| 3.1 |
Members. |
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(a) |
Membership
in the League is limited to the twelve (12) member clubs
specified in Schedule "A" hereof and any new
members properly elected. |
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(b) |
The
admission of a new member club is prohibited unless
approved by the affirmative vote of three-fourths (3/4)
of the existing member clubs of the League, including
the affirmative vote of any member club whose Home
Territory would be overlapped by the proposed admission
of a new member. |
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| 3.2 |
Eligibility
of New Members. |
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Any
person, association, partnership, corporation, or other
entity of good repute organized for the purpose of
operating for profit, and not for charity, a league
professional football team is eligible for membership,
provided that the person, association, partnership, or
other entity has no interest in any other professional
football club. |
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| 3.3 |
Admission
of New Members. |
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(a) |
Each
applicant for membership must make a written application
to the Commissioner. The application must describe the
type of organization and must designate the area in
which the franchise of the applicant will be
located. The application must also describe and
contain the following information: |
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(1) |
The
names and addresses of all persons who own or will own
any interest or stock in the applicant, together with a
statement that such persons will not own or hold, the
interest or stock for the benefit of any undisclosed
person or organization. |
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(2) |
A
detailed balance sheet of the company as of the date of
organization and a pro forma statement as of the time it
will commence actual operation. A written
financial statement must be submitted by the applicant
in sufficient detail to establish that it has the
financial ability and commitment to operate in the
League. The statement must include a percentage
breakdown as to the financial participants, investors,
parties, and/or shareholders, as the case may be. |
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(3) |
If
the applicant is a corporation, a certified copy of the
Articles of Incorporation, By-Laws, and share
certificate must accompany the application.
Regardless of whether the organization of the
corporation has been commenced or completed, the
organization must furnish a written financial statement
summarizing the proposed plan of operation, the names
and addresses of its stockholders, officers, and
directors, and the corporation's capital structure. |
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(4) |
If
the applicant is partnership, unincorporated
association, or other entity, a certified copy of the
Articles of Co-Partnership or organization agreement
must accompany the application, along with a detailed
financial statement similar to that required in Section
3.3(a)(3) above. |
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(5) |
All
applications must contain a representation that upon
acceptance, the applicant will subscribe to and agree to
be bound by the Constitution, By-Laws, Rules and
Regulations of the League, and any amendments or
modifications thereof. |
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(b) |
Each
application for membership must be accompanied by a
certified check for Fifty Thousand ($50,000,00) Dollars,
along with a banking reference stating that the
applicant and supporting banking institutions are
capable of, and prepared to post, a letter of credit as
required under Section 3.13. If any application
for admission is rejected, the League will repay the
applicant the Fifty Thousand ($50,000.00) Dollars paid
by the applicant at the time of the application, less
all expenses reasonably incurred in connection with the
consideration and investigation of the application. |
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(c) |
Upon
any expansion of the League, the vote of tw-thirds (2/3)
of the member clubs shall set the franchise fee which
will be required of a successful applicant. |
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(d) |
Upon
receipt of any application for membership in the League,
the Commissioner will conduct such investigation as he
deems appropriate. Following the completion of the
investigation, the Commissioner will submit the
application to the members for approval together with
his recommendation and any other information that the
Commissioner deems pertinent. The application must
then be voted on by the members under the procedures of
Section 3.1(b). |
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| 3.4 |
Franchise
Certificate. |
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Upon
payment of the required franchise fee, the member will
receive a Franchise Certificate of Membership signed by
the Commissioner and Secretary of the League, certifying
that the member is a member of the League and holds a
franchise from the League to operate a professional
football club in a designated area. The Franchise
Certificate is not assignable nor transferable, except
as provided in Section 3.5 hereof. |
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| 3.5 |
Transfer
of Membership. |
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No
membership, or any interest in one, may be sold,
assigned, or otherwise transferred, in whole or in part,
unless the transfer is done in conformity with the
following provisions: |
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(a) |
The
application for the sale, transfer, or assignment of a
membership, or any interest in one, must be made in
writing to the Commissioner. Upon receipt of the
application, the Commissioner may require from the
applicant any information the Commissioner deems
appropriate bust must require: |
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(1) |
All
the information, actions, and representations required
of an applicant under Sections 3.3(a) and (b). The
Commissioner and the member clubs must proceed in the
same manner as that set out in Sections 3.3(b), and (d),
except, however, that no franchise fee called for under
Section 3.3(c) shall be required for a transfer under
this Section 3.5. |
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(2) |
The
price to be paid for the sale, transfer or assignment,
and the terms of payment, including a description of the
security for any unpaid balance, if any. |
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(b) |
If
any person owning or holding, or who owned or held, a
membership or an interest, by stock ownership or
otherwise, seeks to transfer or has transferred a
membership or any interest in it by gift, will,
intestacy, trust, sale, or otherwise, to a member of
that person's "immediate family," no consent
or approval of the members of the League or the
Commissioner is required to complete the transfer.
