FINANCE AND ECONOMIC DEVELOPMENT COMMITTEE REPORT OCTOBER 2012

Transcription

1 FINANCE AND ECONOMIC 135 COMITÉ DES FINANCES ET DU COMPLETED AGREEMENTS (n file with the City Clerk and Slicitr as f ) Prject OSEG Members Descriptin f Prject Prvisins Applicable t Certain Cmpnents Legal Structure The Waterfall Pst Waterfall Cnditins f Clsing Maximum Liability Events f Default Terminatin Fr Cnvenience Rights Limits n Dispsitins Encumbrances Other Prvisins Stadium Lease Term and Rent Certain Rights and Obligatins A This dcument is intended t be a summary f the material terms f Lansdwne Partnership Plan legal s, but des nt describe all terms f such legal agreements.

2 136 COMITÉ DES FINANCES ET DU Indemnificatin Redevelpment and Renvatin Events f Default Insurance and Damage t Stadium Other Prvisins Retail Lease Term and Rent Certain Rights and Obligatins Indemnificatin Cnstructin, Redevelpment and Renvatin Events f Default Other Terminatins Limits n Mrtgaging Insurance and Destructin f Retail Cmpnent Other Prvisins Prject Management Master Limited Partnership Cntributins by Parties Terminatin Dispsitins and Other Issues Unanimus Sharehlder Frmatin Management f the Crpratin Event f Default

3 137 COMITÉ DES FINANCES ET DU Cnflict f Interest Transfer f Shares Other Cmpnent Limited Partnership s Frmatin f Limited Partnership Receipts, Payments, and Distributins Remedies n Default Gvernance Issues Cmpnent Limited Partnership Sharehlder s Frmatin Management f the Crpratin Cnflict f Interest Transfer f Shares Other AGREEMENTS FOR CLOSING Cnstructin Prcedures Parking Structure Reciprcal Easements Exceptins t General Reciprcal Easements Event and Nn-Event Day Parking Right t Cnstruct and Alter Shared Facilities Maintenance and Repair f the Shared Facilities Revenue Sharing related t Parking Operatin

4 138 COMITÉ DES FINANCES ET DU Cst Sharing fr Shared Facilities Cst Sharing fr Parking Operatin Csts Parking Structure Warranty Management Owners Cmmittee Insurance Matters Events f Default Dispsitins Other Prvisins Stadium Cnstructin License Term Limits n License Infrastructure Upgrades Other Prvisins Master Site Cmprehensive Cnstructin Cntract Urban Park Prgramming Gverning Principles Prgramming City Events Stadium Partnership Events Additinal Reciprcal s Easements General Prvisins

5 139 COMITÉ DES FINANCES ET DU Office Lease Membership s OSEG Right f First Offer (s) between CFL and the City POST-CLOSING AGREEMENTS Urban Park Prperty Management Parking Management CFL Partnership and OHL Partnership Sublease s COMPLETED AGREEMENTS First Cst Sharing Secnd Cst Sharing Optin Respecting Assignment f Cntracts

6 140 COMITÉ DES FINANCES ET DU Descriptin B Prject The Prject is the primary agreement between the City ( City ) and the Ottawa Sprts and Entertainment Grup ( OSEG ), setting ut the financial and ther fundamental elements f the relatinship between the parties in respect f the prject and prviding a framewrk fr many f the belw-described agreements. It is anticipated t be entered int by the City, OSEG and OSEG members. The fllwing is a summary f the key terms f the agreement. Lansgreen Investments Inc., in respect f which descendants f Irving and Gilbert Greenberg are the principals Shenkman Lansdwne Ltd., in respect f which descendants f Harld Shenkman are the principals Trinity Lansdwne Ltd., in respect f which Jhn Ruddy is the principal Keljay Ltd., in respect f which Jeff Hunt is the principal Friarmere Hldings Inc., in respect f which Jhn Pugh is the principal The agreement describes at a high level the requirements fr each f the elements f the prject, being the stadium imprvements including the parking assciated therewith, the urban park (including the Aberdeen Pavilin, the Hrticulture Building, Aberdeen Square and the great prch area), the residential cmpnent including the parking assciated therewith, the retail cmpnent including the parking assciated therewith, the ffice cmpnent including the parking assciated therewith, the CFL sprts franchise and the OHL sprts franchise. Althugh the lease f specific parking areas n the site will be included in each f the Stadium Lease, the Retail Lease and the Office Lease, the undergrund prtin f such parking areas and the undergrund parking areas fr the residential cmpnent will be cntained within ne physical B In the event f any incnsistency between the descriptin f the material business terms in this dcument and thse in full versins f the Lansdwne Partnership Plan legal agreements n file with the City Clerk and Slicitr, the terms f the legal s will prevail.

