HEADS OF AGREEMENT – 20TH JULY 2016

  1. LTA OPERATIONS LIMITED of The National Tennis Centre, 100 Priory Lane, Roehampton, London SW15 5JQ (LTA);
  2. THE QUEEN’S CLUB LIMITED of Palliser Road, West Kensington, London W14 9EQ (the Club);
  3. LTA GROUND LIMITED of The National Tennis Centre, 100 Priory Lane, Roehampton, London SW15 5JQ (LTA Ground);
  4. QC GROUND LIMITED of Palliser Road, West Kensington, London, W14 9EQ (QC Ground);
  5. LAWN TENNIS ASSOCIATION LIMITED of The National Tennis Centre, 100 Priory Lane, Roehampton, London SW15 5JQ (LTA Limited); and
  6. QC HOLDINGS LIMITED of Palliser Road, West Kensington, London, W14 9EQ (QC Holdings).

Background

A. LTA and the Club (the parties) have reached agreement on:
(a) the undertaking of improvement works at the Venue and particularly the expansion of the North Stand of the Centre Court; and
(b) the staging of the Tournament in the years 2017 to 2026 inclusive on the terms set out in these Heads of Agreement.
B. The fixed and final financial terms relating to the staging of the Tournament, set out within clause 4 of these Heads, have been agreed having regard to:
(a) the parties’ in principle assumption of an approximate 75% (LTA) : 25% (Club) overall value split;
(b) agreement that the Club’s financial participation should consist of a facility fee (fixed in advance), a percentage (fixed in advance) of LTA Tournament Profit, and other financial benefits; and
(c) the application of a series of projections and assumptions.
C. LTA and the Club (and/or their affiliates) are of course parties to leases in respect of the Venue. Accordingly, it is important to both parties (and those affiliates) that appropriate consents, the status of the 2016/17 Works and other matters are suitably documented in the context of the leases.

Substantive provisions

1. DefinitionsExisting Staging Agreement means the “Tournament Staging Agreement” dated 18 October 2013 and made between LTA (1) Lawn Tennis Association Limited (2) the Club (3) QC Holdings Limited (4) and QC Ground Limited (5) relating to the staging of the Tournament.

Lease means the lease dated 11 December 2006 and made between The Queen’s Club Limited (1) and QC Ground Nominees Limited (2) as varied by a deed of variation date 22 May 2007 and made between LTA Ground Limited (1) QC Ground Nominees Limited (2) and The Queen’s Club Limited (3) and any supplemental documents.

LTA Tournament Budget means, for each Tournament, the budget forecasting the LTA Tournament Revenues, LTA Tournament Costs, and the LTA Tournament Profit.

LTA Tournament Costs means LTA’s direct operating costs (excluding VAT) incurred by LTA associated with the staging of the Tournament at the Venue.

LTA Tournament Profit means, for each Tournament, LTA Tournament Revenues less LTA Tournament Costs and such costs shall include the fixed facility fee which has been paid by LTA to the Club in respect of that Tournament.

LTA Tournament Revenues means, for each Tournament, all sums received (excluding VAT) by LTA relating directly to the staging of the Tournament at the Venue, including (but not limited to) from the sales of tickets (but excluding for the avoidance of doubt the Club’s income from sales of Preferential Seats) and hospitality, television rights and merchandising (if any) and the licensing of any and all commercial rights associated with the Tournament and the Sponsorship Allocation in respect of that Tournament.

Overall Tournament Profit means, for each Tournament, the aggregate of the LTA Tournament Profit and the QCL Tournament Profit.

Preferential Seats means seats in preferential locations offering premium views of Tournament matches on Centre Court at the Venue.

QCL Tournament Budget means, for each Tournament, the budget forecasting the QCL Tournament Revenues, QCL Tournament Costs, and the QCL Tournament Profit.

QCL Tournament Costs means the Club’s direct operating costs (excluding VAT) incurred by the Club associated with the staging of the Tournament at the Venue.

QCL Tournament Revenues means, for each Tournament, all sums received (excluding VAT) by the Club in relation to the staging of the Tournament, including (but not limited to) the compensation for loss of courts (if any) and the fixed facility fee which has been paid by LTA to the Club in respect of that Tournament.

QCL Tournament Profit means, for each Tournament, QCL Tournament Revenues less QCL Tournament Costs.

