Exhibit 10.21
PREFERRED ACCESS AGREEMENT
THIS AGREEMENT is made this 21st day of December, 2001, effective
January 1, 2001, between MEC HOLDINGS (CANADA) INC., an Ontario corporation
("MEC") and MAGNA INTERNATIONAL INC., an Ontario corporation ("Magna").
WHEREAS:
A. MEC owns and operates the Magna Golf Club in Aurora, Ontario (the
"Club");
B. Magna maintains its head office in Aurora, Ontario, adjacent to the
Club;
C. Magna requires the use of both the golf course and the clubhouse
meeting, dining and other facilities of the Club from time to time for
certain Magna-sponsored corporate and charitable events, as well as for
business development, marketing or other business purposes; and
D. MEC wishes to make the Club available to Magna from time to time on the
terms and conditions and in consideration of the fees provided for
herein.
NOW THEREFORE THIS AGREEMENT WITNESSES THAT in consideration of the
mutual covenants and agreements hereinafter contained and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, it is hereby agreed as follows:
1. GRANT OF PREFERRED ACCESS
(a) Magna shall have a right of access (the "Right of Access") to use, from
time to time, the clubhouse, golf course, rental suites (of which one
shall be a dedicated suite, reserved for use by Magna), meeting rooms,
dining facilities and all other areas comprising part of the Club
(collectively, "Facilities"), for:
(i) up to three (3) major and four (4) minor Magna-sponsored
one-day corporate or charitable events per annum, without
payment of any rent or other such usage fee. An event is
considered "major" if it entails the use of the Facilities, to
the exclusion of members, for substantially all of one day. A
"minor" event is one which is either restricted to a morning
or afternoon, or which can accommodate the simultaneous use of
the Facilities by members of the Club;
(ii) additional Magna-sponsored tournaments or other events, upon
payment of the Club's then applicable rate, which shall not
exceed the current fair market rate for such use of a golf
club of similar calibre; and
(iii) business development, marketing or other business purposes;
all upon the terms and conditions set out in this agreement.
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(b) Provided there is no unreasonable interference with the members of the
Club, Magna's Right of Access may be exercised in preference and
priority to all other users of the Facilities of the Club.
(c) Magna may exercise its Right of Access to the Club by notifying MEC in
writing, in advance, of the intended dates, times and Facilities
required, as well as reasonable details as to the tournament or other
event intended to be held where applicable. MEC shall promptly advise
Magna in writing whether or not the required Facilities will be
available when requested.
(d) Magna agrees to use the Club and its Facilities, and to exercise its
Right of Access, in the manner and subject to the terms and conditions
contained in this agreement.
2. MEMBERSHIPS
(a) During the term of this agreement, as long as it has paid all fees then
due and is not otherwise in default of any material provision of this
agreement, Magna shall be entitled to nominate thirty (30) members from
time to time (the "Nominated Members") to enjoy all the rights and
privileges of membership in the Club, without payment of any membership
fees or annual fees.
(b) Spouses of Nominated Members may enjoy all the rights and privileges of
spousal membership in the Club, so long as their spouses are Nominated
Members, without payment of any membership fees or annual fees.
(c) Guests of Nominated Members may use the Facilities of the Club, without
payment of guest fees, and with or without the Nominated Member being
present at the time, provided there is no unreasonable interference
with the members of the Club.
(d) During the term of this agreement, Magna shall be entitled to change
its designation of its Nominated Members, as often as it wishes,
without payment of any transfer fees.
(e) During the term of this agreement, Magna shall be given advance notice
of and be entitled to veto any proposed material change in the
operating philosophy and/or governing rules and other regulations of
the Club, provided that, MEC shall continue to have full authority and
discretion to manage the day-to-day operations of the Club as it sees
fit.
