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HomeMy WebLinkAboutFresno Baseball Club, LLC - 2010 Proposed Term Sheet for Stadium Sublease Agreement (Chukchansi Park) - Acquired from Fresno Diamond Group in 2005FRRSNO December IQ 2009 term The Term of lie. Stadium Sublease Agreement shell be extended by five (5) years (35 years from Commencement Dace) on the terms and conditions set forth in the Smditun Subbases Agreement, except as amended hereby. FSxed Renal Fixed Rental shall remain $1,500,000 per visa. Rest shall be paid in twelve (12) monthly payments of S125pU0. Annual Maintenance and The Temmn (Team) shall comorme to be responsible for all Repair operating expenses and course mawteoaace and repairs of the Stadium as set forth in As Smdium Sublease Agreement. The Team shall operate the Stadium in a soft, clean, attractive, and first class manner comparable to that of other AAA MiLB facilities. The Trance shall climate (0r cause orders to 0pemm) me Stadium in a maturer that complies with all applicable requirements imposed by MiLB and all other entities and pgencieswiWju dkdonovu Ne Teamor Stadium. In order to provide bicameral relief to the Team and to protect use City's original imartmust in the. Serious. the City AM:! eimburse the Team for 50°6 of rhe opemnng .expenses and routine accountants and repairs of [he Stadium to a msxfmtm of a $50Q000 amual reimbumemeat (not subject to escalation). Reimbursements shell be made quarterly, subject t0emual adjustment based on @e Team's audit. The 0peradng expenses and murine maintenance and recurs of the Stadium subject to relmbursemeot (Reimbursable Expenses) shall include: • General Repair and Maintmmm(Not Capital) o Gromds Mgiv[enmtce o Field Maintewtce a Vehicle Mninteumce o Olbv • Utilities a Electricity o Gus o Wate o Weise DlspOsal o Cable Television • Security • Alarm Page 1 of I I FRESNO GRIZZLIES SUBLEASE AMI PROPOSED TERM SHEET Remember 16,3009 • Operations Hnusekeepmg • Supplies • ViJeo Board mud Equipment (Nat Capitol) Put Control Reimbursable Expenses shag gets ally consist of the items identified above, and shall be consistent with the Team's mortem umbers identical in Exhibit A. The Team shall account for Reimbmseble Expenses in a rtamer consistent with historical practice. no Team and City shall meet and confer at least normally, but nen later than October 31 of rich year, on general apemtivg and maintenance sundmi and the City shall provide feedback on the Team's performance. City shall have the authrrity to volume the Team to modify the policieslappreazh to gaw.ml operating and maintenance as appropriate to meet the standards required in the Smdicn Sublease Agreement as ==tied hereby. The City shall have the right to invoke a "self-help" remedy pursue m cream Fvlure to Perform below. Ifthc City's above of opesatiog expenses and routiae s eintemaa and repay is less than $500,000 in my given year, We City my elect in its sole and absolute discretion, to conribme the diffoanice between 5500,000 and the City's share in that given year tram a capital roper, replacement and improvement remove food (Coined Reserve Fuad). Replacement; mud topers, replacements and improvements (Capitol Improvements) Improvements as set farh w the location Sublease Agreement The Teem shell command the Stadium in a safe, clean, attractive, and frss eters in to cause it to remain w onditio comparable to that of other MILB facilities of similar design avd age, rrdoary caand tear excepted. The Team shall mawtaVa(or cause others Tomaiabin) Ne Stadium in a money that is consistent v nth all applicable requimments imposed by MiLB and all abler otities and agencies retch jurisdiction over the Team or Sodium, and with the original design and construction program of the Stadium. The Team shall make (or come others to make) all recessary or appropriate repairs, renewals and replacemeao as required by the Sodium Sublease Agreement, whether inonor or exterior, ordinary or ubeordmary, foreseen or mferemem, as a prompt and timely cancer. The Team shall maintain any and all osuroce Page 2 of 11 FRESNO PROPOSED TERM StlEET December 16, 2009 components w In order to provide Euancial retied m the Teem and to protect the City's origmal invannent iv the Stadium, me City shell invest $100,000 smeth normally in e Capital Reserve wd thin shall he deed In meet the obligations of We Team, The City's investment shell be made four (4) equal qusrtmly inserlmenb of§25,000. Prior to be start of the 2010 baseball season, be City end the Teem shell meet and jointly develop a five (5) year Capital Improvements plan. The five (5) year Capiml Improvements plan will be modified, as appropriate, can an annual basis, no later mm October 31" of curb year, as determwei jointly by be City and the Team. The