Sponsorship Allocation shall have the meaning set out in clause 4.5.1.

2016/17 Works means the works set out in Schedule 2.

Other defined terms used in these Heads of Agreement (including the terms “Tournament” and “Venue”) shall have the meaning as set out in the Existing Staging Agreement (where applicable).

2. The 2016/17 Works
2.1 Conditions
These Heads of Agreement will be conditional on:
(a) the grant of planning consent (without unduly onerous conditions) by the London Borough of Hammersmith and Fulham (LBHF) to carry out the 2016/17 Works, an application for which has already been submitted by the LTA; and
(b) the grant of appropriate licences (without unduly onerous conditions) by LBHF, such licences to be applied for by LTA.
2.2 Development of Agreed Scheme
2.2.1 The parties will collaborate to negotiate the appointment of a team of professional consultants (including a project manager). The professional consultants will be jointly appointed by the LTA and the Club by deed; the appointments will be enforceable by either party, but each appointment will provide clear direction as to which of the parties will pay the fees and manage the undertaking of the 2016/17 Works.
2.2.2 The professional consultants will develop a fully costed detailed design for the 2016/17 Works. The LTA and the Club will jointly approve the detailed design such approval shall not be unreasonably withheld or delayed by either party if it is within the original budget and substantially complies with the 2016/17 Works as set out in Schedule 2 and any brief approved by the parties.
2.3 Appointment and Undertaking of the 2016/17 Works
2.3.1 Following the grant of planning consent referred to in clause 2.1(a) above, LTA and the Club will jointly appoint a contractor to undertake the 2016/17 Works (subject to agreement between the LTA, the Club and the selected contractor of the terms of appointment, the precise project scope, the timetable and the price).
2.3.2 The contractor shall be appointed by deed on terms based on an industry standard form of building contract, subject to amendments agreed by both the LTA and the Club, who shall act reasonably and properly in agreeing such terms. The contractor will be jointly appointed by the LTA and the Club; the contract will be enforceable by either party, but it will contain provisions allocating responsibility for management of the 2016/17 Works.
2.3.3 LTA and the Club each agree to use their respective reasonable endeavours to procure that the 2016/17 Works are undertaken in a good and workmanlike manner, in accordance with good industry practice and in accordance with any planning consent, all licences, all legal requirements, the approved design and avoiding any prohibited materials. LTA and the Club shall procure the completion of the 2016/17 Works with due expedition.
2.3.4 The 2016/17 Works and the existing structures will need to be insured in the joint names of the LTA, the Club and the contractor. The appropriate way of procuring this insurance will be agreed between the parties (including QC Ground which currently insures the “Premises” under the Lease) and the contractor in the light of the existing insurance arrangements.
2.3.5 The Club and the LTA will act as joint clients under the CDM Regulations. The Club and the LTA shall jointly employ an individual who shall co-ordinate all aspects of the CDM Regulations.
2.3.6 Whilst the project manager will manage the 2016/17 Works for the mutual benefit of the LTA and the Club, the LTA and the Club will both act in a spirit of mutual cooperation to each other in relation to the design, and the carrying out and completion of the 2016/17 Works. For the avoidance of doubt, any significant decisions made by the project manager shall be subject to the approval of each of the LTA and the Club, such approval not to be unreasonably withheld or delayed.
2.4 Financial Terms for the 2016/17 Works
2.4.1 The anticipated cost of the 2016/17 Works, and associated consultants’ and project management fees, is £2,680,000 (exclusive of VAT), based on the proposal attached at Schedule 2. The cost of the 2016/17 Works, and associated consultants’ fees, will, based on that proposal, be split as follows:
(a) 50% of costs will be borne by the Club; and
(b) 50% of costs will be borne by the LTA.
2.4.2 Any amendment to the 2016/17 Works, or the costs and fees set out at clause 2.4.1 above will be agreed by the parties, acting reasonably and properly. Such agreement shall be reached by the Tournament Director and the Club’s CEO. In the event that those individuals cannot agree, the matter shall be escalated to the CEO of the LTA and the Chairman of the Club for resolution.
2.4.3 The parties shall request that each supplier of goods and services relating to the 2016/17 Works shall invoice each of LTA and the Club fifty per cent (50%) of its respective costs.
2.4.4 Should a supplier not be prepared to invoice each of LTA and the Club, the supplier shall be requested to invoice LTA for its entire costs and the LTA shall then invoice the Club for its respective fifty per cent (50%) share of such costs.
2.4.5 Without prejudice to the invoicing arrangements set out above, the LTA and the Club mutually agree to account to each other for any sum or sums paid by one party on behalf of the other pursuant to any contract or appointment for the design and/or construction of the 2016/17 Works, in order that the cost allocation set out in Clause 2.4.1 is achieved.