The "immediate family," for the purpose of
this paragraph, means the wife, child, mother, father,
brothers and sisters, or any other lineal descendant of
the transferor. In all other cases involving transfers,
any person succeeding to a membership or an interest,
whether by gift, will, intestacy, trust, sale, or
otherwise, first must be investigated by the
Commissioner in a manner the Commissioner deems
appropriate. Upon completion, the Commissioner
will submit the succession or transfer to the membership
for approval under Section 3.1(b), along with his
recommendation. |
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| 3.6 |
Voluntary
Withdrawal. |
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Any
member of the League may withdraw from membership
either: |
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(a) |
By
selling, assigning, or transferring its membership upon
the terms and conditions set out in Section 3.5 hereof;
or |
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(b) |
By
voluntarily withdrawing from the League by tendering its
written resignation to the Commissioner and
simultaneously surrendering its Franchise Certificate of
Membership, making full payment of any and all dues,
assessments, or other debts owing to the League or
others arising out of his membership, and then
proceeding under the provisions of Section 3.8. No
voluntary withdrawal may be made in any year between
October 1, and the date of the Championship Game of the
following calendar year, except with the unanimous
consent of the members. |
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| 3.7 |
Involuntary
Termination. |
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Membership
in the League can be terminated by the League under
Section 8.13 or automatically terminated whenever: |
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(a) |
An
individual or corporate member or a partnership member
or any general partner makes an assignment for the
benefit of his or its creditors or files a voluntary
petition in bankruptcy, or whenever a receiver or
trustee in bankruptcy is appointed for the property and
assets of the member or of any general partner of a
partnership member, or whenever reorganization
proceedings in bankruptcy are instituted by or against
the member or by or against any general partner
possessing an interest in a partnership
membership. In the event the partnership agreement
of a partnership member provides for automatic
termination of the interest of any general partner who
makes an assignment for the benefit of his creditors or
who becomes the subject of any bankruptcy proceedings
and also provides for the continuation of such
partnership in any event, and the remaining partners
satisfy the requirements of Sections 3.2, and 3.3(a) and
(b), hereof, then this Section 3.7(a) is inoperative
with respect to the partnership member. |
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(b) |
A
member disbands its team between October 1 and the date
of the Championship Game of the following calendar year
without the unanimous consent of the members. |
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(c) |
A
member permanently disbands its business organization or
ceases its business. |
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| 3.8 |
Effect
of Termination. |
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(a) |
Upon
the expulsion of a member or upon any other involuntary
or voluntary termination of membership other than a
sale, transfer, or assignment under Section 3.6(a), the
following will occur: |
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(1) |
The
lease of its playing field or interest of I the member
therein, if and to the extent the lease or interest is
assignable, must, upon demand of the League, be assigned
to the League or its nominee if the assignment of the
lease to the League is first approved by the affirmative
vote or written consent of no less than a majority of
the members of the league. The lease will be
handled or disposed of in any manner as the remaining
League members, by the affirmative vote of no less than
a majority of them, decide. |
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(2) |
Title
to such of the player contracts of the terminated member
and title to such of the players on the Distribution
List of the terminated member as are designated by the
Commissioner, and any interest or right to such players
and contracts must, if demanded by the League, be
assigned to the League or its nominee if the assignments
are first approved by the affirmative vote or written
consent of not less than a majority the remaining League
members. The players and contracts so acquired
will be handled and disposed of within the League in any
manner the remaining member clubs decide by the
affirmative vote of not less than a majority of them. |
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(3) |
All
interest of the terminated member in and to any funds or
property of the League, or any right or interest
therein, will cease. |
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(b) |
Whenever
any stockholder, partner, or holder of an interest in a
member club is requested to sell or dispose of his stock
or interest in a membership in the League by reason of
any termination other than pursuant to Section 3.6(a),
the sale or disposition must be completed within one
hundred eighty (180) days after the action has been
ordered. In the event the stock or interest is not
sold or disposed of within ninety (90) days, then the
price and other terms of the sale or disposition will be
fixed by mutual agreement between the terminated holder
of the stock or interest and the Commissioner. If
such mutual agreement is not arrived at within one
hundred twenty (120) days of the date the sale or
disposition was ordered, the price and other terms will
be fixed by arbitration, with one arbitrator selected by
the Commissioner and the other by the terminated holder
of the stock or interest. If within one hundred
fifty (150) days of the date the sale was ordered the
two (2) arbitrators cannot agree on the price and terms,
the two arbitrators will select a third arbitrator, and
the decision of the majority of the arbitrators be
binding upon the parties. If any party required to
name an arbitrator fails to do so, or if the two
