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Commission January 27, 2006 The Honorable Linda W. Cropp Dear Chairman Cropp: I reference (i) the Lease Agreement between the District of Columbia Sports and Entertainment Commission (the "Commission") and Baseball Expos, L.P. (the "Team"), which initially was filed with the Office of the Secretary of the Council (the "Secretary") on Friday, December 9, 2005, and was supplemented by filing with the Secretary on Monday, December 12, 2005 (as supplemented, the "Lease"); (ii) the Non-Relocation Agreement (the "Non-Relocation Agreement") between the Commission and the Team, which was filed with the Secretary on Friday, December 9, 2005; and (iii) the Construction Administration Agreement among the Commission, the Team and the Government of the District of Columbia (the "District Government"), which initially was submitted to the Secretary on Monday, December 19, 2005 (as supplemented, the "CAA"; and together with the Lease and the Non-Relocation Agreement, the "Ballpark Agreements"). As a result of continuing negotiation with respect to the Ballpark Agreements and mediation in connection with the Baseball Stadium Agreement, dated September 29, 2004, among the Commission, the Team and the District Government, the parties have agreed upon certain revisions to the Ballpark Agreements favorable to the District. Revised copies of the Ballpark Agreements, including copies marked to indicate such revisions; required supporting documentation; and a memorandum summarizing the agreed-upon revisions to the Ballpark Agreements are enclosed herewith. If you have any questions regarding these revisions to the Ballpark Agreements, or any other matter concerning the Ballpark Agreements, please do not hesitate to contact me. Sincerely, SUMMARY OF RECENT AMENDMENTS TO WASHINGTON NATIONALS LEASE AGREEMENTThis memorandum summarizes material changes to the Lease Agreement (the "Lease") between the District of Columbia Sports and Entertainment Commission (the "Commission") and Baseball Expos, L.P. d/b/a/ the Washington Nationals (the "Team") reflected in the Lease as submitted to the District Council on January 27, 2006, compared to the Lease as previously submitted on December 12, 2005 (the "Original Lease"). This summary supplements the summary that was submitted with the Original Lease. Change to Section 3.1. The Original Lease provided that certain terms would become effective immediately upon execution and other terms would become effective upon Substantial Completion of hte Ballpark. The Lease now provides that the terms that formerly would become effective upon execution will now become effective on the earlier of March 1, 2006 or the date that the Team reserves a fully executive construction management agreement. Change to Section 3.8. The Lease now provides that the Team will pay rent for the early occupancy of any portion of office or retail space in the Ballpark prior to the Substantial Completion date. Change to Section 3.9. The Lease now provides that if the Commission fails to complete the Ballpark by March 1, 2008, the Team will pay 50% of the rent otherwise payable under the RFK License Agreement for the period it remains in RFK. The Original Lease provided that the Team would pay no rent while it remained in RFK. Changes to Sections 4.1, 4.6, and 5.1 - Bondable Lease Terms. In the Original Lease the Team provided certain assurances of rent and tax payments in order to assist the District in obtaining a favorable investment grade rating on bonds proposed to be issued in a private financing. The District has now determined not to proceed with that private financing. Accordingly, the assurances provided in the Original Lease have been removed, but will be restored if required for the District to obtain an investment grade rating on the revised financing plan. The specific changes are as follows:
Changes in Section 5.6. The Lease was clarified to provide that the Commission is entitled to Net Parking Revenues derived from up to 1,225 parking spaces (including 30 bus spaces) during Commission Events. This was a conforming change to a provision that already existed in Section 8.3 of the Original Lease. Change to Section 6.7. Section 6.7 of the Lease clarifies and confirms that the Team will allocate its $20,000,000 contribution to the Project Account only for previously approved project costs. Change to Section 6.6. Section 6.6 of the Lease clarifies that the Commission's rights with respect to "Separate Development" prior to Lease commencement are governed by the Construction Administration Agreement. The Lease also clarifies that after the Commencement Date, the Commission may utilize its Development Rights for certain capital improvements and for Commission Additions permitted under Section 6.6. Changes to Section 8.5. The Lease obligates the Team to include among the benefits