conduct...................................................
21
8.6.
Use of Goodwill...................................................
22
8.6.1. Advertising................................................
22
8.6.2. Media Rights...............................................
22
8.6.3. Merchandizing..............................................
23
8.6.4. Marketing..................................................
23
8.6.5. Enforcement................................................
24
9.
RELATIONSHIP.............................................................
24
9.1.
Independent Business..............................................
24
9.2.
Proprietary Information...........................................
25
9.3.
Business Restrictions.............................................
26
9.4.
Intellectual Property.............................................
27
10. RENEWAL, TRANSFER AND
TERMINATION....................................... 27
10.1. Pre-Opening
Cancellation......................................... 27
10.2.
Renewal..........................................................
27
10.3. Owner's
Company..................................................
28
iv
<PAGE>
10.3.1. Incorporation.............................................
28
10.3.2. Transfer..................................................
28
10.3.3. Conditions of Transfer....................................
29
10.3.4. Death or Incapacity.......................................
30
10.3.5. Offerings By Owner........................................
30
10.3.6. Encumbrances..............................................
30
10.4.
Breach...........................................................
31
10.4.1. Thirty-Day Cure...........................................
31
10.4.2. Ten-Day Cure of Breaches..................................
31
10.4.3. Exceptional Breaches......................................
31
10.5. Post-Agreement
Duties............................................ 31
10.5.1. Generally.................................................
32
10.5.2. Team Assets...............................................
32
10.5.3. Telephone and Internet....................................
33
10.5.4. Trademark Discontinuance..................................
34
10.6. Business
Continuation............................................
34
10.7.
Insolvency.......................................................
36
11. OTHER
TERMS.............................................................
36
11.1.
Insurance........................................................
36
11.2.
Warranties.......................................................
37
11.3. Location
Responsibility..........................................
37
11.4.
Claims...........................................................
38
11.4.1. Third Party Claims........................................
38
11.4.2. Officiating Claims........................................
39
11.4.3. Owner's Claims............................................
39
v
<PAGE>
11.4.4. Dispute Resolution........................................
40
11.5. Purchase
Orders..................................................
41
11.6. Inflation
Adjustment.............................................
42
11.7. Accord and
Satisfaction.......................................... 42
11.8.
Representations..................................................
42
11.9. Substitute
Performance........................................... 43
11.10. Authority and
Guaranty.......................................... 43
11.11. Changes and
Variances........................................... 44
11.12. Consent to Joint Operating
Agreement............................ 44
12.
INTERPRETATION..........................................................
45
12.1. Entire
Agreement.................................................
45
12.2.
Waivers..........................................................
45
12.3.
Materiality......................................................
46
12.4.
Survivability....................................................
46
12.5. Governing
Law....................................................
46
12.6. Consumer Rights
Waiver........................................... 47
12.7.
Construction.....................................................
47
12.8. Savings
Clause...................................................
48
12.9. Third
Parties....................................................
48
12.10. Other
Agreements................................................
49
12.11.
Notices.........................................................
50
12.12. Submission of
Agreement......................................... 50
13.
ACKNOWLEDGEMENTS........................................................
50
13.1. Documents
Received...............................................
50
13.2. Final
Representations............................................
50
vi
<PAGE>
EXHIBITS
OWNER'S SPECIFIC
TERMS......................................................
A
STATEMENT OF
OWNERSHIP......................................................
B
vii
<PAGE>
This
Agreement between
Western Professional
Hockey League,
Inc., D/B/A
Central Hockey League, a Texas corporation, ("WPHLI") and the Owner
identified
herein is effective when accepted by WPHLI as stated herein.
The parties agree as follows:
1. DEFINITIONS
Capitalized terms
in this Agreement have the meaning given in this
Agreement and no other
meaning. Some are defined below. Others are defined
elsewhere where they appear within quotation marks.
1.1. SYSTEM. WPHLI's
standard concepts,
methods, and limitations which are
licensed to WPHLI League owners generally concerning establishment, operation
and expansion of
WPHLI's professional
ice hockey league (the
"League").
The
System includes
but is not limited to WPHLI's standard procedures for
organization and
management
of licensed teams, supervision, training and
management of players,
advertising
and marketing to promote interest in the
League and ice hockey and use of such of WPHLI's Marks, Products, Proprietary
Information, Governing
Documents,
and WPHLI's standard
methods, sources,
and
materials for scheduling, advertising, supplying, operating, marketing, and
selling that WPHLI provides to League owners generally together and such other
benefits and
assistance
that WPHLI agrees in writing from time to time to
provide Owner;
all subject to the
terms of this
Agreement and the
Governing
Documents.
1.2.
GOVERNING DOCUMENTS.
The System's Constitution, Bylaws, LEX SCRIPTA.
Governing Documents,
and other uniform documents developed and revised by WPHLI
from time to time in its sole discretion, delivered singly or as a
collection,
setting requirements,
standards,
rules
and procedures for establishing,
equipping, staffing, operating, marketing, supplying, training, advertising,
scheduling, and other matters relating to the System and its
affiliated teams.
1.3.
MARKS. The System's
trademarks, service
marks, trade names,
domain
names, symbols,
trade dress, logos,
slogans, indicia, interior and exterior
signs and furnishings, layouts, colors, personalities, publicly displayed
copyrighted works, and
any items symbolizing the System's public good will. The
Marks are defined further herein.
2. GRANT, PROTECTED TERRITORY, TERM.
2.1.
GRANT. WPHLI grants Owner a limited non-exclusive license to use the
System to establish
and operate one WPHLI
team (Owner's
"Team") named "Team
Name" based at or near
Owner's "Home
City," having its principal operating
location at the "Home
Arena" ice arena in
Owner's "Protected
Territory,"
to
represent Owner's Team
to the public as an authorized WPHLI team, and to have
Owner's Team play in League games with other League teams as
scheduled by WPHLI,
the first game to be upon "Season Opening Day," all as defined in
Exhibit A, and
on the terms stated in this Agreement. Owner accepts this
Agreement. Owner shall
establish and operate Owner's Team and Home Arena on the terms
stated herein.
2.2.
PROTECTED TERRITORY. WPHLI will not locate or
authorize any other
party to locate a WPHLI System home ice hockey arena within Owner's Protected
Territory as long as Owner is in full compliance with this Agreement. Owner's
1
_______
_______
Owner WPHLI
<PAGE>
"Protected Territory"
is the geographic area
designated in Exhibit
A. Owner's
Team shall not engage in hockey games within another owner's
protected territory
except for scheduled
games or with
WPHLI's written consent. The Protected
Territory is not an exclusive marketing area. Owner may market and
solicit sales
from Owner's Home Arena to anywhere within the USA subject to the
terms of this
Agreement. WPHLI,
other System
owners, arenas, or businesses may market or
solicit sales in the
Protected Territory for teams based at arenas located
outside of the Protected Territory; and, customers in the Protected
Territory
may choose to purchase from such others. As non-limiting examples, if Owner's
Protected Territory is
defined to be a twenty-five mile radius from the Owner's
Home Arena's main
entrance, then another
League team's arena may be lawfully
located anywhere as long as the other League team's arena's main
entrance is not
within a twenty-file
mile radius of Owner's
Home Arena's main
entrance, and
other League teams may lawfully sell or market tickets, goods or services, or
the like, in Owner's
Protected Territory as long as the other
League teams'
arenas are not located within Owner's Protected Territory.
2.3.
TERM. The duration of
this Agreement's
"Initial Term" is ten
years.
This Agreement is
effective and its Initial Term commences upon this Agreement
being accepted in writing as required herein by WPHLI. Unless sooner terminated
as herein provided,
the Initial Term
continues through the first day of June
immediately following
the tenth season of League play after this Agreement
becomes effective.
Subject to the renewal
conditions and terms
stated herein,
this Agreement's
Renewal Term commences the first day of June immediately
following the tenth
season of League play
and, unless
sooner terminated as
herein provided,
continues through the first day of June immediately following
the Renewal Term's
tenth season of League
play. A season of League play passes
regardless of whether
or not Owner's Team
participates
in League play
unless
WPHLI, in WPHLI's
discretion, provides a
written waiver to Owner specifically
extending the applicable term.
3. WPHLI'S OBLIGATIONS
3.1.
PRE-OPERATIONAL
OBLIGATIONS.
WPHLI
will provide the following
assistance to Owner on or before Season Opening Day.
3.1.1. SYSTEM LICENSE. WPHLI grants Owner a limited license to use
the
System to establish
and operate Owner's Team at Owner's Home Arena and to
represent Owner's Team
to the public as an
authorized WPHLI team
on the terms
stated in this Agreement.
3.1.2. GOVERNING
DOCUMENTS.
WPHLI will loan Owner the System's
Governing Documents
for establishing a standard System team and managing,
marketing and
operating a standard
System team at a standard System arena and
competing with other League teams. WPHLI will update same as WPHLI
deems useful.