arbitrators cannot agree on a third arbitrator, the
arbitrator in either case will be named by the American
Arbitration Association. If such sale is not
completed within one hundred eighty (180) days, then the
League shall have the option to purchase the interest or
franchise within two hundred ten (210) days of the date
the sale or disposition was ordered, at the agreed upon
price, payable in cash. Such option may only be
exercised by the affirmative vote of two-thirds (2/3)
of the member clubs. |
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| 3.9 |
Capital
Contribution of Transferee. |
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A
new member acquiring its membership by transfer from
another member or through the League under Section 3.8,
succeeds to the interest of the transferor in the funds,
property, rights, and interests of the League and is not
obligated to make the capital contribution required
under Section 3.3(b) hereof. The new member must,
however, secure a letter of credit pursuant to Section
3.13. |
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| 3.10 |
Membership
Fees and Assessments. |
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Whenever
funds are required to meet the expenses of the League
and League funds are not available for that purpose, the
Commissioner shall require each member to contribute
equally its share of the required funds, except that in
no instance may the Commissioner call for any
assessments to meet expenditures in excess of the
aggregate amounts set forth in the League budget. |
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| 3.11 |
Membership
Covenants and Obligations. |
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Each
member club, and each and all of the owners, officers,
stockholders, directors, or partners therein, as well as
any other person owning any interest in such member
club, assumes and agrees to be bound by the following
obligations of membership in the League: |
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(a) |
They,
and each of them, will be bound by and will observe all
decisions of the Commissioner of the League in all
matters within his jurisdiction. |
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(b) |
They,
and each of them, will be bound by and will observe all
decisions, rulings, and actions of the Executive
Committee or the member clubs of the League in every
matter within the jurisdiction of the Committee or the
member clubs, as the case may be. |
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(c) |
They,
and each of them, waive any and all claims or demands
whether for damages, equitable relief, or otherwise,
which they or any of them, might now or later possess
against the Commissioner of the League, individually or
in his official capacity, as well as against the League
or any employee thereof, and against any member club or
any officer, director, owner, stockholder, or partner
thereof, or the holder of any interest herein, in
connection with or by reason of any decision, ruling, or
action, of the Commissioner, the Executive Committee, or
the League in reference to any matter within their
respective jurisdictions. |
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(d) |
They,
and each of them, will include in every contract between
any member club and its employees, including coaches and
players, a clause in which the to the contract agree to
be bound by the Constitution and By-Laws of the League. |
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(e) |
That
after becoming a member of the League, the primary
purpose of the corporation, partnership, or other entity
operating the club will at all times be and remain the
operation of a professional football team as a member
club of the League, and this primary purpose will not be
changed. |
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(f) |
They,
and each of them, agree to be bound by all of the terms
and provisions of the Constitution and By-Laws of the
League as now or later in effect. |
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(g) |
They,
and each of them, agree to be represented at each
meeting of the League and of the Executive Committee of
the League by a representative duly authorized and
empowered to cast the binding vote of the member club on
all questions coming before the meeting. |
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| 3.12 |
Rights
Reserved. |
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Nothing
in the foregoing requires any member or holder of a
membership interest to waive any claim for damages,
equitable relief, or otherwise, which proximately
results from any violation of the Constitution or
By-Laws. |
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| 3.13 |
Letter
of Credit. |
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Each
member club assumes and agrees upon joining the League
to post a letter of credit which meets or exceeds the
requirements for such letters as set out in Schedule B. |
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| 3.14 |
Permissible
Encumbrances. |
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Nothing
in this Article III shall be construed as limiting or
prohibiting the holder of an ownership interest from
mortgaging his franchise interest, or posting it as
security for a lawful debt. The Commissioner's
office must be notified in writing five (5) business
days before the effective date of such encumbrance for
security. Any person or entity taking all or part
of any ownership interest as security for an
indebtedness (the secured party) takes the interest
subject to the provisions of the Constitution and the
By-Laws of the League and subject also to all debts,
assessments, and other obligations owing to the League
or others arising out of the operation of the League or
franchise. The rights of the secured party to
effect a sale of an ownership interest under the terms
of the mortgage or security instrument are subject to
the provisions of this Article III, including Sections
3.2, 3.3, 3.5, 3.7, 3.8, 3.9, 3.11 and 3.13. In
the event a sale under this Section takes place during
the playing season, the phrase "debts, assessments,
and other obligations," includes any debts,
assessments and other obligations which must be incurred
to complete the season. |
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