it provides to the District an emphasis on youth education and recreation, including the rebuilding of youth baseball infrastructure in the District. The Lease obligates the Team to work with the Commission and other District charitable organizations to develop a dedicated year round baseball training and recreation facility in the District. Additionally, the Lease provides for an increase to 10,000 in the number of free tickets offered to underprivileged youth each year. The Team agreed to take affirmative steps to employ District residents at all levels of its organization within the District. Change to Section 14.2. The Lease corrects an inadvertent error in the Original Lease to confirm that the Commission may assign all or any portion of its interest in the Leased Premises and the Lease. Section 14.2 also clarifies that any assignee of the Commission must only assume the commission's obligations related to the interest it is assuming. Change to Section 16.1. Section 16.1 of the Lease specifically confirms that the Team may not terminate the Lease as a result of its own non-payment of Rent. SUMMARY OF WASHINGTON NATIONALS LEASE AGREEMENTThis memorandum summarizes material terms. of the Lease Agreement (the "Lease") between the District of Columbia Sports and Entertainment Commission (the "Commission") and Baseball Expos, L.P, d/b/a the Washington Nationals (the "Team") and the related Non-Relocation Agreement (the "Non-Relocation Agreement") between the Commission and the Team. The Lease includes the Commission's obligation to complete a new ballpark (the "Ballpark") to be constructed on an approximately 19-acre site bounded by N Street S. E., Potomac Avenue S.E., South Capitol Street and 1 Et Street S.E. (the "Ballpark Site"). A companion Construction Administration Agreement (the "CAA") by and among the Commission, the. Team and the Government of the District of Columbia (the "District") governs the process by which the parties will design, develop and construct the Ballpark. Since the Lease requires the Commission to perform its obligations under the CAA, material terms of the CAA are also summarized in Part LC. of this memorandum, The obligations of the Commission under the Lease and CAA arc guaranteed by the District under a District Guaranty in favor of the Team. These agreements are being entered into in accordance with the Baseball Stadium Agreement, dated September 29, 2004, by and among the Commission, the Team and the District (the "BSA"). I. Lease SummaryThe Lease obligates the Commission to lease to the Team the "Leased Premises," which consists of the Ballpark Site and all improvements thereon, including the Ballpark and related infrastructure, parking facilities and other facilities provided for under the program statement for the Ballpark (collectively, the "Ballpark Complex"). The Leased Premises excludes, however, "Commission Additions" (discussed below) and the certain Team-owned property installed or maintained in the Ballpark Complex. A. Use of the Leased PremisesLease of the Leased Premises. The Lease obligates the Commission to sublease to the Team the Ballpark Complex and the Ballpark Site and permits the Commission to reserve certain air, surface and subterranean rights and rights-of-way related to the Ballpark Site (collectively, the "Development Rights") necessary to develop the Ballpark Site. The Commission will acquire a leasehold interest in the Ballpark Complex and the Ballpark Site from the District under a ground sublease with a 99-year term. The District is the fee owner of the Ballpark Complex and will acquire a leasehold interest in the Ballpark Site from the Anacostia Waterfront Corporation ("AWC"), which is the owner of the Ballpark Site, under a ground lease with a 99-year term. Upon execution of the Lease, the Commission will represent and warrant to the Team that AWC and the District, collectively, hold fee simple title to the Leased Premises. Neither the ground lease nor the ground sublease may be amended without the Team's consent. Team's Permitted Uses of the Leased Premises. The Team may use the Leased Premises only for the purposes specifically set forth in the Lease or otherwise consented to by the Commission, The Team has the right to use the Leased Premises for:
The Team cannot use the Leased Premises in a manner that violates the terms of the Lease, applicable law, or Major League Baseball rules and regulations; creates safety hazards or interferes with the normal and safe operation and maintenance of the Ballpark; or materially increases the cost of insuring the Leased Premises. Revenue Allocation. The Team is entitled to all revenues generated from its permitted uses of the Leased Premises or the Team's exercise of its promotional rights in connection with such permitted uses. The Commission is entitled to all revenges generated by amateur athletic, public service or other events (excluding professional baseball games) (collectively, "Commission Events") organized and promoted by the Commission. The Commission may use the Ballpark for up to 18 days per year for Commission Events (no more than 8 during the Major League Baseball season). (See Part I.I, below). The parties will share certain revenues from parking on the Ballpark Site (See Part I.F, below). Any revenue opportunities from the Leased Premises that are not allocated under the Lease will be allocated in the future by mutual agreement of the parties. B. Term and TerminationTerm and Termination. The Lease has a 30-year initial term, with five consecutive two-year extension terms exercisable by the Team, other than during the continuance of a Team default. The "Commencement Date" under the Lease is the first day following substantial completion of the Ballpark Complex and delivery of a "punch list", design documents, maintenance manuals and certain other documents and information under Section 7.8 of the CAA, The Team has the right to designate a later Commencement Date within agreed upon parameters if substantial completion has not occurred by March 31, 2008. The Lease terminates upon termination of the Baseball Stadium Agreement or upon a condemnation of the Ballpark Complex that renders it no longer economically and feasibly useful by the Team for its permitted uses under the Lease. Additionally, the Lease may be terminated (i) by written agreement of the Team and Commission, (ii) by the Commission, following a Team default, (iii) by the Team, following a Commission default and a subsequent failure of the District to cure the default under the District Guaranty, or (iv) by either party, if the Ballpark cannot be restored or repaired following casualty damage or destruction. Early Occupancy. The Team, with the prior written approval of the Commission, may occupy portions of the Ballpark Complex that have been substantially completed prior to the Commencement Date. The Team is obligated to pay for maintenance of the occupied portions of the Ballpark Complex and utilities consumed by the Team, but is not obligated to pay rent until the Commencement Date. C. Design and Construction of the Ballpark ComplexConstruction Administration Agreement. The Lease obligates the Commission and the Team to timely perform their respective obligations under the CAA. Design. The parties have agreed upon a Project Program Statement which establishes the framework for all subsequent, more detailed, phases of the design process - Schematic Drawings, Design Development Documents, and Plans and Specifications. Project Coordination Team. The CAA establishes a Project Coordination Team comprised of a representative of the Team and a shared representative of the Commission and the District to (i) provide input to and approval of the major design phases, (ii) make recommendations with respect to selection of design and construction professionals, and (iii) monitor progress of the project. A Project Coordination Team Administrator will maintain records of Project Coordination Team actions and changes to the construction project. Construction. Additionally, the Commission is required to construct and complete the Ballpark Complex in accordance with agreed-upon design plans and specifications and bear the costs of such construction, excluding construction costs resulting from Team-directed construction change orders that are funded by the Team. The Commission is obligated to use its reasonable best efforts to complete construction of the Ballpark Complex prior to March 1, 2008. Late Completion Damages. In the event that the Commission fails to substantially complete the Ballpark Complex by March 1, 2008, the Commission and Team have agreed that the Commission's liability to the Team for damages will be limited to:
The Commission is obligated to compensate the Team for damages incurred from late completion for a maximum of 24 months following March 1, 2008. The Team's right to recover damages for late completion is subject to its common law duty to mitigate damages and a maximum recovery of $19,000,004 for the second 12month period, exclusive of Third-Party Late Completion Proceeds received by the Team during such period. Funding to be "In Balance." The Commission is obligated to maintain a project account with sufficient funding for completion of the Project. If the Team delivers a notice to the Commission and the District stating that projected expenditures exceed available funding, the Commission must deposit sufficient amounts into the project account to bring funding for construction of the Ballpark Complex into balance within 18 months following the date of the notice. D. Team InvestmentThe Lease provides for the Team to make a $20,000,000 contribution to the project account (created pursuant to the CAA) on or before January 1, 2008. The contribution