Any documents
or items to be provided by WPHLI which can be provided
electronically to Owner, at WPHLI's election, may be provided
electronically by
WPHLI to Owner. As a non-limiting example, WPHLI's providing Owner with
access
to a
password-protected
League internet
site for League owners comprises
delivery to Owner of such documents that are available there.
3.1.3. ARENA CONTRACT ASSISTANCE. Unless Owner has already obtained
an
Arena Contract or WPHLI or a WPHLI Affiliated Entity (see 12.9) is involved
in
offering same to Owner, WPHLI will make advisory assistance available to Owner
2
_______
_______
Owner WPHLI
<PAGE>
concerning Owner's
lease negotiations for Owner's Arena Contract. WPHLI's
advisory assistance in
this regard consists of general guidance concerning the
System's standards
for arenas and arena
lease terms generally
and may not be
relied on by Owner for
Owner's specific decisions. Owner's negotiation of
Owner's Arena
Contract, subject to the parameters and terms stated herein,
including without limitation, Part 4.1, is solely Owner's
responsibility.
3.1.4. SYSTEM PRODUCTS. WPHLI will loan Owner a sample list of
vendors
and Products
approved for use with
the System and identify at least one source
capable of providing
such Products to Owner. The System's "Products" are the
System's equipment, supplies, goods, uniforms, signs, forms,
documents, computer
hardware, software,
communications and related items specified in the Governing
Documents, together
with such
modifications and items WPHLI adds to the System
by amending
the Governing Documents. WPHLI will loan Owner a sample list
specifying Products
available to System
owners generally from
WPHLI, if any.
WPHLI will offer Owner such Products as WPHLI offers to other System owners
generally subject
to availability, scheduling, agreement on payment, and
provided Owner is not
in any default with
WPHLI. WPHLI may pool
purchases of
certain goods or services by WPHLI owners from one or more
designated
suppliers
("Supplier Pool")
3.1.5. TRAINING MANUAL. WPHLI will loan Owner one copy of the
System's
Training Manual for
use during initial
training and in ongoing training and
operation of Owner's
Team. The Training
Manual may be an
integral part of the
Governing Documents.
3.1.6. RECRUITMENT.
WPHLI will make
available advisory assistance to
Owner in recruitment of Players (a professional hockey player
employed by a team
participating in
League games) and
non-player
personnel for Owner's Team.
WPHLI's advisory
assistance
is general guidance concerning the System's
standards for Player and non-player recruitment and may not be relied upon by
Owner for Owner's
specific personnel
decisions.
WPHLI does not hire
Owner's
employees for Owner.
Owner will acquire
Players for Owner's Team in accordance
with WPHLI's Player Recruitment policies as set out in the
Governing Documents.
3.1.7. INITIAL
TRAINING. WPHLI shall furnish initial training to
Owner's initial Management Personnel employed by Owner for
operation of Owner's
Team (up to six persons), namely, a single training session
comprised of a two
day initial basic training program in English concerning
establishing a standard
System team at a
standard System arena in accordance with the Governing
Documents and
managing, marketing,
and operating a
standard System team
at a
standard arena in
accordance
with the Governing Documents. The cost of the
instructional and training materials used in the initial training
is included in
the Initial Fee.
WPHLI will not provide
wages or employee
benefits to anyone
during any training period. All expenses incurred by trainees in
connection with
and during any training, including without limitation,
transportation,
living
expenses, meals,
lodging, wages, employment benefits, etc. (collectively,
"Personal Expenses"),
shall be at Owner's sole expense. Each of Owner's initial
trainees must complete
training to the
satisfaction
of WPHLI prior to
Season
Opening Day, unless
waived in writing by
WPHLI in its sole
discretion in any
particular case. The
initial training
program for Owner's
initial Management
Personnel will be at
WPHLI's headquarters or locations selected by WPHLI.
Training in use of the System includes loaning Owner a System
Training Manual
and the Governing
Documents and providing the System's standard guidance
concerning the System's standards for recruiting Players, scheduling games,
customer relations,
sales, advertising, equipment, quality control, and
franchise
operations.
Training requires
full-time attendance of Owner's
Management Personnel
for approximately eight hours per day as described in more
3
_______
_______
Owner WPHLI
<PAGE>
detail in the Governing Documents. Upon Owner's written request,
WPHLI will make
additional initial
training available to Owner as WPHLI deems appropriate
subject to scheduling and terms set forth elsewhere herein.
3.1.8. UNIFORMS. WPHLI will loan Owner a set of WPHLI's
specifications
for uniforms for
Owner's players and
identify at least one
source capable of
providing such uniforms to Owner. Owner shall design Owner's Team's uniforms
within WPHLI's specifications and subject to WPHLI's approval.
3.1.9. ON-SITE PRE-OPENING ASSISTANCE. WPHLI will provide pre-opening
assistance to Owner by providing a WPHLI advisor at Owner's Home
Arena, prior to
or during Owner's Season Opening Day to offer general advice
concerning opening,
managing, marketing
and operating a standard System team at a standard arena in
accordance with
the System's standards. The advisor's responsibility and
authority is limited to giving general guidance to Owner concerning
the System's
standards. Owner has sole and exclusive authority and
responsibility to instruct
Owner's employees and sole responsibility for Owner's Team
and operations.
The
cumulative number of
days that a WPHLI's
advisor must be at Owner's Home Arena
to provide on-site opening assistance and start-up consultation
pursuant to this
Agreement is two days, sequential or not, prior to Season Opening
Day, the dates
of attendance being selected by WPHLI. At Owner's request, WPHLI and Owner may
offer additional initial on-site consultation as WPHLI deems
appropriate subject
to scheduling and terms set forth elsewhere herein.
3.2.
POST-OPERATIONAL
OBLIGATIONS.
WPHLI
will provide the following
assistance to Owner on or after Season Opening Day.
3.2.1. SYSTEM
BENEFITS. WPHLI will make available to Owner the
System's methods of standardizing operations of League teams
generally pursuant
to the System, loan Owner the System's Governing Documents, deliver amendments
to same to Owner, and
identify to Owner
qualified sources of equipment and
supplies to operate a
standard System team
at a standard arena,
all as WPHLI
makes same available to League owners generally.
3.2.2. SCHEDULING
LEAGUE GAMES. WPHLI
will coordinate
scheduling of
games between Owner's
Team and other League teams, pursuant to the procedures
for scheduling stated in the Governing Documents.
3.2.3. OFFICIATE
GAMES. WPHLI shall provide League officials to
officiate at scheduled
regular season League games of Owner's Team as specified
in the Governing Documents at WPHLI's cost. WPHLI shall provide
League officials
to officiate at scheduled preseason, post-season and all other
scheduled League
games which are not regular season games, at Owner's cost. Any increase in
WPHLI's cost of providing officials from the effective date of this Agreement
forward shall be
reimbursed
to WPHLI by League
owners on a pro rata
basis as
determined by the Governing Documents.
3.2.4. ON-SITE
OPENING ASSISTANCE. WPHLI will provide on-site
assistance to Owner by providing a WPHLI advisor at Owner's Home
Arena during or
shortly after Owner's
Team's first regular season game at Owners' Home Arena to
offer general guidance
concerning the System's standards with respect to player
recruitment,
scheduling, opening,
managing, marketing and operating a standard
team at a standard
arena in accordance with the System's standards. The
4
_______
_______
Owner WPHLI
<PAGE>
cumulative number of
days that a WPHLI's
advisor will be at Owner's Home Arena
to provide on-site
assistance, and
consultation pursuant
to this Agreement is
two days, sequential
or not, during Owner's
Team's first season,
the dates of
attendance being selected by WPHLI.
3.2.5. ON-GOING
CONSULTATION.
The first three months
after Owner's
initial season's
Season Opening Day, WPHLI will be available to speak with
Owner's Management
Personnel by telephone
once each week at reasonably agreed
times to discuss Owner's operational opportunities and challenges.
Thereafter,
representatives at WPHLI's headquarters will be reasonably
available to Owner's
Management Personnel
during WPHLI's normal business hours for telephonic
consultation and
guidance with respect to operation and management of Owner's
Team by Owner's
Management Personnel
in accordance with System standards.
WPHLI's advisory
assistance
is general guidance concerning the System's
standards and may not be relied upon by Owner for Owner's specific
decisions. At
Owner's request, WPHLI
and Owner may schedule additional on-site assistance and
consultation as WPHLI
deems appropriate
subject to
scheduling
and terms set
forth elsewhere herein.
3.2.6. ADDITIONAL TRAINING AND UPDATES. WPHLI's current practice is
to
have a summer conference each year for the purpose of getting
League team owners
and management
together with WPHLI's
management to develop
plans for the next
season. WPHLI
may, in its discretion, hold conferences to discuss sales
techniques, personnel
training, bookkeeping, inventory control, performance
standards, advertising
and merchandising procedures, and other matters relevant
to the System. WPHLI
will make such
seminars and
additional instruction
and
training available to
Owner and Owner's
Management Personnel
that WPHLI makes
available to System
owners generally and provide Owner with updates to the
Governing Documents
as WPHLI makes such
updates available to System owners
generally. Such
seminars and
additional training
may either be via conference
call, at WPHLI's
Headquarters city,
another System arena, or other location as
may be scheduled
and designated by WPHLI. WPHLI does not currently charge
conference attendance fees, but reserves the right to do so in the
future. Owner
is solely responsible
for the Personal
Expenses of Owner and Owner's staff and
all other costs in connection with same.
