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DC Sports and Entertainment Commission
Memorandum of agreement with Washington Baseball Club
January 13, 2002

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Executive Summary Memorandum of Agreement
Amendment No. 1

DCSEC–WBC Agreement (MOU) 

The following is the summary of the Memo of Understanding (MOU) written by the D.C. Sports & Entertainment Commission and the Washington Baseball Club in support of WBC's efforts to bring a Major League Baseball team back to Washington, D.C.

Executive Summary

MEMORANDUM TO: Distribution
FROM: John L. Richardson
Bobby Goldwater
RE: Major League Baseball Initiative -
Summary of DCSEC/WBC Memorandum of Understanding
DATE: January 13, 2002

This will briefly summarize the terms of the Memorandum of Understanding ("MOU") between the District of Columbia Sports and Entertainment Commission ("DCSEC"), Washington Baseball Club, L.L.C. ("WBC"), and WBC's six founding members (the "WBC Founders"). In general, the MOU maps out a "joint action plan" for DCSEC and WBC to work together to restore a Major League Baseball ("MLB") Franchise to the District and, if successful, to then build in the District a new, world-class stadium (the "New Ballpark") to be the permanent home for the MLB franchise after an interim period at RFK.

A backdrop to negotiation of the MOU has been the growing prospect that MLB could relocate a team to the Washington area through some yet to be determined process. It is possible that this subject will be considered by MLB owners during meetings scheduled on January 15-17 or soon thereafter. Therefore, in negotiating the MOU, one of our primary objectives has been to demonstrate to MLB the District's immediate readiness and resolve to host a team in a location and with a combination of resources that are unparalleled. The MOU meets this objective, first by presenting to MLB one choice that it could accept now (i.e. public endorsement of a motivated, well-funded and credentialed ownership group with a public/private partnership to build a new baseball stadium), while at the same time maintaining the District’s ability to welcome alternative approaches to bringing a team to the District should MLB so mandate.

The principal terms of the MOU are as follows:

I. Obligations of WBC and WBC Founders

1. Best Efforts to Acquire MLB Franchise. The MOU commits WBC to use best efforts to bring a MLB franchise to the District to begin play at RFK Stadium as soon as possible, but in all events by no later than the 2004 MLB season, and thereafter to play permanently at the New Ballpark to be constructed in the District.

2. WBC Will Work Exclusively for a DC Franchise. The MOU requires WBC during the "Exclusivity Period" to negotiate exclusively with DCSEC regarding a lease to RFK, development of a New Ballpark, and a long-term lease for the New Ballpark. WBC and its affiliates are expressly prohibited from seeking or working with anyone else to acquire (i) any MLB franchise to play anywhere other than the District, or (ii) any rights with respect to any stadium other than in the District. The WBC Founders personally guarantee this obligation.

3. Exclusivity Period and Right of DCSEC to Terminate MOU. The Exclusivity Period runs through December 31, 2003, but it may be terminated by DCSEC if an "Existing Owner" expresses a bona fide intent to bring a MLB Franchise to the District. "Existing Owner" means (i) any person mandated by the Commissioner of MLB or MLB owners to own a DC Franchise (no matter how mandated, including if through an auction or other sales process), or (ii) any entity at least 90% owned by persons who are owners of some other MLB franchise on the date of the MOU or after March 1, 2003. The MOU also may be terminated by DCSEC if (1) WBC or any WBC Founder breaches its obligations, (2) any WBC Founder disposes of more than 50% of his current interests in WBC or the WBC Founders collectively cease to control and own at least 50% of WBC, or (3) if due to a material adverse change financial condition, DCSEC determines that WBC is not financially qualified to own a MLB Franchise.

4. Funding of New Ballpark Predevelopment Work. WBC will contribute $200,000 to pay the first 75% percent of any "predevelopment work" on the New Ballpark, and thereafter will fund 50% of any additional predevelopment expenses. DCSEC must establish a budget for the predevelopment work, subject to WBC's reasonable approval. Predevelopment work is expected to include: (i) selection of a site for the New Ballpark, (ii) preparation of RFPs for each of a principal architect, construction management firm and general contractor for the New Ballpark, (iii) preparation of a comprehensive development and construction schedule targeting completion of the New Ballpark within 3 years of a team beginning play at RFK, and (iv) preparation of a proposed comprehensive financing plan for the New Ballpark.

5. Shared Funding of New Ballpark Construction. Assuming WBC secures a MLB franchise, WBC has agreed conceptually to fund a substantial portion of the costs of development and construction of the New Ballpark, subject to the District also providing substantial funding and other resources along the lines outlined in the Mayor's November 17, 2000 letter to MLB. The amounts, timing and sequencing of any funding are subject to negotiation of definitive plans and agreements and any public funding would be subject to all necessary legislative and governmental approvals.