shall be allocated to the cost of fixtures and equipment included in the Leased Premises as designated by the Commission. E. RentBasic Rent. The Team is obligated to pay basic rent to the Commission no later than April i of each Lease year beginning the second Lease year following the Commencement Date (and with respect to the first Lease year, within 45 days following the Commencement Date). The Team's basic rent obligation is $3,500,00 for Lease year 1, $3,750,000 for Lease year 2, $4,000,00 for Lease year 3, $4,500,00 for Lease year 4, $5,000,00 for Lease year 5, $5,500,00 for Lease year 6, and with respect to Lease year 7 and each Lease year thereafter, $10,000 less than 102% of the basic rent owed for the prior Lease year. Beginning with the seventh Lease year, however, the amount of basic rent owed for any Lease year will not increase over the basic rent owed for the prior Lease year if the paid attendance at the Team's home games for the prior season was less than the median paid attendance for all Major League Baseball clubs' home games over the preceding three-year period. Additional Rent. The Team also is obligated to pay additional rent if the Team sells in excess of 2,500,000 full price tickets (or full price ticket equivalents). The additional rent payment is the dollar amount equal to the number of full price tickets (or full price ticket equivalents) sold in excess of 2,500,000. Rent Abatement. The Team is entitled to abate rent for any portion of a Lease year during which it is unable to play home games at the Ballpark because of casualty damage to, or a condemnation of, the Ballpark, or the occurrence of force majeure events. The Team is not, however, entitled to abate rent if cancelled games are (i) played at the Ballpark on a later date during the same season or (ii) the result of strikes, lack-outs or boycotts involving Major League Baseball or the Major League Baseball Players' Association. Security for Rent. In the event that the Team violates the Major League Baseball Debt Service Rule and fails to cure the violation within 60 days after written notice demanding cure from the Commission, the Team must post reasonable collateral to secure its basic rent obligation. Rent Reserve. On or before March 1, 2008, the Team is required to deposit a letter of credit in the amount, at any time of determination, of the least of (i) the aggregate amount of Basic Rent scheduled to fall due on the next following April 1 (without adjustment for paid attendance levels or any possible rent abatement); (ii) the total remaining amount of basic rent scheduled to fall due prior to the Expiration Date (without adjustment for paid attendance levels or any possible rent abatement); or (iii) the principal amount of the Series A-1 stadium revenue bonds at the time outstanding within the meaning of the indenture under which the bonds were issued. The rent reserve may be drawn upon by the bond trustee in order to (i) offset abated rent payments; (ii) offset the Team's failure to pay basic rent when due; and (iii) in the event of late completion, satisfy the District's debt service obligations on the Series A-I stadium revenue bonds during the period between March 1, 2008 and the Commencement Date. The Team is obligated to replenish 100% of amounts drawn from the rent reserve to offset the Team's failure to pay basic rent for any Lease year. The Commission is obligated to replenish 100% of amounts drawn from the rent reserve as a result of a Commission default, rent abatement for force majeure or late completion of the Ballpark Complex. All amounts in the rent reserve will be distributed to the Team at the earlier of the expiration or termination of the Lease or the redemption of the Series A-1 stadium revenue bonds, F. Management and Operation of the Leased PremisesManagement and Operation. The Team has the exclusive right to manage, operate and control the Leased Premises, subject to its obligations under the Lease, applicable law and the Commission's rights with respect to parking at the Ballpark Site and Commission Events. In connection with its management responsibilities, the Team is entitled to employ such personnel, engage such independent contractors to perform services, and adopt such rules and regulations, as the Team deems necessary or desirable for the operation of the Ballpark Complex. The Commission is entitled to review and comment on the Team's contracts with independent contractors to the extent the, contracts pertain to the maintenance and repair of the Leased Premises or the health and safety of persons on the Leased Premises. The Team is obligated to use good faith efforts to cause event promoters to waive any liability of the Commission and the District for damages due to the failure of any utility or similar service necessary for the operation of the Ballpark Complex, except to the extent damages