3.2.7. STANDARDS.
WPHLI will make
reasonable efforts to maintain the
System's standards
by conducting inspections of Owner's Team as WPHLI deems
useful, revising the
System as WPHLI deems
advisable and
notifying Owner of
updates and changes in
the Governing
Documents and the System as WPHLI makes
same available to System owners generally. WPHLI will receive and
review Owner's
suggestions for improvement of the System.
3.2.8. BOARD OF
GOVERNORS. WPHLI shall
schedule and
coordinate the
League's Board of
Governor's
meetings and the League's owner's meetings as
stated in the Governing Documents. Owner is solely responsible for
the Personal
Expenses of Owner and Owner's staff, and such charges and fees as are
uniformly
set for attending teams in the Governing Documents.
3.2.9. ADDITIONAL
ASSISTANCE.
WPHLI will be
reasonably available to
provide Owner additional guidance concerning the System's standards
as set forth
in the Governing
Documents on a reasonable request basis or when deemed
necessary by WPHLI. Assistance may be in person, telephonic, or by publication
as WPHLI deems
appropriate. If
requested by Owner,
and if WPHLI personnel are
available, WPHLI, at
its option, may provide a WPHLI representative at Owner's
5
_______
_______
Owner WPHLI
<PAGE>
business to provide
additional training or
guidance concerning
the System's
standards upon WPHLI's then current standard fees and expenses and
terms.
3.2.10. MARKETING ASSISTANCE. WPHLI shall furnish Owner with
advisory
promotional guidance
concerning promoting Owner's Team's initial Season Opening
Day in accordance with the System's standards. WPHLI will be available
thereafter on a
reasonable
basis to provide ongoing advisory promotional
guidance to the Owner in accordance with the System's standards. WPHLI will
permit Owner to use WPHLI's League logos and marketing
procedures as stated
in
the Governing
Documents.
If WPHLI elects to make System stock advertising
materials available to System owners generally, then WPHLI shall
provide same to
Owner, WPHLI will
review proposed
advertising copy sent
by Owner to WPHLI and
inform Owner of the marketing concepts WPHLI makes available to System owners
generally. WPHLI may
create an advertising
fund (the "Advertising Fund") to
promote the interests
of the League and to
assist with marketing
the League.
Materials provided
by the Advertising Fund to System owners may include
marketing materials, advertisements, videotapes, etc., any specific
such efforts
being in WPHLI's
discretion If an Advertising Fund is created and it funds such
efforts, Owner will receive one sample of each System-wide
distributed marketing
piece or advertising material at no charge beyond Owner's Advertising
Contributions to the Advertising Fund. WPHLI does not represent or
promise that
an Advertising Fund will be created or be useful to Owner. Owner
may develop and
place advertising
materials for Owner's own use, at Owner's own cost as long as
same are within the System's standards.
3.2.11. ADVERTISING
ASSOCIATIONS.
WPHLI may implement advertising
associations as WPHLI deems useful to combine the advertising
efforts of System
owners, such as common marketing and advertisements, use of common advertising
agencies, coordination of ad placement, etc., any specific such
efforts being in
WPHLI's discretion.
Establishment of any advertising association depends on the
existence and cooperation of other appropriate teams. WPHLI does not represent
or promise that any cooperative advertising associations or efforts will
occur
or be useful to Owner,
in part because same are dependent on the cooperation of
others.
3.2.12. RULE
ENFORCEMENT.
Owner delegates to WPHLI the power to
enforce the League's Rules, decide disputes between League
owners and to be the
final decision-maker
with regard to such
disputes. WPHLI has
the authority to
reprimand and/or fine any owner, owner's employee or Player for
violation of the
League's Rules or Governing Documents.
3.2.13. SALARY CAP. WPHLI currently has an annual salary cap
applicable to all
League teams.
Because the laws of affected jurisdictions
concerning salary
caps are complex and changing, WPHLI does not promise or
represent that a
salary cap will be
maintained or what its terms will be, only
that WPHLI currently
intends to maintain and pursue same. WPHLI will review the
salary cap annually and establish rules and procedures within the Governing
Documents regarding
free agency trading,
sales and trades of
Players between
teams, rules and
exceptions to same, in WPHLI's discretion are deemed by WPHLI
likely to maintain
competitive balance
among League
Teams. WPHLI expressly
disclaims any representation that any or all teams will be
competitive.
6
_______
_______
Owner WPHLI
<PAGE>
4. HOME ARENA.
4.1.
HOME ARENA CONTRACT.
Owner is entitled and obligated to obtain use of
the one Home Arena at the address stated in Exhibit A and at no other
place,
subject to
relocation
as provided herein. Owner hereby elects one of the
following options:
4.1.1. [ ] OPTION 1:
PRE-AGREED
LEASE. Owner has obtained an Arena
Contract and
WPHLI hereby approves same or WPHLI is itself involved with
offering same to Owner.
4.1.2. [ ] OPTION 2:
OBTAIN OWN LEASE. Owner is responsible for
entering an approved Arena Contract within the time period stated
herein.
4.1.2.1. Owner
will enter into a lease, sub-lease, license, or
purchase agreement
for the Home Arena
(the "Arena
Contract")
providing for
Owner's occupancy of the Home Arena sufficiently prior to Season
Opening Day for
Owner to fulfill all
of Owner's obligations
under this
Agreement.
The Arena
Contract must be
acceptable to WPHLI and may only be entered into by Owner with
WPHLI's prior written
approval. OWNER IS
CAUTIONED AGAINST ENTERING INTO ARENA
CONTRACTS WHICH ARE NOT EXPRESSLY CONTINGENT ON WPHLI'S APPROVAL. A
condition of
Arena Contract
approval
is Owner's delivery to WPHLI of the System's
then-current Lease
Rider fully executed by the lessor and Owner.
The Arena
Contract shall have an initial term and renewal terms which are
collectively not
less than this
Agreement's initial
term and renewal term unless otherwise
approved in writing by WPHLI in WPHLI's sole discretion. If an
independent legal
review is deemed necessary by WPHLI, Owner shall pay all legal fees
and expenses
incurred by WPHLI
and Owner in connection with review, negotiation, and
execution of the Arena
Contract and issues
relevant to the same.
Owner shall
never assign or sublet any interest in the Arena Contract,
other than to
WPHLI,
without obtaining
the prior written
consent of WPHLI,
such consent not to
be
unreasonably withheld.
4.1.2.2. If Owner does
not enter an approved Arena Contract meeting
WPHLI's standard
criteria six months
prior to the upcoming
season's opening
game, WPHLI may elect to terminate this Agreement by notifying
Owner of the same
in writing. Upon Owner
accepting such
termination upon
WPHLI's form for same,
WPHLI will
refund one-half of the Initial Fee to Owner, less WPHLI's
out-of-pocket expenses and standard fees (including, without limitation, Arena
location and lease
negotiation efforts,
training, etc. incurred due to this
relationship). WPHLI
is not required to
refund any money until Owner executes
WPHLI's acceptance
of termination form. If Owner's Home Arena is to
be newly
constructed, or if an
existing arena is to be substantially remodeled to
accommodate Owner's Team, a substantial investment and effort will be
required.
Owner shall
employ a qualified architect to adapt the System's plans and
specifications to
the Home Arena and all applicable laws, regulations,
ordinances, lease
requirements and market conditions, being especially mindful
of all zoning,
signage, parking,
access, health, environmental and storage
requirements. The
architect must be submitted to WPHLI for approval and be
approved by WPHLI
before the
architect is engaged. WPHLI's approval of an
architect does not
comprise any
representation
concerning
the architect by
WPHLI. Owner is solely
responsible
for Owner's
choice of Owner's
architect.
WPHLI may elect to require use of a WPHLI-selected architect, and, if so, Owner
shall employ the
WPHLI-selected
architect. Owner will
submit Owner's plan for
adapting the System to the Home Arena to WPHLI for prior written
approval, not
change the same
without WPHLI's
written approval, and certify to WPHLI that
Owner has obtained
all permits and
permissions
required for remodeling or
7
_______
_______
Owner WPHLI
<PAGE>
construction and operation. Owner will submit to WPHLI the
information required
by WPHLI concerning Owner's general contractor. The general contractor must be
approved before the
general contractor is engaged. WHPLI's approval of the
general contractor does not comprise any representation concerning the general
contractor by WPHLI.
