UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d)
of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 17, 2018
THE MADISON SQUARE GARDEN COMPANY
(Exact name of registrant as specified in its charter)
| Delaware | 1-36900 | 47-3373056 | ||
| (State or another jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
| 2 Penn Plaza, New York, New York |
10121 | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area (212) 465-6000
Not Applicable
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 1.01 | Entry Into a Material Definitive Agreement |
On December 17, 2018 MSG Sports & Entertainment, LLC (“MSG S&E”), a wholly-owned subsidiary of The Madison Square Garden Company (the “Company”) entered into an Aircraft Support Services Agreement (the “New Support Agreement”) with Charles F. Dolan (“CFD”), a director of the Company, and certain of his children, specifically: Thomas C. Dolan (a director of the Company), Deborah Dolan-Sweeney, Patrick F. Dolan, Marianne Dolan Weber (a director of the Company), and Kathleen Dolan (together with CFD, collectively, the “Dolan Family Members”).
Pursuant to the New Support Agreement, MSG S&E has agreed to provide certain aircraft support services to the Dolan Family Members for a monthly services fee of $14,584 and reimbursement of certain costs and expenses. Those services will include providing access to pilots, crew and maintenance personnel, aircraft maintenance, Federal Aviation Administration (“FAA”) compliance reporting, hangar, office and shop facilities, flight scheduling and dispatch services, training, record keeping and other services necessary and appropriate for the support of aircraft owned by the Dolan Family Members.
The New Support Agreement replaces the Aircraft Support Services Agreement (the “Old Support Agreement”), that had been effective July 1, 2018, among MSG S&E, CFD and Sterling Aviation, LLC (“Sterling”), a company owned and controlled by CFD, which provided support services for a Gulfstream Aerospace G-V aircraft (the “GV”) owned by Sterling and utilized by CFD. In connection with the family’s purchase of a new Gulfstream Aerospace G550 aircraft (the “DFO G550”), on December 17, 2018 MSG S&E terminated the Old Support Agreement and entered into the New Support Agreement, which provides substantially the same support services for the DFO G550 as were previously provided for the GV.
On December 17, 2018, MSG S&E entered into a dry lease agreement (the “New Dry Lease”) with Sterling2K LLC (“S2K”), an entity owned and controlled by Deborah Dolan-Sweeney, the daughter of CFD and the sister of the Company’s Executive Chairman and Chief Executive Officer, pursuant to which MSG S&E may lease on a non-exclusive basis the DFO G550. Under the terms of the New Dry Lease, MSG S&E will pay S2K rent at an hourly rate and specified expenses of each flight (which mirror the types of expenses charged under the time sharing agreement between MSG S&E and CFD (the “CFD Time Share”), effective July 1, 2018, regarding CFD’s use of the Company’s Gulfstream Aerospace G550 aircraft (the “G550 Aircraft”)). The New Dry Lease provides for certain equitable adjustments to ensure that the arrangement is not economically unfair to the lessor, including a “true-up” mechanism such that, to the extent that MSG S&E’s annual usage of the DFO G550 exceeds annual usage of the G550 Aircraft under the CFD Time Share (which, based on historical usage, is expected), MSG S&E would pay an additional hourly rate with respect to excess hours intended to cover the additional costs.
The New Dry Lease replaces the dry lease agreement (the “Old Dry Lease”), that had been effective July 1, 2018, between MSG S&E and Sterling, pursuant to which MSG S&E could lease on a non-exclusive basis the GV. In connection with the sale of the GV, the Old Dry Lease automatically terminated pursuant to its terms, and was replaced with the New Dry Lease covering the DFO G550. The terms of the Old Dry Lease and the New Dry Lease are substantively the same.
On December 17, 2018, Andrew Lustgarten, President of the Company, entered into an aircraft time sharing agreement (the “New Time Sharing Agreement”) with MSG S&E, pursuant to which Mr. Lustgarten may lease the DFO G550 from MSG S&E for limited personal use. For flights taken under the New Time Sharing Agreement, Mr. Lustgarten will pay for the actual expenses of such flight as listed in the agreement, but not to exceed the maximum amount permitted under FAA rules. The New Time Sharing Agreement replaces an existing time sharing agreement between MSG S&E and Mr. Lustgarten and is substantively the same.
The above description of the New Support Agreement, the New Dry Lease and the New Time Sharing Agreement are qualified in their entirety by reference to those agreements which are attached hereto as Exhibit 10.1, Exhibit 10.2 and Exhibit 10.3, respectively, and are incorporated into this Item 1.01 by reference.
| Item 1.02 | Termination of a Material Definitive Agreement |
The information set forth in Item 1.01 with respect to the termination of the Old Support Agreement between MSG S&E and CFD and Sterling is incorporated herein by reference.
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| Item 5.02 | Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers; Compensatory Arrangements with Certain Officers |
The information set forth in Item 1.01 with respect to the New Time Sharing Agreement between MSG S&E and Mr. Lustgarten is incorporated herein by reference.
| Item 9.01 | Financial Statements and Exhibits |
(d) Exhibits
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| THE MADISON SQUARE GARDEN COMPANY (Registrant) | ||
| By: | /s/ Donna Coleman | |
| Name: | Donna Coleman | |
| Title: | Executive Vice President and Chief Financial Officer | |
Dated: December 21, 2018
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Exhibit 10.1
AIRCRAFT SUPPORT SERVICES AGREEMENT
THIS AIRCRAFT SUPPORT SERVICES AGREEMENT (this “Agreement”) is entered into effective as of December 17, 2018 by and between MSG SPORTS & ENTERTAINMENT, LLC a Delaware limited liability company with an office at 2 Pennsylvania Plaza, New York 10121 (“MSG”), on the one hand; and the following operators as follows: Charles F. Dolan, Thomas C. Dolan, Deborah Dolan-Sweeney, Patrick F. Dolan, Marianne Dolan Weber, and Kathleen M. Dolan, each an individual, with their address at c/o Dolan Family Office, LLC, 340 Crossways Park Drive, Woodbury, New York 11797 (each a “Client,” and collectively, “Client” or “Clients” as appropriate), on the other hand.
MSG will act as Clients’ agent to support Clients’ operation of the aircraft described below (the “Aircraft”) in accordance with the terms and conditions of this Agreement.
SPECIFIC TERMS
| I. | Aircraft Identification |
| • | Aircraft Make and Model: Gulfstream Aerospace GV-SP (G550) |
| • | Manufacturer’s Serial Number: 5043 |
| • | Aircraft Registration Number: N107VS |
| II. | Agency Fee and Flight Support Personnel Costs |
Monthly Agency Fee: $14,584
Flight Support Personnel Costs: As set forth in Section 2.1 of the General Terms below.
| III. | Term |
| Effective Date: | December 17, 2018 |
| Expiration Date of the Term: | June 30, 2019; and thereafter shall automatically renew for successive one-year terms unless either party provides written notice not less than 30 days prior to the expiration of the current term. | |
| IV. | Notices |
| To Charles F. Dolan, Thomas C. Dolan, Patrick F. Dolan, or Deborah Dolan-Sweeney:
c/o Dolan Family Office LLC 340 Crossways Park Drive Woodbury, NY 11797 Attn: Dennis H. Javer Telephone: (516) 226-1188 Fax: (516) 226-1155 Email: officer@dfollc.com |
To MSG:
MSG Sports & Entertainment, LLC c/o The Madison Square Garden Company 2 Pennsylvania Plaza New York, New York 10121 Attention: Phil Stang Telephone: (212) 465-5930 Fax: (212) 465-6011 Email: Phil.Stang@msg.com | |
| and | ||
| To Marianne Dolan Weber, or
c/o MLC Ventures, LLC 34 Acorn Lane Yorktown Heights, NY 10598 Attn: Rich Baccari Telephone: (914) 804-5478 Email: rich@rgbcpa.com |
MSG Sports & Entertainment, LLC c/o The Madison Square Garden Company Hangar 5 Republic Airport Farmingdale, New York 11735 Attention: Phil Stang Telephone: (212) 465-5900 Email: Phil.Stang@msg.com | |
| and | ||
| All Notices to any Client shall also include a Notice to: Aero Law Group 11120 NE 2nd Street Suite 100 Bellevue, Washington 98004-8332 Attn: Nathan R. Pietila Telephone: (425) 456-1800 Email: pietilanr@law.aero |
MSG Sports & Entertainment, LLC c/o The Madison Square Garden Company 2 Pennsylvania Plaza New York, New York 10121 Attn: General Counsel Telephone: (212) 465-6000 Fax: (516) 908-4195 | |
| V. | Aircraft Operating Base |
The Aircraft will be based at Republic Airport, Hangar 5, Farmingdale, New York or such other location as Clients and MSG may mutually agree (the “Operating Base”).