3. Lease
LTA and the Club agree to procure that their respective affiliates that are parties to the Lease negotiate and use reasonable endeavours to agree an agreement or agreements confirming the terms set out at Schedule 1.
4. Staging
4.1 General
4.1.1 LTA will in each of the years 2017 to 2026 inclusive stage, and the Club will grant to LTA a licence to occupy and all other necessary rights to enable LTA to stage, the Tournament at the Venue on the terms, mutatis mutandis, of the Existing Staging Agreement subject to the specific provisions set out in these Heads of Agreement and in the event of any inconsistency between the Existing Staging Agreement and these Heads of Agreement, the Heads of Agreement shall have priority.
4.1.2 LTA and the Club acknowledge and agree that:
(a) Under these Heads of Agreement, the Licence Period agreed as part of the Existing Staging Agreement remains unchanged, notwithstanding the greater complexity and work anticipated to be required, following completion of the 2016/17 Works, to undertake the build up and take down of the temporary structures and facilities required to stage the Tournament in each Year.
(b) However, both parties would like to further reduce the Licence Period, if reasonably possible, by a period of at least two (2) weeks, both parties expressly agreeing and acknowledging that any reduction (of any period) must be reasonable and practicable for LTA, commercially, operationally and logistically; and
(c) Accordingly, it is in the interests of both parties to consider and if appropriate develop and implement alternative schemes for the build up and take down of such structures and facilities and the reduction of the Licence Period, having full regard however to what is reasonable and practicable commercially, operationally and logistically.
4.1.3 Taking account of the objective set out in clause 4.1.2 above, LTA shall use reasonable endeavours to reduce the Licence Period by such period as is reasonable and practicable for LTA, commercially, operationally and logistically, and as soon as reasonably practicable during the Term.
4.1.4 In any event and for the avoidance of doubt, if the length of the Licence Period is reduced in respect of any Tournament, the facility fee for the Tournament in question shall be reduced in accordance with the provisions of clause 4.12 of the Existing Staging Agreement.
4.2 Superseding of Existing Staging Agreement for 2017 Tournament
The Existing Staging Agreement covers the Tournament years 2014 to 2017 inclusive. However, these Heads of Agreement will, except where stated otherwise, supersede the Existing Staging Agreement in respect of the staging of the 2017 Tournament.
4.3 Operational Staging Arrangements
4.3.1 It is anticipated that the operational terms for the staging of the Tournament will be further varied over the course of 2016/2017 to give effect to:
(a) changes in practice since the date of the Existing Staging Agreement;
(b) agreed changes resulting from the 2016/17 Works; and
(c) other changes agreed between the parties.
4.3.2 LTA and the Club intend to put in place a replacement staging agreement (in respect of all Tournaments from 2017 to 2026) by no later than 1 December 2016, and shall negotiate in good faith to that effect and such replacement staging agreement shall supersede both the Existing Staging Agreement and these Heads of Agreement. Until such time as the replacement staging agreement has been entered into by all of the parties to these Heads of Agreement, these Heads of Agreement shall be binding on all parties to these Heads of Agreement.
4.4 Principal Financial Terms for Staging the Tournament
LTA will pay (or, as applicable, provide) the Club the following:
4.4.1 a fixed facility fee in the following amounts:
(a) for each of the 2017 and 2018 Tournaments: £950,000;
(b) for each of the 2019 and 2020 Tournaments: £900,000;
(c) for each of the 2021 and 2022 Tournaments; £800,000; and
(d) for each of the 2023, 2024, 2025 and 2026 Tournaments: £700,000.
4.4.2 a share of LTA Tournament Profit, calculated in accordance with clause 4.5 below, in the following amounts:
(a) for each of the 2017 and 2018 Tournaments: 7.5%;
(b) for each of the 2019 and 2020 Tournaments: 8.5%;
(c) for each of the 2021 and 2022 Tournaments: 10.5%; and
(d) for each of the 2023, 2024, 2025 and 2026 Tournaments: 12.5%.
4.4.3 a ticket allocation as follows (which, for the avoidance of doubt, shall supersede the terms of sections 1 to 3 in Schedule 4 of the Existing Staging Agreement):
(a) for each Tournament, LTA shall supply to the Club 260 tickets for each day of the Tournament free of charge for Preferential Seats (for sale by the Club exclusively to Members at 150% of the face value of the tickets) at least four weeks (or such other agreed time period) before such tickets are then offered by the LTA for sale to any other party. The Club shall be entitled to retain all proceeds from its sale of those 260 tickets for Preferential Seats. The Club may, subject to availability, buy up to an additional 70 tickets from the LTA for use as Preferential Seats;