6. Financial Strength of WBC. WBC and the WBC Founders have warranted to DCSEC that they have a net worth in excess of $1 billion and that they are ready, willing and able to purchase a MLB franchise and fund their share of the New Ballpark.

7. Expansion of Minority Ownership and Management. WBC has committed to recruit additional District-resident and minority equity owners and to develop employment practices and programs that will increase opportunities for minorities at all levels of WBC management.

II. Obligations of DCSEC

1. Exclusive Negotiations with WBC. DCSEC will negotiate exclusively with WBC during the Exclusivity Period regarding a lease for RFK, development of the New Ballpark, and a long-term lease for the New Ballpark.

2. Reasonable Best Efforts to Complete Predevelopment Work. DCSEC will develop a budget for the predevelopment work described in I.4. above, and for itself and in conjunction with other applicable agencies of the District, will use reasonable best efforts to undertake the predevelopment work.

3. Economic Incentives to Promote WBC as Preferred Local Owner. In the event that DCSEC terminates the Exclusivity Period to deal with an "Existing Owner," DCSEC will still promote WBC as a potential minority owner through two methods. First, if MLB awards the DC Franchise to the Existing Owner on the condition that such party recruit additional District-area investors, DCSEC will require that the Existing Owner give WBC a right of first refusal on whatever investment is required to satisfy MLB's local ownership requirement. If there is an impasse on this matter, WBC's sole remedy will be arbitration and money damages against the Existing Owner. Second, if DCSEC terminates to deal with an Existing Owner who is a MLB mandated owner, then if WBC or the WBC Founders, despite their best efforts, do not acquire at least a 10% interest in the DC Franchise, in negotiating a lease for RFK and/or a funding agreement for the New Ballpark DCSEC will require the Existing Owner to repay WBC's invested expenses in the pursuit of a MLB franchise up to a cap of $2 million as well as opportunity costs of $500,000 escalating every calendar quarter by $250,000 up to a cap of $2 million.

4. Refund of Predevelopment Expenses. If DCSEC deals with an Existing Owner who brings a DC Franchise and WBC fails to obtain at least a 10% interest in the DC Franchise, DCSEC will repay to WBC without interest the amounts contributed by WBC for the predevelopment work.

5. Limit on DCSEC Obligations. DCSEC's obligations are (i) subject to the availability of lawfully appropriated funds, and (ii) any applicable statutory or other limitation on its legal powers including but not limited to any requirement for District Council approval of a contract for the expenditure of $1 million or more within a 12-month period.

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MEMORANDUM OF UNDERSTANDING

This Memorandum of Understanding (the "MOU") dated as of January 10, 2002 outlines the principal undertakings and terms of agreement by and among the District of Columbia Sports and Entertainment Commission, an independent agency of the District of Columbia ("DCSEC"), Washington Baseball Club, L.L.C., a District of Columbia limited liability company ("WBC"), and the founding members of WBC (the "WBC Founders", and together with WBC and DCSEC, the "Parties") relating to the Parties' coordinated, joint efforts to secure a Major League Baseball ("MLB") franchise to locate and play all future home games in the District of Columbia (a "DC Franchise").

BACKGROUND

A. DCSEC was created by the Council of the District of Columbia pursuant to D.C. Code Sec. 3-1401 et seq to combine in one entity the supervision and control of sporting, entertainment and recreational activities in the District of Columbia (the "District"), including, inter alia, to assume all of the nonregulatory functions of the District of Columbia Commission on Baseball.

B. DCSEC owns and operates Robert F. Kennedy Memorial Stadium ("RFK"), which was formerly home to the Washington Senators MLB franchise, and which has all necessary facilities and current availability to serve as an interim home for a DC Franchise pending construction of a new, world-class baseball park located in one of several currently available sites in the District (the "New Ballpark").

C. WBC is owned by a diverse group of District area investors identified on Exhibit 1 hereto and since its formation on July 16, 1999 has been engaged exclusively in efforts to acquire a DC Franchise.

D. MLB has a number of franchises that are no longer financially viable in their current home cities, bit which the Parties believe would enjoy long term prosperity if relocated to the compelling economic market of the District with a home initially in RFK followed shortly thereafter by a move to the New Ballpark.

E. The Parties, believing that a DC Franchise would significantly enhance the social, economic and cultural environment of the District, have collaborated informally since 1999 in promotional and other efforts to secure a DC Franchise and wish now, particularly in light of the current circumstances within MLB, more formally to establish a joint action plan to secure a DC Franchise.