7 141 COMITÉ DES FINANCES ET DU structure. Descriptin B The design guiding principles fr the Lansdwne site as cntained in a dcument headed Guiding Principles fr the Lansdwne Transfrmatin dated January 2010 (as apprved by City Cuncil) will guide the master site plan, the design f the urban park, and the plans and specificatins relating t the stadium, retail, ffice, residential, parking and urban park elements f the prject. the master site plan fr the Lansdwne site, ther than the urban park, has been develped by OSEG, subject t the City s apprval the site plan apprval prcess was implemented in tw stages: the first stage, being the verall site plan, was apprved by Cuncil n Nvember 22, 2010 the secnd stage, being the final site plan apprval, was delegated t the City s General Manager, Planning and Grwth Management and was apprved by the Lansdwne Design Review Panel the plans and specificatins fr the urban park were develped frm the design cmpetitin cmpleted by the City the requirement fr OSEG r any f the cmpnent partnerships t pst security in favur f the City under the Site Plan has been replaced by making a default under such agreement a crss-default under the Prject a site plan agreement will be entered int between the City, the retail cmpnent limited partnership, the stadium limited partnership and OSEG, as guarantr The City will assume all respnsibility fr any remediatin resulting frm existing envirnmental cnditins (including, during the initial term f the Stadium Lease, the csts f mnitring cntainment f hazardus substances n the stadium lands and imprvements theren, maintenance csts fr cntainment rather than remval f certain cntaminatin at the stadium prir t imprvement theref and future csts resulting frm the decisin t cntain hazardus cntaminatin rather than t remediate it) and fr csts resulting frm archaelgical cnditins at the Lansdwne site, as well as defined delay csts resulting therefrm. The prject will be cnstructed in stages, permitting certain cmpnents theref (including the urban park) t be used as staging space fr the cnstructin f ther cmpnents.

8 142 COMITÉ DES FINANCES ET DU Descriptin B Stadium Cmpnent and Parking The maximum hard and sft csts t the City relating t the stadium cmpnent and the prtin f the parking structure assciated therewith are anticipated t be $135.8 millin, subject t thse inclusins and exclusins described in the Prject. The members f OSEG guarantee the cmpletin f the stadium cmpnent and the prtin f the parking structure assciated therewith and are respnsible fr any cst verruns if the ttal hard and sft csts t the City theref are greater than $135.8 millin (excluding csts f the City nt included in the maximum cst f $135.8 millin). The guarantee is subject t the City s payment f the $135.8 millin maximum fr hard and sft csts relating t the stadium cmpnent and the prtin f the parking structure assciated therewith. A frm f guarantee is appended t the Prject. As further discussed belw in respect f the Stadium Lease and the Parking Structure Reciprcal, reserve funds will be established fr lifecycle replacements and majr capital repairs fr each f the stadium and the prtin f the parking structure assciated therewith. OSEG will fund any shrtfalls in the reserve funds nt funded thrugh the waterfall. The Stadium Lease will cntain a restrictin prhibiting trade shws that will cmpete with the Expsitin Hall Facility. Retail Cmpnent The anticipated retail cmpnent will cnsist f a retail area and parcels within the stadium cmpnent and ffice cmpnent and will include the parking assciated therewith. The retail cmpnent limited partnership will be respnsible fr cnstructing and maintaining a passive pen space as set ut in minutes f settlement reached with Hlmwd Grup and the Old Ottawa Suth and Glebe Cmmunity Assciatins.

9 143 COMITÉ DES FINANCES ET DU Office Cmpnent Descriptin B Parking Areas The City has marketed leasehld air parcels fr ffice develpment, tgether with assciated parking. The ffice develper will reimburse the City fr allcated develpment csts in the amunt f $3,490,000, including the crdinatin fee described belw under the heading Prject Management. Parking areas n the site will include bth surface parking and undergrund parking, the latter lcated within ne physical structure. Urban Park The City will bear the csts f imprving the urban park, including the Aberdeen Pavilin and the Hrticulture Building, prvided that OSEG will cntribute up t $2.5 millin in respect f hard csts f the urban park (such amunt t be in satisfactin f any cash-in-lieu f a park dedicatin fr the Lansdwne site). Parking may be permitted in the urban park fr large stadium events and in respect f certain ther events between December 1 and March 31, subject t Cuncil s apprval and selectin f an urban park develpment plan which accmmdates parking and includes hard surface marshalling areas and subject t urban park events. The City is t maintain the Urban Park t a reasnable standard. Leasing f the Hrticulture Building by the City is subject t certain requirements, including: the Hrticulture Building retail space will nt be ffered fr lease until the earlier f: (a) cmmitments t sublease are received fr 80% f the retail cmpnent limited partnership retail space; r (b) ne year fllwing the perating term cmmencement date f the Retail Lease maximum retail space in the Hrticulture Building is 6000 sq. ft. n 2 flrs

10 144 COMITÉ DES FINANCES ET DU Descriptin B there is nt t be any restaurants established in the pavilin prtin f the building (excluding a cmmunity r catering use kitchen) minimum f $35/sq. ft. net effective rent, nt subsidized by the City, prvided that the City may request waiver f this prvisins n a case-by-case basis, which waiver will nt be unreasnably withheld uses must be cnsistent with the image/reputatin f retail cntained in the retail cmpnent limited partnership retail area Residential Cmpnent The City has marketed freehld residential air parcels, tgether with assciated parking. The residential develper will reimburse the City fr allcated develpment csts in the amunt f up t $19,135,000, including the crdinatin fee described belw under the heading Prject Management. Sprts Franchises As further described belw in the sectin entitled Master Limited Partnership, OSEG will transfer its right, title and interest in the prject t the master limited partnership at clsing, including its interest in limited partnerships which wn the franchise/membership f the CFL and OHL teams. The parties have agreed that the prtin f the purchase price allcated t the OHL team will be $10 millin, satisfied by a credit t OSEG s capital accunt in the master limited partnership f $5 millin and issuance f a prmissry nte in the amunt f $5 millin. The CFL and OHL teams must perate fr a minimum f eight years fllwing the cmmencement f the perating term f the Stadium Lease, unless the CFL r OHL, respectively, cease peratins. The prfessinal sccer franchise acquired by affiliates f OSEG members is nt included in the belw-described waterfall and will pay market rent fr use f the stadium. The City will have a right f first ffer (similar t that fr the CFL team and OHL team described belw) in the event f a relcatin f such sccer team utside f Ottawa.