were caused by the negligence or willful misconduct of the Commission or the District. Maintenance and Repair. The Team is obligated to perform all maintenance and repairs on the Ballpark Complex, including emergency capital improvements, necessary to maintain the Ballpark Complex as first class facility and in compliance with applicable law and Major League Baseball rules and regulations. Maintenance and repairs must be performed using good and workmanlike procedures, good quality materials and parts that are of the same or better quality than those being repaired or replaced. The Team is responsible for paying the costs when due of utility services necessary for the operation of the Ballpark Complex and in connection with Baseball Events. The Team has the choice of whether to procure such utilities or other services from District-sponsored providers or independent utility providers. Neither the Commission nor the District is responsible for the disruption or cancellation of any Baseball Event due to the failure or interruption of any utility or similar service, except to the extent the failure or interruption was caused by the negligence or willful misconduct of the Commission or the District, Traffic, and Security. The Team is obligated to provide and pay for public safety and security throughout the Ballpark Complex, other than during Commission Events or in connection with Commission Additions, the costs and responsibilities of which are the Commission's. G. ParkingThe parking facilities on the Ballpark Site will be managed by a thirdparty parking management company selected by the Team, subject to the written approval of the Commission (which may be withheld in the Commission's absolute discretion once per selection process, and in all other instances, shall not be unreasonably withheld). The Team cannot terminate any parking manager without the prior written approval of the Commission, The parking contract shall require the parking manager to manage the parking facilities and to account for and remit the net parking revenues on a shared basis between the Commission and the Team, with the Team receiving all revenues from parking for Team events, and the parties sharing revenues from public parking for other than Team events. Alternatively, if the parking facilities are expanded before the Commencement Date the Team has an option to receive only Team event parking revenues from the larger parking facility, with the Commission retaining all of the parking revenues from public parking for other than Team events. H. Capital ImprovementsCapital Improvements. The Team has the right, subject to the prior written approval of the Commission, to make capital improvements to the Ballpark Complex. However, the Team is not required to seek the Commission's approval with respect to (i) emergency capital repairs (i.e., capital improvements (A) necessary to prevent immediate injury or to protect property, (B) that if performed promptly can avoid material cost to the, Commission or the Team to keep the Ballpark Complex open, or (C) necessary to comply with applicable law); (ii) the installation of trade fixtures, supplies, and equipment owned by the Team or a concessionaire; or (iii) de minimis capital improvements. Capital improvements must be constructed in accordance with applicable law, Major League Baseball rules and regulations, and applicable insurance requirements, and in a first class manner, using good quality materials. Capital improvements cannot (i) impair the structural or systemic integrity of the Ballpark Complex; (ii) materially change the exterior aesthetics of the Ballpark Complex; or (iii) change the essential nature of the Ballpark Complex. Capital Expenditure Plan. The Team is obligated to develop, subject to the approval of the Commission, a capital expenditure plan for each Lease year that includes, (i) all known capital improvements that the Team proposes for such Lease year; (ii) the estimated cost of each planned capital improvement, including the allocation of such costs between the Team and Commission; and (iii) a designation of each planned capital improvement as a "Necessary Improvement", an "Upgrade Improvement" or a "Discretionary Improvement", with documentation supporting such designations. Definitions. Necessary Improvements are capital improvements required (i) by applicable law; (ii) in order to obtain insurance at commercially reasonable rates; (iii) to maintain the Ballpark in compliance with Major League Baseball rules and regulations; or (iv) other than routine maintenance, to replace components of the Leased Premises at the end of their economic life cycle with reasonably comparable and appropriate substitutes. Capital Improvements necessitated by the Team's violation of the Lease are not Necessary Improvements. Upgrade Improvements are capital improvements that are necessary to keep the