F. The Parties agree that the joint action plan must address shared responsibilities for acquiring a team, developing, financing and constructing the New Ballpark, negotiating appropriate terms of an interim lease for RFK and a long-term lease for the New Ballpark, securing MLB and all other necessary approvals for locating a franchise in the District, and facilitating other revenue generating transactions that will ensure broad fan and financial support for the DC Franchise.

Now, therefore, the Parties, intending to be legally bound, in consideration of the premises and mutual covenants set forth herein, and for other good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, hereby agree as follows:

I. Obligations of WBC

A. Best Efforts to Acquire MLB Franchise. During the Exclusivity Period (defined below), WBC shall use its best efforts to enter into a definitive agreement before the end of the Exclusivity Period with MLB and/or the controlling owner of an existing MLB franchise to secure a DC Franchise, which may or may not be controlled by WBC, to commence playing at RFK as soon as practicable, but in all events, by no later than the beginning of the 2004 MLB season (a "Franchise Acquisition Agreement'). The Franchise Acquisition Agreement shall impose no material conditions on the timely commencement of the DC Franchise at RFK other than (i) the satisfactory negotiation between the DC Franchise and DCSEC of an interim lease for RFK on reasonable market terms and conditions (the "RFK Lease"), (ii) the satisfactory negotiation of a definitive development and funding agreement for completion of the New Ballpark by no later than commencement of any MLB season after a maximum of three MLB seasons at RFK (or four years if a DC Franchise commences at RFK in the 2002 MLB season) (the "Ballpark Development Agreement"), (iii) the satisfactory negotiation of a form of long-tern lease for the New Ballpark (the "Permanent Lease"), (iv) the requisite approval of MLB in accordance with its governing instruments, and (v) all other requisite governmental approvals. The Franchise Acquisition Agreement shall further provide that the parties thereto shall use best efforts to satisfy all of the foregoing conditions by no later than six months following the date of the Franchise Acquisition Agreement (the "Approval Period").

B. Exclusive Negotiations with DCSEC Regarding RFK and New Ballpark. During the Exclusivity Period and the Approval Period, WBC will, and will cause each of its owners and their affiliates (collectively, the "WBC Parties"), to negotiate exclusively and in good faith with DCSEC regarding the RFK Lease, the Ballpark Development Agreement, and the Permanent Lease. If pursuant to the Franchise Acquisition Agreement, WBC shall not be intended to become the controlling owner of the DC Franchise (the "Proposed Owner"),with the prior consent of DCSEC, which consent will not be unreasonably withheld, WBC shall assign to the Proposed Owner, and cause the Proposed Owner to assume, WBC's rights and obligations set forth in the preceding sentence.

C. Covenant of WBC to Refrain from Competing Efforts. During the Exclusivity Period and the Approval Period, WBC will, and will cause each of the WBC Parties to: (i) refrain from negotiating or entering into discussions with any person with the intent or purpose of any of the WBC Parties, directly or indirectly, obtaining a Competing Interest (defined below), and (ii) disclose promptly to DCSEC all material terms and participants in any proposals that may be received by any WBC Party from any person seeking to induce any WBC Party to seek to obtain any Competing Interest. "Competing Interest" shall mean (a) any ownership or other significant economic interest in any MLB franchise other than the DC Franchise, unless such other franchise shall be purchased with a view to permanently relocating it to the District; provided, that, the closing on the purchase of any interest in such other franchise shall be subject to the condition that MLB shall approve the relocation of the franchise permanently to the District and such condition shall not be waived by any WBC Party, or (b) any rights to use or develop any stadium, other than RFK and the New Ballpark, for use by any MLB franchise.

D. Recruitment of Local and Minority Investors. WBC hereby commits to (i) admit additional District-resident and minority equity owners into WBC prior to the end of the Approval Period, which additional owners shall meet all owner qualification requirements of MLB and who shall agree to invest in WBC on the same basis as other additional investors in WBC, and (ii) develop employment practices and programs to increase the opportunity for minorities at all levels of management.

E. Exclusivity Period and Early Termination. The Exclusivity Period shall commence on the date of this MOU and expire on December 31, 2003. Notwithstanding the foregoing provisions of this Section I., the Exclusivity Period may be earlier terminated in accordance with the termination provisions of Section V. of this MOU.