11 145 COMITÉ DES FINANCES ET DU Transprtatin Impact Matters Descriptin B Naming The Prject (and each f the Stadium Lease, Retail Lease and Office Lease) addresses the transprtatin impact matters required by City Cuncil in its apprval f the prject n June 28, Naming rights in respect f the retail, stadium and ffice are further described belw. OSEG shall have n rights in respect f the naming f the urban park, Aberdeen Square, the great prch area, the Aberdeen Pavilin r the Hrticulture Building and radways. Lansdwne Park will be used fr the urban park, including the Hrticulture Building, the great prch area, Aberdeen Square and the Aberdeen Pavilin. The gateway signage n the site shall als indicate the name Lansdwne Park (r anther name if determined by the City) in reference t the urban park. Each cmpnent may have its wn name and tw r mre cmpnents may share a cmmn name, subject t naming rights in respect f the retail, stadium and ffice that are further described belw. A master limited partnership will be established, f which the City and OSEG will be the limited partners and will hld an equal number f units. The general partner will be a crpratin f which OSEG will be the sle sharehlder. A limited partnership will be established fr each cmpnent f the prject, ther than the Residential and Office cmpnents. In respect f each cmpnent limited partnership: the limited partner will be the master limited partnership.

12 146 COMITÉ DES FINANCES ET DU Descriptin B the general partner will be a crpratin f which OSEG is the sle sharehlder, r a crpratin all f the shares f which are wned by OSEG r OSEG members. The structures f the master limited partnership and the cmpnent limited partnerships are further described belw under the headings Master Limited Partnership, Unanimus Sharehlder, Cmpnent Limited Partnership s and Cmpnent Limited Partnership Sharehlder s. The City has n day-t-day management rights r bligatins fr the cmpnent limited partnerships. OSEG is a general partnership established under Ontari law. Each f the OSEG members (as identified abve) will be a special purpse vehicle, meaning that it shall have n assets r liabilities ther than as related t the prject, and carries n n business ther than as cntemplated in the Prject r the related material agreements, but may hld cash r its equivalent, assets generating incme n a nn-recurse basis r bnds r similar passive investments in which a municipality culd invest. OSEG and its members will be required t cntribute at least $30 millin at r prir t clsing thrugh capital cntributins (cash r its equivalent) and/r letters f credit and/r expenditures in respect f the csts and expenses f the prject which are nt internal t OSEG (and specifically excluding the $5 millin prmissry nte fr the purchase f the Ottawa 67 s, described belw) ( Equity ). The $30 millin minimum Equity cntributin will be reduced n a straight-line amrtized basis ver a perid f 27 years, cmmencing upn the third anniversary f the cmmencement f the term f the Stadium Lease. If OSEG cntributes Equity in excess f the $30 millin minimum ( Additinal Equity ), it shall be entitled t the return f such Additinal Equity in accrdance with the waterfall.

13 147 COMITÉ DES FINANCES ET DU Descriptin B Prir t the return theref, OSEG will be entitled t a return n all Equity cntributed by it at the rate f 8% per annum (less any return earned n any part f such Equity which is cmprised f negtiable securities and excluding any Equity in the frm f a letter f credit, ther than any fees incurred in respect theref). The OSEG members will prvide a cmpletin guarantee pursuant t which: the OSEG members will jintly and severally guarantee the cntributin f amunts n accunt f the cst f the stadium and the stadium prtin f the parking structure if hard and sft csts relating theret exceed $135.8 millin including an agreed upn cntingency fr the stadium f $6.4 millin and a cntingency fr the related prtin f the parking structure f $3.6 millin where the actual cst f either the stadium r the related parking is less than the agreed allcated cst plus related cntingency, the differential may be added t the cntingency fr the ther f the stadium r related parking in determining whether and t the extent a guarantee is payable where the actual cst f bth the stadium and the related parking is less than the agreed allcated cst plus related cntingency, the unused cntingency may be applied t the cst f ther prtins f the parking structure any prtin f the cmpletin guarantee payable with respect t the parking structure will be treated as Additinal Equity any prtin f the cmpletin guarantee payable with respect t the stadium will be treated as Equity, but nt included in the $30 millin minimum Equity requirement The City will receive a credit fr City Deemed Equity f $23,750,000, being the fair market value f the retail cmpnent lands, excluding tenant imprvements under the Retail Lease, recalculated every five years using the same basis f calculatin as was initially emplyed. The City will receive a credit fr City Funding Equity, being: the lesser f the City s $135.8 millin maximum cst f the stadium cmpnent and assciated parking r the actual csts t the City f the stadium cmpnent including assciated parking (in each case excluding certain csts referred t abve and described in the Prject )