(f) Upon the expiry of the term of this agreement, Magna shall have the
option, provided it has paid all fees due hereunder and is not
otherwise in default of any material provision of this agreement, to
purchase:
(i) thirty (30) memberships with accompanying spousal memberships
for CDN $1.00 each; and
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(ii) at any time or from time to time, within the next ten (10)
years, up to an additional twenty (20) memberships for
CDN$65,000 each.
3. TERM
The term of this agreement shall be deemed to have commenced on January
1, 2001 and shall terminate at 11:59 p.m. on December 31, 2003.
4. FEES AND OTHER CHARGES
Magna covenants and agrees to pay to MEC the following fees and other
charges at the time or times hereinafter provided:
(a) ANNUAL FEE: The sum of CDN $5.0 million per annum (the "Annual Fee"),
together with GST and/or PST, if applicable, payable monthly in advance
in equal instalments of CDN$416,667 per month during the term of this
agreement, commencing January 2002. The Annual Fee for 2001, being CDN
$5.0 million, shall be paid in full no later than December 31, 2001.
(b) EXPENSES: MEC's regular charges for all goods and services consumed
pursuant to the Right of Access, with the sole exception of greens
fees, golf cart rental fees and the goods and services provided
pursuant to Section 5 (which are included in the Annual Fee).
(c) TAXES: An amount equal to all taxes (excluding income taxes), licence
fees, rates, duties, assessments and other fees payable by MEC pursuant
to any applicable law arising from Magna's use of the Facilities.
Restaurant, pro shop and other goods and services shall be billed
monthly by MEC to Magna at MEC's regular rates, without any discount or
surcharge. All amounts due from Magna to MEC hereunder, other than the Annual
Fee, shall be paid within thirty (30) days of the date of any invoice delivered
by MEC to Magna.
5. SERVICES SUPPLIED BY MEC
(a) In connection with any corporate or charitable tournament or other
event held by Magna at the Club, MEC shall furnish to Magna, without
charge, the services customarily provided by operators of comparable
facilities for such events, but expressly excluding food and beverage
services and pro shop purchases, which shall be billed at MEC's regular
rates for such goods and services.
(b) MEC shall rebate to Magna, on a quarterly basis, in arrears, all
amounts paid by Magna for food and beverage services consumed:
(i) by Nominated Members or their guests, up to a maximum of
$300,000 per year; and
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(ii) by occupants of the rental suites at the Club.
6. REPRESENTATIONS, WARRANTIES AND COVENANTS
(a) Magna hereby represents, warrants and covenants as follows and
acknowledges that MEC is relying upon the same in entering into this
agreement:
(i) Magna will not use or permit the use of the Club or its
Facilities, nor do or permit anything to be done on or about
the Club's premises or its Facilities, in violation in any
material respect of any applicable laws or regulations;
(ii) Magna will not use or permit the use of the Club or its
Facilities, nor do or permit anything to be done on or about
the Club's premises or its Facilities, which, in whole or in
part, is detrimental in any material respect to the image or
reputation of the Club, MEC or Magna Entertainment Corp.;
(iii) Magna shall comply in all material respects with those rules
and regulations published from time to time by MEC relating to
the use of the Club and its Facilities by Club members and
others provided that they are not inconsistent with Magna's
rights under this agreement;
(iv) Magna will not use or permit anything to be done on or about
the Club's premises or its Facilities which (i) would create a
material risk, threat or danger to the Club or any part of its
Facilities, the contents of any building thereon or to any
person on or about the Club, or (ii) would constitute a
material nuisance, including without limitation, the making or
permitting of any unusually loud noise, or disrupt the members
or other customers of the Club; and
(v) the execution and delivery of this agreement have been duly
authorized by the Board of Directors of Magna and this
agreement has been validly executed and delivered by the
proper officers of Magna pursuant to such authorization.
(b) MEC hereby represents, warrants and covenants as follows and
acknowledges that Magna is relying upon the same in entering into this
agreement:
(i) this agreement has been validly executed and delivered by the
proper officers of MEC; and
(ii) although senior management of MEC may submit this agreement to
the Board of Directors of its parent company, Magna
Entertainment Corp., for ratification, no such prior approval
is required in order for this agreement to be binding on MEC.