F. Predevelonment Funding. On the date of this MOU WBC shall contribute to DCSEC the sum of $100,000, to be used by DCSEC to fund the undertakings set forth in Section II.B. (the "Predevelopment Work"). In addition, DSCEC shall develop a budget and a timetable for completing the Predevelopment Work (the "Predevelopment Budget"), subject to WBC's approval, which shall not be unreasonably withheld or delayed. Upon WBC's approval of such Predevelopment Budget, WBC shall contribute to DCSEC an additional $100,000 to fund Predevelopment Work. Thereafter, WBC shall contribute to DCSEC one-half of the amount by which the Predevelopment Budget exceeds $267,000 to be used by DCSEC to fund the Predevelopment Work. Such payments shall be made at the beginning of each calendar quarter in an amount equal to one half of the amount set forth in the Predevelopment Budget for such quarter.

G. Funding of New Ballpark. WBC acknowledges that the Mayor of the District has outlined in a November 17, 2000 letter to MLB available sources of funding and other resources of the District and DCSEC with respect to the development and construction of the New Ballpark (the "Public Funding Sources Letter"). In furtherance of the Parties' obligations hereunder with respect to the New Ballpark, WBC commits to DCSEC that in the event that (i) WBC or any of the WBC Parties acquires a controlling interest in the DC Franchise, and (ii) the District and/or DCSEC proceeds to fund the New Ballpark in substantially the magnitude set forth in the Public Funding Sources Letter, WBC shall fund the remaining balance of the costs of the New Ballpark (the "Private Funding"). WBC's obligation to provide the Private Funding is subject to the Parties' negotiation of the Ballpark Development Agreement and the Permanent Lease which will address, among other issues, the design, budget, location, and management of the New Ballpark as well as the use, distribution, and allocation of all revenues generated by the New Ballpark. WBC further represents and warrants to DCSEC that WBC has sufficient financial resources to obtain the Private Funding.

II. Obligations of DCSEC

A. Exclusive Negotiations with WBC Regarding RFK and New Ballpark. During the Exclusivity Period and the Approval Period, DCSEC will negotiate exclusively and in good faith with WBC or the Proposed Owner (as applicable pursuant to Section I.B.) regarding the RFK Lease, the Ballpark Development Agreement, and the Permanent Lease; provided that, if during the Exclusivity Period an Existing Owner (defined below) expresses a bona fide intent to relocate an existing MLB franchise to the District as a DC Franchise or otherwise to place in the District a DC Franchise, DCSEC shall be permitted to terminate the Exclusivity Period and negotiate and enter into any agreement with such Existing Owner. In such event, the Parties shall be released from their obligations under this MOU, except that DCSEC shall comply with the provisions of Section II.E. and WBC shall continue to have the rights set forth in Section II.C. "Existing Owner" shall mean any of (i) any entity at least ninety percent (90%) of the equity interests in which are owned by one or more persons who then own or have contractual rights to own any MLB franchise either (A) on the date of this MOU, or (B) on or after March 1, 2003, or (ii) any entity controlled by a person or persons endorsed by a requisite majority of MLB member clubs or the Office of the Commissioner of MLB as a mandated ownership group, no matter how mandated including if mandated as a result of such group being the successful bidder in an auction or other managed sale of the DC Franchise.

B. New Ballpark Development: Use of Payment by WBC. During the Exclusivity Period, DCSEC shall use reasonable best efforts to undertake directly and in conjunction with the Mayor of the District of Columbia and other applicable government agencies of the District all of the following necessary pre-development efforts for the New Ballpark: (i) selection of a site for the New Ballpark, (ii) preparation of requests for proposals for each of a principal architect, construction management firm and general contractor for the New Ballpark, (iii) preparation of a comprehensive development and construction schedule targeting completion of the New Ballpark by no later than the deadline set forth in Section I.A. for commencing play at the New Ballpark, and (iv) preparation of a proposed comprehensive financing plan that shall identify available sources of public and private financing for the development and construction costs of the New Ballpark. All sums paid by WBC shall be used exclusively by DCSEC to fund these pre-development efforts and shall not be repaid to WBC except as expressly provided herein. DCSEC shall consult regularly with WBC regarding its recommendations for these pre-development efforts.