14 148 COMITÉ DES FINANCES ET DU less Descriptin B the maximum amunt f debenture financing available t the City fr the prject, as determined n July 31, 2012, based n the amunt f debt that culd be supprted by seventy-five percent f the municipal prtin f anticipated tax revenue t be generated by the prject cmpnents ther than the residential cmpnent and $3.8 millin annually, being the agreed upn amunt fr the expenses that wuld therwise be payable by the City in respect f the stadium during the perating term f the Stadium Lease, if the stadium was nt imprved and the Stadium Lease nt entered int as cntemplated as part f the prject the net amunt received by the City as a result f the sale f the residential air rights, being $7,716,879 The net cash flw will be distributed as fllws: first, payments n accunt f the reserve fr the stadium cmpnent including the prtin f the parking structure assciated therewith, n a cumulative, but nt cmpunded basis secnd, t each f OSEG and the City, a return n OSEG s Equity and n the City s Funding Equity at 8% per annum, n a cumulative, but nt cmpunded basis; if there is sufficient net cash flw t make nly a prtin f such payment, prprtinate payments will be made t each party third, return t OSEG f its Additinal Equity furth, fllwing the third anniversary f the cmmencement f the perating term f the Stadium Lease, the return f OSEG s minimum Equity, amunts paid in cnnectin with OSEG s cmpletin guarantee fr the stadium (excluding the parking structure) and the City s Funding Equity (if there is sufficient net cash flw t make nly a prtin f such payment, prprtinate payments will be made t each party) in respect f OSEG s minimum Equity and amunts paid in cnnectin with its cmpletin guarantee, n a straight-line amrtized basis ver a perid f 27 years in respect f the City s Funding Equity, n a straight-line amrtized basis ver a perid f 27 years fifth, a return n the City s Deemed Equity at 8% per annum, n a cumulative, but nt cmpunded basis sixth, any remaining balance will be shared equally by the parties Net cash flw is defined in the Master Limited Partnership as being grss receipts minus utflws in a given fiscal year:

15 149 COMITÉ DES FINANCES ET DU Descriptin B grss receipts are cash receipts f the master limited partnership (r the general partner n behalf theref) calculated n a cash basis, including incme and capital distributins, repayment f lans, return n capital and ther funds received frm the cmpnent limited partnerships, cntributins f capital, revenue frm defined investments, prceeds f business interruptin r lss f incme insurance, net prceeds frm dispsitins f assets and net prceeds frm exprpriatin f assets and net prceeds f financing utflws are amunts paid t cmpnent limited partnerships fr defined amunts prperly required fr bligatins and liabilities f the cmpnent limited partnerships, amunts paid under the Ottawa 67 s prmissry nte and amunts paid fr defined general expenses In turn, each Cmpnent Limited Partnership in respect f a cmpnent limited partnership will include a manner fr calculating net cash flw f such cmpnent limited partnership, which will be distributed t the master limited partnership. Ntwithstanding the waterfall prvisins abve, in the event that either the CFL team r the OHL team cease t perate withut the cnsent f the City fr any reasn whatsever (whether r nt the CFL r Ottawa 67s cmpnent limited partnerships wn the CFL r OHL teams, respectively) ther than the CFL r the OHL ceasing t perate, then at the ptin f the City, the City s Deemed Equity (tgether with interest accrued and unpaid), determined n a cumulative, but nt cmpunded basis, shall be deemed t be Funding Equity fr the purpses f the pririty f waterfall payments in respect f return n Funding Equity (the secnd waterfall step abve) but nt fr return f Funding Equity (the furth waterfall step abve). Unless the Prject is terminated prir theret, the waterfall autmatically expires n December 31, Upn such expiratin: n further payments are made under the waterfall the City s units in the master limited partnership will be transferred t OSEG fr nminal amunts participatin rent f fifty percent f annual net cash flw f the retail premises will be paid t the City under the Retail Lease, in additin t base rent established based n fair market value

16 150 COMITÉ DES FINANCES ET DU Descriptin B t the extent that ne half f the fair market value f the CFL and OHL teams exceeds the present value (utilizing a five percent discunt factr) f the aggregate f the prjected participatin rent payable t the City under the Retail Lease, the fair market value f the retail cmpnent n which base rent shall be calculated shall be increased by such excess the retail cmpnent tenant, the ffice tenant and the City, as may be applicable, shall thereafter share parking net perating revenues upn defined equitable principles, including: taking int accunt the prprtins in which such parties cntributed t hard and sft csts f the initial parking cnstructin csts (excluding interest in respect f financing and financing fees) with the ffice develper having been deemed t have cntributed such hard and sft csts the impact f the absence f the retail, stadium and/r ffice cmpnent(s) if applicable the usage f the parking structure by each cmpnent if the stadium has fewer than 25 events with a minimum attendance f 5,000 persns per year the extent t which thse f the 90 parking spaces f the Office Cmpnent allcated t it are made available fr public use ther prevailing cnditins, including the circumstances respecting leasing f space in a cmpnent ther matters may ccur, such as: the pssible extensin f the Stadium Lease the pssible terminatin f the Retail Lease as described belw in the Retail Lease if the Retail Lease is nt terminated, applicatin f the pst-waterfall financing terms and cnditins set ut in the Retail Lease At clsing, certain cnditins are required t be satisfied by each f the City and OSEG. Either party will be entitled t nt prceed t clsing if certain matters are nt satisfied including: satisfactin f the parties with the Final Pr Frma financial statement respecting the prject and the waterfall as f the executin date, the parties will have agreed upn the terms f the lifecycle reserve funds t be