Team shag submit its mgnesto for Capital Improvements to be City. The City shall cousin float approval Door Capital bvprovemmrs and expenditures from the Capital Reserve Fwd which approval will not be unreasonably withheld. The Capitol Improvements plan easy be modified 6mn time to time doting each year as necessary aed appropriate to address required and necessary Capital Improvements, subject to the approval of be City, which approval will not be umestrim bly withheld During the last Eve (5) years of We Teem, We City will act reasonably w Imposing mquitemem; for Capital Improvements, magnizing be age and useful life of the Sodium; provided, however, that the Team's repair and maintenance obligations shell not be brandished being 0ds period. The City shun have be night m invoke a "self-help" remedy pursues[ to Team Failure m Perform below. addition to coy other rights or remedies available to City for any default on be pan of be Team under be Stadium Sublease Agreement, if at any time the Team fvls to perform my obligation to be turbanned under be Stadium Sublease Agreement (including, but not limited to: Stadium management, tmiomnance, Sweden, replacements, improvements, etc.), which Iduum continua without core following wrinm notice from City for a period of maty (30) days, there, the City may, at its sole option, but shell ret be obligated to, perform such obligation for cod on behalf of the Team. Notwimsanding the foregoing, however, if within such period the Team givew notice to be City that such failure is wuad by Force Madame or trat core of such failure cannot mannishly be completed within such period, men Page 3 of It FRESNO GRIZZLIES SLBLEASE AMENDMENT December 16,2009 Page <of l l of such Force Majcure delay or extended cure period, or We use may be, and for so long thereafter w the Term continua diligently to pmseame such core or the resolution of such event of Force Majeure; provided, however, that the City shall not be required to fmbimr if the Team's failure to perform peace a reasonably perceived Nrem to public health, safety at welf . Team Obligation to If the City performs any obligation required m be perfomed by Reimburse City Team, fie Team shag reimburse City within thirty (30) business days following demand, the sum o paid, or the reasonable mismae incurred by the City in performing such obligation, together with imeren daemon at the meximim legal per eneum rate, if such payment is not made within each period, computed from the date of Ore City's deemed moil Payment is made. Alternatively, the City may, in to sole and absolute discrctioq elect to off rt/rad ce nary payments otherwise due to the Teem from the City by reimburse the City for rersanable expenses umad by the City in performing Team's obligation, together with int smereonmmertaxitmm legal peramumrate. New Video BovdI The. City shall provide the Teom up m a mmdmum ofli50o," to Scorebomd replace the Stadium video board I swmboard with a first clear, shite -of -Ne -an system approved by the City, which appmrel will not be unreasonably withheld, i m maned or delayed The City's investment shall only be wed to replace the Smdiwn video beery I scoreboard and for no other Impose. The Team shall repiaze the video board I scoreb wed prior to me 2010 baseball seesan. Commencing Forename I, 2010 and for nine (9) consecutive year; thereafter on such date, me Team shall reimburse me City 550,000, The Tema may elect to mlmburse We City out of the Capitol Reaerve Fund. The Team shall pay to the City any nae- eimbursed amoma Immediately upon sale or other transfer of the controlling innocent w the Tens. AMIPark/BvmrmWmevt The Timm shall impose aed called a $1.00 APES fee on all Paid Igports (APES) Fee Yckets moludivg tmawamr) for all Team eveoa, except as noted below. The City shell exetnise its right m wove me APES f for Orialies full sesson ticket holdem and partial sew ticket holden (miai plans that cwhWe 10 or more regular more game). The City shall have the option to Income the APES fee by up to. but not mom than, $0.50 every five years after me ecutlm of this agreement. The Teary shall remit to the City One APES fees collected as a qummrly basis. APES fees shall be validated through cineol audit (see below) mNar lhmu omerm such as Pacific Coo[L ren Page <of l l FRESNO GRIZZLIES SOBLEASE AMENDMENT PROPOSED TERM SHEET December 16, 2009 Page 5 of 11 submitted by the Trutrandor Tickets.wm (or equivalent) reports submitted to the Team as teacombly requested by me Ciry. Parking The Team shall ro ve nal puking revenues from the City controlled spaces as set forth in Exhibit B for Team events at the Stadium. The Teem shell have me right to eslabtish puling rates for Team events. The City shall rxcive not puking revenues from the City combolled spaces