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HomeMy WebLinkAboutSharks Sports & Entertainment - Exclusivity Agreement (2019)EXCLUSIVE NEGOTIATING RIGHTS AGREEMENT This Exclusive Negotiating Rights Agreement ("Agreement") is entered into as of this day of rn 2019, by and between the City of Gilroy, a California municipal corporation ("City"), and S arks Sports & Entertainment LLC, a Delaware limited liability company ("Sharks"). The City and the Sharks shall collectively be referred to herein as the "Parties" and individually as a "Party." RECITALS A. The City is the owner of certain real property located at 5925 Monterey Frontage Road, in the City of Gilroy, County of Santa Clara, State of California, and commonly known as the "Gilroy Sports Park." B. The City is considering developing an indoor entertainment and sports complex ("Project") on a portion of the Gilroy Sports Park which is more particularly shown on Exhibit A attached hereto ("Project Site"). C. The Sharks, through its subsidiary Sharks Ice, LLC, a Delaware limited liability company, currently operates a 4-rink ice facility known as "Solar4America Ice at San Jose" which is located at 1500 South Tenth Street, San Jose, California, 95112. D. The City has selected the Sharks to negotiate the terms for the operation of the Project. E. The purpose of this Agreement is to establish procedures and standards for the negotiation by the City and the Sharks of an operating agreement ("OA") pursuant to which the Sharks will conduct specified operational activities related to the Project Site. As more fully set forth in Section 3.1, the Sharks acknowledge and agree that this Agreement in itself does not grant the Sharks the right to operate the Project, nor does it obligate the City to any activities or costs to develop the Project Site. AGREEMENT NOW, THEREFORE, in consideration of the mutual covenants and promises contained herein and for other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the City and the Sharks mutually agree as follows: ARTICLE 1. EXCLUSIVE NEGOTIATIONS RIGHT Section 1.1 Negotiations. The City and the Sharks shall negotiate diligently during the Negotiating Period described in Section 1.2, the terms of an OA for the operation of the Project on the Project Site. Among the issues to be addressed in the negotiations are the City's -1- development schedule for the Project, marketing and management of the Project, design and aesthetic considerations of the Project, and operational obligations with respect to the Project. Section 1.2 Negotiating Period. The negotiating period ("Negotiating Period") under this Agreement shall be three hundred sixty-five (365) days, commencing on the date of this Agreement, unless the Parties extend the Negotiating Period by written amendment to this Agreement. If an OA has not been executed by the City and the Sharks by the expiration of the Negotiating Period, then this Agreement shall terminate and neither Party shall have any further rights or obligations under this Agreement except as set forth in Section 3.6 below. If an OA is executed by the City and the Sharks then, upon such execution, this Agreement shall terminate, and all rights and obligations of the Parties shall be as set forth in the executed OA. Section 1.3 Exclusive Negotiations. During the Negotiating Period, (A) the Sharks (and/or their affiliates) shall not negotiate with any entity, other than the City, regarding the development and/or operation any project that would be located in Santa Clara County south of Solar4America Ice at San Jose and be similar to the Project contemplated by this Agreement, or solicit or entertain bids or proposals in connection with such a project, and (B) the City shall not negotiate with any entity, other than the Sharks, regarding the operation of the Project, or solicit or entertain bids or proposals to do so. Section 1.4 Costs and Expenses. Each Party acknowledges that it may expend substantial resources in the negotiation of the OA and the performance of the tasks in this Agreement. Each Party shall be responsible for its own costs and expenses in connection with any activities and negotiations undertaken in connection with this Agreement, and the performance of each Party's obligations under this Agreement, subject to any provisions in an executed OA that provide for reimbursement of such costs. Section 1.5 Identification of Sharks Representative. The Sharks' representatives to negotiate the OA with the City are: Jon Gustafson (Vice President of the Sharks) and Lucy Lofrumento of LMA Law, LLP (legal counsel of the Sharks). ARTICLE 2. NEGOTIATION TASKS Section 2.1 Overview. To facilitate negotiation of the OA, the Parties shall use reasonable efforts to accomplish the tasks set forth in this Article 2 in a timeframe that will support negotiation and execution of a mutually acceptable OA prior to the expiration of the Negotiating Period. Within the first sixty (60) days after the mutual execution of this Agreement, the Parties will agree upon a work plan for tasks to be accomplished. Section 2.2 Scope of Proiect. The Sharks have proposed to operate the Project on the Project Site. The Parties shall endeavor to agree on a scope of operational obligations specifying in sufficient detail each component of the operations necessary to operate the Project in a first-class manner. -2- Section 2.3 Schedule of Performance. The Parties shall endeavor to agree on a detailed schedule of performance for the Project to be included in the OA. Section 2.4 Financing and Cost of Proiect Operations. The Parties shall endeavor to agree on a financial proforma for the operation of the Project containing, among other matters, a detailed budget setting forth the costs of the tasks to be undertaken by the Sharks. Section 2.5 Organizational Documents. Prior to finalizing the OA, the Sharks anticipate creating a separate subsidiary to act as the operating entity for the Project. The Sharks will provide the City with the operating entity's organizational documents, as well as an organizational chart outlining key personnel roles and responsibilities. ARTICLE 3. GENERAL PROVISIONS Section 3.1 Limitation on Effect of Agreement. This Agreement shall not obligate either the City or the Sharks to enter into an OA or to enter into any particular OA. By execution of this Agreement, the City is not committing itself to or agreeing to undertake