17 151 COMITÉ DES FINANCES ET DU Descriptin B included in the Stadium Lease executin f agreements identified as being material between the parties and/r with ther third parties executin f the Office Lease with the ffice develper that has been selected by the City btaining building, heritage and planning apprvals t the extent required fr cmpnents f the prject ther than the urban park the stadium and related parking having been designated a municipal capital facility by the City the fundatin permit fr the stadium having been btained ther cnditins, as prvided in the agreement In additin, the City will be entitled t nt prceed t clsing if certain matters fr its benefit are nt satisfied including: envirnmental and legal due diligence matters receipt f required third party apprvals satisfactin with envirnmental and archaelgical remediatin csts satisfactin that sufficient space in the retail cmpnent has been subleased fr Distinctive Uses and the retail plans and specificatins being cmpleted in accrdance with the retail design strategy and the design and plan requirements if, prir t clsing, the City determines that it cannt issue debentures at the rate assumed in the Final Pr Frma and in respect f the maximum stadium and parking csts ther cnditins, as prvided in the agreement In additin, OSEG will be entitled t nt prceed t clsing if certain matters fr its benefit are nt satisfied including: satisfactin with encumbrances n title t the lands and receipt f an indemnity by the City fr abriginal rights claims if insufficient retail subleases (less than sixty five percent f the grss flr area) are entered int despite cmmercially reasnable effrts being made if financing fr the retail cmpnent cannt be btained n cmmercially reasnable terms despite cmmercially reasnable effrts being made

18 152 COMITÉ DES FINANCES ET DU Descriptin B ther cnditins, as prvided in the agreement Each party pays its wn csts in the event that clsing des nt ccur, excluding under the First Cst Sharing and Secnd Cst Sharing. The City s ptential liability under the agreement and related agreements and leases is capped at an aggregate f $50 millin (adjusted fr inflatin), excluding: any payments t be made in respect f terminatin fr cnvenience any payments t be made in respect f the exercise by the City f its terminatin ptin under the Retail Lease as at the thirtieth anniversary f the cmmencement f peratins thereunder any payments t be made in respect f the imprper terminatin f, r a breach ging t the rt f, the agreement r a related agreement r lease any amunts which are paid by insurance liability in respect f existing envirnmental and archaelgical cnditins subject t OSEG s bligatins, the City failing t make a required payment in respect f the cnstructin f the stadium cmpnent, the parking structure (ther than the prtin f the parking structure assciated with the retail cmpnent) and/r certain infrastructure upgrades payments under the First Cst Sharing r the Secnd Cst Sharing Subject t existing envirnmental cnditins, archaelgical cnditins and any express representatins and warranties f the City, OSEG enters int the Prject n an as is where is basis and is relying slely n its wn due diligence. The agreement may be terminated by ne party in the event f a default by the ther party.

19 153 COMITÉ DES FINANCES ET DU Descriptin B Fr example, the City may terminate the agreement fr reasns including: OSEG, an OSEG member r a cmpnent limited partnership materially breaches bligatins under the agreement r related material agreements and leases lss f cnstructin permits that materially affects OSEG s ability t perfrm its bligatins under the agreement abandnment f cnstructin f a prject cmpnent by OSEG r f the stadium r parking by the cnstructr theref certain events f bankruptcy r inslvency in respect f an OSEG cmpany, subject t a right t cntest the existence theref r t a stay in respect f such event OSEG r a cmpnent limited partnership defaulting under the site plan agreement OSEG may terminate the agreement fr reasns including the City failing t remedy a breach f bligatins under the agreement. where the agreement is terminated between the clsing and December 31, 2044 pursuant t applicable law in respect f an event f default f the City, the same payments being made, and actins undertaken, by the City as are described in respect f the City s right t terminate fr cnvenience described belw where the agreement is terminated after December 31, 2044 pursuant t applicable law in respect f an event f default f the City, OSEG is entitled t damages in accrdance with applicable laws Terminatin f the agreement by the City is subject t the prvisin f ntice by the City and an pprtunity fr OSEG t cure the event f default r (in the case f nn-mnetary defaults) t present a plan t cure the event f default. A crss-default will exist between the Prject, the Retail Lease and the Stadium Lease in that an event f default in favur f the City under ne agreement r lease cnstitutes an event f default in favur f the City under all agreements/leases. Default will permit the City t step-in and perate the CFL team and, subject t league apprval, OHL team. The Cmpnent Limited Partnership s in respect f the CFL team and the OHL team permit either team t be sld in specified circumstances t remedy certain nn-mnetary events f default, including default by the general partner f

20 154 COMITÉ DES FINANCES ET DU Descriptin B the CFL limited partnership r the OHL limited partnership under the applicable Cmpnent Limited Partnership, the ccurrence f an event f inslvency in respect f the general partner f the CFL limited partnership r the OHL limited partnership r an unpermitted dispsitin by the general partner f the CFL limited partnership r the OHL limited partnership. Separate frm a terminatin in respect f events f default described abve, certain terminatin fr cnvenience rights will exist in favur f the City. The City may terminate the agreement and related agreements and leases at any time fllwing the cmmencement f the perating term f the Retail Lease withut cause upn the fllwing payments being made, and actins undertaken, by the City: repayment r assumptin by the City f financing n the retail cmpnent assumptin by the City f the cmpnent subleases and, if applicable, subcntracts granting f a fair market value lease in respect f the stadium fr what wuld have been the balance f the term f the Stadium Lease fr cntinued peratin f the sprts franchises transfer by the City f any interest in the CFL r OHL teams and the related cmpnent limited partnerships where the terminatin ccurs prir t the twenty-fifth anniversary f cmmencement f the perating term f the Retail Lease: return f OSEG s utstanding Equity (excluding letters r credit, bank accunts and their equivalents) payment f the cumulative unpaid return n OSEG s Equity payment f the present value f payments that OSEG wuld receive pursuant t the waterfall fr the perid frm the terminatin t the expiry f the thirtieth year f the perating term f the Retail Lease, based upn existing activities r activities then-cntemplated t be undertaken fr such perid the net present value f the payment which wuld be made by the City pursuant t the Retail Lease in respect f the exercise f the City s terminatin right effective the thirtieth anniversary f cmmencement date f the perating term theref, taken back t the date f terminatin, excluding any amunts which