C. Endorsement of WBC to Existing Owner to Satisfy MLB Local Ownership Requirement. DCSEC has publicly endorsed WBC as its most favored candidate to own the DC Franchise and has acknowledged the strong positive contribution that WBC has made to the joint efforts to restore a MLB franchise to the District. At the same time, DCSEC and WBC recognize that ownership of a MLB franchise requires approval of MLB and therefore the Parties have agreed that DCSEC shall be permitted to terminate this MOU in accordance with the terms hereof to deal with an Existing Owner (as defined herein) so that MLB may determine that an entity other than WBC should own the DC Franchise. Accordingly, in the event that DCSEC enters into an RFK Lease with an entity controlled by an Existing Owner for a DC Franchise and MLB requires the Existing Owner as a condition of obtaining MLB approval for commencement of the DC Franchise to admit additional District-area resident investors as equity owners (the "Local Ownership Requirement"), unless DCSEC shall have properly terminated this MOU as permitted hereunder (other than pursuant to clause (iii) of Section V.B.) and provided that WBC then meets all of MLB's criteria to satisfy the Local Ownership Requirement, DCSEC shall cause the Existing Owner to offer to WBC a right of first refusal to acquire an interest in such entity to satisfy the Local Ownership Requirement on the bases set forth in Section ILD, and, if applicable, to satisfy the Expense Reimbursement set forth in Section II.E.

D. Right of First Refusal on Local Ownership. In the event that the right of first refusal on the Local Ownership Requirement is applicable under Section II.C., before selling to any person other than WBC any portion of the Existing Owner's interest in a MLB franchise to satisfy the Local Ownership Requirement (except for up to a 10% interest as permitted consistent with the definition of Existing Owner) the Existing Owner shall offer such interest to WBC (with a copy to DCSEC) setting forth in writing with particularity the price and terms thereof. Thereafter, WBC shall have fifteen business days to accept or reject such offer. If the offer is rejected, the Existing Owner shall be free to negotiate a sale of the same interest to any third party, provided, however, that if the terms and conditions of any proposed third party sale are more favorable to the buyer in any material respect than those offered to WBC, the Existing Owner shall so notify WBC in writing with a copy of an offer it is prepared to accept (with a copy to DCSEC) and WBC shall have a further fifteen business days to accept the offer or to make a proposal that is equivalent or superior measured on the basis of net present value assuming the sale were to close, and the probability that the transaction would close on a timely basis (a "Superior Proposal"). If the offer is rejected by WBC, and the Existing Owner sells the offered interest to the third party offeree on the terms and conditions contained in the offer, a copy of which was provided to WBC within the longer of 120 days of WBC's rejection or such longer period as shall be necessary for the Existing Owner and offeree to obtain MLB approval, WBC's rights under this section shall be extinguished. If such third party transaction is not so consummated, the process set forth in this Section II.D. shall be repeated until the Existing Owner sells the offered minority interest either to WBC or a third party. 

If WBC makes a counter proposal that is rejected by the Existing Owner and WBC asserts in good faith that its proposal is a Superior Proposal, or DCSEC fails to cause the Existing Owner to comply with this Section II.D., WBC's sole and exclusive remedy shall be to commence an arbitration proceeding under the rules of the American Arbitration Association within ten business days following notice from the Existing Owner that it has rejected WBC's counterproposal. Within five business thereafter, the Existing Owner and WBC shall each appoint an arbiter and within a further five business days the two arbiters so appointed shall agree upon a third arbiter. The three arbiters shall reach a decision within thirty days of the selection of the full panel. The parties intend, and hereby direct the arbitration panel, that in making such determination, if the arbitration panel shall find that WBC did present a Superior Proposal, and if the Existing Owner continues to refuse to accept WBC's Superior Proposal, such panel shall be permitted only to issue an award for monetary damages payable by the Existing Owner in an amount equal to WBC's damages determined by the panel. Such determination will be final and binding on WBC and the Existing Owner and not subject to judicial review. WBC further covenants, that WBC (i) shall not seek, and hereby waives any right to seek, to enjoin any transaction between the Existing Owner and any person (including DCSEC or the District), and (ii) shall not sue or otherwise initiate any legal process, and hereby waives any right to sue or initiate any legal process, against any person in respect of any claim that may arise in respect of any of its rights under this Section II.D.

During the period covered under this Section II.D., WBC agrees that at the request of an Existing Owner who is awarded a DC Franchise, WBC shall negotiate an agreement to assign at fair market value its rights and obligations under this Section II.D. (along with any surviving rights and obligations under this MOU) to such Existing Owner or to any person designated by such Existing Owner who makes an offer of purchase giving rise to WBC's rights under this section.