any development activities with respect to any property. Execution of this Agreement by the City is merely an agreement to conduct a period of exclusive negotiations in accordance with the terms hereof, reserving for subsequent City and City Council action the final discretion and approval regarding the execution of an OA and all proceedings and decisions in connection therewith. Any OA resulting from negotiations pursuant to this Agreement shall become effective only if and after such OA has been considered and approved by the City following applicable environmental clearance as required by the California Environmental Quality Act. Section 3.2 Notices. Formal notices, demands and communications between the City and the Sharks shall be sufficiently given if, and shall not be deemed given unless, dispatched by certified mail, postage prepaid, return receipt requested, sent by express delivery or overnight courier service, to the office of the parties shown as follows, or such other address as the parties may designate in writing from time to time: City: City of Gilroy 7351 Rosanna Street Gilroy, CA 95020 Attention: City Administrator Sharks: c/o Sharks Ice, LLC 1500 South Tenth Street San Jose, CA 95112 Attn: Jon Gustafson, Vice President -3- With a copy to: Lucy Lofrumento LMA Law, LLP One Almaden Blvd., Suite 700 San Jose, CA 95113 Such written notices, demands and communications shall be effective on the date shown on the delivery receipt as the date delivered or the date on which delivery was refused. Section 3.3 No Commissions. The City shall not be liable for any real estate commissions or brokerage fees that may arise from this Agreement or any OA that may result from this Agreement. The City represents that it has engaged no broker, agent or finder in connection with this transaction, and the Sharks shall defend and hold the City harmless from any claims by any broker, agent or finder retained by the Sharks. The Sharks represent that it has engaged no broker, agent or finder in connection with this transaction. Section 3.4 Breach of Agreement. If either Party breaches the terms and conditions of this Agreement, the other Party may terminate this Agreement upon thirty (30) days' prior written notice to the non -breaching party. Following such termination, neither Party shall have any further right, remedy or obligation under this Agreement; provided, however, that the Sharks' indemnification obligation pursuant to Section 3.6 shall survive such termination. Neither Party shall have any liability to the other for monetary damages for any breach of this Agreement. No member, official, officer, or employee of the City shall be personally liable to the Sharks, or any successor in interest, in the event of any default or breach by the City or for any amount which may become due to the Sharks or to its successor, or on any obligations under the terms of this Agreement. Section 3.5 Shark's Obligation to Indemnifv Citv. Except for the gross negligence or willful misconduct of the City, the Sharks undertake and agree to defend, indemnify, and hold harmless the City from and against all suits and causes of action, claims, losses, demands and expenses, including, but not limited to, reasonable attorneys' fees and costs of litigation, the cost to remove any lien or encumbrance on the Project Site, damage or liability of any nature whatsoever, arising directly or indirectly, in whole or in part, are caused by, arise in connection with, result from, relate to, or are alleged to be caused by, arise in connection with performance of this Agreement on the part of the Sharks or any contractor or subcontractor of the Sharks. The Sharks shall pay immediately upon the City's demand any amounts owing under this indemnity. The duty of the Sharks to indemnify includes the duty to defend the City, at the City's choosing, to pay the City's costs of its defense in any court action, administrative action, or other proceeding brought by any third Party arising in any manner by reason of or incident to the performance of this Agreement on the part of the Sharks or any contractor or subcontractor of the Sharks. The City shall have the right to reasonably approve any attorneys retained by the Sharks to defend the City pursuant to this Section 3.6 and shall have the right to reasonably approve any settlement or compromise. The Sharks' duty to indemnify the City shall survive the termination of this Agreement. M Section 3.6 Assignment. The Sharks shall not assign its rights or responsibilities under this Agreement, in whole or in part, except with the written consent of the City. Any attempted assignment without such prior written consent shall be invalid and void. Section 3.7 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California. Section 3.8 No Third -Party Beneficiarv. This Agreement shall not be construed or deemed to be an agreement for the benefit of any third party or parties, and no third party or parties will have any claim or right of action hereunder for any cause whatsoever. Section 3.9 Entire Agreement. This Agreement constitutes the entire agreement of the parties regarding the subject matters of this Agreement. Section 3.10 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same agreement. [Signatures Appear on Following Page] -5- IN WITNESS WHEREOF, this Agreement has been executed, in duplicate, by the Parties on the date first above written. SHARKS: SHARKS SPORTS & ENTERTAINMENT LLC By: Name: Tor✓ 614 r t Ffa/^- Title: VlLC Date: S/zt/19 CITY: CITY OF GILROY By: - Name: Gabriel A. Gonzalez � Fc_ Title: City Administrator Date: 4;—Aw ATT erk APP377! City Attorney -6- EXHIBIT A POSSIBLE PROJECT SITE OFFICE OF COUNTY ASSESSOR — SAN TA CLARA C 0 U N T Y . CAL I F 0 R N IA 0 11 P, BOOT AM I-OMAS 5�8D OF RANCH 808 21 BOOK ST i S ANIMAS RANCHO PART ITT ON AM-COWIGF-MF --LUCHESSA ---AvEN E NL- _LMESSISA AVE u IiI.AS RD.) 4% �Tro'y Sports Park/PLOT a S _AC Possible Project Site 0 /8�41 1" = 300' PTN. 6 2 OSAC (C I T Y OF CI L R 0 Y) 1.42 AC, I NET 9 PTN. PCL I " yP TN. 26.262 Ar- 0 PTN. I 5. C �70 AC. MET (CITY OF GILROY) --------------------goe s.--------- 14. boy a PTN. PCL I 1�s gag 31.53 AC, NET (PLAN.) 6.20 AC. NET PjK Q-09 iNPTN. PCL I SMET 20.731 AC.PLAN. "Sif 0 N (C I T Y GJ L R Y) , L5 .M.J- — -- —, --HE y / ". — I _ - -- ­ .. MVE 3421AC TOTA,� v P.M. 744-M-39 P'- S. L., �— @ 'T`C R. O. S. 5 3 0 /at 7-Rd Yes 2qp-3010 A-7