(b) for each Tournament, LTA shall offer all other tickets for the Tournament for sale to Members at least two weeks (or such other agreed time period) before such tickets are then offered by LTA for sale to any other party. LTA and the Club shall agree (acting reasonably) the locations of seats for such tickets, subject to LTA requirements for allocating seating to hospitality packages and sponsors;
(c) for each Tournament, whether purchasing tickets under sub-clause 4.4.3(a) or (b) above or as part of a general sale of tickets, each Member shall be entitled to purchase:
(i) up to six tickets for the Monday and Tuesday of each Tournament; and
(ii) up to four tickets for the Wednesday, Thursday, Friday, Saturday and Sunday of each Tournament;
subject to an overall maximum of 16 tickets in each Tournament week and provided that LTA is satisfied that sales to Members are not having an adverse impact on availability or sales of hospitality packages or on sponsor arrangements.
4.4.4 In the event that use by Members of any courts or facilities at the Venue is materially disrupted by LTA before or after the scheduled Licence Period, LTA shall pay compensation to the Club calculated as £20,000 per full day of disruption. The Tournament Committee will discuss any such instance arising and (acting reasonably) determine whether compensation should be payable under this clause. In the event that the Tournament Committee does not agree, the matter shall be escalated to the CEO of the LTA and the Chairman of the Club for resolution.
4.4.5 The sum total of payments made by LTA to the Club in respect of each Tournament shall be subject to an overall cap of £2,000,000 (excluding any compensation payable by LTA pursuant to clause 4.4.4 above). In the event that such maximum payment is reached in respect of two years in any three year period during the Term, the parties shall, if requested by the Club, negotiate in good faith through the Tournament Committee the level of an increased cap and the parties acknowledge that the intention of any such renegotiation shall be to ensure that the cap is preserved at a level that is the equivalent of approximately 25% of the Overall Tournament Profit. In the event that the Tournament Committee does not agree on the level of an increased cap, the matter shall be escalated to the CEO of LTA and the Chairman of the Club for resolution. In the event that the amount of the cap remains unresolved for a further twenty-one (21) days of being referred to the CEO of LTA and the Chairman of the Club the matter shall be referred to an independent expert for determination (appointed, in default of agreement, at the request of either party by the President of the Institute of Chartered Accountants in England and Wales), such expert to have the appropriate expertise and experience to be able to properly consider and determine the issue referred to him.
4.5 Tournament Profit Share
4.5.1 LTA will collect all receipts from LTA Tournament Revenues as principal and hold such funds for use solely in relation to the LTA Tournament Costs and the LTA Tournament Profit share arrangements (including the payment of the Club’s share of the LTA Tournament Profit in accordance with clause 4.4.2). In each year of the Term, LTA will contribute to the LTA Tournament Revenues either:
(a) 65% of the total cash sponsorship receipts less VAT that LTA receives from all of its sponsors for all properties and rights owned by LTA in such year of the Term; or
(b) 100% of the total cash sponsorship receipts less VAT that LTA receives from its sponsors in relation specifically to the Tournament in such year of the Term,
whichever is the greater (“Sponsorship Allocation”).
4.5.2 LTA will pay, as principal, the LTA Tournament Costs in accordance with the LTA Tournament Budget.
4.5.3 Not later than sixty (60) days after the end of each Tournament, LTA shall provide to the Club clear and detailed accounts specifying:
(a) LTA Tournament Revenues (including such information as may reasonably be required to verify LTA’s calculation of the Sponsorship Allocation);
(b) LTA Tournament Costs;
(c) The facility fee; and
(d) LTA Tournament Profit (if any);
in respect of that Tournament, with any reconciling accounts reflecting late revenues and costs provided not later than ninety (90) days after the end of each Tournament.
4.5.4 Not later than sixty (60) days after the end of each Tournament, the Club shall provide to LTA clear and detailed accounts specifying:
(a) QCL Tournament Revenues;
(b) QCL Tournament Costs; and
(c) QCL Tournament Profit
in respect of that Tournament, with any reconciling accounts reflecting late revenues and costs provided not later than ninety (90) days after the end of each Tournament.
4.5.5 The Tournament Committee shall consider the LTA Tournament Profit and the QCL Tournament Profit in respect of each Tournament and shall require LTA and/or the Club (as applicable) to provide full explanation of any aggregate variance against budget of over 5%.
4.6 Independent third party auditor’s statement