Owner will
certify to WPHLI that
Owner has obtained
all
permits and permissions required for lawful construction and
operation. Owner is
solely responsible
for selecting, supervising and paying for architects,
contractors, detailed
plans, equipment,
supplies, financing,
fixtures, signs,
working capital,
and all other aspects
of creating and opening the Home Arena.
Owner will return to WPHLI any WPHLI standard plans and specifications on or
before using the Home Arena for Owner's business operations.
4.2.
HOME ARENA
OPERATION.
Owner will equip,
staff, train, open, and
operate at Owner's
sole expense one WPHLI
League team at and from Owner's Home
Arena and in Owner's
Protected Territory
and at and from no other place and in
no other territory
except pursuant to League games
scheduled by WPHLI, or
as
otherwise approved by
WPHLI in advance.
Owner will fully
comply with
Owner's
obligations under the
Arena Contract,
and not do or omit
doing anything which
gives anyone the right to terminate or not renew the Arena Contract
prior to the
end of this Agreement's then-current term. Owner will provide the
Home Arena for
scheduled League games
as set forth herein and the Governing Documents. This
will include, without limitation, private team, official, media and
WPHLI areas
before, during,
and after games and appropriate reserved seating for the
visiting team, Media and WPHLI. Owner shall maintain possession of and make the
Home Arena
fully available for all scheduled League games (exhibition,
pre-season, regular,
or playoff) as required herein. Failure to do so is a
material breach
unless the failure is
due to the Home Arena
being materially
damaged or destroyed
by an act of God,
in which event Owner
has the longer of
sixty days or the beginning of the next season to relocate or
reconstruct. Owner
will use Owner's Team's facilities solely for operation of Owner's
Team.
4.3.
CHANGE OF HOME ARENA.
If Owner's right to
use Owner's Home Arena for
all purposes required
by this Agreement
is terminated or impaired prior to
termination of
this Agreement for a reason other than a default of this
Agreement or the Arena
Contract by Owner or
an entity under the
direction or
control of Owner, then
Owner shall have the right to relocate Owner's Team to
another ice arena within Owner's Protected Territory. Owner's relocation right
is subject to Owner
satisfying this
Agreement's and the
Governing
Documents'
requirements
concerning a substitute ice arena and Arena Contract, including
obtaining the prior written consent of WPHLI, which shall not be unreasonably
withheld. Upon Owner
obtaining WPHLI's
consent to the substitute ice arena and
its Arena Contract, Owner shall, at Owner's sole expense,
establish and
operate
Owner's Team at the substitute ice arena, which shall thereafter be
deemed to be
Owner's Home Arena.
Owner will submit each requested substitute site to WPHLI
with a completed proposed Arena Contract, completed standard then
current System
Lease Rider, and arena
evaluation form.
Relocation of the Home
Arena does not
change the Protected
Territory's boundaries
unless WPHLI and Owner
expressly
agree to same. WPHLI
is not liable to Owner for any expense or loss of revenue
directly or
indirectly
incurred by Owner as a result of
termination
of the
original Arena
Contract and is subject to payment of WPHLI's then current
standard relocation fee as provided in the Governing Documents. No refunds are
due from WPHLI if a new arena does not timely materialize.
8
_______
_______
Owner WPHLI
<PAGE>
5. OWNER'S OBLIGATIONS
5.1.
TEAM OPERATION. Owner
will equip, staff,
train, open, and operate at
Owner's sole expense one WPHLI team in compliance with this Agreement and the
Governing Documents
at and from
Owner's Home Arena and in Owner's
Protected
Territory and at and from no other place and in no other territory.
Prior to the
Season Opening Day,
Owner will obtain and
thereafter
maintain all
licenses,
permits and inspection
approvals required by
applicable laws and the Governing
Documents to conduct
business in the Home Arena's jurisdiction and operate
Owner's Team at the
Home Arena, and to
host League games at the Home Arena and
to compete in away games in accordance with League game schedules
developed by
WPHLI, including,
without limitation,
a business license,
labor, health, fire
and safety inspections and approvals, and a liquor license, all as
acceptable to
WPHLI. Owner's
Team will commence League play on the Season Opening Day
specified in Exhibit
A, unless same is rescheduled by WPHLI and thereafter
appear at,
play, and complete all scheduled League games (exhibition,
pre-season, regular,
or playoff) in the manner required by the Governing
Documents as scheduled by WPHLI, or as otherwise approved by WPHLI
in advance.
5.2.
PERSONNEL
5.2.1. PERSONNEL GENERALLY. Owner shall employ a sufficient
number of
fully trained and
competent personnel of
good character,
including,
without
limitation
administrative
personnel, managers,
and clerical staff to properly
perform Owner's obligations. The Governing Documents may require
Owner's Team to
have a certain number of personnel actively engaged in certain
positions and set
skill and qualification standards for each position. Owner is
solely responsible
for the selection
and evaluation of Owner's personnel and may not rely on
WPHLI's suggestion or
approval of such persons. WPHLI is in no way responsible
for the selection of or the performance, honesty or any other
quality of Owner's
personnel. WPHLI may
require any of Owner's personnel to attend additional
training and refresher courses from time to time at locations
chosen by WPHLI at
Owner's expense. Owner
will cause each of Owner's employees to become familiar
with those portions of
the Governing
Documents designated
for the applicable
employee category
and to comply
fully with
them. Owner is responsible for
Owner's employees'
compliance with the
Governing Documents.
Without limiting
WPHLI's other remedies, if any of Owner's employees fail
to comply with WPHLI's
Governing Documents' requirements, upon written request of the
WPHLI, Owner will
take corrective
action ranging from
the subject personnel
taking additional
training to removing the non-complying employee from League-related duties.
WPHLI may require any person associated with the League to attend
training or
additional training as
a condition of beginning to act or continuing to act in
any League related activity, if the same is, in WPHLI's discretion,
in the best
interest of the System. If WPHLI determines that any person's act or acts
are
inappropriate for a
person associated with the League, WPHLI may either
immediately condition
approval for the person acting in any League-related
activity on completing or retaking such parts of the System's
training or taking
such corrective
action that WPHLI deems appropriate, or WPHLI may, after
consultation with WPHLI's Board of Governors, ban the person from acting in
any
League-related capacity, including as an equity owner, manager,
employee, agent,
or capacity related to the League or Owner, all upon such
conditions, terms
and
duration that WPHLI deems appropriate.
5.2.2. MANAGEMENT
PERSONNEL.
Owner shall maintain a full staff of
"Owner's Management
Personnel" as stated in the Governing Documents. Owner has
sole authority to control Owner's Management Personnel's actions and may
remove
9
_______
_______
Owner WPHLI
<PAGE>
any of Owner's
Management Personnel
at any time. WPHLI does not have any power
or authority to control Owner's Management Personnel's acts or decisions.
That
power and authority is held solely by Owner. WPHLI reserves the right to
charge
Owner WPHLI's
then current standard training fee for training any Owner's
Management Personnel
or prospect for same after Owner's initial Season Opening
Day. Owner's Team will be directly supervised "on-premises" by a
General Manager
who shall be the full-time hands-on chief executive officer of
Owner's Team with
full managerial
control, authority and
responsibility
for operating
Owner's
Team. The General Manager will personally participate in actual
operation of the
Team by spending a minimum of an average of thirty hours a week
personally with
the Team directly and actively managing the Team year round to
supervise sales,
recruiting, training,
season play,
etc. Owner shall hire Owner's
Management
Personnel sufficiently
in advance
for them to be
qualified and approved or
disapproved by WPHLI
and fully trained
before becoming responsible for any
System related activities. Owner's Management Personnel shall participate on
a
full-time basis in the direct management and operation of
Owner's Team and sign
the System's
then-current standard agreements, including, without limitation,
agreements to
maintain confidentiality, not have an interest in or business
relationship with any
other ice hockey team,
not compete, etc., that WPHLI
requires of new System team management personnel generally.
In the event of
the
termination,
resignation, death,
or incapacity
of any of Owner's
Management
Personnel, Owner shall
replace same within sixty days with a person approved in
writing by WPHLI, approval not to be unreasonably withheld.
5.2.3. PLAYERS.
Owner shall employ the
League's then-current minimum
of Players for Owner's
Team as stated in the
Governing Documents.
Positions,
qualifications, duties
and the like may be stated in the Governing Documents.
Owner's Players must
continue to be
eligible and available to participate in
League play during each season of League play and any applicable
playoff games,
subject to injuries and excused absences. Owner shall have a written
contract
with each Player which
contract is on a standard form approved by WPHLI. Each
Player contract shall
conspicuously state that it is not binding until approved
in writing by WPHLI.
After Owner and a Player execute a Player contract, Owner
shall immediately
deliver same to WPHLI
for approval. Upon
Owner's receipt of
WPHLI's written
approval or
disapproval of the
Player contract,
Owner shall
immediately deliver a
copy of WPHLI's
approval or
disapproval to the
Player.
WPHLI may impose a salary cap for each League Team within the League limiting
the total sum of Player salaries for Owner's Team which
salary cap shall be the
same for all League teams. Owner's Team shall also employ a Head
Coach who shall
not be a Player. The Head Coach's responsibilities may be stated in the
Governing Documents.
