Exhibit 10.4
MODIFICATION OF JOINT OPERATING AGREEMENT
Western Professional Hockey League, Inc. ("WPHL"), a Texas corporation, and
Central Hockey League, Inc. ("CHL"), an Illinois corporation, enter into this
Modification of Joint Operating Agreement as follows:
WHEREAS, the parties entered into a Joint Operating Agreement dated as of
July 19, 2001 (the "JOA"); and
WHEREAS, the parties desire to modify certain provisions of the JOA to
resolve disputes among themselves and to create greater certainty in the
operation of the JOA; and
WHEREAS, this Modification Agreement represents a compromise agreement and,
along with the parties' Settlement Agreement and Mutual Release of even date, is
intended to resolve all disputes among the parties except as expressly reserved
hereunder.
NOW, THEREFORE, for good and valuable consideration had among the parties,
the sufficiency of which is hereby acknowledged, the parties agree to modify the
JOA as set forth herein.
1. Paragraph II.1 of the JOA shall be modified by deleting the existing
provision in its entirety and replacing it with the following:
Governance. Notwithstanding any other provision of this Agreement,
WPHL and CHL shall remain separate legal entities, shall maintain separate
books and records, and shall be solely responsible for their own
obligations.
The League shall be governed by an oversight board (the "Board")
consisting of two representatives of WPHL, two representatives of CHL, and
a fifth member to be mutually agreed upon by the WPHL and the CHL.WPHL
hereby appoints Xxxx Xxxxxxxx and one member to be determined as its
current Board representatives to serve indefinitely until written notice of
a change is delivered by WPHL to CHL. CHL hereby appoints Xxxxxx Xxxxx and
Xxxx Xxxx as its current Board representatives to serve indefinitely until
written notice of a change is delivered by WPHL to CHL. Unless a member is
unable to serve due to illness or other compelling circumstances, no
changes in board membership shall be made more than once per calendar year.
MODIFICATION OF JOINT OPERATING AGREEMENT - PAGE 1 OF 6
All changes in board membership shall be made by written notice to all
members, to be effective no earlier than fourteen (14) days after the date
of such notice.
The Board shall meet not less than four (4) times each calendar year,
two of such meetings to be held in person at the League's All-Star Game and
during the League's Summer Conference. The other meetings may be by
conference call or other telecommunications arrangement on not less than
two weeks notice to each board member. Notice must be in writing. A minimum
of three (3) directors must be present to constitute a quorum. The
Commissioner shall be responsible for the distribution of written board
minutes not more than twenty (20) days following each board meeting. If no
comments are received within ten (10) days from any Board member, such
minutes shall be deemed approved. Board members shall be reimbursed for all
reasonable expenses incurred solely and directly in connection with board
service.
The general duty of the Board shall be to set policy for the
operations of the League by the Staff. Oversight of League Operations shall
be generally vested in an Executive Committee of the Board consisting of
the Commissioner and a representative from WPHL and CHL. WPHL hereby
appoints Xxxx Xxxxxxxx and CHL hereby appoints Xxxx Xxxx as respective
representatives to the Executive Committee. Any matter except the annual
operating budget upon which the Executive Committee is in agreement shall
be deemed to be approved by the Board. The entire Board shall approve
annual operating budgets for each season by an affirmative vote of not less
than three (3) members not later than June 1 of each year. The Board shall
receive the proposed budget not later than fourteen (14) days prior to the
vote on approval of such budget. The members of the Executive Committee,
expect the league Commissioner, shall receive compensation of $8,500 per
year.
The Board shall approve budgets, determine compensation for league
personnel, approve financial statements, close out the year, , acquire
errors and omission Insurance, and approve any change of trademarks. The
Board may review policy and existence of Letters of Credit, League
expansion, team transfers, control changes, benefits for league personnel,
legal settlements in excess of $50,000, workers compensation insurance
carriers and coverage, and League office relocations.
MODIFICATION OF JOINT OPERATING AGREEMENT - PAGE 2 OF 6
2. Management. Paragraph II.2 of the JOA is modified by deleting the
existing provision in its entirety and replacing it with the following:
The League operations shall be run by the WPHL Staff as currently
identified on the attached Exhibit "A." WPHL and the CHL hereby designate
Xxxxx Xxxxx, WPHL Vice President Operations, as the acting Commissioner.
The Commissioner shall serve indefinitely until written notice of a change
is delivered by WPHL to CHL. Changes of personnel among the Staff may be
made by the Commissioner in his/her reasonable discretion. Written notice
of such changes shall be provided to the Board at the next regularly
scheduled meeting of the Board.