21 155 COMITÉ DES FINANCES ET DU duplicate the afrementined payments Descriptin B where the terminatin ccurs n r after the thirtieth anniversary f cmmencement date f the perating term f the Retail Lease, payment f the fair market value f OSEG s interest in each f the Retail Lease and the Stadium Lease (if a renewal term has been granted fr the Stadium Lease) and each ther related agreement and lease between the parties: in respect f the determinatin f its fair market value, the parties will have regard t the remaining prtin f the initial fifty year perating term f the Retail Lease and the first and secnd extensin terms f the Retail Lease in respect f the determinatin f its fair market value, the parties will have regard t the renewal term (if any) fllwing the initial thirty year perating term f the Stadium Lease where the terminatin ccurs n r after the twenty-fifth but prir t the thirtieth anniversary f cmmencement date f the perating term f the Retail Lease and the City has nt exercised its ptin t terminate the Retail Lease in the thirtieth year: return f OSEG s utstanding Equity (excluding letters r credit, bank accunts and their equivalents) payment f the cumulative unpaid return n OSEG s Equity payment f the net present value f payments that OSEG wuld receive pursuant t the waterfall fr the perid frm the terminatin t the expiry f the thirtieth year f the perating term f the Retail Lease, based upn existing activities r activities then-cntemplated t be undertaken fr such perid payment f the net present value f the payment which wuld have been made by the City pursuant t the Retail Lease in respect f the exercise f the City s terminatin right effective the thirtieth anniversary f cmmencement date f the perating term theref, taken back t the date f terminatin, excluding any amunts which duplicate the afrementined payments payment f the fair market value f OSEG s interest in the Retail Lease having regard nly t the first and secnd extensin terms f the Retail Lease payment f the fair market value f OSEG s interest in the Stadium Lease, if a renewal term has been granted fr the Stadium Lease and having regard nly t such renewal term

22 156 COMITÉ DES FINANCES ET DU Descriptin B where the terminatin ccurs n r after the twenty-fifth but prir t the thirtieth anniversary f cmmencement date f the perating term f the Retail Lease and the City has exercised its ptin t terminate the Retail Lease in the thirtieth year: return f OSEG s utstanding Equity (excluding letters r credit, bank accunts and their equivalents) payment f the cumulative unpaid return n OSEG s Equity payment f the present value f payments that OSEG wuld receive pursuant t the waterfall fr the perid frm the terminatin t the expiry f the thirtieth year f the perating term f the Retail Lease, based upn existing activities r activities then-cntemplated t be undertaken fr such perid the net present value f the payment t be made by the City pursuant t the Retail Lease in respect f the exercise f the City s terminatin right effective the thirtieth anniversary f cmmencement date f the perating term theref, taken back t the date f terminatin, excluding any amunts which duplicate the afrementined payments Other than in accrdance with the Prject r anther material agreement, there is t be n dispsitin f the securities r assets (ther than certain abve-described permitted assets f special purpse vehicles) f OSEG, an OSEG member, the master limited partnership, a cmpnent limited partnership r the general partner f the master limited partnership r a cmpnent limited partnership. A dispsitin includes the issuance f new securities r a sale, transfer, assignment r ther cnveyance f securities r assets, including interests in the Stadium and Retail Leases. A distinctin is made between dispsitins f securities which result in gains and/r change f cntrl t the dispsing party and thse which d nt. The amunt f a gain is calculated based n the securities being dispsed f and the nature f such dispsitin. Where a dispsitin is t be apprved by the City in circumstances where the City is required t act reasnably, the fllwing apprval guidelines will be cnsidered (subject t special cnditins applicable t the dispsitin f the CFL r

23 157 COMITÉ DES FINANCES ET DU OHL teams described belw): Descriptin B financial capacity f the acquirer/its principal(s) lcatin f the acquirer/its principal(s) whether the acquirer/its principal(s) has a successful business track recrd reputatin f the acquirer/its principal(s) develpment r real estate experience and knwledge f the acquirer/its principal(s) histry f litigatin/disputes with the City by the acquirer/its principal(s) Any arm s length acquirer will assume the selling OSEG member s equity psitin and share f cumulative unpaid return n OSEG s equity t the date f dispsitin. In respect f a dispsitin f securities f OSEG, an OSEG member r the master limited partnership, ther than t a permitted transferee (an arm s length dispsitin), the City may review and apprve the dispsitin based n the fllwing: during the first ten years, cmmencing n clsing, where the dispsitin des nt result in a gain by the member the City may review and apprve the dispsitin based n the abve apprval guidelines, acting reasnably during the first ten years, cmmencing n clsing, where the dispsitin des result in a gain by the member the City may review and apprve the dispsitin, in its sle discretin ntwithstanding the prir tw bullet pints, the City may review and apprve any dispsitin f an interest in the master limited partnership, in its sle discretin, except as expressly prvided in the Master Limited Partnership cmmencing n clsing, where the dispsitin des result in a change f cntrl f OSEG, r if a change f cntrl therwise arises, the City may review and apprve the dispsitin, in its sle discretin cmmencing n clsing, where the dispsitin des nt result in a change f cntrl f OSEG, r if a change f cntrl des nt therwise arise, the City may review and apprve the dispsitin based n the abve apprval guidelines, acting reasnably (except where the dispsitin results in a gain by the member during the first ten years, cmmencing n clsing, such review and apprval shall be in the City s sle discretin)