for City events. The City shall have roe right to vublish parsing taws Int City evens. concessions If the City elects to use Ovmiws (m a sueeeaser concessionaire) to provide concessions for City evems, the Ciry shall receive 3W, of gross concessions; revenues for City events, as originally set forth in Ne First Amendment to the Cooce ram Agreement that was not executed The City acknowledges that the Team cmmot seems such percentage; however, the Team shall corporate with City in its efforts m achieve such msult Advertising The City shell receive signage at the Sidmar to promote City =lilies mdtor mounts. The City she also receive scoreboard time and wouncemenis during Team events to promme such .engines mum events. The Team shell perumminty display, m a visible and normal meaner, "City ofFinano" on the video hoard/ scoreboard The City shell have the right, at its sole cost and expense, W Prominently display on feed storage that following message at the morn entrance of the Stadium. • '"fie City of Fremo Welcomes You to Chukclomsi Emir' Signage shot, frryuency and noting of messages shill be megoeated in gaud Sion by the parties. City shall retain game day I icmpmvy advertising fm City events — subject to exchomty agreements for Team sponsorships an excess of $200,000 (subject on escalation on an mutual basis equal to the lesser of 3.0% or regional Consumer Price btdex (CPO). Point Sharing— The Teem shall pay W the City annually as immortal Operetbna consuchrration the greater of, 1) loft, of earnings before interest, razes, depreciation, and emnttbafion(EBIMA) over S500,000( or Page 5 of 11 Sale FRESNO GRIZZLIES SUBLEASE AMENDMENT PROPOSED TERM SKEET December 16, 20M 3) $2A0 per ticket for paid etiondance over 300,000 at Teem events. EBITDA and (Ross revenues shell be determined by We Team's independent Certified Public Accountant (CPA), consistent with Generally Aceepud Accounting Principles (GAAP). Gress revenues hal sl be def ed as any and all revemes related to the Teamand Stadium operations remived by We Teem (and affiliated ®tities) inch®r ng tmdUbmrer. The gross revenue and per ticket figures above are subject to intuit escalation equal W the lesser of 3.0°A or be regional CPI. no net wmme benchmark is not subject to escalation. Bencbnark figures above shall fir validated through ntnual audit (see below) and/or though other sources such as Pacific Coast Lee¢ue reoare smoothest by the Team and/or Tickots.mm (err (a) be Fresco Baseball Club, LLLP (the "LLLP") or Fresco Baseball Club Management LLC (the "LLC) of its stock or risen; mNor (b) ivy partner in the LLLP in member of the LLC (an "mmrert Owner') of its partnership interest in be LLLP or membership interest in the LLC, (ivy such we in transfer pursuant to (a) or (b) W he defined at a Capital Transaction) the City shall be entitled to receive a shme of the excess of such proceeds fiem any such Capital Transaction over be total net investment as set forty below. The tow net vestment slwI be deed as the initial cash investment made in the Team, plus any operating losses, less any opiating profits (such profits and lasses m@ctively reined as EBITDA), has my distributions made to be Interest Owners (Tocol Net lvvesw oQ The Tom] Net Inveewrntas of December 31, 2008 is $9,334,156. The excess of the portents from my Capital Transaction over the Total Net lnvcswent shell be defined as the Net Surplus. The City shall receive the following amown upon cmawvution of my Count Transaction: Page 6 of 11 FRESNO December 16,2009 Page 7 of I I 2009/2010-5aq of Net Surplus 2011— 30004 of Net Surplm< 2012-20Y of Net Surplus 2013 end Hereafter— IM, of Net Surplus Tho TOW] Net Investment shag be detenwned and egrud upon annually by the City and Team after amus] audit (see below) is completed and/or []rough other sources such as Pacific Coast League reports submitted by the Team Renegotiation of Leese If the Team many ofits owners stt®pts, directly or'.ai...dy, t0 Triggers Purchase Right renegotime the Slndium Sublesse Agrchment at my time during the Tenn, the City shall have the right to purchase the Team or identify a potm(1 buyer for the Teem at fah market value. Such right must be eaacised, if at all, within 120 days after the attempt to reecgotime. Fair market value shall be dmermhrrd by m Independent valuation expert that has substmtiel expameree valuing spore ❑anchisesluseu. Team Traonfer Upon any, sale or other trans£ of the Tema or any contralling summit ihercin, the new ner(s) most assume my and all obligations under the SWdiwn Sablerse Agreement The City shall have a reasonable right of approval of my new controlling Team ownega} PBC shall be ropuired to ahercmre my sale or other transfir of the Team as a sale of awnaship interests (nock) in the Team, or a merger