E. Repayment of Shared Predevelonment Costs; Expense Reimbursement. In the event that a DC Franchise is obtained and neither WBC nor the WBC Parties own collectively in the aggregate at least 10% of the equity interest in such DC Franchise prior to the date that an RFK Lease is executed by the owner of the DC Franchise, on such date, unless DCSEC shall have terminated this MOU other than pursuant to clause (iii) of Section V.B., DCSEC shall repay to WBC without interest all sums previously paid by WBC to DCSEC for Predevelopment Work pursuant to Section I.F. In addition, in the event that (i) DCSEC terminates this MOU to deal with an Existing Owner who is a MLB mandated owner as defined in clause (ii) of the definition of Existing Owner, (ii) a DC Franchise is obtained by such Existing Owner and, despite best efforts to acquire a minority interest, neither WBC nor the WBC Parties, own collectively in the aggregate at least 10% of the equity interest in such DC Franchise prior to the latest of the deadline imposed by MLB for an Existing Owner to meet the Local Ownership Requirement, the date of any arbitration award under Section II.D., or the date that the DC Franchise commences play at RFK (the "Expense Reimbursement Date"), (iii) WBC and the WBC Founders demonstrate that they nonetheless meet all applicable financial, character and other qualifications required by MLB to become MLB owners, and (iv) DCSEC shall not have terminated this MOU for any other permitted reason, then DCSEC shall cause the Existing Owner on the Expense Reimbursement Date to reimburse WBC's expenses and costs incurred in connection with its efforts to secure a DC Franchise (the "Expense Reimbursement"). The Expense Reimbursement shall be limited to (i) actual costs and expenses incurred by WBC in connection with efforts to secure a DC Franchise (excluding amounts contributed to DCSEC pursuant to Section I.F. and repaid pursuant to the first sentence of this Section II.E., but including the fair value of unbilled services rendered by WBC's Founders and contributed to WBC) in an aggregate amount not to exceed $2 million, and (ii) opportunity costs of WBC in an amount commencing on the date of this MOU of $500,000 and increasing by $250,000 on the first day of each calendar quarter hereafter up to a maximum of $2 million, but reduced by the amount of any arbitration award in favor of WBC in a proceeding pursuant to Section II.D.

III. Joint Obligations of the Parties

A. Mutual Cooperation Each Party will cooperate in good faith with the other in taking all reasonable actions as may be required in connection with the performance of each Party's respective obligations under this MOU.

B. Compliance with Law. In the performance of its obligations under this MOU, each Party shall comply with all applicable laws and governmental requirements.

C. Coordinated Public Statements. The Parties will consult with each other before issuing any press release or making any public statement with respect to this MOU.

D. Notice of Certain Events. Each Party shall promptly notify the other of (i) any material breach by such Party of its obligations under this MOU, (ii) any circumstance which would cause its representations set forth in Section IV no longer to be true in all material respects, and (iii) any material information of which such Party becomes aware after the date of this MOU that would materially adversely affect the prospects of securing a DC Franchise.

IV. Representations of the Parties 

A. Representations of WBC. WBC represents and warrants to DCSEC as follows:

1. Organization; Power and Authority. WBC is a limited liability company duly formed and validly existing in good standing under the laws of the District of Columbia and has full power and authority to carry on its operations now being conducted and to consummate the transactions contemplated by this MOU. WBC has provided DCSEC with a true, correct and complete copy of its certificate of formation, operating agreement and all other agreements among its members relating to the financing and management of WBC.

2. Due Execution; Binding Agreement. The execution, delivery and performance of this MOU by WBC has been duly and validly approved by all necessary action of WBC and its members. This MOU has been duly executed and delivered by WBC and the WBC Founders and constitutes the valid and binding agreement of WBC and the WBC Founders enforceable in accordance with its terms, except as the same may be limited by bankruptcy or other laws relating to the enforcement of creditors' rights and the application of general principles of equity.

3. No Consents or Conflicts. The execution, delivery and performance by WBC and the WBC Founders of this MOU and the consummation by WBC the transactions contemplated hereby: (i) require no consent, waiver, agreement, approval of any person except as set forth herein, and (ii) do not and will not (a) conflict with or violate any provision of the certificate of formation or operating agreement of WBC, (b) contravene or conflict with or constitute a violation of any provision of any law, statute, rule, regulation, judgment, injunction, order or decree binding upon or applicable to WBC, or (c) result in a violation or breach of, or constitute (with or without notice or lapse of time or both) a default under any of the terms, conditions or provisions of any note, bond, mortgage, indenture, lease, license, contract, agreement or other instrument or obligation to which WBC or any of the WBC Founders is a party or any of their respective properties or assets may be bound.

4. Financial Condition; Qualification of WBC Parties. WBC has a tangible net worth in excess of $750,000 as evidenced by its most recent financial statement provided to DCSEC, which statement fairly presents in all material respects the financial condition of WBC as of the date thereof. The WBC Founders collectively have a tangible net worth in excess of $1 billion and otherwise have sufficient financial resources to qualify as a MLB controlling owner, to consummate the acquisition of a DC Franchise and the other transactions contemplated hereby, and are ready, willing and able to do so. WBC has no reason to believe that any of the WBC Parties is not otherwise qualified to be an equity owner in a MLB franchise in accordance with the applicable requirements of MLB.