24 158 COMITÉ DES FINANCES ET DU Descriptin B ntwithstanding whether a gain r a change f cntrl results therefrm, where the dispsitin ccurs within twelve mnths f the death r incapacity f Rger Greenberg r any subsequent representative in respect f Lansgreen Investments Inc., Jhn Ruddy r any subsequent representative in respect f Trinity Lansdwne Ltd., William Shenkman r any subsequent representative in respect f Shenkman Lansdwne Ltd., Jeff Hunt r any subsequent representative in respect f Keljay Ltd. r Jhn Pugh r any subsequent representative in respect f Friarmere Hldings Inc. the City shall review and apprve the dispsitin based n the abve apprval guidelines, acting reasnably ntwithstanding whether a gain r a change f cntrl results therefrm, in respect f a dispsitin between OSEG members r by an OSEG member t a permitted transferee f anther OSEG member, the City shall review and apprve the dispsitin based n the abve apprval guidelines, acting reasnably ther than dispsitins f securities f OSEG r an OSEG member t a permitted transferee f an OSEG member, anther OSEG member r t the permitted transferee f anther OSEG member wherein the transferr may retain all prceeds received, the transferr may retain the lesser f the prceeds f dispsitin r its prprtinate interest in the Equity attributable t the applicable securities f OSEG, an OSEG member r the master limited partnership. Any payments made t the City will be applied t the City s then-current entitlements under, and in the same rder as, the waterfall (withut regards t the entitlements f OSEG), and, after payment f the return n the City s Deemed Equity, shall thereafter reduce the City s Deemed Equity In respect f a dispsitin f securities f OSEG r an OSEG member r the master limited partnership t a permitted transferee (a nn-arm s length dispsitin) fr which n apprval f the City is required (but fr which the City shall be prvided prir ntice): such dispsitin shall be: t the principal f such OSEG member, being descendants f Irving and Gilbert Greenberg in respect f Lansgreen Investments Inc., Jhn Ruddy in respect f Trinity Lansdwne Ltd., descendants f Harld

25 159 COMITÉ DES FINANCES ET DU Descriptin B Shenkman in respect f Shenkman Lansdwne Ltd., Jeff Hunt in respect f Keljay Ltd. r Jhn Pugh in respect f Friarmere Hldings Inc. t a lineal descendant f such principal t the spuse f such principal r a lineal descendant f such principal t a trust established fr such principal, descendant r spuse r a crpratin, partnership, limited partnership, c-wners arrangement r ther business entity described belw t a crpratin, partnership, limited partnership, c-wners arrangement r ther business entity ther than a crpratin, cntrlled by such principal, descendant, spuse r trust in the event such dispsitin results in such interest being held by multiple persns, ne persn acceptable t the City, acting reasnably, shall act as the representative f the entire interest In respect f the dispsitin f certain cmpnent limited partnerships, the master limited partnership shall nt dispse f any securities f the Stadium partnership r the Retail partnership withut the apprval f each f the City and f OSEG, each in their discretin. The prceeds f such dispsitin will frm part f the net cash flw and be distributed in accrdance with the waterfall. In respect f the securities f the general partner f the master limited partnership r f a cmpnent limited partnership, such securities may nly be dispsed f as part f the transactin invlving the dispsitin f the master limited partnership. Unless therwise permitted, dispsitin f the assets f Stadium partnership r the Retail partnership require the apprval f the City and OSEG, each in their discretin. any dispsitin prceeds frm such sales f assets are subject t the waterfall, ther than in respect f a dispsitin f the Retail Lease prir t the start f the perating term under the Retail Lease in the case f a dispsitin f the Retail Lease prir t the start f the perating term theref, the third party transferee will pay the then fair market value rent fr its share f the lease, the present value f such rent will be subtracted frm the City s Deemed Equity and the City Funding Equity is reduced by the amunt f the

26 160 COMITÉ DES FINANCES ET DU Descriptin B cnsideratin (as apprved by the City, in its discretin) payable by the third party transferee t the City in cnnectin with the dispsitin In respect f a dispsitin f the securities r assets f the CFL partnership r the OHL partnership, each f the City and OSEG may review and apprve the dispsitin in their discretin based n the fllwing: during the first eight years, cmmencing n clsing, n dispsitin f a team shall ccur fllwing the that date which is eight years after clsing, the City may review and apprve the dispsitin (including the prceeds theref) based n the fllwing apprval guidelines, acting reasnably: financial capacity f the acquirer/its principal(s) majrity f the principal(s) f the acquirer being lcally-based reputatin f the acquirer/its principal(s) sprts team peratin and management experience and knwledge, r the ability t secure the same existence r histry f litigatin/disputes with the City by the acquirer/its principal(s) receipt f a cvenant frm the acquirer and its principal(s) t keep the applicable team in Ottawa fr the perid ending n the expiry f the initial term f the Stadium Lease if such teams cntinue t perate OSEG will pst a letter f credit fr tw years fr any amunts which it receives under the waterfall as a result f any dispsitin, accessible by the master limited partnership with respect t any negative cash flw relating t the master limited partnership. The letter f credit and its csts wuld nt cnstitute Equity. During the first ten years cmmencing n clsing, unless incapacitated r deceased, nly the fllwing persns shall act as the representatives f each respective OSEG member: Rger Greenberg in respect f Lansgreen Investments Inc., Jhn Ruddy in respect f Trinity Lansdwne Ltd., William Shenkman in respect f Shenkman Lansdwne Ltd., Jeff Hunt in respect f Keljay Ltd. and Jhn Pugh in respect f Friarmere Hldings Inc. In the event f the death r incapacity f such representative, the City may review and apprve the appintment f a replacement representative, acting reasnably.