or other similar resurrection involving the Teem program to which the surviving entity courtrooms to be obligated to perform ought the Agreement so as not to nigger the renomination right set forth or paragraph II Of the Sponsorship, Marketing Rights and Stadium Naming Rights Agreement dated August 19, 2006 between the Chukcbarui Economic Development Authority (CEDA) and FIC. The Team shall make reasonable off nts to sell to focal ownership mm esd if pug@le. SF Giants Team shall use brit efforts to hon an exhibition game with its NI.B affiliate (Giems) stein year daring the Term. All S[ar Game Teem shall use bat efforts to host the Triple A AB Star game it Fresno within the nut five (5) years and, upon execution and delivery of the Sublets Amendment, shall deliver to the City a term from the President of the Pacific Cram League supporting an All Star genre for Fresco within such time flame. Page 7 of I I FRESNO GRIMLIES SUBLEASE AMENDMENT PROPOSED TERM STET December 16, 2009 Out d sling Obligations The Team shall timely make my and all payments due W the City as required by We Sodium Sublease Agreement Such paynenm include, but may oat be limited to, We following: • November Rent ($]5,OOo)-Paid • Dmcmbn Rent ($i$,bop)-Ped • Deedder Clean Up Payment ($650,000) -Paid • Parkes Paynet($63.T86)-gold • City COnsultingl oixl Fees (S 156,663) -Paid Older Audit Mghm Commencing with the year 2010 anal for each year WereaRer during We Time, We Team shall bave an Dual audit of its financed statements completed by a CPA, consisted wild GAAP. The auWt shag be completed It a timely manner. The City WAI have The Tight to review We audit sod supporting work papers to asses ongoing viability of the Team end to validde dominance with We terms end conditions of the SmWum Sublease Agreement, as amended hereby. The City revido WILL be conducted at We Tenor's offers. The Team shall timely pruvide to the City a copy of The Opinion loner for each annual amm, If We Tram fails to comply with the foregoing, the City shall have not tight to conduct inch audit at The Tome's expense and the Team shall cooperate with the City in the performance of such audit. Upon completion Of the Team's mail for the 2010 season, the City shall mguge an independent firaneid advisor or accomtant with sports milady experience to review the Team's audited fmancal steamenm. If it is reasonably detenoined by We independent financial advisor or azcomtad, m consalmdon with the City and We Teen's auditors, that The audited finaacid smtements matrfiaRy, very from The repmsenmYans mule by the Team, and the historical and pmJedol financial smmmemts provided for review by the Team in connection We Stadium Sublease Agreement, as ameMed hereby. The City doll have We right to. soul This mankind. The City shag have 30 drys a0er Its review Of We Team's 2010 audit to domhe this right. If We City exercises its right to deal This amendment in We Stadium Sublease Agre®mt, We Team shall reimburse We City ea if This umeadmmt did nd exist Tod We current Sodium Sublease Agreement was in place for We 2010 scuson. Better Bualnms Act to connection wild We implementation of this Term Shed and Compliance prolor to We execution and delivery of me propecontij Sublease Pages of 11 FRESNO GRIZZLIES SUBLEASE AMENDMENT PROPOSED TERM SHEET December 16,3009 Amendment the Team shall cooperoe with the City to men the remher mO of Me Better Puniness Act, including providing mfotmation required by the City to protect its interts3 Moder the Act and mimburswg Me City for the ones and salinities of the consultants retained by the City M assist N evaluating, negotiating and documenting the proposed Sublease Amendment. In order in fuller protect Ne interests of Me City, the amendment shall also provide. Mat: (a) the partners of the LLLP shall deliver to the City, at the partners' election, either unconditional, irrevocable hour letters of credit or personal guarantees. in the sumpa, amount of $1,500,000 (Gmrammi Amount) as additional acuity for Mfaug under Me Stadium Sublease Agreement (Guaranty). This additional smemity shall he in addition M any and all remedies Me City currently has under existing documents. If the famous elect to provide personal guarantees, each Panner most provide independent enfimt an that demaetrates mffiQuM net worth to support Me Guaranteed Amount If the Team has not defaulted on my or its obligations, Me Guaranty shell only remain w place until ager Me City's review of Me Team's audit Mr the year including the 2014 season. Provided, however, Mat Me loners of credit or personal luminances shag terminaw upon sale of Me Team m a macaroon approved by Me City wherein Me new owners agme M assume any and all obligations of the Team under the Stadium Sublease Agreement, If Me Team