5. No Competing Interest. Neither WBC nor any of the WBC Parties has entered into any agreement, arrangement or understanding with any person relating to any present or possible future Competing Interest.

B. Representations of DCSEC.

1. Organization; Power and Authority. DCSEC is an independent agency and corporate instrumentality of the government of the District of Columbia and has full power and authority to carry on its operations now being conducted and to consummate the transactions contemplated by this MOU.

2. Due Execution; Binding Agreement. The execution, delivery and performance of this MOU by DCSEC has been duly and validly approved by all necessary action of DCSEC. This MOU has been duly executed and delivered by DCSEC and constitutes the valid and binding agreement of DCSEC enforceable in accordance with its terms, except as the same may be limited by bankruptcy or other laws relating to the enforcement of creditors' rights and the application of general principles of equity.

3. No Conflicts. The execution, delivery and performance by DCSEC of this MOU and the consummation by DCSEC the transactions contemplated hereby: (i) require no consent, waiver, agreement, approval of any person except as set forth herein, and (ii) do not and will not (a) contravene or conflict with or constitute a violation of any provision of any law, statute, rule, regulation, judgment, injunction, order or decree binding upon or applicable to DCSEC, or (b) result in a violation or breach of, or constitute (with or without notice or lapse of time or both) a default under any of the terms, conditions or provisions of any note, bond, mortgage, indenture, lease, license, contract, agreement or other instrument or obligation to which DCSEC is a party or any of its properties or assets may be bound.

V. Termination

A. Termination by Mutual Consent. This MOU may be terminated at any time by mutual written consent of DCSEC and WBC.

B. Termination by DCSEC. This MOU may be terminated by DCSEC upon written notice to WBC stating the reason for such action in the event of (i) any material breach by WBC of the representations set forth in Section IV, (ii) any material breach of any obligations of WBC or the WBC Founders set forth herein not cured within ten (10) business days following written notice of such breach, (iii) upon the determination of DCSEC to negotiate with an Existing Owner but only as permitted pursuant to Section II.A., (iv) upon any sale or other disposition, other than as a result of death or disability, by any of the WBC Founders of more than fifty percent (50%) of his ownership interests in WBC or any sale by WBC of additional ownership interests or other disposition by any of the WBC Founders of any of their ownership interests in WBC resulting in the WBC Founders owning in the aggregate less than fifty percent (50%) of the equity interests in WBC or otherwise ceasing to control the management of WBC, (v) upon any material adverse change in the financial condition of WBC resulting in a determination by DCSEC in its good faith, reasonable judgment that WBC is not financially qualified to acquire a DC Franchise, or (vi) upon failure of WBC to enter into a Franchise Acquisition Agreement prior to expiration of the Exclusivity Period or failure to consummate the Franchise Acquisition Agreement prior to expiration of the Approval Period.

C. Termination by WBC. This MOU may be terminated by WBC upon written notice to DCSEC stating the reason for such action in the event of (i) any material breach by DCSEC of the representations set forth in Section IV, (ii) any material breach of any obligations of DCSEC set forth herein not cured within ten (10) business days following written notice of such breach, or (iii) upon written notice by DCSEC to WBC of DCSEC's determination to negotiate with an Existing Owner only as permitted pursuant to Section B.A.

D. Effect of Termination. In the event of termination of this MOU, this MOU shall become void and of no effect with no liability on the part of any party hereto (unless such termination is the result of breach of this MOU by such party, in which case the other Party shall be entitled to all remedies provided for herein and otherwise available in law or equity).

VI. Miscellaneous

A. No Assignment. No Party shall assign or delegate any of its rights or obligations hereunder without the express written consent of the other Parties hereto in their sole discretion.

B. Successors. This MOU shall inure to the benefit of and be binding upon the Parties and their respective successors and permitted assigns.