GENERAL TERMS
| 1. | Support |
| 1.1. | Primary Staff. The parties acknowledge that the primary staff (pilots and/or mechanics) for the Aircraft (the “Primary Staff”) shall be employed by Clients or an affiliate of Client, and supervised by both Clients and MSG. The Primary Staff shall also from time to time |
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| perform scheduling of the Aircraft, oversee maintenance of the Aircraft and perform certain other administrative services. MSG shall perform such services as set forth below to the extent not performed by the Primary Staff, or upon request of Clients. Any costs associated with the Primary Staff shall be the responsibility of Clients and shall be paid in accordance with Section 8.5; provided, that, Clients may elect to have MSG bear the cost of such Primary Staff, to be billed in accordance with Section 8.5 and “Exhibit D – Allocation Agreement Among Owner and Operator to the Non-Exclusive Aircraft Dry Lease Agreement” between the Clients. |
| 1.2. | Support Services. In consideration of the fees paid by Client, MSG will act as Clients’ agent to perform the following functions on behalf of Clients: |
| (a) | Employment or engagement and supervision of supervisory, flight and maintenance personnel for the Aircraft, except that MSG shall only be responsible for general operational oversight of the Primary Staff; |
| (b) | Aircraft maintenance at the Operating Base, maintenance coordination at contract facilities, and related maintenance support functions; |
| (c) | Advice regarding insurance for the Aircraft; |
| (d) | FAA liaison and compliance, record keeping and reporting; |
| (e) | Aircraft hangar facilities (including office and shop facilities) at the Operating Base (at Client’s request) and other airport locations, as required; |
| (f) | Record keeping, reporting, budgeting, payment on behalf of Clients of Aircraft-related invoices to the extent not paid directly by Clients and other administrative requirements; |
| (g) | Aircraft, passenger, and Flight Support Personnel (as defined in Section 2.1) scheduling support services for Clients and Clients’ passengers; |
| (h) | Negotiation and management of third-party contracts necessary for the operation of the Aircraft; and |
| (i) | Supervision, on behalf of Clients, of the operation and maintenance of the Aircraft by Clients. |
| 1.3. | Part 91 Operations. All flight operations by Clients under this Agreement will be conducted under Part 91 of the Federal Aviation Regulations, as amended (the “FAR’s”), and in accordance with any other laws and rules pertaining to the operation of the Aircraft. Clients acknowledge that services to be provided by MSG to Clients under this Agreement are intended to assist Clients in the operation by Clients of its Aircraft under Part 91 of the FAR’s in the conduct of Clients’ business, and shall be undertaken by MSG consistent with such intentions and only for such purposes. |
| 1.4. | Operational Control. It is understood that Client leases the Aircraft to MSG pursuant to a non-exclusive Aircraft Dry Lease Agreement (the “Lease”). Pursuant to the Lease and in compliance with Part 91 of the FAR’s, at all times during the Term of this Agreement, each Client or, when MSG is using the Aircraft, MSG, will have and retain exclusive operational control, and exclusive possession, command and control, of the Aircraft. Subject to Section 5 hereof, each Client or MSG, when MSG is using the Aircraft, will have and retain |
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| complete and exclusive responsibility for scheduling, dispatching and flight following of the Aircraft on all of its flights conducted under the Lease and this Agreement, which responsibility includes the sole and exclusive right over initiating, conducting and terminating any such flights, subject to the pilot-in-command’s authority for all safety-of-flight matters. Each Client or, when MSG is using the Aircraft, MSG will have complete and absolute control of the crewmembers in preparation for and in connection with the operation of all of its flights conducted under the Lease and this Agreement. |
| 2. | Personnel |
| 2.1. | Support Services Personnel and Flight Support Personnel. On behalf of Clients, MSG shall obtain the services of a fully-qualified (i) support services staff, including flight administration, accounting and dispatch personnel, for the Aircraft (“Support Services Personnel”) and (ii) pilots (“Pilots”), mechanics and flight attendants for the Aircraft (the Primary Staff, Pilots, mechanics and flight attendants, collectively, the “Flight Support Personnel” and, together with the Support Services Personnel, the “Personnel”). Personnel will be appropriately certified, rated and trained as required by the FAR’s and the insurance required by Section 9. All Personnel (other than Primary Staff) will be employed by MSG and carried on MSG’s payroll, and MSG shall be responsible for and shall timely pay and withhold all payroll and employment-related taxes (including, without limitation, Social Security, Medicare and unemployment taxes) relating to such Personnel who are MSG employees, and shall timely file returns with respect to such taxes with proper taxing authorities. Clients shall reimburse MSG in accordance with Section 8.5 for the entire cost of (a) salary, benefits and employer payroll taxes and (b) all training and testing, as applicable, of two (2) Pilots, one (1) flight attendant, one and one half (1 1⁄2) maintenance personnel, and one half (1⁄2) administrative personnel (the costs set forth in this sentence shall collectively be referred to as “Flight Support Personnel Costs”). To the extent MSG’s expenses for Flight Support Personnel Costs increase or decrease, the Flight Support Personnel Costs shall be increased or decreased by the same percentage amount. Clients will also reimburse MSG for third-party fees (e.g., fees payable to recruiters or similar fees) paid in connection with retention of its allocated percentage of Flight Support Personnel being hired by MSG to support the Aircraft, with such allocated percentage determined by comparing to the total flight support personnel hired by MSG pursuant to the Related Agreements (as defined in Section 13.10 below) and Clients’ Flight Support Personnel who are MSG Employees. |
| 2.2. | Availability. Flight Support Personnel will be available, as required, to support the flight schedule of the Aircraft. If Flight Support Personnel are unable to support a requested flight due to such circumstances as sickness, training, vacation, personal emergency, or crew duty limits, MSG will use commercially reasonable efforts to obtain the services of substitute personnel, on behalf of Clients, meeting the standards set forth in this Agreement. Clients acknowledge that the services of substitute qualified personnel may be utilized, as required, to support the Aircraft’s flight schedule, and that applicable FAR’s, Clients’ operations and other manuals, and MSG’s crew duty limits will be used to determine when Flight Support Personnel relief is required. Clients will be allocated incremental out-of-pocket cost of substitute personnel as follows: 33% of substitute pilot costs; 33% of substitute flight attendant costs; and 25% of substitute maintenance costs; and such amounts shall be paid in accordance with Section 8.5. |
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| 2.3. | Monitoring and Reviews. On behalf of Clients, MSG will monitor the qualifications and performance of Flight Support Personnel through a process of record keeping, performance reviews, direct supervision and flight checks. Client will provide reasonable access to the Aircraft, subject to Client’s prior permission, for Support Services Personnel to conduct required training and flight checks to observe Flight Support Personnel performance. |
| 2.4. | Termination or Replacement. MSG reserves the right to terminate or replace Personnel who are MSG employees for any reason. If the credentials or performance of any Personnel who are MSG employees are or become unsatisfactory to Clients, MSG agrees that upon notice to that effect from Clients, it shall consider in good faith whether to replace such Personnel with another qualified individual. |
| 3. | Flight Support Personnel Training and Qualification |
| 3.1. | Training. MSG, on behalf of Clients, will conduct or contract for training for Flight Support Personnel that meets or exceeds the requirements of the FAR’s governing the type of operation being conducted. Training will include, but not be limited to: |
| (a) | Pilots: (i) initial aircraft qualification, if required; (ii) Aircraft-specific recurrent training; (iii) policy and procedures recurrent training; (iv) emergency situations training; and (v) professional qualifications enhancement training, as required, such as cockpit resource management, international operations, and cabin medical safety. |
| (b) | Mechanics: (i) initial aircraft qualification, if required; (ii) biennial Aircraft-specific recurrent training; and (iii) biennial system-specific recurrent training (engines, avionics, etc.). |
| (c) | Flight Attendants: (i) initial qualification training, if required; (ii) policy and procedures training; (iii) cabin medical training; and (iv) emergency situations training. |
| 3.2. | Training Flights. Clients shall make available at their expense a reasonable amount of Aircraft time to accomplish Pilot including Primary Staff, as applicable training, proficiency checks and line checks as required by Clients’ operations and other manuals and the FAR’s; provided, however, that simulators shall be used to the extent practicable. In addition to required FAA pilot checkrides, Support Services Personnel will observe line operation of Flight Support Personnel to confirm crew performance and adherence to MSG’s company procedures and the requirements of the operations and other manuals. Client will provide reasonable access to the Aircraft, subject to Client’s prior permission, for Support Services Personnel to conduct this observation. MSG will maintain a current training record for Flight Support Personnel documenting satisfactory completion of FAA and MSG training and currency requirements. |
| 4. | Aircraft Maintenance |
| 4.1. | Maintenance Program. On Clients’ behalf and at Clients’ expense, MSG will cause the Aircraft to be enrolled in an FAA-approved inspection program or the manufacturer’s recommended maintenance program under Part 91 of the FAR’s, and will conduct, contract for and/or supervise Aircraft maintenance services to cause the Aircraft to be maintained in accordance with the requirements of the approved inspection program and the FAR’s. |
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| 4.2. | Minimum Equipment List. On Clients’ behalf, MSG will obtain an FAA approved Minimum Equipment List (MEL) for the Aircraft. Any costs associated with the MEL shall be the responsibility of Clients and shall be paid in accordance with Section 8.5. |
| 4.3. | Records. On Clients’ behalf, MSG will maintain records on the Aircraft, engines and systems in accordance with the applicable FAR’s, the requirements of the maintenance and other manuals and MSG’s maintenance procedures, all subject to the terms of Section 6.3. |
| 4.4. | Maintenance Scheduling. Clients will cooperate with MSG to schedule all maintenance requirements. MSG will schedule maintenance, to the extent practicable, to minimize conflicts with Clients’ use of the Aircraft. MSG will keep Clients apprised of the Aircraft’s maintenance schedule. |
| 4.5. | Maintenance Service Plan. On Clients’ behalf, MSG shall provide any periodic reports required in order to maintain in full force and effect any maintenance service plan covering the Aircraft or any of its equipment. Clients shall maintain each such program contract in full force and effect. All amounts payable under such contracts shall be the responsibility of Clients and shall be paid in accordance with Section 8.5. |
| 4.6. | Appointment as Agent. Clients appoint MSG as their agent for the purpose of executing, for and on behalf of Clients, any documentation required in connection with any maintenance program, maintenance service plan and/or maintenance inspection agreements as may be necessary in order for MSG to fulfill its maintenance obligations under this Agreement. Except in the case of MSG’s gross negligence or willful misconduct, Clients agree to indemnify and hold MSG harmless from and against any claims, damages, losses and expenses arising pursuant to any maintenance program, maintenance service plan and/or maintenance inspection agreements entered into in accordance with the terms of this Agreement. |
| 5. | Flight Scheduling |
| 5.1. | Services. On behalf of Clients, MSG will perform the following services related to scheduling by Clients of the Aircraft: |
| (a) | Assist Client in scheduling the Aircraft; |
| (b) | Receive trip notices from Client and produce an itinerary for each trip giving the pertinent details of the trip; |
| (c) | Arrange ground transportation requirements for Aircraft passengers; |
| (d) | Schedule Flight Support Personnel; |
| (e) | Arrange for Aircraft catering per Client’s request; |
| (f) | Arrange for landing permits, clearances, and ground handling for domestic and international destinations; |
| (g) | Coordinate the Aircraft’s movements to support Client’s travel schedule; and |
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| (h) | In the event that the Aircraft is unavailable for Client’s use or upon specific request by Client, seek trip conflict resolution with all parties. When this is not feasible arrange for chartering of substitute aircraft with Client’s approval. |
| 5.2. | Hours of Service. MSG will provide the above-listed services twenty-four (24) hours per day, seven (7) days per week. |
| 5.3. | Client Information. Clients will give MSG the most up-to-date and complete information available on the Aircraft’s proposed travel schedule. MSG agrees to hold in confidence any information that it may gain regarding Clients’ travel, business and security arrangements, subject in all respects to applicable laws and regulations. |
| 6. | Records and Administration |
| 6.1. | Record Keeping. MSG will maintain facilities and personnel at its office for Aircraft record keeping, operations supervision, scheduling assistance, and accounting support. On behalf of Client, MSG will keep all flight, passenger, maintenance, operational, logbook, tax, and cost records up to date and in accordance with all of the requirements of the FAR’ s, good accounting practices, and all other applicable laws and regulations. |