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7. RESPONSIBILITY AND INDEMNITY
(a) Magna hereby assumes responsibility for the actions and conduct of all
persons admitted to the Club or to any portion of its Facilities in
connection with a Magna-sponsored tournament or other event with the
consent or acquiescence of Magna or any person acting for or on behalf
of Magna.
(b) Magna agrees to indemnify and hold harmless each of MEC, its directors,
officers, employees, agents and any other person for whom MEC is
legally responsible, from and against any and all actions, claims,
costs, damages, liabilities, or losses arising from or out of the use
by Magna of the Club, or any portion of its Facilities, except for
those actions, claims, costs, damages, liabilities, or losses arising
from the negligence, wilful misconduct or unlawful act of such
indemnified parties.
8. RIGHTS OF FIRST REFUSAL
If, during the term of this agreement, MEC proposes to sell the Club as
a whole, or to sell the clubhouse and/or golf course separately, to an arm's
length third party:
(a) MEC shall advise Magna in writing of the proposed sale and provide
reasonable details as to the Facilities proposed to be sold. Magna
shall advise MEC in writing, within ten (10) business days of receipt
of such written notice, whether Magna is interested in purchasing such
Facilities. If Magna has so advised MEC of its interest to purchase,
Magna and MEC shall negotiate in good faith the terms and conditions of
such purchase. In the event a binding agreement is not reached between
Magna and MEC within sixty (60) days of Magna giving written notice of
its interest in purchasing, MEC shall be entitled to offer the
Facilities which it proposes to sell to an arm's length third party at
any time thereafter.
(b) MEC shall advise Magna in writing if it has agreed conditionally, or
received an offer which it wishes to accept, to sell the Club as a
whole, or the clubhouse and/or golf course, to an arm's length third
party and provide reasonable details as to the identity of the proposed
third party purchaser, the purchase price, the principal terms and
conditions (including the proposed closing date), as well as a copy of
any executed purchase agreement. Magna shall advise MEC, in writing,
within ten (10) business days of receipt of the purchase notice from
MEC, whether it wishes to purchase the Club or such Facilities,
whereupon there shall be a binding agreement of purchase and sale
between Magna and MEC upon the same terms and conditions as with the
proposed third party purchaser. If Magna fails to give written notice
within the ten (10) business day time period, Magna shall be deemed to
have waived its right of first refusal and MEC shall be entitled to
proceed with the sale to the third party purchaser at the purchase
price and on substantially the same terms and conditions delivered to
Magna. In the event the sale to the third party does not close within
one hundred and twenty (120) days of Magna's receipt of the purchase
notice, MEC shall be required to comply again with the terms and
conditions of this section before effecting a sale of the Club or such
Facilities to an arm's length third party.
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9. GENERAL
(a) This agreement shall be governed by and construed in accordance with
the laws of the Province of Ontario and the laws of Canada applicable
therein.
(b) This agreement shall be binding upon and enure to the benefit of the
parties and their respective successors and assigns.
(c) This agreement may be executed in any number of counterparts and may be
executed by facsimile copy. Each executed counterpart shall be deemed
to be an original; all executed counterparts taken together shall
constitute one agreement.
IN WITNESS WHEREOF the parties have duly executed this agreement as of
the date first written above.
MEC HOLDINGS (CANADA) INC.
By:_________________________________
▇▇▇▇▇▇ ▇. ▇▇▇
Executive Vice-President and
Chief Financial Officer
By:_________________________________
▇▇▇▇ ▇. ▇▇▇▇
Vice-President and Secretary
MAGNA INTERNATIONAL INC.
By:_________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Executive Vice-President, Finance &
Chief Financial Officer
By:_________________________________
J. ▇▇▇▇▇ ▇▇▇▇▇▇▇
Executive Vice-President, Special
Projects and Secretary