The Commissioner may add personnel in addition to the designated Staff
or incur additional, controllable, non-budgeted expense as required for the
effective operation of the League. Provided, however, any deviation from
any budgeted expense in excess of ten percent (10%) must be approved in
advance by the Executive Committee.
The Staff shall maintain all appropriate financial records including
an interim balance sheet, quarterly and year-to-date income statements,
accounts payable aging and accounts receivable aging. The Staff shall
provide each Board member with reasonable access to such records not less
than quarterly. Further, any member of the JOA may conduct an audit of the
JOA books and records at their own expense not more than once per year.
3. Expansion Fees The third sentence in Section 5 of the JOA entitled
"Expansion" is hereby amended in its entirety to read as follows:
"Expansion Fees, other than fees for the three teams exempted herein,
shall be divided as follows: in the event the expansion team is generated
by WPHL (other than persons whose salaries or wages are being fully paid
under the JOA) or in the event the expansion team is generated by CHL
(other than persons whose salaries or wages are being fully paid under the
JOA), then the originating entity (either WPHL or CHL) shall be paid 50% of
the expansion fee with the remaining 50% to be added to Operating Revenue
under the JOA; or in the event the expansion team is generated by persons
whose salaries or wages are being fully paid under the JOA, then the entire
amount of the expansion fee will be added to Operating Revenue.".
Notwithstanding the above if WPHL or its affiliates have built a new
building for the expansion team then they are entitled to the 50% share of
the associated expansion fee. In instances which do not fall in any of the
MODIFICATION OF JOINT OPERATING AGREEMENT - PAGE 3 OF 6
above categories as reasonably determined by a vote of the full Board, the
entire amount of the expansion fee will be added to Operating Revenue."
4. Section 10 of the JOA entitled "Purchase Option" is hereby deleted in
its entirety and either party is given a right of first refusal to promptly
purchase the other if a bona-fide, third party, offer to purchase the entire
ownership interest, and only such interest, is received by either party and the
receiving party is willing to accept such offer.. By way of example but not as a
limitation, if a third party offers to purchase a group of businesses under the
Global Entertainment umbrella, one of which is the WPHL, there will be no right
of first refusal
5. Paragraph II.7 of the JOA shall be expanded by adding the following at
the end thererof:
"CHL and WPHL shall use their commercially reasonable efforts to
enforce the obligations hereunder of each of their respective Teams
(including payment of all dues, fees, fines, ETC.)"
6. Paragraph II.17 of the JOA is modified to change the address for notices
to WPHL, counsel for WPHL and to add the counsel for CHL as follows:
J. Xxxxx Xxxx Xxxxxxx Xxxxxx
Xxxxxxx Xxxxxx L.L.P. Latham, Wagner, Xxxxxx & Xxxxxx, P.C.
000 X. Xxxxx, Xxxxx 0000 0000 X. Xxxxxxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxx 00000 Xxxxx, XX 00000
Counsel for WPHL Counsel for CHL
WPHL
0000 X. Xxxxxx Xxxxx
Xxxxx, XX 00000
7. The Joint Operating Agreement is hereby extended for an additional Ten
years.
8. In all their public representations, the parties shall use commercially
reasonable efforts to avoid inaccurately depicting the relationship between
Western Professional Hockey League, Inc. d/b/a Central Hockey League, Central
Hockey League, Inc., and Global Entertainment Corporation.
MODIFICATION OF JOINT OPERATING AGREEMENT - PAGE 4 OF 6
9. Paragraph II.19 of the JOA is modified to incorporate the terms of this
Modification as part of the JOA. No agreements, written or oral, other than the
JOA, Settlement Agreement and Mutual Release and this Modification form the
basis of any agreement between WPHL and CHL.
10. The parties acknowledge they have settled existing disputes between
them and have entered into a Settlement Agreement and Mutual Release that is
executed contemporaneously with this Modification. In the event of a conflict
relating to the claims settled, the Settlement Agreement and Mutual Release
shall govern.
[SIGNATURE PAGE FOLLOWS]
MODIFICATION OF JOINT OPERATING AGREEMENT - PAGE 5 OF 6
CENTRAL HOCKEY LEAGUE, INC.
by: /s/ Horn Chen
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its: President
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WESTERN PROFESSIONAL HOCKEY LEAGUE, INC.
by: /s/ Xxxx Xxxxxxxx
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its: President & CEO
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MODIFICATION OF JOINT OPERATING AGREEMENT - PAGE 6 OF 6