| 6.2. | Reports. MSG will supply Clients with monthly reports summarizing financial and flight activity and such other information as Clients may reasonably request, including, but not limited to, providing a year-end accounting of aircraft usage as may be required by any aircraft dry lease agreement (or comparable agreement). |
| 6.3. | Record Retention. All records pertaining to the Aircraft and the performance of services hereunder will be open for inspection and audit by Clients at MSG’s office upon not less than five (5) days’ written notice throughout the Term, and for the period ending four (4) years after the termination or expiration hereof or for so long as such records are required to be retained in accordance with MSG’s records retention policy, whichever is later. MSG will not destroy such records prior to the time when Clients’ right to inspect and audit terminates. The provisions of this Section 6.3 will survive the termination or expiration of this Agreement. |
| 7. | Hangar at Operating Base |
| 7.1. | Hangarage. MSG will provide Clients with appropriate hangar space (including office and shop space, internet access and access to telephones) at the Aircraft’s Operating Base (as specified in Section V of the Specific Terms) for the Aircraft. Clients shall be responsible for their pro rata share of the total cost of MSG’s hangar rent and hangar maintenance/janitorial costs (including any taxes and other fees payable under the hangar lease, such as utilities) based on the square footage required for all of Clients’ aircraft (whether or not such aircraft is under management by MSG) compared to the total square footage of all aircraft of Clients, MSG and clients of Related Agreements, for hangarage maintained by MSG at the Operating Base (the “Hangar Fee”). To the extent MSG’s rent and/or other lease payments increase or decrease, the Hangar Fee shall be increased or decreased by the same percentage amount. In the event there is a change in circumstances relating to hangarage, the parties agree negotiate in good faith to readjust the total cost to make such cost equitable to all parties. |
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| 7.2. | Provisioning. MSG will provision the Operating Base to support the operation and maintenance of the Aircraft. |
| 8. | Fees, Expenses, Deposits and Billing Procedures |
| 8.1. | Agency Fee: Staff Costs; Hangar Fee. The Monthly Agency Fee to be charged to Clients specified in Section II of the Specific Terms, the Flight Support Personnel Costs, and the Hangar Fee will be billed to and payable by Clients in monthly installments in advance. The Monthly Agency Fee shall be increased each December during the term of this Agreement, commencing with the calendar month ending December 31, 2019, by 4% or such higher amount as mutually agreed between Clients and MSG. |
| 8.2. | Insurance Expense: Taxes. Clients shall pay directly the cost of the insurance coverage required to be maintained by Clients under Section 9; provided, that, Clients may elect to have MSG bear the cost of such insurance, to be billed in accordance with Section 8.5 and “Exhibit D – Allocation Agreement Among Owner and Operator to the Non-Exclusive Aircraft Dry Lease Agreement” between the Clients. Clients shall be responsible for the payment of any Federal, state, local or other governmental taxes, charges or assessments imposed in connection with this Agreement, other than income or franchise taxes imposed on MSG, and shall reimburse MSG for any such tax, charge or assessment which is imposed on it by any governmental agency. Clients shall be responsible to MSG for one hundred percent (100%) of any IRC Section 4261 Federal Transportation Excise Taxes (including any penalties or interest) if imposed by the Internal Revenue Service with respect to any services provided or payments made under this Agreement. The provisions of this Section 8.2 will survive the termination or expiration of this Agreement. |
| 8.3. | Operating Expenses. Clients shall be responsible for all Operating Expenses relating to the Aircraft (to be paid in accordance with Section 8.5) which shall be passed through without markup and net of all available discounts and credits. “Operating Expenses” include, but are not limited to, the following items attributable to each Clients’ specific trip expenses: |
| (a) | Fuel, oil, and additives; |
| (b) | Replacement and consumable parts (including shipping costs and core charges for parts and components), maintenance labor (other than the cost of maintenance labor performed by Flight Support Personnel), and third-party service fees for technical support of the Aircraft; |
| (c) | Engine, auxiliary power unit and airframe maintenance service plan fees, as applicable, and all other expenses under Section 4; |
| (d) | Landing, parking, handling, customs, airways and overflight fees, hangarage fees at locations other than the Operating Base, deicing fees, and computer flight plans; |
| (e) | Navigation, operations, and maintenance publications; |
| (f) | Catering, supplies, and in-flight entertainment materials; |
| (g) | Personnel travel expenses incurred in support of Client’s operation of the Aircraft; |
| (h) | Communications charges and outside computer services related to Aircraft operations and maintenance; |
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| (i) | Passenger ground transportation; and |
| (j) | Substitute flight support personnel in accordance with Section 2.2. |
| 8.4. | Non-recurring Expenses. Non-recurring Expenses relating specifically to the Aircraft and as set forth in Section 5.1(h) shall be the responsibility of Clients (to be paid in accordance with Section 8.5) and shall be passed through without markup and net of all available discounts and credits. “Non-recurring Expenses” include, but are not limited to, such items as Aircraft paint and refurbishing, major maintenance items such as engine overhaul and airframe modifications, maintenance ground support equipment, initial spare parts provisioning and inventories, office and shop equipment, and communications and computer equipment, at the Operating Base. |
| 8.5. | Payment of Expenses. To the extent reasonably practicable, Clients will pay all amounts for which it is responsible under this Agreement directly to the applicable vendor, supplier or provider. Promptly after execution of this Agreement, Clients agree to maintain with MSG an appropriate agreed-upon advance deposit, to be applied by MSG against any amounts payable by Clients under this Agreement. To the extent MSG incurs any such expenses on Client’s behalf, MSG will use the funds available pursuant to the advance deposit to pay such expenses, and within twenty (20) days after the end of each calendar month during the Term, commencing with the calendar month ending January 31, 2019, MSG will issue invoices detailing all charges reasonably and properly incurred on Client’s behalf pursuant to the terms of this Agreement for that calendar month and the amount required to replenish the advance deposit to the agreed amount. Invoices will be due thirty (30) days from date of receipt. All goods, support services, parts, labor, fuel, materials and any other items purchased by MSG on behalf of Client will be passed on to Client at MSG’s actual cost, with no markup, rebate, commission or other fee received or retained by MSG. MSG will attempt to secure discounts on all purchases made on behalf of Client, and such discounts will be included in any charges from MSG to Client. MSG will be provided with a copy of Exhibit D – Allocation Agreement Among Owner and Operator to the Non-Exclusive Aircraft Dry Lease Agreement between the Clients and will invoice each Client in accordance with its allocated share. |
| 8.6. | Severance of Personnel. In the event that (a) this Agreement is terminated by Clients, including, but not limited to, termination pursuant to Section 10.1(c) below, (b) Client suspend their flights of the Aircraft for a period longer than three (3) months, or (c) this Agreement is not renewed in accordance with its terms, then Clients shall be responsible to reimburse MSG for any amounts paid to Personnel in accordance with MSG’s then effective severance policy whose employment by MSG is terminated as a result thereof. The provisions of this Section 8.6 will survive the termination or expiration of this Agreement. |
| 8.7. | Post Termination Expenses. Within ninety (90) days after the termination or expiration of this Agreement, a full accounting shall be made between the parties and all accounts settled between them. In no event shall any termination affect the rights and obligations of the parties arising prior to the effective date of such termination. From and after the date of the expiration or termination of this Agreement, Clients will promptly reimburse MSG upon receipt of invoices from time to time until all remaining Aircraft expenses reasonably and properly incurred by MSG on Clients’ behalf pursuant to the terms of this Agreement are paid. The provisions of this Section 8.7 will survive the termination or expiration of this Agreement. |
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| 8.8. | Overdue Amounts. Overdue amounts payable pursuant to this Agreement shall bear interest at a monthly rate equal to the lesser of 1% or the highest lawful rate allowable under applicable law. The provisions of this Section 8.8 will survive the termination or expiration of this Agreement. |
| 9. | Insurance and Indemnity |
| 9.1. | General. During the Term of this Agreement, and notwithstanding anything in this Agreement to the contrary, Clients will procure and maintain or cause to be procured and maintained at its sole cost and expense aircraft insurance (the “Client’s Insurance Policy”) that satisfies all of the requirements of this Section 9. Clients shall provide: (i) all risk, both ground and in-flight hull, including hull war risks, insurance in an amount equal to the most recent appraised fair market value of the Aircraft; and (ii) liability coverage covering passengers, non-passengers, third party liability (including war risk AV52) and property damage of not less than two hundred fifty million ($250,000,000) United States dollars for each occurrence but sublimited to twenty five million ($25,000,000) United States dollars for each occurrence and aggregate with respect to Personal Injury Liability. Clients will work with MSG to coordinate the Client’s Insurance Policy. |
| 9.2. | Policy Provisions. Client’s Insurance Policy will provide that: |
| (a) | MSG and its affiliates and each of their respective members, managers, shareholders, officers, directors, partners, employees, agents, licensees and guests are designated as additional insureds (without responsibility for premiums) with respect to the liability coverage; |
| (b) | The insurer waives any right of set-off and any right of subrogation against any of the additional insureds; |
| (c) | No cancellation or substantial change in coverage of or failure to renew the Client’s Insurance Policy shall be effective as to the additional insureds for thirty (30) days (seven (7) days, in the case of war risk or allied perils) after receipt by MSG of written notice from the insurer of any such cancellation or substantial change in coverage of the policy; |
| (d) | All coverages will be primary, not subject to any co-insurance clause, not contributory or subject to offset with respect to any other policies in force; |
| (e) | The insurance will include a severability of interest clause providing that Client’s Insurance Policy will operate in the same manner to give each insured the same protection as if there were a separate policy issued to each insured except for the limit of liability; and |
| (f) | The “Approved Pilots” section will require any appropriately rated two pilot flight crew consisting of pilots approved by the Chief Pilot of the Named Insured or MSG Aviation, LLC or their designee, and the “Territory” section will provide Worldwide Coverage |
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| 9.3. | Certificate of Insurance. On or before the Effective Date, Clients will provide or cause to be provided to MSG a certificate of insurance evidencing all coverages in compliance with the requirements of this Agreement. |
| 9.4. | MSG Insurance. At all times during the Term, MSG, at its own cost and expense, shall maintain (or cause to be maintained) the following insurance: |
| (a) | Workers’ compensation insurance and employer’s liability insurance that provides applicable statutory benefits for all of MSG’s employees including, without limitation, Personnel who are employees of MSG, performing services pursuant to this Agreement and includes broad form all-states coverage; and |
| (b) | On airport premises automobile liability insurance in an amount not less than two million ($2,000,000) United States dollars combined single-limit. |
| (c) | Clients and their affiliates and each of their respective members, managers, shareholders, officers, directors, partners, employees, agents, licensees and guests shall be named as an additional insured on the insurance coverages set forth in Section 9.4(b). The policies described in this Section 9.4 shall be primary and not excess, contributory or contingent. On or before the Effective Date, MSG shall cause its insurer to provide Clients with insurance certificates showing all coverages in compliance with this Section 9.4. |
| 9.5. | Cross Indemnities. Without limiting the respective obligations of MSG and Clients (each, a “Party”), each Party (in each case, the “Indemnitor”) hereby indemnifies and holds harmless the other Party and its affiliates and their respective officers, directors, partners, employees, shareholders, members and managers (in each case, collectively, the “Indemnitee”) for any claim, damage, loss, or reasonable expense, including reasonable attorneys’ fees (an “Indemnified Loss”), resulting from bodily injury or property damage arising out of the ownership, maintenance or use of the Aircraft which results from gross negligence or willful misconduct of such Party; provided, however, that neither Party will be liable for any Indemnified Loss to the extent: |
| (a) | Such loss is covered by the insurance policies described in this Paragraph 9 (the “Policies”); |
| (b) | Such loss is covered by the Policies but the amount of such loss exceeds the policy limits specified by Clients; |
| (c) | Such loss consists of expenses incurred in connection with any loss covered in whole or in part by the Policies but such expenses are not fully covered by the Policies; or |