defaults on any of its obligations, the City shell have Me right in pursue its remedies under this Guaranty. N Me event of a maramm tcy or pmcedore involving the Team, the City shell have Me immediate right to enforce the Chummy, Provided, however, if Me Team defaults and is net Me subject of a banhuptcy or remgmization Procedure, Me City must Most proceed student Me assets of Me Team to satisfy Me obligations guaranteed. Bthe asses of the Team are not suffciat to county Me obligations guaranteed or Me obligations Announced we not satisfied within 180 days after the mticc of default, Me City shall have Me immediate tight to enforce Me Guaranty_ (b) in addition to my tights in Me Smdium Sublease Agreement, if at my time during Me Term Me Team defaults order my debt oblieatiao or mammal contract M which it is a Page 9 of I I FRESNO GRIZZLIES SURCEASE AMENDMENT PROPOSED TERM SI[EET December 16, 200 CITY OF FRESNO By: Till. 674 M0vnaa2r Dale J&V). IS-. 2,0 TD Page 10 of I I Ne StaRum Sublease Agmemeat and all relaud agreememi (inclading the Pledge Agreement) and pursue all of its remedies thereunder. (c) w a fition to lie limitations and rcmdcfiom regarding Team debt as outhned in the Stadium Sublease Agreemens, the Team shall be prohibited from obtaining any teams or advances Or accepting any eavemment in the Team from the Chukcbanm Economic Development Authority or any Of its departments or affiliate, without the prior wrinm musent of the City. (d) the Team stall provide a detailed business plan reamnably acceptable to the City no let Wan January 31, 2010. Transactions vmtb During the Teo of the Stadium Sublease Agreement the Team Affiliate mum obtain the prior written approval of the Ciry, before mting then my mosintlm with an affiliate of the Team which involves any payment or provision Of gouda or services by the Team m excess of 825,000. The Team and my affiliales shall human separate business Operations and financial records with no commingling of fiuda. The Team shall cease my affluma with which it dies umsm0om w deliver to the City its mood financial Ammmis (contained). Sub4ase Amendment The provisions of this Tetra Sheet reflect the hasic bminess deal Process bmwem the fund end shall be incotporetad into m Armored and Restated Stad'mn Sublease Agreernent, which shall also reflect such other modifcanoos a are reasonably necessary to uomrtm me Ws terms hereof and to appropriately clarify lie kms of the existing Stadium Sublease Agreement. The Tem and the City shall ambitious w good f n6 W finalize We Amended and Restate Slumum Sublime Agreement, CITY OF FRESNO By: Till. 674 M0vnaa2r Dale J&V). IS-. 2,0 TD Page 10 of I I FRESNO GREMLM SUBLEASE AMENDMENT PROPOSED TERM SHEET December 16,2009 FRESNO BASEBALL CLUB, LLLP, for Itself and as Sole Member of Fresno Baseball Club, LLC By: Fresno Baseball Club Management, LLC, as General Partner By. Cummings Paseball C up, LLC,m Menapppq ere I By: Z ChnasoPher P: ' gs,M a er Dale: 2I 17 Cal FRESNO BASEBALL CL LLC By CMs[oph P. CumBlinga dent Date: 12t 19 Age 11 of 11 Decendi 2009 Coundl Adoption: 12/17/09 TO: MAYOR ASHLEY SWEARENGIN RECEIVED Mayor dead: FROM: REBECCA E, KLISCH, CMR; 2�90EC 23 PM 4t 1'�emde Request City Clerk CRY CLERK, FRESNO CA .SUBJECT: TRANSMITTAL OF COUNCIL ACTION FOR APPROVAL OR VETO At the Council meeting of 12117109. Council took legislative action en0tled App" term sheat amending the Fresno Baseball Club Stadlum Lease Agradnt 8 with CM and CA to complete and execute all necessary docs, Item Ni 30 P.M.A, by the following vote: Ayes Borgeas, Brand, Cages, Wesledund, Xiong, Staining Noes Perea Absent None Abstain None Please indicate either your formal approval or veto by completing the following sections and executing and dating your action. Please file the completed memo with the Clerk's office on or before January 4, 2010. In computing the ten day period required bM Charter, the first day has been excluded and the teem day has been included unless the 10 day, is a Saturday, Sunday, or holiday, in which case it has also been excluded. Failure to file this memo with Me Clerk's office within the required time limit shall constitute approval of the ordinance, resolution or action, and it shall take effect without the Mayors signed approval. Thank you APPROV VETOED for the following reasons: (Written objections are required by Charter attach additional sheets if necessary.) I Data: `7, `7317q Ashley Swearers in, Mayor COUNCIL OVERRIDE ACTION: Date: Ayes Noes Absent Abstain REPORT TO THE CITY COUNCIL AND REDEVELOPMENT AGENCY L&M ANDREW T. SOUZA, City Manager Office of dee City Manager MARLENE MURPHEY. Executive Director Redevelopment Agency AGENDA ITEM NO. 5 : 30Pm A COUNCIL MEETING 12/17/2009 MEScAdmey APPROVE THE TERM SHEET AMENDING THE FRESNO BASEBALL