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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.
MEMORANDUM TO: Distribution
FROM: John L. Richardson
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
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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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").
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
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
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
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
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
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
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
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).
[Signatures follow on the next page.]
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
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
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.
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
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.
In witness whereof, the Parties have executed this MOU as of the date
first above written.
District of Columbia Sports and Entertainment Commission
John L. Richardson
Washington Baseball Club, LL.C.
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.
Franklin B. Raines
James V. Kimsey
Stephen W. Porter
Joseph E. Robert, Jr.
Paul Martin Wolff
CURRENT INVESTORS IN WASHINGTON BASEBALL CLUB, L.L.C.
||Percentage Interest in WBC
|James V. Kimsey
|Joseph E. Robert, Jr.
|Franklin B. Raines
|Stephen W. Porter
|Paul Martin Wolff