Owner recognizes the importance to WPHLI and other
team
owners of ensuring a consistency of League team operating
costs. Owner agrees
that, to the extent
permissible under
applicable
law, all contracts
between
Owner and each of Owner's Team Players will be in such form as may
be prescribed
by WPHLI from time to time (the "Players' Contract") and be in compliance
with
all rules set forth for such agreements in the Governing
Documents.
WPHLI does
not promise or represent that current methods of obtaining and
retaining Players
will be continued for any length of time.
5.3.
TRAINING. WPHLI will
provide the instructional and training materials
used in the initial training program to Owner's Management Personnel without
charge to Owner. Owner and WPHLI shall schedule Owner's Management
Personnel to
attend training at Owner's expense at a location designated by
WPHLI and Owner's
Management Personnel
shall attend and
successfully
complete WPHLI's initial
10
_______
_______
Owner WPHLI
<PAGE>
training program to
WPHLI's satisfaction
prior to the Owner's
Team beginning
operations.
Thereafter, whoever
Owner designates as a Governor or Owner's
Management Personnel must successfully complete WPHLI's initial
training program
prior to serving as Owner's Management Personnel. Owner's Management Personnel
designated by WPHLI
shall attend and complete to WPHLI's satisfaction such
additional training, assistance, seminars, meetings, conferences,
etc. as WPHLI,
may from time to time
require, at such
locations that WPHLI designates. If
requested by WPHLI, Owner shall have Owner's Team's primary
computer
physically
at WPHLI's training
location during initial training so Owner's Management
Personnel can be trained on the actual software loaded on Owner's
hardware that
they will use in
Owner's Team's operations. WPHLI's training duty solely
comprises offering
training experiences
and no more. All costs will be born by
Owner. Owner is solely
responsible for the
performance of Owner's
Management
Personnel. Owner will
cause the attendance
of designated employees at such
training as WPHLI may conduct from time to time.
5.4.
MINIMUM TICKET SALES.
Any League owner's
failure subjects WPHLI, the
League, and other League owners to substantial expenses. For this
reason, League
owners must post a
Letter of Credit in favor of WPHLI. WPHLI's experience is
that focusing new
League owners on
selling season
tickets is critical to
the
success of new League owners. Consequently, WPHLI requires of Owner a letter
of
credit in favor of WPHLI in an amount which varies with
Owner's season ticket
sales, i.e. the more
season tickets
Owner sells,
the less Owner's
letter of
credit requirement.
Owner's duty to create, fund, and maintain a letter of
credit in favor of WPHLI is set forth in Exhibit A and the
Governing Documents
and its amount shall be increased or decreased in accordance with the terms
stated in Exhibit
A and the Governing Documents. The Owner's duty to sell
certain numbers
and types of
tickets may vary and Owner's letter of credit
requirements will be adjusted after Owner's first season.
5.5.
BEST EFFORTS. Owner
will continuously use its best efforts to market,
develop and
maximize recognition and use of the System throughout Owner's
Protected Territory including, without limitation; aggressively advertising and
promoting Owner's Team and the League, obtaining and maintaining
all facilities,
equipment, Products,
Players, staff, etc. as described in the Governing
Documents. Owner shall
continuously operate the System at its full capacity for
the full term of this Agreement; strictly comply with all terms in this
Agreement and with all other agreements which relate to Owner's
business or use
of the System,
including,
without limitation, the Arena Contract and all
agreements with WPHLI, WPHLI Affiliate Entities, Players, vendors, suppliers,
other System owners and System Associations, if any; maintain full continuous
operations; and do all
things necessary for Owner's Team to compete in home and
away games in accordance with League game schedules developed by WPHLI, all in
strict compliance with the Governing Documents as they may be revised
from time
to time. Owner's
failure to strictly comply with, observe and perform any term,
condition, covenant,
provision or
obligation of this
Agreement is a breach of
this Agreement.
Owner will send any
suggestions
Owner has for
improving the
System to WPHLI in writing. Owner will fully cooperate with WPHLI's efforts
to
sell additional
System teams including, without limitation, displaying
information concerning
the availability of
new teams, making
Owner and any of
Owner's personnel
available to
truthfully answer the
questions of prospective
owners if requested
by WPHLI and
assisting in training new owners and their
personnel at Owner's Home Arena.
11
_______
_______
Owner WPHLI
<PAGE>
6. LEAGUE MANAGEMENT.
6.1.
BOARD OF GOVERNORS. For the League and its several individual teams
to
succeed in the League's collective enterprise, the League's several
individual
teams must
cooperate in the integrated operation of the League as single
collective enterprise.
Not every owner's
team's interests will be maximized in
every interaction. The success or failure of each League team
affects all League
teams. WPHLI
manages the League and
sets the League's game
schedule. One of
WPHLI's methods of
League governance is
to consult with and obtain advice from
the owners and management personnel of WPHLI's several
teams. Such consultation
occurs in part,
although not
exclusively,
pursuant to the WPHLI's and the
several League owners' participation in the League's Board of
Governors.
6.2.
MEMBERSHIP.
Each League team that
is in good standing
has one vote
which is voted by the team's Governor. The League's "Board of
Governors" will be
comprised, meet and
operate as stated in the Governing Documents. Owner is
entitled and required to appoint up to two Governors (a principal
Governor and
one alternate
Governor) to the Board of Governors to represent Owner's Team
who
shall attend and
participate in all
Board of Governors
meetings. Owner
shall
notify WPHLI of Owner's nominee for Owner's Team's Governor sufficiently in
advance for
WPHLI to approve or disapprove of the nominee, in WPHLI's
discretion. WPHLI thereafter has the right to revoke WPHLI's
approval of Owner's
Team's Governor, in WPHLI's discretion, but only after consultation with
Owner.
The Board of Governors is chaired by a President appointed by
WPHLI. In the case
of a tie vote of the members of the Board of Governors, The President has an
additional deciding vote.
6.3.
POWERS OF THE BOARD OF
GOVERNORS. The Board
of Governors
represents
the owners of League teams, and is responsible for making recommendations to
WPHLI concerning the following League affairs:
6.3.1. SCHEDULE.
Development
of a schedule
format for
exhibition,
regular season and playoff games;
6.3.2. LEAGUE RULES.
Development of League
Rules for the conduct and
administration of
League games. Enforcement of the League Rules through
investigation
disciplinary offenses
and setting and
enforcing penalties is
solely within WPHLI's power, but in appropriate cases WPHLI may
consult with the
Board of Governors
concerning same.
"League Rules" means rules and regulations
enacted by WPHLI to govern League play. The League Rules may be
supplemented,
deleted or amended from time to time by WPHLI in accordance with the Governing
Documents and after consultation with the Board of Governors.
6.3.3. PLAYOFFS.
Development of playoff
competitions and
funding by
all owners of playoff prize pools;
6.3.4. PLAYER'S
CONTRACT. Suggestions concerning revisions to or
replacement of a standard player's contract, playoff payments, Player salary
cap, and other player-related matters;
6.3.5. ADVERTISING FUND. Administration of the Advertising Fund;
and
12
_______
_______
Owner WPHLI
<PAGE>
6.3.6. MARKETING.
Marketing and operation of the League and the WPHLI
System.
6.3.7.
ADMINISTRATION. Suggesting
changes
concerning
the
administration of WPHLI.
The
Board of Governors
shall act only in
compliance
with the Governing
Documents and all other applicable agreements, including, without limitation,
this Agreement to which League team owners are bound. Board of Governors' acts
do not modify any
agreement between WPHLI and System owners. The Board of
Governors' acts are always advisory without independent force or effect. The
League's owners
never "agree" with each other to act or not act
through the
Board of Governors,
only to develop consensus recommendations to WPHLI. WPHLI
never "agrees" with any Board of Governors' act or recommendation. WPHLI shall
consider the acts, resolutions, and advice of the Board of
Governors, and
then
WPHLI shall reach its own independent decisions concerning such
matters.
6.4.
ATTENDANCE.
Owner will ensure that
Owner is represented
by Owner's
authorized
representatives at
each and every meeting
of WPHLI governors or
owners, which may be
called at the discretion of WPHLI from time to time. There
are currently four Board of Governors' meetings annually at which governors of
all teams are expected to attend. Continuation of this schedule is not
guaranteed. It may be changed. Additional meetings may be called.
If Owner is an
individual, Owner
specifically agrees to personally physically attend in person
at least one League owners' meeting annually called by WPHLI with reasonable
notice. If Owner is an
incorporated
entity, Owner will attend via an agreed
representative,
expected to be the individual with the most equity ownership in
Owner. Attendance
means being physically in attendance in person at such
meetings. There is
currently one Summer
Conference annually at
which Owner is
required to be physically in attendance unless otherwise agreed.