CLUB STADIUM LEASE AGREEMENT, AND AUTHORIZE THE CRY MANAGER AND CITY ATTORNEY TO COMPLETE AND EXECUTE ALL NECESSARY DOCUMENTATION IN SUBSTANTIAL COMPLIANCE WITH THE APPROVED TERM SHEET SIaR remmmentls fuel Ma Ciry Coundl approve Me term sheet amending the Fresm Baseball Club stadium sass agreement, and aumon ve Me Ciry Manager and City Attorney s complete and execute all necessary tloormentation in substantial compliance wiM Me aboroved sr sheet. EXECUTNESUMMARY In August 2009, Me CM retained! Barred Sports Group, LLC (Serve) M assist Me City in renegotiating Me tames and OorMifiats of Me stadium Jesse wind Me Fresno Baseball Club (FBG). The Mayor and City COundl asWinted a lease rte ismatlon committee, w idt was Waked! to Oversee Me work of Barret[ in performing nalionwide bantltmaMirg of Ma existing stadium lease, financial analysis of the existing tars and contliEpns of Ma lease, and clue diligence review of Me operations of FEC and dna major Moved holders of FBC. Upon completdn M Me We diligence, and berwnmadtlng, Me lease negotiation teem determinetl that a realignment of lease Was; was necessary for Fnesrn 9 lease to be cempdays in Me dlpWA frendum market Negofietions ensued beNrecn Me City and FBC, and Me srs and oo dilions ware agreed upon and publicly presented! on December 3, 2009. Staff is recommending Mat Me City Counal approve are teems and consolations. and requests aulhoMy s amerd and exi all resstl documents in subssnbal compliance wdh Me sppresad tars. BACKGROUND The City executed a lease agreement win FBC in August 2005, That Wase was amended in November, 2008. In Spring 2008, FBC indnated a desire to NMer emend it's existing ease wind Me City s mitigate finsi and operefing concerns. 4ue 121 rrrdito ern e D�e Npmmnl Pp•nIy �5 REPORT TO THE CITY COUNCIL AND REDEVELOPMENT AGENCY BOARD Approve Tha Temr Sheat Amending The Fresno Baseball Club Stadium Lease Agreement December 17,2009 Page 2 NegoGafton Process The Mayor and City Council established a lease negotiation committee that Included. Mayor Ashley Swearengin Lee Brand, Council Member Andy Souza, City Manager James Sanchez, City Attorney The City retained Banetl to Nomughly analyze the operations of the Grizzlies team, and to benchmark the existing lease against other similar leases nationwide. Bane¢ and the lease negotiation committee met frequently to review information, examine FBC'; proposed terms, and to develop naw lease tens; and conditions that realign the City's lease to a more market -competitive lease. Once Has necessary tlue diligence and fiscal analysis was completed, the team began discussions with FBG, through Banned, to renegotiate terms. The negotiation team has reached an agreement with FBC on all lease terms and conditions. Both parties expressed to Barret) Nat while the lease points don't completely match everything they were hoping to obtain the points represent a fair and balanced approach o making sure that baseball can continua In Fresno. Recommended Terms and Conditions The allached document outlines Ne specRc terms and conditions that are recommended for a new amendment Of particular note, the rent paid to the City will remain at $15 million annually, howill concessions in other areas have been renegotiated. Several of Ne major provisons of the lease provide substantial security to the City in the event that the team finds itself in the position of not being a feasible business entity in the dty of Fresno, Conversely, If the team does well and returns a profit. the City will reap a potion of that profit at specific, tiered levels. After intense due diligence and fact-finding on other triple-A franchise leases, as well as due diligence and review of the financial position of FBC, Ne City's lease negotiator committee is conflaenl that the proposed terms and conclusion create a longterm lease structure that provides FBC, or any business entity operating at Me stadium, the best chance of success. The new terms are competitive nationwide and bdng Fresno's lease conditions into alignment with what Ne market will bear for a moral frenchlse. and conditions incude the halowing gems: Term extended for an socia nal 5 years. Rent remains at $1,500,000, paid monthly. Teem remains responsible for costs of operations, but City will reimburse Team for 50% of carlaln operating expenses up to $500,000 annually. Team's repair and maintenance obligations remain the same, however City will invest $100,000 in a capital mserm fund. It Team fails to perforin any obligation, City has right to perform on behalf of Team and seek reimbursement from Team. City shall provide up to $500,000 to replace Ne Aced scoraboam, which shall be paid bad by Team at $50,000 per year. TO THE CITY COUNCIL AND REDEVELOPMENT AGENCY BOARD The Term Sheet Amending The Fresno Baseball Club • Team shall charge APES fees of $1 per ticket on all paid tickets except season tickets and mini plans. City may increase APES fees up to $0.50 every 5 years. • Team shall receive parking revenues from Cry controlled parking for Team events. • City to receive 35% of concession revenues from Ovations for CM events at the Stadium. • City to receive certain whood ing rights in Stadium. • City to receive the greater of the fallowing as profit sharing. 