Ballpark Complex on par with the upgraded facilities in place in at least 50°/a of all Major League Baseball ballparks that, at the time of determination, are governmentally owned and more than two years old. Discretionary Improvements are all other capital improvements. Allocation of Costs of Capital Improvements. The Team is responsible for all costs of Discretionary Improvements and a portion of the cost of Upgrade improvements commensurate with the percentage contributions from Major League Baseball clubs to the same or similar upgraded facilities in other Major League Baseball ballparks that, at the time of determination, are governmentally owned and more than two years old, The Commission is responsible for all costs for Necessary Improvements other than during the continuation of a Team default. The Commission is responsible for the portion of the costs of Upgrade Improvements remaining after the Team's percentage contribution, except (i) during the continuation of a Team default, (ii) if the capital expenditure plan for the Lease year did riot include the Upgrade Improvement, and (iii) during an extension term, unless the useful life of the Upgrade Improvement is less than the period of time remaining until expiration of the Lease term. The Commission is obligated to contribute $1,500,000 annually into a capital reserve fund to pay the costs and expenses of capital improvements allocated to the Commission. Additionally, the Commission is obligated to fund, no later than the fifth anniversary of the Commencement Date, a $5,000,000 contingency reserve fund for the benefit of the Commission. Commission Additions. After the Commencement Date, the
Commission has limited rights to make "Commission Additions"
to the Ballpark Complex or on the Ballpark Site. Commission Additions
are buildings or building improvements constructed or installed in respect of the
Development Rights that comply with certain approval requirements and
use restrictions under the CAA. The Commission I. TaxesThe Commission is responsible for all property taxes and targeted taxes that may in the future be assessed against the Teams leasehold interest, the Ballpark Complex or the Leased Premises. Under current law, no such taxes will be levied against the Team's leasehold interest, The Team is responsible for paying its Lease recordation taxes. J. Commission Events/Community BenefitsCommission Events. The Commission has the right to use the Leased Premises for up to 18 calendar days per Lease year to hold Commission Events. The Commission is responsible for all costs and expenses associated with such Commission Events, but is entitled to all net revenue generated by such events, including net revenues from advertising, ticket sales, merchandise sales and other promotional activities. Community Benefit Obligations. The Team is obligated to provide a strong and substantial community benefits package, including funding and promoting the Washington Nationals Foundation; maximizing the benefits of Major League Baseball's various affiliated charitable organizations and programs to District of Columbia residents; working with its players, coaches and senior management to make at least 50 personal public appearances per season in the greater Washington, D.C. metropolitan area in support of public service activities; making available each Lease year at least 250,000 regular season tickets at no more than 75% of the full price of the tickets and at least 9,000 free regular season tickets for appropriate District of Columbia charities; and taking affirmative steps to employ District of Columbia residents. Additionally, upon the sale of the Team or the Nationals franchise prior to April 1, 2010 (excluding the initial sale by Major League Baseball), the Team or the new owner will pay to the Commission 15% of the net appreciation in value of the Team. K. Promotional RightsThe Team has broad advertising, promotional and media rights in connection with its operation of the Ballpark Complex, and the right to realize the revenues generated thereby. The Team has the right, subject to limited Commission approval, to name the Ballpark. The Team cannot, however, exploit any of its promotional rights in a manner that, in the reasonable judgment of the Commission, conflicts with standards of public decency, directly competes with the District of Columbia Lottery or other gambling activities licensed or operated by the D.C. Lottery and Charitable Games Control Board, violates applicable law, or poses an unreasonable risk to public safety or security. L. Insurance and IndemnificationInsurance. The Team is required to carry insurance coverages customarily maintained by other Major League, Baseball clubs, including general liability, property, and business interruption insurance. The Commission is required to carry general liability, property, business interruption and other