| (d) | Such loss is caused by the gross negligence or willful misconduct of the Indemnitee. |
| 9.6. | LIMITATION ON LIABILITY. EACH PARTY ACKNOWLEDGES AND AGREES THAT: (I) THE PROCEEDS OF INSURANCE TO WHICH IT IS ENTITLED; (II) ITS RIGHTS TO INDEMNIFICATION FROM THE OTHER PARTY UNDER SECTION 9.5; AND (III) ITS RIGHT TO DIRECT DAMAGES ARISING IN CONTRACT FROM A BREACH OF THE OTHER PARTY’S OBLIGATIONS UNDER THIS AGREEMENT, ARE THE SOLE REMEDIES FOR ANY DAMAGE, LOSS, OR EXPENSE A RISING OUT OF THIS AGREEMENT OR THE SERVICES PROVIDED |
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| (OR OMITTED TO BE PROVIDED) HEREUNDER OR CONTEMPLATED HEREBY. EXCEPT AS EXPRESSLY SET FORTH IN THIS SECTION 9.6, EACH PARTY WAIVES ANY RIGHT TO RECOVER ANY DAMAGE, LOSS OR EXPENSE ARISING OUT OF THIS AGREEMENT OR THE SERVICES PROVIDED HEREUNDER OR CONTEMPLATED HEREBY. IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR OR HAVE ANY DUTY FOR INDEMNIFICATION OR CONTRIBUTION TO THE OTHER PARTY FOR ANY CLAIMED INDIRECT, SPECIAL, INCIDENTAL, CONSEQUENTIAL, OR PUNITIVE DAMAGES, OR FOR ANY DAMAGES CONSISTING OF DAMAGES FOR LOSS OF USE, REVENUE, PROFIT, BUSINESS OPPORTUNITIES AND THE LIKE, OR FOR DEPRECIATION OR DIMINUTION IN VALUE OF THE AIRCRAFT, OR INSURANCE DEDUCTIBLE, EVEN IF THE PARTY HAD BEEN ADVISED, OR KNEW OR SHOULD HAVE KNOWN, OF THE POSSIBILITY OF SUCH DAMAGES. |
| 9.7. | Survival. The provisions of Sections 9.5 and 9.6 will survive the termination or expiration of this Agreement. |
| 10. | Duration, Notification, and Termination |
| 10.1. | Term. The Term of this Agreement is specified in Section III of the Specific Terms. At any time during the Term, either party may request that the parties engage in good faith discussions with respect to changes desired by such party in the terms of this Agreement, and if such new terms have not been agreed to by the parties within thirty (30) days after the date of such request, then either party may terminate this Agreement upon written notice given at least ninety (90) days prior to the effective date of such termination. Notwithstanding the foregoing, this Agreement shall be terminable in accordance with the following provisions: |
| (a) | This Agreement shall terminate, upon written notice from either party to the other, in the event of a total loss or destruction of the Aircraft, damage to the Aircraft that causes it, in the reasonable opinion of such party, to be irreparable, or theft of the Aircraft. |
| (b) | This Agreement shall terminate, effective on not less than ninety (90) days’ prior written notice from MSG to Client, if MSG will no longer operate a flight support department as of such effective date (which notice shall be given by MSG to Client as soon as reasonably practicable after MSG becomes aware that such is or will become the case). |
| (c) | MSG acknowledges and agrees that nothing in this Agreement shall affect in any way the right of the owner of the Aircraft to sell it. In the event that the owner of the Aircraft enters into an agreement to sell the Aircraft, Client shall promptly notify MSG to that effect. This Agreement shall terminate effective as of the later to occur of (i) the closing of the sale of the Aircraft, or (ii) ninety (90) days after such written notice by Client to MSG; provided, that, if Client purchases a new aircraft, Client may provide written notice to MSG of its intent not to terminate this Agreement and continue operating under the terms provided herein, subject to reasonable adjustments of fees, allocation of flight support personnel, hangar costs, etc., based on any different needs of such new aircraft. |
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| 10.2. | Effect of Termination. In the event of a termination of this Agreement, whether as a result of a default or the expiration of its Term, MSG shall immediately cease its performance hereunder and return the Aircraft at Client’s expense to the custody of Client or its agents or representatives at any airport in the northeastern United States designated in writing by Client along with all maintenance records, flight logs, manuals, ledgers, etc.; provided, that, MSG agrees that it will continue to provide Client space at the Operating Base for Client’s Aircraft for the lesser of twelve (12) months from the effective date of such termination, or such time period that MSG retains control of the Operating Base pursuant to an underlying sublease (or comparable agreement), at the same cost as the Hangar Fee provided for hereunder. Client and MSG agree that in the event of termination, the parties will negotiate in good faith terms of a separate sublease (or comparable agreement) for Client’s Aircraft to be stored at the Operating Base. |
| 10.3. | Notices. All notices or other communications delivered or given under this Agreement shall be in writing and shall be deemed to have been duly given if hand-delivered, sent by certified or registered mail, return receipt requested, or nationally-utilized overnight delivery service, Portable Document Format (“PDF”) or confirmed facsimile transmission, as the case may be. Such notices shall be addressed to the parties at the addresses set forth in Section IV of the Specific Terms, or to such other address as may be designated by any party in a writing delivered to the other in the manner set forth in this Section 10.3. Notices sent by certified or registered mail shall be deemed received three (3) business days after being mailed. All other notices shall be deemed received on the date delivered. Routine communications may be made by e-mail or fax to the addresses set forth herein. |
| 10.4. | Default. In addition to the termination provisions set forth in Section 10.1 above, this Agreement may be terminated immediately by the party not in default (without prejudice to any other rights that such party may have) upon written notice to the defaulting party in the event of any of the following (each, an “Event Default”): |
| (a) | failure of the defaulting party to make payments due hereunder within ten (10) business days of a notice from the non-defaulting party that such payment was not timely made when due; |
| (b) | except as provided in Section 10.4(c)-(f), violation or default of any term, obligation or condition of a non-monetary nature set forth in this Agreement, together with a failure to cure within ten (10) days after receipt of written notice of such violation; |
| (c) | breach of any material warranty or provision, or falsity of any material representation, made by Clients or MSG in connection with this Agreement; |
| (d) | if the Aircraft is operated by or maintained in violation of any law, regulation, directive or order of any governmental authority or in violation of any provision of any insurance policy contemplated by this Agreement, unless such violation can reasonably be cured, in which case the defaulting party shall have failed to cure such violation within ten (10) days after receipt of written notice thereof; |
| (e) | lapse of insurance coverage required to be kept in force by the defaulting party; or |
| (f) | if MSG or Clients shall make a general assignment for the benefit of creditors, or be declared insolvent or bankrupt under any bankruptcy, insolvency or other similar law, or commence a voluntary proceeding seeking liquidation, reorganization or other relief under any such law or seeking the appointment of a receiver or liquidator over any substantial portion of their respective assets. |
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| 11. | Force Majeure |
| 11.1. | General. Neither party will be deemed to be in breach of its obligations hereunder or have any liability for any delay, cancellation, or damage arising in whole or in part from any act of God, act of nature, acts of civil or military authority, civil unrest, war, terrorism, strike or labor dispute, mechanical failure, lack of essential supplies or parts, or for any cause, whether similar or dissimilar to any of the foregoing, beyond the reasonable control of such party. The time required for any performance hereunder shall be extended by the duration of any such event(s). |
| 12. | Liens |
| 12.1. | No Liens. MSG shall ensure that no liens, attachments, levies or executions are created or placed against the Aircraft by MSG or third parties as a result of MSG’s acts or omissions other than third-party liens to be discharged in the ordinary course of business. MSG shall notify Clients promptly upon learning of any liens against the Aircraft and will forthwith satisfy, bond off or discharge any such liens caused by the acts or omissions of MSG or the breach of MSG of its obligations under this Agreement. |
| 13. | Miscellaneous |
| 13.1. | Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, determined without regard to its conflicts of laws principles. If any provision of this Agreement conflicts with any statute or rule of law of the State of New York or is otherwise unenforceable, such provision shall be deemed null and void only to the extent of such conflict or unenforceability and shall be deemed separate from and shall not invalidate any other provision of this Agreement. |
| 13.2. | Headings. Captions and paragraph headings in this Agreement are inserted only as a matter of convenience, and in no way define, limit, extend or interpret the scope of this Agreement or of any particular section. |
| 13.3. | Modification. This Agreement shall not be modified or amended or any provision waived except by an instrument in writing signed by authorized representatives of the parties. |
| 13.4. | Successors and Assigns. Neither party shall have the right to assign this Agreement without the prior written consent of the other party; provided, however, that MSG shall have the right, upon notice to Clients, to assign this Agreement to any affiliate of The Madison Square Garden Company. This Agreement shall be binding upon the parties hereto and their respective heirs, executors, administrators, successors and assigns, and shall inure to the benefit of the parties hereto and their respective heirs, executor’s administrators, successors and permitted assigns. |
| 13.5. | Counterparts. This Agreement may for all purposes be executed in several counterparts, each of which shall be deemed an original, and all such counterparts, taken together, shall constitute the same instrument, even though all parties may not have executed the same counterpart of this Agreement. Each party may transmit its signature by confirmed facsimile or PDF transmission, and such signatures shall have the same force and effect as an original signature. |
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| 13.6. | Venue. Any legal action, suit or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby may be instituted in any state or federal court in the State of New York. Each party waives any objection which such party may now or hereinafter have to the laying of the venue in New York County, New York in any such action, suit or proceeding, and irrevocably submits to the jurisdiction of any such court in any such action, suit or proceeding. |
| 13.7. | Integration. This Agreement sets forth the entire agreement between the parties with respect to the subject matter hereof and supersedes any and all other agreements, understandings, communications, representations or negotiations, whether oral or written, between the parties with respect to the support services for the Aircraft. There are no other agreements, representations or warranties, whether oral or written, express or implied, relating to the support services for the Aircraft that are not expressly set forth in this Agreement. |
| 13.8. | No Partnership or Joint Venture. Nothing contained in this Agreement will in any way create any partnership or joint venture relationship between MSG and Clients or be construed as evidence of the intention of the parties to constitute such. |
| 13.9. | WAIVER OF JURY TRIAL. EACH PARTY HEREBY KNOWINGLY AND VOLUNTARILY WAIVES ITS RIGHTS TO A JURY TRIAL IN ANY ACTION, SUIT OR PROCEEDING RELATING TO, ARISING UNDER OR IN CONNECTION WITH THIS AGREEMENT AND ANY OTHER DOCUMENT, AGREEMENT OR INSTRUMENT EXECUTED AND/OR DELIVERED IN CONNECTION WITH THE FOREGOING. |
| 13.10. | Related Agreements. The parties hereto acknowledge and agree that the terms reflected in this Agreement, including but not limited to the allocation of certain expenses and fees, are based on the assumption that, in addition to this Agreement, MSG is party to Aircraft Support Services Agreements providing for substantially similar services as those covered herein with each of JD & the Straight Shot, LLC and Brighid Air, LLC (each such current agreement, or any future amended, restated or replacement agreement, a “Related Agreement”). In the event that any such Related Agreement is terminated or otherwise expires, and this Agreement shall continue, the parties will work in good faith to revise the terms of this Agreement to reflect updated terms, including but limited to allocation of certain expenses and fees, to ensure that the terms are equitable to the parties to this Agreement and any remaining Related Agreement. In addition, the parties hereto acknowledge and agree that in the event that factors cause the terms of this Agreement to be economically unfair to one party, the parties will work together in good faith to adjust these terms to achieve a more equitable arrangement. |
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IN WITNESS WHEREOF, the parties have executed this Aircraft Support Services Agreement as of the Effective Date shown in Section III of the Specific Terms.
| CHARLES F. DOLAN | MSG SPORTS & ENTERTAINMENT, LLC | |||||||
| /s/ Charles F. Dolan | By: | /s/ Donna Coleman | ||||||
| THOMAS C. DOLAN | Name: Donna Coleman Title: EVP & Chief Financial Officer | |||||||
| /s/ Thomas C. Dolan | ||||||||
| DEBORAH DOLAN-SWEENEY | ||||||||
| /s/ Deborah Dolan-Sweeney | ||||||||
| PATRICK F. DOLAN | ||||||||
| /s/ Patrick F. Dolan | ||||||||
| MARIANNE DOLAN WEBER | ||||||||
| /s/ Marianne Dolan Weber | ||||||||
| KATHLEEN M. DOLAN | ||||||||
| /s/ Kathleen M. Dolan | ||||||||
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Exhibit 10.2
EXECUTION VERSION
AIRCRAFT DRY LEASE AGREEMENT
THIS AIRCRAFT DRY LEASE AGREEMENT (this “Lease”) is entered in effective as of December 17, 2018, by and between STERLING2K LLC, a New York limited liability company with an address at 340 Crossways Park Drive, Woodbury, NY 11797 (“Lessor” or “Sterling”) and MSG SPORTS & ENTERTAINMENT, LLC, a Delaware limited liability company with an address at Two Pennsylvania Plaza, New York, New York 10121 (“Lessee” or “MSG”).