C. Notices. All notices, demands and other communications that are required or that may be given pursuant to the terms of this MOU shall be in writing and shall be deemed given when delivered by hand or sent by facsimile transmission or on the third day after mailing if mailed by certified mail, postage prepaid, return-receipt requested, as follows:

a. If to DCSEC, to:

D.C. SPORTS AND ENTERTAINMENT COMMISSION
2400 East Capitol Street, S.E.
Washington, D.C. 20003
Facsimile (202) 547-7460
Attention: Robert D. Goldwater, President

With a copy to:

COVINGTON & BURLING
1201 Pennsylvania Avenue, N.W.
Washington, D.C. 20004-7566
Facsimile: (202) 662-6291
Attention: Eric H. Holder

b. If to WBC or any of the WBC Founders, to:

Thayer Capital Partners
1455 Pennsylvania Avenue, N.W.
Suite 350
Washington, D.C. 20004
Facsimile: (202) 371-0391
Attention: Frederic V. Malek

With a copy to:

ARNOLD & PORTER
555 Twelfth Street, N.W.
Washington, D.C. 20004
Facsimile: (202) 942-5999
Attention: Stephen W. Porter

or to such other address as any Party shall have designated by notice in writing to the other Party.

D. Severability, Reformation. If any provision of this MOU is held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remainder of this MOU shall not be affected thereby and such provision shall be reformed to give effect to the Parties' intentions, including the intended allocation of economic risks and benefits, to the fullest extent permitted by applicable law.

E. Entire Agreement; Amendment; Waiver. This MOU constitutes the entire agreement of the Parties with respect to its subject matter and supersedes all prior agreements and understandings of the Parties, oral and written, with respect to its subject matter. None of the terms or provisions of this MOU may be changed, waived, modified, discharged or terminated except by instrument in writing executed by the Party or Parties against whom enforcement of the change, waiver, modification, discharge or termination is asserted. No waiver or approval under this MOU shall, except as may be otherwise stated in such waiver or approval, be applicable to subsequent transactions.

F. Governing Law; Limitation on DCSEC Obligations. This MOU shall be construed under and in accordance with the internal laws of the District of Columbia without regard to the conflict of laws principles thereof. Notwithstanding any other provision of this MOU to the contrary, the obligations of DCSEC hereunder and in connection with the transactions contemplated hereby are subject to (i) the availability of lawfully appropriated funds, and (ii) any applicable statutory or other limitation on its legal powers, including, but not limited to, any statutory requirement to obtain District Council approval of a contract for the expenditure of $1,000,000 or more in a twelve-month period.

G. Relationship of the Parties. Nothing in this MOU shall be construed in any manner so as to create a partnership, joint venture or other legal entity comprised of WBC and DCSEC. Each of DCSEC and WBC is independent of the other and neither Party shall have any authority to bind the other.

H. No Third Party Beneficiaries. This MOU shall be effective only as between the Parties hereto and their permitted successors and assigns and shall not be construed as creating or conferring upon any person or entity any right, remedy or claim under or by reason of this MOU.

I. Force Majeure. Any failure of any of the Parties to perform its respective obligations hereunder due to any Acts of God, strikes, civil riot, floods and any other cause not reasonably within the control of such Party shall not constitute a breach of this MOU.

J. Headings. The headings in this MOU are for the sole purpose of convenience of reference and shall not in any way limit or affect the meaning or interpretation of any of the terms or provisions of this MOU.

K. Counterparts. This MOU may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument, and shall become effective when each of the Parties hereto shall have delivered to it this MOU duly executed by the other Parties hereto.

L. Commitments of WBC Founders. Each of the WBC Founders hereby (i) confirms to DCSEC the representations and warranties of WBC set forth in Subsections 4 and 5 of Section W.A., (ii) unconditionally guarantees the full, complete and timely performance of WBC's obligations set forth in Section I.B. and I.C., and (iii) covenants to provide DCSEC on a confidential basis within 15 days of the date of this MOU personal financial information that will collectively evidence compliance with the financial condition representation set forth in Section IV.A. The personal obligations of the WBC Founders under this MOU are limited solely to the foregoing specific provisions set forth in this Section VI.L.

[Signatures follow on the next page.]

In witness whereof, the Parties have executed this MOU as of the date first above written.

District of Columbia Sports and Entertainment Commission

By:.
John L. Richardson
Chairman

Washington Baseball Club, LL.C.

By:
Frederic Malek
Managing Member

The WBC Founders have executed this MOU as of the date first above written solely as to the obligations set forth in Section VI.L.

Frederic Malek
Franklin B. Raines
James V. Kimsey
Stephen W. Porter
Joseph E. Robert, Jr.
Paul Martin Wolff

EXHIBIT 1

CURRENT INVESTORS IN WASHINGTON BASEBALL CLUB, L.L.C.

Founder Percentage Interest in WBC
Frederic Malek 28 1/3%
James V. Kimsey 28 1/3%
Joseph E. Robert, Jr. 28 1/3%
Franklin B. Raines 5%
Stephen W. Porter 5%
Paul Martin Wolff 5%

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