customary insurance coverages. Indemnification. The Team and Commission each are obligated to indemnify the other for losses caused by breaches of the Lease and by reason of the party's, negligence or willful misconduct. The Team's indemnification obligation extends to the District as well. Additionally, the Team is obligated to indemnify the Commission for losses caused by the, Team's use of the Leased Premises and the Commission is obligated to indemnify the Team for losses caused by violations of environmental laws by the Leased Premises and errors or omissions of the design and construction professionals engaged by the Commission in connection with the design and construction of the Ballpark Complex. M. CasualtyDamage or Destruction by Casualty. The Commission and Team are obligated, to the extent of insurance proceeds received, to repair and restore the Ballpark Complex in the event of damage by fire or other casualty, If the Ballpark Complex cannot be repaired or restored within three years after the casualty, either party may terminate the Lease and the Team's non-relocation obligations under the Non-Relocation Agreement. Neither party is obligated to expend funds in excess of insurance proceeds received and amounts available in the capital reserve fund and the contingency reserve fund. The Team is entitled to abate rent during the period in which the Ballpark is unusable for the play of Major League Baseball games. Condemnation. The Team is entitled to apportioned rent in the event of a partial condemnation of the Ballpark Complex. In the event that the Ballpark Complex is condemned and no longer economically and feasibly useful by the Team for its permitted uses under the Lease, the condemnation award will be allocated first, to the Commission to be applied to redeem any outstanding stadium revenue bonds, second, to the Team, the amount determined to be just and equitable in condemnation proceedings, and third, to the Commission, the balance, if any. If the District is the condemning authority, the Team is entitled to 100% of the award. N. Defaults and RemediesThe Team and the Commission are subject to events of default, such as the failure to pay amounts when due, bankruptcy events, and the failure to perform obligations under the Lease. The occurrence of an event of default of either party would permit the other to exercise any of its remedies provided for under the Lease, including instituting arbitration proceedings to seek recovery of all available damages. The Commission has the right to terminate the Lease upon the occurrence of a Team default. The Team may only terminate the Lease, upon the occurrence of a Commission default if the District also defaults on its obligation under the District Guaranty to fund any unperformed Commission payment obligation within 18 months of a valid demand therefor. Other than claims for equitable relief, all disputes arising under the Lease are to be settled through negotiation of senior executives of the parties, mediation and arbitration. O. Subordination, Non-Disturbance and AttornmentIn order to protect the rights of the Team under the Lease and the revenue streams supporting the stadium revenue bonds, the Lease obligates the Commission to cause its creditors to execute agreements with the Team providing that, for so long as the Team is not in default under the Lease, a default by the Commission under the applicable encumbrance will not adversely affect the Team's leasehold interest. In such agreements, the Team will agree, if the creditor succeeds to the Commission's interest under the Lease, to recognize the creditor as the "landlord" under the Lease. II. Non-Relocation Agreement SummaryUnder the Non-Relocation Agreement, the Team is obligated to (i) maintain its principal place of business in the District of Columbia as a registered business in good standing; (ii) maintain the Nationals franchise as a validly existing and participating Major League Baseball franchise; (iii) play all of the Team's home games at the Ballpark (with limited exceptions); and (iv) not relocate, attempt to relocate, or permit the relocation of, the Nationals franchise outside of the District of Columbia. Additionally, the Team cannot sell the Nationals franchise or any control interest in the franchise unless the transferee agrees to be bound by the terms of the Lease and the Non-Relocation Agreement. The Team could be responsible for redeeming the stadium revenue bonds and for reimbursing the Commission and District for other damages suffered as a result of any breach of its non-relocation obligations. A subordinate lien on the Nationals' franchise will secure the Team's non-relocation obligations. The lien will be effective upon deposit of the net proceeds of the initial Stadium Revenue Bonds into the Commission's project account. |
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