Continuation of
this schedule is not guaranteed. It may be changed. If Owner or
Owner's Governor
is unable to attend
any such meetings,
Owner will send a
substitute
person,
approved in advance by WPHLI, in the missing person's place to
represent Owner's
Team. Isolated
absences with prior notice and due to good cause are
acceptable.
Participation in League meetings is at Owner's sole cost.
7. OWNER'S PAYMENTS
7.1.
INITIAL FEE. Owner will pay WPHLI an "Initial Fee" of $1,250,000.
The
Initial Fee is fully earned and non-refundable upon WPHLI's acceptance of
this
Agreement as
set forth herein and is in partial payment for WPHLI's
administrative costs, opportunities lost or deferred, past efforts
in developing
the System, and a license to use the System, together with the other
assistance
and advantages made available to Owner as stated herein.
The Initial Fee is
due
from Owner to WPHLI upon the schedule stated in Exhibit A. WPHLI will
return to
Owner the portion of
the Initial
Payment received from Owner with Owner's
executed copy of this
Agreement if WPHLI does not accept this Agreement as set
forth herein within thirty days of receiving Owner's executed
Agreement and the
required portion of the Initial Payment.
7.2.
ASSESSMENT
FEE. In consideration for the licenses granted herein,
WPHLI's administrative
and lost opportunity
costs, WPHLI's costs
and risks in
developing the System, and the assistance specified herein, Owner
will pay WPHLI
an "Assessment
Fee" of $100,000
each calendar
year. The Assessment Fee is
payable as follows: At
the earlier of WPHLI's
Annual Summer
Conference or the
fifteenth day of June of each year, Owner shall deliver to WPHLI four
checks in
13
_______
_______
Owner WPHLI
<PAGE>
the amount of $25,000
each, dated June 15,
July 15, and September
15, of that
year, and February 15 of the succeeding year. These amounts are subject to
the
CPI inflation
adjustment
of Section 11.6. The checks shall contain no
restrictive
endorsements other
than being post-dated.
WPHLI shall not present
same for payment until their stated dates. Owner shall insure that these
checks
will be paid upon their being presented for payment upon their face
dates. Upon
three months advance written notice to Owner, WPHLI may elect to
replace Owner's
duty to pay WPHLI an annual Assessment Fee of $100,000 with an Owner's
duty to
pay WPHLI a License Fee of five percent of Owner's Revenues upon schedules and
terms to be stated in the then-current Governing Documents. Further, WPHLI may
impose other reasonable special assessments based on a
recommendation from
the
Board of Governors.
7.3.
LETTER OF CREDIT.
WPHLI and other League
owners depend upon
Owner's
performance of Owner's
promises hereunder.
A League owner's
failure to comply
with the owner's
promises to WPHLI and other League owners subjects WPHLI and
other league
owners to substantial expenses. As continuing security for
satisfaction of
Owner's obligations,
Owner will establish and continually
maintain an irrevocable non-expiring (automatically renewing) letter of
credit
upon terms stated in the Governing Documents to secure Owner's full
performance
of Owner's duties
under this Agreement
at a federally
chartered bank ("Bank")
acceptable to WPHLI
upon terms acceptable
to WPHLI in the amount
of $100,000
(the "Letter of Credit") pursuant to the System's
then-current
standard such
agreement contained in the Governing Documents as it may be changed
from time to
time. These terms may
include, without
limitation,
that the Letter of
Credit
shall automatically perpetually renew until after Bank has given at
least ninety
days prior
written notice to WPHLI that the Letter of Credit is to not be
renewed. WPHLI has discretion to make withdrawals from the Letter
of Credit from
time to time (with the deemed consent of Owner) if and when
WPHLI informs Bank
that Owner or Owner's Team is indebted to WPHLI or that WPHLI
intends to pay any
debt from Owner to a third party which Owner has failed to pay. If
WPHLI deems
itself insecure, WPHLI may, in WPHLI's discretion, require Owner to
increase the
Letter of Credit up to $250,000. If Owner's Arena Contract or other
agreements
related to operation of Owner's business require one or more letters of
credit
in favor of the landlord or other entities, Owner will always
comply with same.
7.4.
TRAINING AND
ASSISTANCE.
WPHLI will provide the
instructional
and
training materials used in the initial training program to Owner
without charge.
However, Owner is
always responsible for all of Owner's and Owner's personnel's
own costs, including
all Personal Expenses, for any training, assistance,
seminars, meetings, conferences, etc. WPHLI's additional training
and additional
assistance (after initial opening assistance), is at Owner's
expense, namely, at
WPHLI's then current
published rates, minimum charges, expenses, and both
Owner's and WPHLI's
Personal Expenses.
These rates,
charges and expenses
are
subject to change via
amendments to the Governing Documents. The Training and
other events will occur at WPHLI's headquarters or where designated
by WPHLI.
7.5.
OFFICIATING
GAMES. OFFICIATE GAMES. WPHLI shall provide League
officials to officiate at scheduled regular season League games of
Owner's Team
as specified in the
Governing Documents at
WPHLI's cost.
WPHLI shall
provide
League officials to officiate at scheduled preseason, post-season and all other
scheduled League games
which are not regular season games, at Owner's cost. Any
increase in WPHLI's cost of providing officials from the effective date
of this
Agreement forward
shall be reimbursed to WPHLI by League
owners on a pro rata
basis as determined by the Governing Documents.
14
_______
_______
Owner WPHLI
<PAGE>
7.6.
ADVERTISING.
7.6.1. LOCAL
ADVERTISING.
Owner may spend as
much money advertising
Owner's Home Team and the League as Owner desires, except that Owner must spend
at least three percent of Owner's Revenue per Owner's prior fiscal
year on such
advertising in Owner's
Protected Territory as set forth in this
Agreement and
the Governing Documents. Promotional discounts,
coupon reductions and
the like
are not counted as an advertising expenditure. Owner's advertising
is subject to
the Governing
Documents restrictions
which may include,
without limitation,
requirements that Owner clearly identify that Owner's promotions,
prices, etc.,
are only for Owner's Team if this is true; having Owner's advertising created
and placed through a WPHLI owned or approved media agency (in such
event, WPHLI
may seek and retain any commission); to advertise and charge prices
within the
League's pricing
policies (which may only be effected by a formal written
statement issued by
WPHLI's President),
being restricted to Media primarily
directed to Owner's
Protected Territory
and exclusively using
the location on
the League's System
internet web site
allocated by WPHLI;
and obtaining WPHLI
approval of
sponsors to Owner and no other web site or
internet advertising
except as approved by WPHLI in writing.
7.6.2. ADVERTISING
ASSOCIATIONS.
WPHLI
may create one or more
advertising cooperatives, corporations or groups (each an
"Association") to pool
the advertising monies
and efforts of WPHLI and/or owners. Owner's payments to
an authorized
Association shall be
credited against Owner's local advertising
requirement, but do
not reduce Owner's Advertising Cost duties. WPHLI shall, in
its sole discretion, designate the area covered by any Association
(for example,
Texas, to share in TEXAS MONTHLY advertising if Texas co-op members
so choose).
Each System team is
entitled to one vote in each Association of which it is a
member, provided it
complies with that Association's rules. WPHLI may structure
Associations to grant WPHLI a veto over expenditures, permit WPHLI to grant any
Owner an exemption for any length of time from the requirements of
membership in
and/or the obligation to contribute fully to any Association,
and require their
governing documents to include such restrictions as WPHLI deems
desirable. Owner
shall join such
Associations, if and
when established by WPHLI, enter into all
governing Association
documents and fully perform all Association duties,
including paying
Owner's pro rata share of all costs,
expenses, and outlays
limited to a maximum two percent of Owner's Revenue per Owner's fiscal year.
WPHLI may require
Owner or any
Association
to create and place its local or
Association
advertising through a
WPHLI owned or approved media agency and, in
such event,
WPHLI may seek and
retain the commission paid by the agency or
advertising's seller.
7.6.3. ADVERTISING
FUND. WPHLI may, by ninety days prior written
notice, create an
Advertising
Fund, in which event; Owner will pay WPHLI an
"Advertising
Contribution" for
Advertising
Costs of up to three
percent of
Owner's Revenue per
Owner's fiscal year to WPHLI. "Advertising Costs" include
the cost of: precursor
activities such as surveys, design, layout, legal and
administration
expenses; service
mark, trademark and
trade dress development,
clearance,
registration,
maintenance and
protection;
creating, developing,
preparing and testing
advertising
and promotional materials, marketing and
public relations personnel or agencies; distribution and Media
placement; taxes;
and related expenses.
A portion of these amounts may be reimbursements to WPHLI
due to its internal and external expenses of providing same. WPHLI
reserves the
right to use Advertising Contributions to fund advertising co-ops
or advertising
in national Media.
WPHLI may charge fees
and expenses against
the Advertising
Fund if it uses an inside or related agency to create and place advertising.
