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HomeMy WebLinkAbout13-111 - Sky Entertainment / iFLY - Settlement Agreement and Release of Claims13-111 Council Approval N/A SETTLEMENT AGREEMENT AND RELEASE OF CLAIMS THIS SETTLEMENT AGREEMENT AND RELEASE OF CLAIMS ( "Agreement ") is entered into by and between the City of Tukwila ( "City" or "Tukwila "), a Washington municipal corporation, and Sky Entertainment LLC dba iFLY Seattle Indoor Skydiving ( "iFLY ") (collectively, the "Parties ") with respect to the City's admission and entertainment tax ( "A &E tax ") and declaratory judgment claims against iFLY. I. RECITALS A. On or about June 23, 2011, iFLY submitted a business license application to Tukwila for operation of its indoor skydiving facility that utilizes a vertical wind tunnel to simulate a skydive free fall. B. Since opening, iFLY has not remitted A &E tax to Tukwila. C. The City alleges that iFLY owes A &E tax, plus a 10% late penalty on all unpaid A &E taxes due and owing, based on amounts charged by iFLY for indoor skydiving. D. iFLY disputes that any A &E tax is owed and asserts that its gross income is primarily related to instructional use rather than for entertainment purposes. E. The City filed a lawsuit against iFLY on March 1, 2013 under King County Cause No. 13-2-07146-1KNT (the "Lawsuit "). F. Given the uncertainty and cost of litigation, Tukwila and iFLY now desire to settle and resolve all claims relating to the Lawsuit and A &E tax without further expense or delay. II. AGREEMENT In consideration of the mutual promises and agreements contained herein, the Parties agree to the following: 1. A &E Tax Arrears. The Parties agree that the final assessment on any unpaid A &E tax arrears shall be a fixed sum of $50,000.00. Beginning on the date which is three business days after the date this Agreement is executed, and continuing on the first day of each subsequent month from July 1, 2013, through November 1, 2013 ( "Repayment Term "), iFLY shall pay to the City equal monthly payments of $8,333.33. Provided iFLY pays these monthly installments in full and on time over the Repayment Term, no interest or penalty will be imposed by the City; however, in the event of partial and/or late payments, the City expressly reserves the right to impose a 10% penalty on the unpaid portion of any partial and/or late payment. Page 1 of 4 — Settlement Agreement and Release 2. Percentage of iFLY Future Gross Revenue Subject to City A &E Tax. Beginning June 1, 2013 and thereafter as long as iFLY engages in the same or a similar business in Tukwila, iFLY agrees to pay the City A &E tax on 30% of its gross flight revenue (which specifically excludes revenue for food, beverages, merchandise, memorabilia and other non - flight products and services). iFLY shall file all future A &E tax returns and pay current A &E taxes due as prescribed in Tukwila Municipal Code Chapter 3.20. 3. Reservation of Rights. Each Party reserves all of its rights that are related to this subject matter but that are not explicitly waived or modified herein. 4. Mutual Release of Claims. iFLY and Tukwila, on behalf of themselves, their affiliates, successors, agents, and assigns, release and forever discharge all claims that were or could have been asserted in the Lawsuit that arose prior to the date of this Agreement. The City, in consideration of the covenants set forth herein, also releases and forever discharges iFLY and its agents, heirs, attomeys, assigns, successors, and insurers from any and all past and present claims, demands, rights, action or causes of actions related to the A &E taxes which are the subject matter of the Lawsuit, whether known or unknown. 5. Dismissal of Lawsuit. Upon full payment by iFLY as set forth in Paragraph 1, the Lawsuit shall be dismissed with prejudice and without award of attorney fees or costs by or against either Party. 6. Full and Final Release of All Claims. This Agreement shall be a full, final, and binding settlement and final discharge of all claims between the Parties regarding the Lawsuit and the A &E tax assessment on iFLY, whether known or unknown and whether or not specifically alleged in the Lawsuit. 7. No Admission of Liability. Nothing contained in this Agreement is intended to constitute an admission of liability by either of the Parties with respect to any or all of the claims released, waived, and discharged. It is expressly understood and agreed that the compromise and settlement of the Lawsuit is not an admission of liability as to any claim and that this Agreement shall in no way be construed as an admission of liability or truth as to the matters asserted in the claims. 8. Authority. The Parties covenant, represent, and warrant that each of them has all authority necessary to execute this Agreement. Upon execution, this Agreement will be fully binding and enforceable in accordance with its terms. No other consents or approvals of any other or third parties are required for this Agreement to be so binding. 9. Amendments. This Agreement may not be amended or modified except by a writing signed by the Parties or by their respective attorneys as authorized. 10. Assignment. iFLY shall not assign any portion and/or obligation of this Agreement without the City's prior express written consent. Page 2 of 4 — Settlement Agreement and Release 11. Free and Voluntary Agreement. The Parties acknowledge and warrant that each has been represented by legal counsel throughout all negotiations that preceded the execution of this Agreement. Each party has read all of this Agreement or had the Agreement explained by its respective attorneys. The Parties have been fully advised as to the legal effect of the Agreement, and they execute this instrument freely and voluntarily for the purpose of making a full and final compromise and settlement of any and all claims which were alleged or could have been alleged in the Lawsuit. 12. Cooperation. The Parties agree to execute and deliver all documents and to cooperate and perform all additional actions that may be reasonably necessary to carry out the provisions of this Agreement and to give full force and effect to the terms and intent of this Agreement. 13. Governing Law, Consent to Jurisdiction, and Venue. This Agreement shall be interpreted and enforced according to the laws of the State of Washington. The Parties hereby submit to the jurisdiction of the courts of the State of Washington and stipulate that the exclusive venue for any proceeding to interpret or enforce the terms of this Agreement shall be in King County Superior Court. 14. Attorney's Fees. If any Party to this Agreement commences litigation to interpret or enforce the terms hereof, the prevailing party shall be entitled to recover its reasonable costs, litigating expenses, and attorney's fees from the non - prevailing party. 15. Counterparts. This Agreement may be executed in any number of counterparts, including by electronic or .pdf signature, each of which when executed and delivered shall be an original, but all such counterparts shall constitute one and the same instrument. 16. Binding Effect. The terms and releases contained in this Agreement shall obligate and inure to the benefit of each of the Parties and to each of their respective agents, heirs, attorneys, assigns, successors and insurers. 17. Entire Agreement; Integration; Non - Waiver. This instrument contains the entire Agreement and understanding between the Parties and supersedes and replaces all prior negotiations, proposed agreements and agreements, whether written or oral. The Parties acknowledge that they are not executing this Agreement in reliance on any promise, representation or warranty not contained herein. 18. Severability. If any term, condition or provision of this Agreement is declared void or unenforceable or limited in its application or effect, such event shall not affect any other provisions hereof and all other provisions shall remain fully enforceable. 19. Effective Date: This Agreement shall be effective May 31, 2013 and shall remain in effect until iFLY ceases its business operations in Tukwila. Page 3 of 4 — Settlement Agreement and Release Signed this 10th day of June, 2013. CITY OF TUKWILA By: ggerton, Attest/Authenticated: Approved as to For "Off ce o City Atto Page 4 of 4 — Settlement Agreement and Release SKY ENTERTAINMENT LLC dba iFLY SEATTLE INDOOR SKYDIVING By: Alan Metni, CEO of SkyGroup Investments, LLC, its Manager SKY ENTERTAINMENT LLC dba iFLY SEATTLE INDO R SKYD G By: '1 , Bill Adams, CEO