4.6.1 Each party (“Audited Party”) will permit during the Term and for a period of twelve (12) months thereafter the other party (“Examining Party”) to appoint an independent third party auditor to examine (on reasonable notice, during normal business hours, at the Audited Party’s premises (and not off-site) and at the Examining Party’s sole expense) the books, records, agreements and computer data of the Audited Party in so far as they may relate to the staging of the Tournament, the obligations of the Audited Party under this Agreement and if relevant the calculation of the Sponsorship Allocation. The independent third party auditor shall be instructed to produce a short-form statement which declares for the benefit of both parties the actual LTA Tournament Profit or the actual QCL Tournament Profit (as the case may be) and not to disclose any other data relating to its examination.
4.6.2 If the examination establishes the LTA Tournament Profit or the QCL Tournament Profit (as the case may be) as stated by LTA or the Club respectively is inaccurate by 5% or more, the Audited Party will pay on demand to the Examining Party (in addition to any underpayment which shall be payable regardless of the amount) the costs of that examination. Otherwise, the costs of any such examination shall be borne in full by the Examining Party.
4.6.3 At the beginning of each year and within 60 days after the end of each Tournament LTA shall provide to the Club the following details of each and every sponsorship agreement the LTA has entered into which has been included or should be included in the LTA’s calculation of the Sponsorship Allocation:
(a) the annual fee payable by each sponsor;
(b) the term of each sponsorship agreement; and
(c) the specific properties and rights of the LTA which are being sponsored.
4.7 Payment Terms
4.7.1 The facility fee for each Tournament shall be paid as follows:
(a) 40% shall be paid not later than 30 days before the scheduled first day of the Tournament;
(b) 20% shall be paid not later than 7 days before the scheduled first day of the Tournament; and
(c) 40% shall be paid not later than 28 days after the last day of the Tournament.
4.7.2 The Club’s share of the LTA Tournament Profit shall be paid 90 days after the last day of the Tournament.
4.7.3 All payments to be made by LTA to the Club under these Heads of Agreement shall be paid by bank transfer to the Club bank account (details of which may be notified by the Club to LTA from time to time).
4.7.4 If either party shall fail to make any payment when due under this Agreement, then interest shall accrue and be payable on such unpaid amount, from the due date for payment until such amount with all accrued interest is received by the party to whom such payment is owed, at the rate per annum of 2% above the Bank of England base rate from time to time.
4.8 VAT
4.8.1 All sums payable under these Heads of Agreement by either party are exclusive of Value Added Tax, which shall where applicable be payable in addition.
4.9 Other Financial Terms
4.9.1 LTA shall supply the LTA Tournament Budget to the Tournament Committee by 1 January in each Year.
4.9.2 The Club shall supply the QCL Tournament Budget to the Tournament Committee by 1 January in each Year.
4.9.3 The Tournament Committee shall consider the budgeted LTA Tournament Profit and the budgeted QCL Tournament Profit in respect of the Tournament in question and shall require LTA and/or the Club (as applicable) to provide full explanation of any aggregate variance against either the actual LTA Tournament Profit or the QCL Tournament Profit (as applicable) of over 5%.
4.9.4 Clause 6 of the Existing Staging Agreement shall be deleted.
4.9.5 Clauses 7.1 to 7.3 of the Existing Staging Agreement shall be deleted.
4.9.6 The costs of any expert appointed under these Heads of Agreement shall be shared by the parties 50:50 in the case of an expert appointed under clause 4.12; and shall be paid as directed by the expert in any other case.
4.10 Merchandise
Currently, the retail merchandising offering at the Venue during the Tournament is operated by the Club, with merchandising and associated costs incurred, and merchandising revenues retained, by the Club. On service of not less than nine months’ written notice prior to any Tournament after the 2017 Tournament, LTA may, on terms reasonably to be agreed by the parties having regard to the resulting loss of net profit to the Club, assume responsibility for the operation of any and all retail merchandise offerings at the Venue during the Tournament.
4.11 Duration of Staging Commitments and Terms relating to possible Extension and Early Termination
4.11.1 As per clause 4.1, LTA will in each of the years 2017 to 2026 inclusive stage the Tournament at the Venue, subject to the following terms.
4.11.2 LTA and the Club shall, not later than the 2024 Tournament, discuss in good faith a possible extension of these Heads of Agreement for an agreed additional period, subject to agreement of terms.
4.11.3 In the event that the LTA determines to sell the Tournament (or the freehold interest in the Venue), it shall notify the Club and give the Club the opportunity to make an offer to buy the Tournament or the freehold interest in the Venue (whichever is being sold) from the LTA. For the avoidance of doubt, the LTA shall be under no obligation to accept any such offer.
4.11.4 LTA reserves the right to terminate these Heads of Agreement early:
(a) in the event that LTA’s average share of LTA Tournament Profit, calculated over a consecutive three-year period, falls below £2,500,000 per Tournament (provided that prior to any such right to terminate being exercised LTA shall in good faith have discussed with the Club possible variations to these Heads of Agreement which may, if agreed, enable LTA to continue to stage the Tournament);
(b) in the event that LTA makes a loss on the Tournament (i.e. a negative Tournament Profit) in two out of any three consecutive years (provided that prior to any such right to terminate being exercised LTA shall in good faith have discussed with the Club possible variations to these Heads of Agreement which may, if agreed, enable LTA to continue to stage the Tournament);
(c) in the event that LTA makes a loss on the Tournament (i.e. a negative LTA Tournament Profit) in any three consecutive years;
(d) where LTA is entitled to terminate under the Existing Staging Agreement (save that sub-clause 18.2.2.1 of the Existing Staging Agreement shall not apply); or
(e) at any time following the 2020 Tournament, if LTA determines (acting reasonably) that the Venue is no longer fit for the purpose of staging the Tournament (having regard to ATP requirements at the time), or if LTA decides to sell the Tournament to a third party, subject to payment of the fixed facility fee relating to each of the next three Tournaments, less any sums advanced to the Club against those facility fee payments in accordance with clause 6.1 below (and if any sums paid under clause 6.1 exceed the total facility fee in respect of those three years, the Club shall refund LTA the excess).
4.11.5 LTA agrees that, in circumstances where it has staged the Tournament at a venue other than the Venue (but not where this Agreement has been terminated on the basis of clause 18 of the Existing Staging Agreement) but wishes to exercise its rights under the Lease in relation to the staging of the Tournament at the Venue in any year, it shall provide written notice of such intention not later than 1 July in the previous year.
4.11.6 In the event that over a consecutive period of three (3) years, the aggregate of:
(a) the facility fee;
(b) any compensation for loss of courts;
(c) the Club’s share of LTA Tournament Profit; and
(d) a sum equivalent to 150% of the face value of the tickets supplied to the Club under clause 4.4.3(a)
for each Tournament held during such period falls below £1,300,000 the LTA shall, if requested by the Club and within a reasonable period of time, enter into good faith discussions with the Club to establish whether alternative financial provisions can be agreed which deliver a higher level of profit share to the Club.
4.12 Amendments to the Tournament and configuration of the Venue
The LTA shall not amend any of the elements of the Tournament referred to in 4.12.1 to 4.12.3 below in relation to any Tournament without the prior written approval of the Club (such approval to be determined by the Club acting reasonably). Notwithstanding the foregoing should the LTA wish to make any such changes it shall submit such proposals in writing to the Club and the parties shall discuss in good faith whether such proposals are in the interests of the LTA, the Club and the Tournament and whether it is necessary for any amendments to be made to the then current Tournament Staging Agreement.
4.12.1 Any material increase in the number of spectators admitted to the Venue on each day of the Tournament, the current agreed maximum spectator capacity being 10,500;
4.12.2 Any material alterations to the footprint and configuration of the Venue including the location and size of the buildings, structures, facilities and amenities that are erected at the Venue for the purposes of staging the Tournament;
4.12.3 Any increase in the Licence Period which is currently 68 days.
4.13 Licence Period
4.13.1 At least six months prior to the start date of the Tournament in each of 2017 and 2022, the LTA shall (subject to the prior written approval of the Club, not to be unreasonably withheld or delayed) appoint an independent expert, the terms of reference of whose appointment shall be to consider the arrangements for the build up and take down of the structures and facilities required to stage the Tournament and to make recommendations, if reasonably possible, for improvements to such arrangements including a reduction in the time taken by LTA and its contractors to carry out such works before and after the Tournament, where such improvements and/or reduction in time are reasonable and practicable for the LTA, commercially, operationally and logistically.
4.13.2 The parties shall be entitled to make submissions to the expert (including oral submissions) and will provide (or procure that others provide) the expert with such assistance and documents as the expert reasonably requires for the purpose of making recommendations. The expert shall be allowed free and unfettered access to the Venue during the Licence Period in each of 2017 and 2022 and shall also be given access to any staging plans and any staging logistics meetings by the parties to enable the expert to undertake a comprehensive evaluation of the staging of the Tournament.