Selection of advertisements, Media and locale for Media
placement is at WPHLI's
15
_______
_______
Owner WPHLI
<PAGE>
sole direction. No
advertising program can equally benefit all Owners. Nothing
herein requires allocation of advertising costs or benefits on a
pro-rata basis,
proportional basis, or otherwise. Owner is not entitled to any
specific benefit
from its Advertising
Contributions.
Owner's failure to derive any specific
benefit from the
Advertising
Contributions is not
cause for Owner reducing or
ceasing the same.
Monies remaining in
any Advertising
Costs accounts will
be
carried forward unless WPHLI elects to end any such account in
which event WPHLI
may elect to either
refund unused money to then current owners who are in
compliance with all
agreements
with WPHLI or spend it on future
advertising
costs. Advertising
Contributions
are not Owner
investments
or assets; the
Advertising Fund is
not a trust fund;
WPHLI owes no fiduciary or any other
duties concerning
same except as expressly stated in this subsection. No
interest accumulates on unused portions thereof in favor of
Owner.
7.7.
TRANSFER FEE. As a condition of WPHLI granting its consent to any
Transfer, Owner shall reimburse WPHLI for WPHLI's costs and
expenses, including,
without limitation,
legal and accounting
fees, associated with the proposed
Transfer. Transfers
of more than a
cumulative
ten percent or more of
Owner's
outstanding
equity within
any twelve month period or which, alone or
cumulatively, effect a
change in control of Owner relative to Owner's original
principal controlling
entity are conditioned upon payment to WPHLI of a
"Transfer Fee" equal to twenty-five percent of WPHLI's then current
Initial Fee
charged to new System owners.
7.8.
REVENUE. "Revenue" is all monies and
benefits received or receivable
due to any business
by or for Owner (which term for the purposes of this
paragraph includes any
subsidiary or
affiliate of Owner or any other entity in
which Owner has a legal and beneficial interest) or Owner's Associated Persons
in connection with or due to any part of the System, or Owner's
Team. Revenue is
determined on a cash basis. Money or benefits received by
Owner in exchange for
prepayments, coupons
or the like issued by Owner are Revenue. Revenue includes,
without limitation,
revenue
from all ticket sales for games (including
exhibition, regular
season and playoff games, whether against other WPHLI teams
or otherwise),
television, radio and
other broadcast revenue, revenue from all
forms of advertising,
sponsors, revenue from
sales of foods, beverages, other
goods and services
related to
Owner's Team or during games by Owner's Team
(including Owner's
revenues from any sales of liquor, beer, wine, tobacco and
the like if applicable), whether in the form of cash,
charge or otherwise,
all
transactions for goods, services or intangibles sold, leased, used,
delivered or
rendered at, through or related to the System or Owner's Team via
cash, credit,
barter or otherwise, on or off premises or using in any way any part of
the
System's Marks, Products, Proprietary Information or other part or item
of the
System, inside
or outside of Protected Territory, business interruption
insurance payments and
any other related benefits. In the case of any non-cash
consideration received
by Owner, Revenue
means the fair market
value of such
consideration. Revenue
does not include
sales taxes and any
other taxes which
Owner separately states, collects from customers,
pays to any federal,
state,
county, municipal
or other local taxing authority and is not entitled to
recover, and discounts
which WPHLI may in its sole discretion permit from time
to time. Cash refunds
made within the time periods and in compliance with the
Governing Documents' procedures shall be deducted from Revenue.
Refunds paid not
in compliance with the Governing Documents' procedures shall not be deducted.
Any money or benefit received by Owner or its Associated Persons as a
consequence of or
attributable
to any activity which is in breach of this
Agreement is deemed
Revenue, without limiting WPHLI's remedies therefore.
Revenue begins to
accumulate
immediately
and is not delayed
until the Team's
16
_______
_______
Owner WPHLI
<PAGE>
opening game.
Credit transactions (transactions where not all of the agreed
payment is
received at the time of delivery) are deemed complete when the
transaction giving rise to the extension of credit occurs.
7.9.
PAYMENT TERMS. The payment due dates for any monies due WPHLI
for
Assessment Fees,
Transfer Fees, Advertising Contributions, WPHLI's goods,
services or
otherwise are as set forth in this
Agreement and the Governing
Documents. If no other
date is agreed in writing, payment for goods, services
and intangibles
is due twenty days
after the invoice
date. Payments
must be
accompanied by
such fully and accurately completed standard forms, and
physically received at
WPHLI's Headquarters
no later than five o'clock p.m. on
the date due or be
received there in U.S.
dollars by mail
within three days
thereafter, postmarked on or before the date due and be accompanied
by such full
and accurately
completed standard forms, receipts, and other documents as
prescribed in the Governing Documents for a transaction of that
type. Failure to
properly and timely
deliver any payment due WPHLI, whether due under this
Agreement or any other
agreement or
obligation, is a
material breach of
this
Agreement. Owner is
absolutely
required to make full
payment to WPHLI exactly
when due in all
instances without
setoffs due to amounts due from WPHLI and
without withholding
any amount due to any alleged breach by WPHLI. All past due
amounts bear
interest at
eighteen percent per annum, or the highest rate
permitted by law, whichever is less, from the day due until paid.
Entitlement to
interest is in addition to WPHLI's other rights and remedies.
If Owner delivers
a check which is returned due to insufficient funds or is otherwise not paid,
WPHLI may additionally
assess a service
charge at the highest amount permitted
by law. Upon Owner's
failure to punctually
pay any obligation due to WPHLI,
WPHLI may accelerate that and any other obligations of Owner to WPHLI,
whether
under this Agreement
or any other
agreement, making any
such full
underlying
obligations
immediately due and
payable without notice of intent to accelerate
or notice of acceleration. The terms of any transactions between
WPHLI and Owner
shall be governed by this Agreement and the Governing Documents as it may be
changed from time to time, except to the extent that the parties
may later agree
otherwise in writing. The terms of all sales from WPHLI are fully
prepaid F.O.B.
point of shipment unless otherwise agreed in writing. WPHLI may require payment
in advance C.O.D.
WPHLI may implement a program for direct, automatic or
otherwise, electronic payment from Owner's primary operating
accounts of amounts
invoiced by WPHLI to Owner. In such event, WPHLI shall only invoice
amounts owed
by Owner and Owner
will always
fully cooperate with the program including
executing the System's
then-current uniform applicable agreements and financial
institution agreements, complying with same, and maintaining
sufficient funds in
the accounts to pay such invoices as they come due. Owner will
reimburse WPHLI
for all taxes and levies due on transactions with Owner except for taxes
based
on WPHLI's net income.
8. RESTRICTIONS
8.1.
BUSINESS. The parties intend by this Agreement to establish the
relationship of licensor and licensee, each as an independent
contractor. It is
not the intention
of either party to
establish a fiduciary
relationship,
to
undertake a joint
venture, to make Owner in any sense an agent, employee,
affiliate, associate
or partner of WPHLI or to confer on Owner any authority to
act in the name of or on behalf of WPHLI. Day-to-day conduct of
Owner's Team and
performance of Owner's employees is controlled solely by Owner and
not by WPHLI.
Owner's Team must be on the ice and ready to play according to the Schedule set
in the Governing Documents each year, and the Home Arena must be
fully available
for games according to
the Schedule set in the Governing Documents each year,
and be fully staffed
by players,
management
and staff who conform
to WPHLI's
performance,
cleanliness and
attire standards, all as prescribed in the
17
_______
_______
Owner WPHLI
<PAGE>
Governing Documents.
Owner will
operate Owner's Team solely for the
purposes
permitted herein and
not enter into
agreements
that conflict with Owner's
obligations to WPHLI.
Owner will offer the
System's full line of
activities,
goods and services as prescribed in the Governing Documents. No other
activities, goods or
services, whether for
profit or not, shall
be offered or
sold by Owner's
Team, or, at the Home Arena during League games, or in
connection with any part of the System without WPHLI's prior written approval.
Owner shall limit its use of the System to operating Owner's Team. Non-league
play, and off-premises, internet, electronic and catalog-type sales are
prohibited unless authorized in writing by WPHLI. Owner's reputation for credit
worthiness is a
material part of the System. Owner will promptly pay all
obligations when due,
including,
without limitation, those to WPHLI, other
System owners, System
Associations,
employees,
agents, landlords, vendors,
suppliers, taxing
authorities,
applicable public or private authority, and any
third parties who have extended credit to Owner.
8.2.
STANDARDS. Owner shall
manage Owner's Team in accordance with Owner's
own business
judgment subject to the restrictions herein and the standards
prescribed by WPHLI.
Owner recognizes the
importance to WPHLI, to other System
owners and to the public, of maintaining the standards, qualities
and attributes
of products and services identified by the System.