W I T N E S S E T H
WHEREAS, Lessor is the owner of a Gulfstream Aerospace GV-SP (G550) aircraft, manufacturer’s serial number 5043, United States registration N107VS, including its engines, accessories, components and parts (the “Aircraft”); and
WHEREAS, the parties have agreed that Lessor shall lease the Aircraft to Lessee on a non-exclusive basis for use by Lessee upon the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants, agreements, representations and warranties set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which hereby are acknowledged, Lessor and Lessee, intending to be legally bound, agree as follows:
1. Lease of Aircraft.
(a) This Lease sets forth the exclusive terms and conditions under which Lessee is entitled to use the Aircraft, and Lessee shall have no right to use the Aircraft except as expressly set forth herein. Lessor shall lease the Aircraft to Lessee, and Lessee shall lease the Aircraft from Lessor, during all Lease Periods throughout the Term (as defined in Section 12) of this Lease as provided hereunder. “Lease Periods” shall mean those times, if any, when the Aircraft is being utilized by Lessee hereunder, with the consent of Lessor as provided in Section 1(e), for flight operations conducted by Lessee under Part 91 of the Federal Aviation Regulations (“FARs”), including any deadhead, ferry or repositioning flights to return the Aircraft to the airport at which the Lease Period commenced or to position the Aircraft for a Lessee trip at a remote location away from Republic Airport, Farmingdale, New York (KFRG), but excluding any deadhead, ferry and repositioning flights described in Section 1(b) below (“Lessee Flights”). Lessee’s right to use the Aircraft hereunder during the Term shall be non-exclusive and is subject in all respects to (i) Lessor’s right to use the Aircraft at all times during the Term other than during such Lease Periods and (ii) Lessor’s right to permit other non-exclusive lessees to use the Aircraft under their operational control and possession, command and control
(b) Notwithstanding the foregoing, the parties agree that if a trip by Lessee causes or will cause the Aircraft to be at a remote location away from KFRG (“Lessee’s Location”), Lessee shall, at Lessor’s request, permit the Aircraft to be relocated from Lessee’s Location to KFRG or other location designated by Lessor (and thereafter shall be returned to Lessee’s Location) if Lessor requires use of the Aircraft directly or for one of its affiliated non-exclusive lessees, but only if such itinerary will not unreasonably delay or interfere with any scheduled flight by Lessee. In that event, (i) Lessee’s then-current Lease Period shall terminate effective as of initial engine start-up for the departure flight from Lessee’s Location; (ii) Lessor or its affiliated non-exclusive lessee shall pay all costs incurred during the period in which the Aircraft is away from Lessee’s Location, including all occupied and deadhead legs to ferry the Aircraft from Lessee’s Location and back; and (iii) a new Lease Period shall begin effective as of final engine shut-down upon return of the Aircraft to Lessee’s Location.
(c) Transfer of the Aircraft from Lessor to Lessee to commence a Lease Period hereunder, and transfer of the Aircraft from Lessee to Lessor to terminate a Lease Period hereunder, shall be evidenced by the entry of appropriate notations of such transfer on the Aircraft’s logs. Upon the commencement or termination of any Lease Period hereunder, the party transferring possession of the Aircraft shall deliver the Aircraft to the other party at KFRG or such other location as the parties may agree. In the case of a transfer of possession from Lessee to Lessor, the Aircraft shall be in at least the same operating condition, order, repair and condition as when received by Lessee at the commencement of the Lease Period, reasonable wear and tear and maintenance events arising during the Lease Period not caused by Lessee’s gross negligence or willful misconduct excepted.
(d) Subject to Aircraft and crew availability, Lessor shall use its good faith efforts, consistent with Lessor’s approved policies, in order to accommodate the needs of Lessee, to avoid conflicts in scheduling with Lessor’s affiliated non-exclusive lessees’ use of the Aircraft, and to enable Lessee to enjoy the benefits of this Lease; however, Lessee acknowledges and agrees that notwithstanding anything in this Lease to the contrary, Lessor shall have sole and exclusive final authority over the scheduling of the Aircraft and Lessor’s other affiliated non-exclusive lessees’ needs for the Aircraft shall take precedence over Lessee’s rights and Lessor’s obligations under this Lease pursuant to Section 1(e).
(e) Lessee shall use its reasonable efforts to give Lessor as much advance notice of Lessee’s proposed utilization hereunder. If Lessee notifies Lessor pursuant to Section 15 of Lessee’s proposed use of the Aircraft and Lessor consents thereto, the period described in such notice of proposed use may be scheduled by Lessee (unless such intended use is cancelled by Lessee by like notice to Lessor). Notwithstanding anything herein to the contrary, all Lessee Flights approved by Lessor and scheduled by Lessee are subject to the absolute right of Lessor to revoke such approval at any time prior to twenty four (24) hours before the scheduled departure of the initial flight of the approved itinerary, without liability, upon notice to Lessee. Any notice under this Section 1(e) may be either written or oral, but shall be given only to or by individuals designated by each party from time to time as authorized to act on its behalf for purposes of this Section 1(e).
2. Rent.
(a) Lessee shall remit to Lessor the sum per block hour set forth on Schedule 1 hereto from time to time as Rent for the use of the Aircraft by Lessee during each Lease Period hereunder. For this purpose, a “block hour” shall be measured in hours and tenths of hours, rounded to the nearest tenth of an hour, from the time the Aircraft moves for purposes of flight at the departure airport to the time the Aircraft comes to a stop at the arrival airport.
(b) Not later than thirty (30) days after the end of each calendar month during the Term, Lessee shall provide to Lessor a statement showing all use of the Aircraft during Lease Periods during that month, and a complete accounting detailing any Rent due from Lessee for that month. Notwithstanding anything in this Lease to the contrary, Lessee shall have no obligation to utilize the Aircraft hereunder, and there shall be no Rent payable to Lessor hereunder with respect to any calendar month if Lessee does not use the Aircraft hereunder during such month. All payments of Rent due for any calendar month shall be made at Lessor’s address set forth above, or at such other place as Lessor may designate to Lessee in writing from time to time, not later than the thirtieth (30th) day of the following month.
(c) Not later than thirty (30) days following June 30 (the “True-Up Date”) each year during the Term, Sterling shall provide (or cause to be provided) to MSG a statement showing the total number of hours of use of the Aircraft from July 1 of the preceding year to and including the True-Up Date. The statement provided by (or on behalf of) Sterling for the period of July 1, 2018 through June 30, 2019, the statement shall include MSG’s use of Sterling Aviation LLC’s Gulfstream Aerospace G-V aircraft, manufacturer’s serial number 639, United States registration N501CV (the “GV”). Pursuant to that certain Time Sharing Agreement, effective as of July 1, 2018, between Charles F. Dolan (“CFD”) and MSG (the
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“MSG G550 Time Sharing Agreement”) providing for the lease of MSG’s Gulfstream Aerospace GV-SP aircraft, manufacturer’s serial number 5264, United States registration N551CS (the “MSG G550”) by CFD, MSG shall deliver a statement showing the total number of hours of use of the MSG G550 by CFD from July 1 of the preceding year to and including the True-Up Date. The parties acknowledge and agree that the expectation is that Lessee’s use of the Aircraft pursuant to this Lease shall be greater (on a per hour basis) than Lessor’s use of the MSG G550 pursuant to the MSG G550 Time Sharing Agreement. In the event that the total number of hours of use of the Aircraft (including use of the GV, as applicable) by MSG during such period is greater than CFD’s use of the MSG G550 for such period, MSG shall remit to Lessor as Additional Rent the sum per block hour set forth on Schedule 1 hereto for such hours in excess of CFD’s use of the MSG G550 (the “True-Up Hours”). In addition, the parties hereto acknowledge and agree that such Rent, including any Additional Rent, shall be permitted to be further adjusted to ensure that the arrangement is not economically unfair to the Lessor of the Aircraft. Notwithstanding anything in this Lease to the contrary, under no circumstances shall the fees paid under this Lease by Lessee be greater than those permitted under FAR Part 91.501(d).
3. Expenses. Lessor shall pay the entire cost of insuring, maintaining and fueling the Aircraft during the Term. Lessee shall pay the following trip-specific costs of operating the Aircraft during Lease Periods under this Lease:
(a) travel expenses of crew, including food, lodging and ground transportation;
(b) hangar and tie-down costs away from KFRG;
(c) additional insurance obtained for the specific flight at the request of Lessee;
(d) landing fees, airport taxes and similar assessments;
(e) customs, foreign permit and similar fees directly related to the flight;
(f) in-flight food and beverages;
(g) passenger ground transportation;
(h) flight planning and weather contract services; and
(i) oil, lubricants and other additives.
4. Flight Crew.
(a) Lessee shall obtain at its sole cost and expense the services of fully qualified and properly certificated flight crew to operate the Aircraft under this Lease. All flight crew provided by Lessee to operate the Aircraft during any Lease Period hereunder shall be employees or contractors of Lessee, and Lessee shall be solely responsible for their compensation.
(b) Only fully-qualified and properly-credentialed flight crew members who are included under the insurance coverage required to be maintained hereunder shall be permitted to operate the Aircraft during any Lease Period. All flight crew utilized by Lessee hereunder shall comply with all applicable regulations and the requirements of all applicable operations and maintenance manuals.
5. Operational Control; Operations.
(a) Lessor and Lessee intend that the lease of the Aircraft effected hereby shall be treated as a “dry lease”. Notwithstanding anything in this Lease to the contrary, Lessee shall have complete
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and exclusive operational control, and complete and exclusive possession, command and control, of the Aircraft for all flights during each Lease Period under this Lease. Lessee shall have complete and absolute control of the crewmembers in preparation for and in connection with the operation of all flights during each Lease Period under this Lease. Lessee shall have complete and exclusive responsibility for scheduling, dispatching and flight following of the Aircraft on all flights conducted during Lease Periods under this Lease, which responsibility includes the sole and exclusive right over initiating, conducting and terminating any such flights. Lessee shall have no operational control over any flights of the Aircraft not conducted during Lease Periods under this Lease.
(b) Lessee shall use and operate the Aircraft under this Lease only in accordance with applicable manufacturers’ recommendations and airport and climatic conditions. Neither Lessee nor Lessor shall permit the Aircraft to be maintained, used or operated in violation of any law, rule, regulation, ordinance or order of any governmental authority having jurisdiction, or in violation of any airworthiness certificate, license or registration relating to the Aircraft.
6. Regulatory. Lessee shall obtain and maintain in full force and effect any necessary certificates, licenses, permits and authorizations required for its use and operation of the Aircraft hereunder. Lessee agrees to conduct all operations contemplated by this Lease in compliance with all applicable provisions of the FARs, including, but not limited to, Part 91 thereof.
7. Records. Lessee shall maintain any records required by applicable laws, rules or regulations in connection with the operation of the Aircraft during any Lease Period hereunder. Without limiting the generality of the foregoing, Lessee shall maintain or cause to be maintained flight log books showing the full flight time of the Aircraft during each Lease Period hereunder, and shall keep such logs available for inspection by Lessor or its representatives at all reasonable times. Lessor shall be entitled, upon reasonable notice to Lessee, to inspect any books or records of Lessee that relate to the Aircraft’s use hereunder.
8. Remote Locations. Lessee shall pay the cost of hangaring the Aircraft at remote locations during any Lease Periods hereunder.
9. Insurance.
(a) During the Term, Lessor will procure and maintain or cause to be procured and maintained at its sole cost and expense aircraft insurance (the “Policy”) that satisfies all of the requirements of this Section 9. The Policy will provide: (i) all risk, both ground and in-flight hull, including hull war risks, insurance in an amount equal to the most recent appraised fair market value of the Aircraft; and (ii) liability coverage covering passengers, non-passengers, third party liability (including war risk AV52) and property damage of not less than two hundred fifty million ($250,000,000) United States dollars for each occurrence but sublimited to twenty five million ($25,000,000) United States dollars for each occurrence and aggregate with respect to Personal Injury Liability.
(b) The Policy will provide: (i) that Lessee and its affiliates and each of their respective members, managers, shareholders, officers, directors, partners, employees, agents, licensees and guests are designated as additional insureds (without responsibility for premiums) with respect to the liability coverage; (ii) that the insurer waives any right of set-off and any right of subrogation against any of the additional insureds; (iii) that no cancellation or substantial change in coverage of or failure to renew the Policy shall be effective as to the additional insureds for thirty (30) days (seven (7) days, in the case of war risk or allied perils) after receipt by Lessee of written notice from the insurer of any such cancellation or substantial change in coverage of the policy; (iv) that all coverages will be primary, not subject to any co-insurance clause, not contributory or subject to offset with respect to any other policies in force; (v) for a severability of interest clause providing that the Policy will operate in the same manner to give each insured the same protection as if there were a separate policy issued to each insured except for the limit of liability; and (vii) that the “Territory” section will provide Worldwide Coverage.