4.13.3 The expert shall submit their report and recommendations within 3 months of the end of the Licence Period in each of 2017 and 2022. The Tournament Committee shall give full and proper consideration to any and all recommendations proposed by the expert. The LTA shall implement recommendations where it is satisfied that they are reasonable and practicable for the LTA, commercially, operationally and logistically. LTA acknowledges that any proposed contribution by the Club to the capital costs of any works and the potential availability of a reduction in the facility fee under clause 4.1.4 will be relevant factors in LTA’s decision as to whether or not to implement such recommendations.
4.13.4 Additionally immediately following the staging of the Tournament in each year, other than in 2017 and 2022, the parties shall procure that the Tournament Committee shall review the period of time that has been taken to build up and take down the structures and facilities required to stage the Tournament in that year and, if considered appropriate, to develop and propose revised schemes and schedules with the intention of reducing the amount of time taken to carry out such works before and after the Tournament and ultimately to reduce the Licence Period.
5. Governance
5.1 The Tournament Committee shall be reconstituted with three representatives from the Club (CEO, QC Director, Finance Director) and three representatives from LTA (CEO, Tournament Director, Finance Director).
5.2 Tournament Committee meetings shall be held four times per year.
5.3 Clause 12.2 of the Existing Staging Agreement shall be deleted.
6. Site Development Projects
6.1 In the event that the Club determines (acting reasonably) to proceed with a major development project at the Venue, and such project will be of material benefit to LTA in its operation of the Tournament:
6.1.1 the Club may request that LTA advances the remainder of the fixed facility fee for each remaining Tournament year up to and including 2026 (up to a maximum of five years), on terms to be agreed by the parties (acting reasonably) to use as capital expenditure for such a project; and
6.1.2 the parties shall discuss the project in good faith and, provided that the parties both agree to proceed with and participate in the project, the parties shall agree a fair and reasonable apportionment of the costs for the project, based on the increased Tournament Profit that the project is predicted to generate.
7. Boilerplate
7.1 General. For the avoidance of doubt, and as per clause 4.1.1 above, the remaining provisions of the Existing Staging Agreement shall continue to apply, mutatis mutandis, including for example the ‘boilerplate’ provisions in clauses 15 to 39 of the Existing Staging Agreement.
7.2 Confidentiality. The content of these Heads of Agreement is confidential to the parties and is subject to the confidentiality provisions contained in clause 26 of the Existing Staging Agreement.
7.3 Third parties. A person who is not a party to these Heads of Agreement may not enforce its terms under the Contracts (Rights of Third Parties) Act 1999.
7.4 Governing law. These Heads of Agreement and the negotiations between the parties in connection with the proposed 2016/2017 Works and/or the staging of the Tournament and all disputes or claims arising out of or in connection with them or their subject matter or formation (including non-contractual disputes or claims) shall be governed by and construed in accordance the law of England and Wales.
7.5 Jurisdiction. The parties irrevocably agree that the courts of England and Wales shall have exclusive jurisdiction to settle any dispute or claim arising out of or in connection with these Heads of Agreement or its subject matter or formation (including any non-contractual disputes or claims).
8. Guarantees
8.1 As per the Existing Staging Agreement, and in consideration of LTA entering into these Heads of Agreement, each of QC Holdings and QC Ground:
8.1.1 hereby confirms its agreement to the terms of these Heads of Agreement;
8.1.2 as primary obligor irrevocably and unconditionally guarantees to LTA full and prompt performance by the Club of the terms of these Heads of Agreement; and
8.1.3 agrees to fully and effectively indemnify LTA on demand and keep LTA fully and effectively indemnified against all liabilities, losses, claims, costs, damages and expenses which LTA may suffer arising from or on connection with any breach by the Club of any of its obligations under these Heads of Agreement.
8.2 The provisions of clauses 32.2, 32.3 and 32.4 of the Existing Staging Agreement are explicitly re-stated in respect of these Heads of Agreement.
8.3 As per the Existing Staging Agreement, and in consideration of the Club entering into these Heads of Agreement, LTA Limited:
8.3.1 hereby confirms its agreement to the terms of these Heads of Agreement;
8.3.2 as primary obligor irrevocably and unconditionally guarantees to the Club full and prompt performance by LTA of the terms of these Heads of Agreement; and
8.3.3 agrees to fully and effectively indemnify the Club on demand and keep the Club fully and effectively indemnifies against all liabilities, losses, claims, costs, damages and expenses which the Club may suffer arising from or in connection with any breach by LTA of any of its obligations under these Heads of Agreement.
8.4 The provisions of clauses 32.6 and 32.7 of the Existing Staging Agreement are explicitly re-stated in respect of these Heads of Agreement.