Owner acknowledges
Owner's
responsibility to the
public and other
System owners to
maintain the System's
standards, that Owner
benefits from the standards and that the standards herein
and in the Governing
Documents are reasonable and necessary. Owner agrees to
maintain and adhere to the standards, procedures and policies set by
WPHLI. The
standards may now or in the future include, without limitation, requirements,
and restrictions
for: Owner's Team,
Home Arena; the public image designated by
WPHLI; Products and their use; use and protection of Proprietary
Information and
the Marks; services,
goods, signs,
intangibles, supplies;
computer hardware,
software and
communications;
marketing, operations,
uniforms, improvements,
governmental compliance, suppliers, agreements between
teams, ordering, paying,
selling, maintenance, repairs, alterations, replacement, hiring,
training, skill
standards,
bookkeeping, and all
other matters
related to
Owner's business.
Owner's operations
shall never create a
threat to public or employee health or
safety. Owner shall
immediately
cure such problems upon receipt of written
notice from WPHLI and shall comply with or timely and appropriately
contest any
health or safety order or requirement issued by a competent governmental
authority concerning same at Owner's sole expense. The Governing
Documents shall
be uniform for all
owners in each class of owners, it being understood that
WPHLI may establish
and change
classes of owners,
though not more often
that
once a year. The Governing Documents are ineffective with respect
to the parties
to the extent the Governing Documents contradict this Agreement. Subject to
these limitations, the Governing Documents explain and supplement
this Agreement
and are binding on Owner as if included and incorporated herein. All written
additions and revisions to the Governing Documents by WPHLI become
a part of the
Governing Documents,
effective on receipt by Owner or
electronic
posting by
WPHLI on a League website designated for the purpose. WPHLI may change any part
or parts of the System and the Governing Documents, in WPHLI's absolute
discretion,
including,
without limitation,
its System, Marks, Products,
Proprietary Information, fees, expenses, rates, charges and costs, by
amending
the Governing Documents, except that amendments to the Governing
Documents which
are not uniform for Owner's class of WPHLI owners or which are
contrary to this
Agreement are ineffective as between Owner and WPHLI. Owner shall
adopt the same
at Owner's
sole expense. Owner agrees to use and abide by the Governing
Documents, and to not
copy or permit them to be copied at any time, without the
prior written approval of WPHLI.
18
_______
_______
Owner WPHLI
<PAGE>
8.3.
SUPPLIES. Owner shall only acquire, use, offer to sell, and sell
Products, equipment,
goods, and services
that have been approved in writing by
WPHLI as meeting WPHLI's standards, maintain each in the appropriate
manner and
in sufficient supply in, and only deal with suppliers of same who
demonstrate to
WPHLI's continuing
satisfaction an
ability to meet WPHLI's standards and have
been approved in writing by WPHLI and not thereafter disapproved,
all as stated
by the Governing Documents. Approval criteria may include,
without
limitation,
quality controls,
capacity
to supply System needs, warranties, design,
appearance,
reputation, finances,
experience
and the System's
need for each
approved supplier to be reasonably assured of doing sufficient
business with the
System. Owner
shall submit a written request to WPHLI if Owner desires to
purchase unapproved goods or services or deal with unapproved
suppliers.
WPHLI
may condition approval
on its representatives
being permitted to inspect the
supplier's goods, services and facilities, and that free samples
being delivered
for inspection and testing. WPHLI may from time to time require
re-inspection of
the goods, services
and facilities
of any supplier and
revoke approval
upon
failure to meet any then current criteria. Nothing in the foregoing requires
WPHLI to approve any particular supplier, goods or services or to disclose
any
standards,
specifications,
or other information deemed by WPHLI to be
confidential. WPHLI
may refuse to approve an alternate supplier if, in WPHLI's
opinion, approval could adversely affect pricing or availability to
other owners
or WPHLI. WPHLI may
require Owner to perform substantial changes to come into
compliance with the System's then current standards. The System uses or may in
the future use, certain Products, equipment, fixtures, goods, services, and
methods which
WPHLI deems to be of value to the System. Because of the
importance of maintaining a competitive advantage, and maintaining uniformity
and reliability concerning certain methods, information,
goods, services,
etc.,
an exception to all other terms herein is that WPHLI may
designate any of the
same as being restricted, keep its specifications
secret, and require
Owner to
use and sell only such designated items and acquire the same only
from specific
sources designated
in the Governing Documents. WPHLI may pool purchases of
certain goods or services by WPHLI owners from one or more
designated
suppliers
("Supplier Pool").
Owner shall not
purchase goods or services subject to a
Supplier Pool from a
supplier who is not in the Supplier Pool until and unless
the supplier has been approved in writing by WPHLI. WPHLI may designate itself
as the sole source of any good or service. WPHLI (either alone or
in conjunction
with other WPHLI
affiliates)
may charge
fees to suppliers for the right to
participate in the
Supplier Pool, and may receive for WPHLI's own account
refunds, rebates and
similar incentives from suppliers and may distribute
portions of such monies to WPHLI owners.
8.4.
FINANCES AND RECORDS.
8.4.1. FINANCES.
Owner shall maintain
and employ in connection with
its business and operations under this Agreement sufficient net working capital
and net worth to fully perform Owner's obligations under this
Agreement. Uniform
such standards may be stated in the Governing Documents. Owner will deliver to
WPHLI's Headquarters
Owner's draft financial and business plan for Owner's Team
and its operations for
the following year (the "Plan"). The Plan shall project
all estimated
revenues and expenses for the next year and explain from
what
sources Owner expects to meet its expenses. WPHLI may either
approve the Plan as
submitted by Owner or work with Owner concerning such revisions as
may be agreed
upon by WPHLI and Owner, each acting reasonably. In the absence of agreement
concerning Owner's
Plan, the disagreement
will be resolved by this Agreement's
dispute resolution
process, the goal being a Plan which
fairly balances the
interests of Owner,
WPHLI, and the League's other owners, Players and fans and
19
_______
_______
Owner WPHLI
<PAGE>
recognizes that the League's several teams cooperate in the
integrated operation
of the League as a single collective enterprise. Balancing these interests may
produce a Plan which does not maximize Owner's finances to the detriment
of the
other stakeholders.
Owner shall operate
Owner's Team pursuant
to the approved
Plan. WPHLI's
approval of the Plan does not comprise any representation,
guarantee or promise by WPHLI concerning anything except that a required
act by
Owner has been
performed. Owner will
not permit any third
party to rely upon
WPHLI's approval of the Plan.
8.4.2. REPORTING.
Subject to such
uniform changes as may
be made in
the Governing
Documents, Owner shall
deliver complete and
accurate records to
WPHLI as follows: (a)
The regular reporting
period shall be one calendar month
or such other period
as stated in the
Governing Documents
(in any case,
the
"Period"). Within
fifteen days of the end of each Period, Owner shall submit to
WPHLI a correct and
complete statement of all Revenue for such Period on
the
reporting forms required in the Governing Documents (the "Period Report").
The
Period Report shall contain all information required thereby and be
certified as
correct by Owner. (b) Within twenty-five days of the end of
each Period, Owner
will submit to WPHLI a copy of Owner's operating statements for
such Period; and
(c) Within ninety days
after each fiscal year end, Owner shall submit to WPHLI
the following information as finally adjusted and reconciled after
the close and
review of Owner's books and records for the year, certified as correct by Owner
and, on a review engagement basis, by an independent certified
public accountant
retained by Owner:
balance sheet, income
statement and statement of source and
application of funds,
prepared in accordance with generally accepted accounting
principles applied on a basis consistent with prior fiscal years;
and such other
reports, tax returns, and information, including for Owner's Associated
Persons
or guarantors,
as WPHLI may from time
to time require.
If Owner understates
Owner's Revenues
or monies due to WPHLI for any Period by more than three
percent then Owner
shall immediately
pay the amount due and
WPHLI's cost of
discovering the error, including legal and accounting fees, and for
a full audit
of Owner's business by WPHLI's representatives for the prior,
immediate and next
fiscal annual periods. This is in addition to any other remedies
WPHLI may have.
8.4.3. RECORDS.
Owner will completely and accurately record all
business and create, use, keep and submit all records, and reports according to
the requirements
prescribed
in the Governing Documents. This may include,
without limitation,
upon WPHLI's
request, Owner using the System's uniform
accounting system
and making reports based thereon so WPHLI, in WPHLI's
discretion, can better
create and disseminate
summary information, evaluate
relative operating
performances,
and develop criteria to enable WPHLI to
formulate League plans and policies. WPHLI's accounting system shall be given
priority in use by Owner, but is not exclusive of any other
accounting
system
Owner may desire to use. WPHLI may require Owner to purchase and use certain
procedures, computer
software and hardware,
data transmission,
forms, record
keeping devices,
cash registers
equipped with
recorders and a locked-in grand
total unit, and to obtain same from single designated sources, for control and
uniformity. WPHLI may
disclose portions of any Owner's financial information in
support of WPHLI's efforts to add additional Owners to the System. Owner shall
permit WPHLI or
WPHLI's representatives to enter any premises of Owner and
inspect, sample,
copy, photograph, take and test any of Owner's premises,
Products, goods, services, items, books, files, drawers, storage
areas, records,
computer generated
records, electronic memory, bank statements, books of
account, tax returns,
file