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(c) On or before the date hereof, Lessor will provide Lessee with a certificate of insurance evidencing all coverages in compliance with the requirements of this Lease.
10. Maintenance. Lessor shall, at its sole cost and expense, (i) enroll or cause the Aircraft to be enrolled on a Federal Aviation Administration (“FAA”) approved or manufacturer-recommended maintenance and inspection program under Part 91 of the FARs, and (ii) maintain or cause the Aircraft to be maintained in accordance with the requirements of the approved maintenance and inspection program and all applicable FAA regulations. No period of maintenance, preventive maintenance or inspection shall be delayed or postponed for the purpose of scheduling the Aircraft, unless said maintenance or inspection can be safely conducted at a later time in compliance with all applicable laws and regulations. Lessor represents and warrants that, at all times during the Term, the Aircraft will be in airworthy condition and current on the approved maintenance program. Lessee shall be responsible for obtaining letters of authorization in its own name as operator of the Aircraft for operations within RVSM, use of a MEL, or any other operator specific authorization required for Lessee’s operation of the Aircraft.
11. Default. In addition to the termination rights set forth in Section 12, the non-defaulting party shall have the right to terminate this Lease immediately (without prejudice to any other rights that such party may have) upon written notice to the defaulting party in the event of any one or more of the following events of default:
(i) failure of the defaulting party to make payments due hereunder within ten (10) days following notice from the non-defaulting party that such payment was not timely made when due;
(ii) except as provided in Section 11(iii) - (vii), violation or default of any material term, obligation or condition of a non-monetary nature set forth in this Lease, together with a failure to cure within ten (10) days after receipt of written notice of such violation;
(iii) if Lessee operates or maintains the Aircraft in violation of any law, regulation, directive or order of any governmental authority or in violation of any provision of any insurance policy contemplated by this Lease, unless such violation can reasonably be cured, in which case Lessee shall have failed to cure such violation within ten (10) days after receipt of written notice thereof;
(iv) if any representation or warranty made in this Lease by a party is or becomes false, misleading or incorrect in any material respect;
(v) lapse of insurance coverage required to be kept in force hereunder;
(vi) if a party shall make a general assignment for the benefit of creditors, or be declared insolvent or bankrupt under any bankruptcy, insolvency or other similar law, or commence a voluntary proceeding seeking liquidation, reorganization or other relief under any such law or seeking the appointment of a receiver or liquidator over any substantial portion of its respective assets;
(vii) assignment by a party of this Lease, except as permitted under Section 22, or any right or interest created hereunder without the prior written consent of the other party;
(viii) Lessee incurs, causes, permits, consents to, or there arises due to Lessee’s actions or failure to act, the creation, attachment, filing or registration of any lien, mortgage, security interest or other charge or encumbrance or claim or right of others against the Aircraft, other than the creation and
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attachment of statutory liens for operating costs related to Lessee Flights that arise in the ordinary course of business and that are not perfected by filing or registration against the Aircraft or the lienor asserting or retaining possession of or seizing or arresting the Aircraft.
(ix) Lessee fails to execute reasonable and customary documentation required by the Lessor to finance or continue financing of the Aircraft. Lessee knowingly operates the Aircraft in a location or manner that violates the terms of an Aircraft Loan and Security Agreement as provided by the Lessor.
(x) Lessee knowingly operates the Aircraft in or above a war or conflict zone.
12. Term. The term of this Lease (including as it may be extended pursuant to the terms hereof, the “Term”) shall commence on the date hereof and, unless terminated in accordance with the provisions hereof, shall remain in full force and effect for an initial term ending on June 30, 2019 and thereafter shall automatically renew for successive one-year terms unless either party provides written notice not less than 30 days prior to the expiration of the current term. Notwithstanding the foregoing, (a) Lessor shall have the right to terminate this Lease immediately (x) upon termination of the G550 Time Sharing Agreement, (y) upon termination of the any underlying lease of the Aircraft or (z) upon the sale of the Aircraft and (b) either party shall have the right to terminate this Lease (i) upon breach of the terms of this Lease by the other party as provided in Section 11, or (ii) for any reason or no reason by written notice given to the other party not less than ten (10) days prior to the proposed termination date.
13. Remedies on Default or Termination. In the event of a termination of this Lease, whether as a result of a default or the expiration of its Term, Lessee shall immediately cease its use of the Aircraft and return the Aircraft and all records pertaining thereto to the custody of Lessor or its agents or representatives as set forth herein at such airport as Lessor and Lessee may agree. Not later than thirty (30) days after the termination of this Lease, a full accounting shall be made between Lessee and Lessor and all accounts settled between the parties. In no event shall any termination affect the rights and obligations of the parties arising prior to the effective date of such termination. Without prejudice to or limitation or modification of the other provisions of this Lease, in no event shall either party be liable to the other for damages relating to the loss of use of the Aircraft after the date of termination of this Lease, due to default or expiration of the Term or otherwise.
14. Cross Indemnities; LIMITATION ON LIABILITY.
(a) Without limiting their respective obligations hereunder, each party (in each case, the “Indemnitor”) hereby indemnifies and holds harmless the other party and its affiliates and their respective officers, directors, partners, employees, shareholders, members and managers (in each case, collectively, the “Indemnitee”) for any claim, damage, loss, or reasonable expense, including reasonable attorneys’ fees (an “Indemnified Loss”), resulting from bodily injury or property damage arising out of the ownership, maintenance or use of the Aircraft which results from the gross negligence or willful misconduct of such party; provided, however, that neither party will be liable for any Indemnified Loss to the extent:
(i) Such loss is covered by the insurance policies described in Section 9 (the “Policies”);
(ii) Such loss is covered by the Policies but the amount of such loss exceeds the policy limits specified by Lessor;
(iii) Such loss consists of expenses incurred in connection with any loss covered in whole or in part by the Policies but such expenses are not fully covered by the Policies; or
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(iv) Such loss is caused by the gross negligence or willful misconduct of the Indemnitee.
(b) Each party agrees to look to the insurance required to be maintained under Section 9 prior to seeking indemnification from the other party hereunder.
(c) LIMITATION ON LIABILITY. EACH PARTY ACKNOWLEDGES AND AGREES THAT: (I) THE PROCEEDS OF INSURANCE TO WHICH IT IS ENTITLED; (II) ITS RIGHTS TO INDEMNIFICATION FROM THE OTHER PARTY UNDER SECTIONS 14(a) and 17; AND (III) ITS RIGHT TO DIRECT DAMAGES ARISING IN CONTRACT FROM A BREACH OF THE OTHER PARTY’S OBLIGATIONS UNDER THIS LEASE; ARE THE SOLE REMEDIES FOR ANY DAMAGE, LOSS, OR EXPENSE ARISING OUT OF THIS LEASE OR THE TRANSACTIONS CONTEMPLATED HEREBY. EXCEPT AS EXPRESSLY SET FORTH IN THIS SECTION 14(c), EACH PARTY WAIVES ANY RIGHT TO RECOVER ANY DAMAGE, LOSS OR EXPENSE ARISING OUT OF THIS LEASE OR THE TRANSACTIONS CONTEMPLATED HEREBY. IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR OR HAVE ANY DUTY FOR INDEMNIFICATION OR CONTRIBUTION TO THE OTHER PARTY FOR ANY CLAIMED INDIRECT, SPECIAL, INCIDENTAL, CONSEQUENTIAL, OR PUNITIVE DAMAGES, OR FOR ANY DAMAGES FOR LOSS OF USE, REVENUE, PROFIT, BUSINESS OPPORTUNITIES AND THE LIKE, OR FOR DEPRECIATION OR DIMINUTION IN VALUE OF THE AIRCRAFT OR INSURANCE DEDUCTIBLE, EVEN IF THE PARTY HAD BEEN ADVISED, OR KNEW OR SHOULD HAVE KNOWN OF THE POSSIBILITY OF SUCH DAMAGES.
NOTWITHSTANDING ANYTHING IN THIS LEASE TO THE CONTRARY, NEITHER PARTY SHALL HAVE ANY LIABILITY TO THE OTHER PARTY FOR ITS PERFORMANCE OR FAILURE TO PERFORM ANY OF ITS OBLIGATIONS UNDER THIS LEASE (INCLUDING, WITHOUT LIMITATION, IN THE CASE OF ITS NEGLIGENCE) EXCEPT IN THE CASE OF ITS GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
(d) The provisions of this Section 14 shall survive the termination or expiration of this Lease.
15. Notices. All notices or other communications delivered or given under this Lease shall be in writing and shall be deemed to have been duly given if hand-delivered, sent by certified or registered mail, return receipt requested, or nationally-utilized overnight delivery service, Portable Document Format (“PDF”) or confirmed facsimile transmission, as the case may be. Such notices shall be addressed to the parties at the addresses set forth above, or to such other address as may be designated by any party in a writing delivered to the other in the manner set forth in this Section 15. Notices sent by certified or registered mail shall be deemed received three (3) business days after being mailed. All other notices shall be deemed received on the date delivered. Routine communications may be made by e-mail to Lessor at officer@dfollc.com and to Lessee at joseph.yospe@msg.com or fax to Lessor at (516) 226-1155 and to Lessee at (212) 465-6148.
16. Relationship of Parties. The relationship of the parties created by this Lease is strictly that of lessor and lessee. Nothing in this Lease is intended, nor shall it be construed so as, to constitute the parties as partners or joint venturers or as principal and agent.
17. Taxes. Lessor shall pay all taxes, assessments and charges imposed by any Federal, state, municipal or other public authority upon or relating to the ownership of the Aircraft during the Term (other than any taxes, fines or penalties imposed upon Lessor as a result of a breach of this Lease by Lessee). Lessee shall pay all taxes, assessments, and charges imposed by any Federal, state, municipal or other public authority upon or relating to the rental, use or operation of the Aircraft by Lessee during the Lease Periods
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(including any sales or use tax imposed by the State of New York on any lease payment hereunder), other than income taxes of Lessor. Lessee shall also be liable for any federal excise tax imposed under Internal Revenue Code Section 4261 if such tax is applicable to any or all amounts paid (or deemed to be paid) by Lessee to Lessor hereunder. Lessee shall pay such tax to Lessor within thirty (30) days after receipt of Lessor’s written invoice therefor. Each party agrees to indemnify and hold the other harmless against any and all liabilities, costs and expenses (including attorneys’ fees) resulting from a breach of its respective undertaking hereunder.
18. Governing Law. This Lease shall be governed by and construed in accordance with the laws of the State of New York, determined without regard to its conflicts of laws principles. If any provision of this Lease conflicts with any statute or rule of law of the State of New York or is otherwise unenforceable, such provision shall be deemed null and void only to the extent of such conflict or unenforceability and shall be deemed separate from and shall not invalidate any other provision of this Lease.
19. Venue. Any legal action, suit or proceeding arising out of or relating to this Lease or the transactions contemplated hereby may be instituted in any state or federal court in the State of New York. Each party waives any objection which such party may now or hereinafter have to the laying of the venue in New York County, New York in any such action, suit or proceeding, and irrevocably submits to the jurisdiction of any such court in any such action, suit or proceeding.
20. Amendment. This Lease shall not be modified or amended or any provision waived except by an instrument in writing signed by authorized representatives of the parties.
21. Counterparts. This Lease may for all purposes be executed in several counterparts, each of which shall be deemed an original, and all such counterparts, taken together, shall constitute the same instrument, even though all parties may not have executed the same counterpart of this Lease. Each party may transmit its signature by confirmed facsimile or PDF transmission, and such signatures shall have the same force and effect as an original signature.