Schedule 1

Consents, permissions and other matters arising under the leases

  • Right for Landlord [LTA] to enter Premises/carry out the 2016/17 Works.If the LTA is going to jointly instruct the 2016/17 Works then it needs explicit recognition from both the Tenant and the Sub-Tenant that the carrying out of the 2016/17 Works do not constitute a derogation from grant/breach of quiet enjoyment.
  • Right for Tenant [the Club] or Sub-Tenant [QC Ground] to alter the Premises without the Landlord’s consent.The Club will need the Landlord’s [LTA’s] consent to carry out the 2016/17 Works, and in the case of the Sub-Tenant [QC Ground] the explicit consent of the Tenant and will both need to be party to the documentation relating to the 2016/17 Works which shall include an acknowledgement of responsibility by all parties regarding the Lease obligations relating to the implementation of planning consents (see clause 10.4 of Lease).
  • Status of the 2016/17 Works, under the Lease.Presumably the 2016/17 Works will form part of the Premises going forward and as such should be maintained by the Tenant/Sub-Tenant [QC Ground].
  • Insurance of the 2016/17 Works.See also 2.3.4 above. QC Ground insures the Premises under the Lease as Sub-Tenant.
  • Third party consents.Clarity is needed as to who has to obtain third party consents (there are no obvious restrictions on the title but it will need to be clear who is to apply for planning permission etc).
  • Reinstatement at the end of the Term.The end of the term is of course a long way off, but it is important that this is documented.

Schedule 2

Agreed Works and costs as of date of this Agreement

Please see the following documents produced by Gardiner & Theobald, which are incorporated by reference:

1. Queen’s Club / LTA North Stand Development Project Brief (April 2016); and
2. The Queens Club, Northern Stand Works: Approximate Cost Estimate (January 2016).

Signatures

EXECUTED by
for and on behalf of
LTA OPERATIONS LIMITED
……………………………………..
EXECUTED by
for and on behalf of
THE QUEEN’S CLUB LIMITED
……………………………………..
EXECUTED by
for and on behalf of
LTA GROUND LIMITED
……………………………………..
EXECUTED by
for and on behalf of
QC GROUND LIMITED
……………………………………..
EXECUTED by
for and on behalf of
LAWN TENNIS ASSOCIATION LIMITED
……………………………………..
EXECUTED by
for and on behalf of
QC HOLDINGS LIMITED
……………………………………..