27 161 COMITÉ DES FINANCES ET DU Descriptin B The securities and assets f the master limited partnership, the master limited partnership s general partner, OSEG, OSEG members r any f the cmpnent limited partnerships r their general partners may nt be encumbered, except: encumbrances n the securities f OSEG r an OSEG member as security given t ther OSEG members r permitted transferees in respect f lans made fr Equity requirements ther than fr minimum Equity requirements the retail partnership may mrtgage the Retail Lease n certain terms the CFL partnership may encumber its assets in accrdance with the terms f its membership agreement with the CFL the OHL partnership may encumber its assets in favur f the OHL in accrdance with the OHL cnstitutin the CFL and OHL partnerships may encumber its respective assets in favur f an institutinal lender by way f purchase mney security r fr an perating line f credit, s lng as OSEG s equity in the applicable partnership is maintained the retail partnership may encumber its assets in favur f an institutinal lender, n such terms and cnditins as may be apprved by the City under the Retail Lease, in its discretin acting in gd faith a pledge f the ne-half f the partnership interest held by the master limited partnership in supprt f the master limited partnership s bligatin t repay the amunt f $5 millin t Keljay Ltd. in cnnectin with the acquisitin f the Ottawa 67 s the OHL partnership may encumber its assets in favur f an existing institutinal lender in respect f an existing lan f apprximately $35,000 Prvisins recgnizing bth f Canada s fficial languages will be included in each f the Retail Lease and the Stadium Lease. Prvisins in respect f the first pririty f, and cmpliance with, an easement in favur f the Ontari Heritage Easement are included in the Prject, as well as each f the Retail Lease and the Stadium Lease. Disputes under the agreement will be settled by arbitratin.

28 162 COMITÉ DES FINANCES ET DU Stadium Lease Descriptin B Other terms and cnditins which are usual t agreements f this nature are included. The Stadium Lease is the lease by the City f the stadium cmpnent f the prject, cmprised f Frank Clair Stadium, the Civic Centre, parking assciated with the stadium cmpnent and assciated real prperty. The Stadium Lease is t be entered int by the City, as landlrd, and the stadium cmpnent limited partnership, as tenant, and is effective upn substantial cmpletin f the cnstructin f the stadium imprvements. Prir t cmmencement f the term f the Stadium Lease, the City will grant a separate license in favur f OSEG and/r the stadium cntractr t access the stadium facilities and areas where the parking structure is t be cnstructed during the cnstructin phase theref, as is further described belw under the heading Stadium Cnstructin License. City Cuncil will be asked t declare that the stadium is a municipal capital facility, pursuant t the Municipal Act, 2001 (Ontari). The fllwing is a summary f the key terms f the Stadium Lease. The initial term f the Stadium Lease is apprximately thirty years beginning n substantial cmpletin f the cnstructin f the stadium imprvements and ending n December 31, 2044 (the waterfall expiry), prvided that the City may ffer t extend the term n r befre the twenty-fifth anniversary f the cmmencement f the Stadium Lease. Shuld the City ffer t extend the term, the parties wuld have a ne-year perid t negtiate the terms f such extensin. Base rent during the initial term is ne dllar per year. Shuld the Stadium Lease be extended, base rent wuld be negtiated by the parties. The Stadium Lease will be a net lease in that all expenses, csts, payments, utgings, bligatins r liabilities incurred with respect t the stadium shall be brne by the tenant, except fr certain csts that are persnal t the landlrd. The tenant will be respnsible fr all prgramming at the stadium, prvided that the City may prhibit certain events which vilate laws, established standards fr the facility (as agreed upn by the City and tenant) r the reputatinal standard apprpriate t a public venue in Ottawa r which wuld be in cmpetitin with trade and cnsumer shws typically carried ut at the Expsitin Hall Facility.

29 163 COMITÉ DES FINANCES ET DU Descriptin B The tenant will have naming rights fr the stadium cmpnent, subject t cmpliance with the City s plicies and by-laws, any naming agreement and applicable laws. Any name is subject t the City s apprval, acting reasnably. Any prceeds derived frm naming are distributed accrding t the waterfall under the Prject. The City will wn all intellectual prperty rights assciated with the name (ther than thse f the persn prviding the name) and the use f the stadium name will be fr specified limited purpses. The naming rights in favur f the tenant are fr the stadium cmpnent nly. There is n bligatin fr the tenant t use the name Lansdwne fr the stadium cmpnent, prvided that gateway signage n the site will bear the name Lansdwne Park r anther name that the landlrd may determine, as a reference t the urban park. Thse parts f the stadium knwn as Frank Clair Stadium r the Civic Centre (but nt a part f Frank Clair Stadium r the Civic Centre) will nt include alchl r the name f an alchlic prduct r the name f a manufacturer r distributr f alchlic prducts. The parties will develp an events standard/prtcl t gvern all events undertaken at the stadium. The City is entitled t make bkings at a reduced rate (nt less than 85% market rates) fr special sprts events and cultural activities at the stadium that are f cmmunity interest that are therwise unable t pay market rental rates. Such bkings may nt be made mre than ne mnth in advance. The City is entitled t use the stadium nce in each calendar year fr an event, at n fee r charge, except csts and expenses f the tenant in cnnectin with such event. The tenant will have the exclusive right during the term t enter int agreements in respect f cmmercial advertising, private bxes, puring rights, cncessins, prgrams and suvenirs, bradcast rights and ticket/bx ffice, subject t requirements and limitatins described in the Stadium Lease, including in respect f subletting, signage, cmpliance with