22. Successors and Assigns; Third-Party Beneficiaries. Neither party shall have the right to assign this Lease without the prior written consent of the other party; provided, however, that (i) Lessor shall have the right, upon notice to Lessee, to assign this Lease to any other direct or indirect wholly-owned subsidiary of Lessor provided any such assignments hereunder and the resulting ownership and operational structure are consistent with applicable FARs, and (ii) Lessee shall have the right, upon notice to Lessor, to assign this Lease to any entity controlling, controlled by, or under common control with, The Madison Square Garden Company. This Lease shall be binding upon the parties hereto and their respective heirs, executors, administrators, successors and assigns, and shall inure to the benefit of the parties hereto and their respective heirs, executors, administrators, successors and permitted assigns. This Lease shall not be construed to create any third-party beneficiary rights in any person not a party hereto (or a successor to or permitted assign of any such party).
23. Integration. This Lease sets forth the entire agreement between the parties with respect to the subject matter hereof and supersedes any and all other agreements, understandings, communications, representations or negotiations, whether oral or written, between the parties with respect to the lease of the Aircraft. There are no other agreements, representations or warranties, whether oral or written, express or implied, relating to the lease of the Aircraft that are not expressly set forth in this Lease.
24. Legal Fees and Other Costs and Expenses. In the event of any dispute, litigation or arbitration between the parties with respect to the subject matter of this Lease, the unsuccessful party to such dispute, litigation or arbitration shall pay to the successful party all costs and expenses, including, without limitation, reasonable attorneys’ fees, incurred therein by the successful party, all of which shall be included in and as a part of the judgment or award rendered in such dispute, litigation or arbitration. For purposes of this Lease, the term “successful party” shall mean the party which achieves substantially the relief sought, whether by judgment, order, settlement or otherwise.
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25. WAIVER OF JURY TRIAL. EACH PARTY HEREBY KNOWINGLY AND VOLUNTARILY WAIVES ITS RIGHTS TO A JURY TRIAL IN ANY ACTION, SUIT OR PROCEEDING RELATING TO, ARISING UNDER OR IN CONNECTION WITH THIS LEASE AND ANY OTHER DOCUMENT, AGREEMENT OR INSTRUMENT EXECUTED AND/OR DELIVERED IN CONNECTION WITH THE FOREGOING.
26. TRUTH IN LEASING. TRUTH IN LEASING STATEMENT UNDER SECTION 91.23 OF THE FEDERAL AVIATION REGULATIONS:
(a) LESSOR HEREBY CERTIFIES THAT THE AIRCRAFT HAS BEEN MAINTAINED AND INSPECTED UNDER FAR PART 91 DURING THE 12-MONTH PERIOD PRECEDING THE DATE OF EXECUTION OF THIS LEASE. THE AIRCRAFT WILL BE MAINTAINED AND INSPECTED UNDER FAR PART 91 FOR ALL OPERATIONS TO BE CONDUCTED DURING LEASE PERIODS UNDER THIS LEASE.
(b) LESSEE HEREBY CERTIFIES THAT IT IS RESPONSIBLE FOR OPERATIONAL CONTROL OF THE AIRCRAFT DURING ALL LEASE PERIODS UNDER THIS LEASE.
(c) EACH OF LESSOR AND LESSEE CERTIFIES THAT IT UNDERSTANDS ITS RESPONSIBILITIES FOR COMPLIANCE WITH APPLICABLE FEDERAL AVIATION REGULATIONS.
(d) EACH OF LESSOR AND LESSEE UNDERSTANDS THAT AN EXPLANATION OF THE FACTORS BEARING ON OPERATIONAL CONTROL AND THE PERTINENT FEDERAL AVIATION REGULATIONS CAN BE OBTAINED FROM THE NEAREST FAA FLIGHT STANDARDS DISTRICT OFFICE.
Instructions for Compliance with “Truth In Leasing” Requirements are attached hereto as Schedule 2.
(SIGNATURE PAGE FOLLOWS)
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IN WITNESS WHEREOF, the parties hereto have executed this Aircraft Dry Lease Agreement this 17th day of December, 2018, effective as of the date first written above.
| LESSOR: | ||
| STERLING2K LLC | ||
| By: | /s/ Dennis H. Javer | |
| Name: Dennis H. Javer | ||
| Title: Vice President | ||
| LESSEE: | ||
| MSG SPORTS & ENTERTAINMENT, LLC | ||
| By: | /s/ Donna Coleman | |
| Name: Donna Coleman | ||
| Title: EVP & Chief Financial Officer | ||
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SCHEDULE 1
Rent per block hour: An amount equal to actual fuel costs for each Lessee flight during such Lease Period (including any deadheads, ferry and repositioning flights). For this purpose, a flight shall be measured in hours and tenths of hours from the time the Aircraft moves for purposes of flight at the departure airport to the time the Aircraft comes to stop at the arrival airport.
Additional Rent per block hour for True-Up Hours: An amount to be determined to cover variable costs (e.g., maintenance, support, etc.) of the Aircraft for such True-Up Hours (less any amounts previously paid for such True-Up Hours).
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SCHEDULE 2
INSTRUCTIONS FOR COMPLIANCE WITH “TRUTH IN LEASING” REQUIREMENTS
1. Mail a copy of this Lease to the following address via certified mail, return receipt requested, immediately upon execution of this Lease (14 C.F.R. 91.23 requires that the copy be sent within twenty-four (24) hours after it is signed):
Federal Aviation Administration
Aircraft Registration Branch
ATTN: Technical Section
P.O. Box 25724
Oklahoma City, Oklahoma 73125
2. Telephone or fax the nearest Flight Standards District Office at least forty-eight (48) hours prior to the first flight made under this Lease.
3. Carry a copy of this Lease in the Aircraft at all times when the Aircraft is being operated under this Lease.
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Exhibit 10.3
TIME SHARING AGREEMENT
THIS TIME SHARING AGREEMENT is entered into effective as of the 17th day of December, 2018, by and between MSG SPORTS & ENTERTAINMENT, LLC, a Delaware limited liability corporation with a place of business at 2 Penn Plaza, New York, New York 10121 (“Lessor”), and ANDREW LUSTGARTEN, with a mailing address c/o of The Madison Square Garden Company, 2 Penn Plaza, New York, NY 10121 (“Lessee”).
W I T N E S S E T H:
WHEREAS, Lessor is the lessee and the operator of a Gulfstream Aerospace GV-SP (G550) aircraft, manufacturer’s serial number 5043, United States registration N107VS (the “Aircraft”); and
WHEREAS, Lessor has engaged fully-qualified and credentialed flight crew to operate the Aircraft; and
WHEREAS, Lessor has agreed to lease the Aircraft, with flight crew, to Lessee on a “time sharing” basis as defined in Section 91.501(c)(1) of the Federal Aviation Regulations (“FAR”) upon the terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing premises, and the covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are acknowledged, Lessor and Lessee, intending to be legally bound, hereby agree as follows:
1. Lease of Aircraft. Lessor agrees to lease the Aircraft to Lessee pursuant to the provisions of FAR Section 91.501(b)(6) and Section 91.501(c)(1) and this Agreement, and to provide a fully-qualified and credentialed flight crew for all flights to be conducted hereunder during the Term (as defined in Section 13) hereof. The parties acknowledge and agree that this Agreement did not result in any way from any direct or indirect advertising, holding out or soliciting on the part of Lessor or any person purportedly acting on behalf of Lessor. Lessor and Lessee intend that the lease of the Aircraft effected by this Agreement shall be treated as a “wet lease” pursuant to which Lessor provides transportation services to Lessee in accordance with FAR Section 91.501(b)(6) and Section 91.501(c)(1).
2. Payment for Use of Aircraft. Lessee shall pay Lessor the following listed actual expenses of each flight (the “Reimbursement Amount”) conducted under this Agreement (i.e. non-business flights for which reimbursement is required in accordance with Lessor’s policies), not to exceed the maximum amount legally payable for such flight under FAR Section 91.501(d)(1)-(10):
| (a) | fuel, oil, lubricants and other additives; |
| (b) | travel expenses of crew, including food, lodging and ground transportation; |
| (c) | hangar and tie-down costs away from the Aircraft’s base of operation; |
| (d) | additional insurance obtained for the specific flight at the request of Lessee; |
| (e) | landing fees, airport taxes and similar assessments; |
| (f) | customs, foreign permit and similar fees directly related to the flight; |
| (g) | in-flight food and beverages; |
| (h) | in-flight telecommunication expenses; |
| (i) | passenger ground transportation; and |
| (j) | flight planning and weather contract services. |
Notwithstanding the foregoing, in the event that any income is required to be imputed to you with respect to personal use of the Aircraft, calculated using the Standard Industry Fare Level method in accordance with Internal Revenue Service Regulation §1.61-21, the amount payable by you pursuant to this Section 2 shall be reduced by the amount necessary so that the total out of pocket cost to you, including taxes owed as a result of imputed income, is no greater than the Reimbursement Amount.
3. Operational Control of Aircraft. Lessor and Lessee intend and agree that on all flights conducted under this Agreement, Lessor shall have complete and exclusive operational control over the Aircraft, its flight crews and maintenance, and complete and exclusive possession, command and control of the Aircraft. Lessor shall have complete and exclusive responsibility for scheduling, dispatching and flight following of the Aircraft on all flights conducted under this Agreement, which responsibility includes the sole and exclusive right over initiating, conducting and terminating such flights. Lessee shall have no responsibility for scheduling, dispatching or flight following on any flight conducted under this Agreement, nor any right over initiating, conducting or terminating any such flight. Nothing in this Agreement is intended or shall be construed so as to convey to Lessee any operational control over, or possession, command and control of, the Aircraft, all of which are expressly retained by Lessor.
4. Scheduling.
(a) Lessee will provide Lessor with requests for flight time and proposed flight schedules as far in advance of any given flight as possible. Lessee or the designated authorized representative(s) of Lessee shall submit scheduling requests under this Agreement to the designated authorized representative(s) of Lessor. Requests for flight time shall be in such form (whether oral or written) mutually convenient to, and agreed upon by, the parties. In addition to proposed schedules and flight times, Lessee shall upon request provide Lessor with the following information for each proposed flight prior to scheduled departure: (i) proposed departure point; (ii) destination; (iii) date and time of flight; (iv) the number of anticipated passengers; (v) the nature and extent of luggage to be carried; (vi) the date and time of a return flight, if any; and (vii) any other pertinent information concerning the proposed flight that Lessor or the flight crew may request.
(b) Subject to Aircraft and crew availability and to any usage limitations established by Lessor, Lessor shall use its good faith efforts, consistent with Lessor’s approved policies, in order to accommodate the needs of Lessee, to avoid conflicts in scheduling, and to enable Lessee to enjoy the benefits of this Agreement; however, Lessee acknowledges and agrees that notwithstanding anything in this Agreement to the contrary, (i) Lessor shall have sole and exclusive final authority over the scheduling of the Aircraft; and (ii) the needs of Lessor for the Aircraft shall take precedence over Lessee’s rights and Lessor’s obligations under this Agreement.
(c) Although every good faith effort shall be made to avoid its occurrence, any flight scheduled under this Agreement is subject to cancellation by either party without incurring liability to the other party. In the event that cancellation is necessary, the canceling party shall provide the maximum notice practicable.
5. Billing. Lessor shall pay all expenses relating to the operation of the Aircraft under this Agreement (in accordance with Section 2 hereof) on a monthly basis. As soon as possible after the end of each monthly period during the Term, Lessor shall provide to Lessee an invoice showing all use of the Aircraft by Lessee under this Agreement during that month and a complete accounting detailing all amounts payable by Lessee pursuant to Section 2 for that month, including such detail supporting all expenses paid or incurred by Lessor for which reimbursement is sought as Lessee may reasonably request. Lessee shall pay all amounts due to Lessor under this Section 5 not later than 30 days after receipt of the invoice therefor.
6. Maintenance of Aircraft. Lessor shall be solely responsible for securing maintenance, preventive maintenance and inspections of the Aircraft (utilizing an inspection program listed in FAR Section 91.409(f)), and shall take such requirements into account in scheduling the Aircraft hereunder.
7. Flight Crew.
(a) Lessor shall employ or engage and as between Lessor and Lessee shall be responsible for the payment of all salaries, benefits and/or compensation for a fully-qualified flight crew with appropriate credentials to conduct each flight undertaken under this Agreement. All flight crewmembers shall be included on any insurance policies that Lessor is required to maintain hereunder.
(b) The qualified flight crew provided by Lessor shall exercise all of its duties and responsibilities with regard to the safety of each flight conducted hereunder in accordance with applicable FAR’s.
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The Aircraft shall be operated under the standards and policies established by Lessor. Final authority to initiate or terminate each flight, and otherwise to decide all matters relating to the safety of any given flight or requested flight, shall rest with the pilot-in-command of that flight. The flight crew may, in its sole discretion, terminate any flight, refuse to commence any flight, or take any other action that, in the judgment of the pilot-in-command, is necessitated by considerations of safety. No such termination or refusal to commence by the pilot-in-command shall create or support any liability for loss, injury, damage or delay in favor of Lessee or any other person. Lessor shall not be liable to Lessee or any other person for loss, injury or damage occasioned by the delay or failure to furnish the Aircraft and flight crew pursuant to this Agreement for any reason.
8. Insurance.
(a) At all times during the Term of this Agreement, Lessor shall maintain at its sole cost and expense (i) comprehensive aircraft and liability insurance against bodily injury and property damage claims, including, without limitation, contractual liability, premises damage, personal property liability, personal injury liability, death and property damage liability, public and passenger legal liability coverage, in an amount not less than $100,000,000 for each single occurrence and (ii) hull insurance for the full replacement cost of the aircraft.
(b) Any policies of aircraft and liability insurance carried in accordance with this Section 8 and any policies taken out in substitution or replacement of any such policies (i) shall name Lessee and his employees, agents, licensees, servants and guests as additional insured; (ii) shall provide for 30 days’ written notice to Lessee by such insurer of cancellation, change, non-renewal or reduction (seven days in the case of war risk and allied perils coverage or such shorter period as is customarily available in the industry); (iii) shall provide that in respect of the interests of Lessee in such policies, the insurance shall not be invalidated by any action or inaction of Lessor regardless of any breach or violation of any warranties, declarations or conditions contained in such policies by or binding upon Lessor; and (iv) shall permit the use of the Aircraft by Lessor for compensation or hire to the extent permitted under applicable law. Each such policy shall be primary insurance, not subject to any co-insurance clause and shall be without right of contribution from any other insurance.
(c) Lessor shall use reasonable commercial efforts to provide such additional insurance coverage for specific flights under this Agreement, if any, as Lessee may request in writing. Lessee also acknowledges that any trips scheduled to the European Union may require Lessor to purchase additional insurance to comply with local regulations. The cost of all additional flight-specific insurance shall be borne by Lessee as set forth in Section 2(d) hereof.
(d) Each party agrees that it will not do any act or voluntarily suffer or permit any act to be done whereby any insurance required hereunder shall or may be suspended, impaired or defeated. In no event shall Lessor suffer or permit the Aircraft to be used or operated under this Agreement without such insurance being fully in effect.
(e) Lessor shall ensure that worker’s compensation insurance with all-states coverage is provided for the Aircraft’s crew and maintenance personnel.
(f) Lessor shall deliver certificates of insurance to Lessee with respect to the insurance required or permitted to be provided by it hereunder not later than the first flight of the Aircraft under this Agreement and upon the renewal date of each policy.
9. Taxes. Lessee shall be responsible for paying, and Lessor shall be responsible for collecting from Lessee and paying over to the appropriate authorities, all applicable Federal transportation taxes and sales, use or other excise taxes imposed by any governmental authority in connection with any use of the Aircraft by Lessee hereunder. Each party shall indemnify the other party against any and all claims, liabilities, costs and expenses (including attorney’s fees as and when incurred) arising out of its breach of this undertaking.
10. Lessee’s Representations and Warranties. Lessee represents and warrants that:
(a) He will not use the Aircraft for the purposes of providing transportation of passengers or cargo in air commerce for compensation or hire or for common carriage.
(b) He shall refrain from incurring any mechanic’s or other liens in connection with inspection, preventive maintenance, maintenance or storage of the Aircraft, and shall not attempt to convey, mortgage, assign, lease or in any way alienate the Aircraft or create any kind of lien or security interest involving the Aircraft or do anything or take any action that might mature into such a lien.
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(c) He shall not lien or otherwise encumber or create or place any lien or other encumbrance of any kind whatsoever, on or against the Aircraft for any reason. He also will ensure that no liens or encumbrances of any kind whatsoever are created or placed against the Aircraft for claims against Lessee or by Lessee.
(d) He will abide by and conform to all laws, governmental and airport orders, rules and regulations, as shall be imposed upon the lessee of an aircraft under a time sharing agreement, and applicable company policies of Lessor.
11. Lessor’s Representations and Warranties. Lessor represents and warrants that it will abide by and conform to all such laws, governmental and airport orders, rules and regulations, as shall from time to time be in effect relating in any way to the operation and use of the Aircraft pursuant to this Agreement.
12. Disclaimer of Warranties. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, LESSOR HAS MADE NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT, INCLUDING ANY WITH RESPECT TO ITS CONDITION, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE. IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY OR TO ANY OTHER PERSON FOR ANY INCIDENTIAL, CONSEQUENTIAL OR SPECIAL DAMAGES, HOWEVER ARISING.
13. Term. The term of this Agreement (the “Term”) shall commence on the effective date hereof and, unless terminated in accordance with the provisions hereof, shall remain in full force and effect for so long as you remain employed by The Madison Square Garden Company or any of its subsidiaries. Notwithstanding the foregoing, either party shall have the right to terminate this Agreement for any reason or no reason by written notice given to the other party not less than 30 days prior to the proposed termination date.
14. Limitation of Liability. Lessee, for himself and on behalf of his agents, guests, invitees, licensees, servants and employees, covenants and agrees that the insurance described in Section 8 hereof shall be the sole recourse for any and all liabilities, claims, demands, suits, causes of action, losses, penalties, fines, expenses or damages, including attorneys’ fees, court costs and witness fees, attributable to the use, operation or maintenance of the Aircraft pursuant to this Agreement or performance of or failure to perform any obligation under this Agreement.
15. Relationship of Parties. Lessor is strictly an independent contractor lessor/provider of transportation services with respect to Lessee. Nothing in this Agreement is intended, nor shall it be construed so as, to constitute the parties as partners or joint venturers or principal and agent. All persons furnished by Lessor for the performance of the operations and activities contemplated by this Agreement shall at all times and for all purposes be considered Lessor’s employees or agents.
16. Governing Law; Severability. This Agreement shall be governed by and interpreted in accordance with the laws of the State of New York, without regard to its choice of law rules. If any provision of this Agreement conflicts with any statute or rule of law of the State of New York, or is otherwise unenforceable, such provision shall be deemed null and void only the extent of such conflict or unenforceability, and shall be deemed separate from, and shall not invalidate, any other provision of this Agreement.
17. Amendment. This Agreement may not be amended, supplemented, modified or terminated, or any of its terms varied, except by an agreement in writing signed by each of the parties hereto.
18. Counterparts. This Time Sharing Agreement may be executed in counterparts, each of which shall, for all purposes, be deemed an original and all such counterparts, taken together, shall constitute one and the same agreement, even though all parties may not have executed the same counterpart. Each party may transmit its signature by facsimile, and such faxed signature shall have the same force and effect as an original signature.
19. Successors and Assigns. This Time Sharing Agreement shall be binding upon the parties hereto, and their respective heirs, executors, administrators, other legal representatives, successors and assigns, and shall inure to the benefit of the parties hereto, and, except as otherwise provided herein, to their respective heirs,
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executors, administrators, other legal representatives, successors and permitted assigns. Lessee agrees that he shall not directly or indirectly sublease, assign, transfer, pledge or hypothecate this Agreement or any part hereof (including any assignment or transfer pursuant to the laws of intestacy) without the prior written consent of Lessor, which may be given or withheld by Lessor in its sole and absolute discretion.
20. Notices. All notices or other communications delivered or given under this Agreement shall be in writing and shall be deemed to have been duly given if hand- delivered, sent by certified or registered mail, return receipt requested, or nationally-utilized overnight delivery service, or confirmed facsimile transmission, as the case may be. Such notices shall be addressed to the parties at the addresses set forth above, or to such other address as may be designated by any party in a writing delivered to the other in the manner set forth in this Section 20. In the case of notices to Lessor, a copy of each such notice shall be sent to MSG Sports & Entertainment, 2 Penn Plaza, New York, New York 10121, attention: General Counsel. Notices sent by certified or registered mail shall be deemed received three business days after being mailed. All other notices shall be deemed received on the date delivered. Routine communications may be made by e-mail or fax to the addresses set forth therein.
21. Truth-in-Leasing Compliance. Lessor, on behalf of the Lessee, shall (i) mail a copy of this Agreement to the Aircraft Registration Branch, Technical Section, of the FAA in Oklahoma City within 24 hours of its execution; (ii) notify the Farmingdale Flight Standards District Office at least 48 hours prior to the first flight by Lessor under this Agreement of the registration number of the Aircraft, and the location of the airport of departure and departure time of the first flight; and (iii) carry a copy of this Agreement onboard the Aircraft at all times when the Aircraft is being operated under this Agreement.
22. TRUTH IN LEASING STATEMENT UNDER FAR SECTION 91.23:
(A) LESSOR HEREBY CERTIFIES THAT THE AIRCRAFT HAS BEEN MAINTAINED AND INSPECTED UNDER FAR PART 91 DURING THE 12-MONTH PERIOD PRECEDING THE DATE OF EXECUTION OF THIS AGREEMENT. THE AIRCRAFT WILL BE MAINTAINED AND INSPECTED IN COMPLIANCE WITH THE MAINTENANCE AND INSPECTION REQUIREMENTS OF FAR PART 91 FOR ALL OPERATIONS TO BE CONDUCTED UNDER THIS AGREEMENT.
(B) MSG SPORTS & ENTERTAINMENT, LLC, 2 PENN PLAZA, NEW YORK, NEW YORK 10121, HEREBY CERTIFIES THAT IT IS RESPONSIBLE FOR OPERATIONAL CONTROL OF THE AIRCRAFT FOR ALL OPERATIONS UNDER THIS AGREEMENT.
(C) EACH PARTY HEREBY CERTIFIES THAT IT UNDERSTANDS ITS RESPONSIBILITIES FOR COMPLIANCE WITH APPLICABLE FEDERAL AVIATION REGULATIONS.
(D) THE PARTIES UNDERSTAND THAT AN EXPLANATION OF THE FACTORS BEARING ON OPERATIONAL CONTROL AND THE PERTINENT FEDERAL AVIATION REGULATIONS CAN BE OBTAINED FROM THE NEAREST FAA FLIGHT STANDARDS DISTRICT OFFICE.
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IN WITNESS WHEREOF, Lessor and Lessee have executed this Time Sharing Agreement effective as of the date first above written.
| LESSOR: | ||
| MSG SPORTS & ENTERTAINMENT, LLC | ||
| By: | /s/ Donna Coleman | |
| Name: Donna Coleman | ||
| Title: EVP & Chief Financial Officer | ||
| LESSEE: | ||
| /s/Andrew Lustgarten | ||
| Andrew Lustgarten | ||
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