0 20% of eamlog5 before Interest, taxes, depreciation, and amortization over $500.000 0 20% of Team gross revenues over $7,250,00 o $2.00 per ticket for paid attendance over 300,000 at Team events • City to receive Rte following percentages of net profit on we of Team or Interest handle 0 200912010-50% 0 2011 —30% 0 2012-20% 0 2013 andthereafter-10% • If Team attempts to renegotiate Stadium Sublease during its teml, City may either purchase the Team or find a buyer for Team at Fair Market Value. New owners) must assume obligations ct Team upon sale or transfer. • Team to use best offers to host exhibition game with Giants and All Star game. • Team to pay City all outstanding obligations as due under the current Stadium Sublease (approximately $863]96 through the end of 2009). • Team shall have an annual audit of its financial statements by a CPA, ttfirst audit shows variation form representations by Team during negotiations, City can annul amendment. • Team shall comply with terms of Better Business Act, Including pervading information and reimbursement to City for consulting fees. Teem shall also provide either an irreversible letter of credit or personal guarantees in me amount of $1.50,000, • Teem must receive City approval of any transaction with an eRllate over $25,000, Vast Steps Jpon approval of the terms and conditions by the City Council, the new retaliation team wilt direct the City's .onsul ants and City Attorney staff to finalize all documents related to the lease amendment. All Granges to he documents will be in substantial compliance to the terms and conditions approved by Council. These focuments will not need to return to Coundl for approval. It Is expected that these documents will be finalized ry December 31, 2009. -BC will provide payment of all outstanding debt obligations to the City In the amount of $863,]86, reluding he balloon rent payment and all outstanding parking revenue. MC will also provltle payment to the City for eimbureement of all consultant fees related to this lease transaction. Setter Business Act Report by the City Manager rhe Better Business Act was enacted by Council in May, 20M The AG requires that an entity seeking resistance of over $1,000,000 be thoroughly evaluated and investigated, with a subsequent vetting by the City Jouncil. The Act also calla for Me City Manager to Issue a Mal written report Oat includes an overell summary A the documents scrutinized, fiscal Impact of Me transaction. finding of the economic impact, a rating of 1 M1erugh 10 about the risk of Me transaction, and a recommended level of ongoing oversight. The following addresses these requirements: THE CITY COUNCIL AND REDEVELOPMENT AGENCY BOARD Tenn Sheet Amending The Fresno Baseball Club Summary of the Request antl Findings, Rema mondabon a)Fiscal Impact 4fier through review of the Gd zlies operating statements, tax returns, etc.. Ne negotiations committee yolieves that the team has suffered substantial losses. The lease that has one of the highest rent payments N other triple-A teams, however, that fad is offset by FBC holding one of the most lueretive naming rights nntrects In the nation. The due diligence and benchmarking done by Bartell show that Fresno's lease is not as lucrative as some leases In Ne curtest marketplace. To realign Me lease to a more compettlive one, which means a higher public subsidy, is ultimately a policy decision for the Council to make. Howeveq review of amMmic Indicators In other cities shows those cites that have baseball teams of triple-A rank or higher do oendit from the economic impact, when the economy is gain. 5) Findings oreconomic impact rhe lease terms and conditions represent mncesslons of approximately $700,000 annually. The City, like all other California ctios, is operating in a depressed economy and facing ecanomlc challenges. However, the ces of a baseball team In Fresno, and Mweby having an empty stadium, will have dim impacts on the City as x211 as he local economy. The City mrtently receives approximately $1.9 million annually under the existing ease with FBG After Me concessions of $700,000, Me City will Will receive $1.2 million annually to apply awards the debt service amount of approximately $3.5 million. H baseball want away in Fresno. Me general and would need to pick up gra entire $3.5 million payment In addition, the loss of lobs including Me parking, :story, custodial. and concessions would be lost, The loss of a stadium tenant, which dram people from mound the Valley, would be a major setback in Me City's continued progress in downtown devebpment 1)Risk Andowarident Rating is this transaction is the deregulation of an existing lease, the risk assessment must take place within the context of not taking this action. The risk assessment of taking no action s between 8 and 9 on a sceie of f to 10. The risk assessment of the ongoing viability under the amendment proposed is thatmen 3 antl 3. The major factors causing the reduction of risk are the direct impact of the concessions to has team, as wall as the nommons provided to the City in the way gra concessions were slummed These Include the $1.5 million one year rent) personal guarantees to be received and the enhanced ability of FBC to transfer the naming ights in the event do change of ownership. Ad banally, there is also was profit-sharing cause should the earn be sold. it Recommended level of ongoing oversight Nanage's Office will provide ongoing oversight ant contract management for the stadium lease. The Iepatlment currently provides a monthly statement showing Me payments made by FBC. The City s Ofice will ensure that all provisions of Me lease, such as annual audits and regular facti0ls walk - are conducted The Better Business Ad requires that the City Manager ant City Attorney annually projects approved by the City Council under the Act. Therefore, Council will renews an annual 1 the compliance of FBC with all lease terms and conditions. I Recommendation. City Manager recommends approval of this transaction. REPORT TO THE CITY COUNCIL AND REDEVELOPMENT AGENCY BOARD Approve The Term Sheet Amending The Fresno Baseball Club Stadium Lease Agreement December 17, 2009 Page 5 FISCAL IMPACT As proposed, the terms and corMMons constlMe approximately $700,OgO annually in concessions to FBC based upon Me existing lease. FBC will pay any outstanding debt obligations before the end of December, 2009, and wit continue to pay an annual rent payment of $1,500,000. The new terms of the lease will return all parking revenue to the team, This means that the genal fund will be required to ropey the perking fund an amount equal h what is forwarded to FBG each yeas This is approximately $360.000 annually. Additionally, Me Gay will utilize existing funds to purchase a new scoreboard for the stedlum, which Is expected to cast $WOp00. FBC will repay this cast at $50,000 each year. The City will also contribute $100,000 to a capitol fund with FBC retaining the obligations for repair and maintenance of the facility. The new terms call for the City to share in pro9ls made by FBC, as well as capturing a substantial percent of concession revenue. In addition, Me City will now have the rights to certain advertising opportunities for additional City howl as well as rights to share In any profits generated by Me sale of the team. A—Tom Sheet, rated December 1, 20)9, conf fining recommended amendments to Me existing lease and related documents FRESNOORITZI.IES SUBLEASE AMI PROPOSED TERM SHEET December I, 2009 Term The Tom of the Stadium Sublease Agreement shall be extended by five (5) years (35 years from Commencement Date) on the terms and covditiotu sel forth in the Stadium Sublease Agreement, except as amended hereby. FIaW Rental Fixed Rental shall remain $1,500.000 per year Rem shall be paid in twelve (121 monthly payments of $125,000. Annual Maintenance and The Tenant (Team) shall comwue to be respons3le for all Repair operating expenses and routine maintenance and repents of the Stadium as set forth in the Stadium Sublease Agreement. The Team shall operate the Stadium in a mfe, clam, attractive, and first class manner comparable to that of other AAA MiLB facilities. The Team shall operate (or cause others to operate) the Sodium in a mercer that complies with all applicable requiremmo imposed by MiLB and all other miotics and agencies withjurisdictim over the Team or Stadium. In order to provide theories] relief to the Team and to protect the City's unrest investment in the Stadion, the City shell imburse the Team for 5M°a ol'too operating expenses and mutine maintenance and repairs of the Sodium to a maximum of a $50,000 amml reimbursement (nm subject to escalation). Reimbursements shall be made quarterly, subject to annual adjustment based an the Team's audit. The operating expenses and murine maintenance and repairs of the Sodium subject to reimbursemmr (Reimbursable Expenses) shall include: • Gencral Repair and Maintenance (Not Capital) o Grounds Maintenance o Field Maintenance o Vehicle Maintenance o Other • Utilities o Electricity o Gas a Water o Waste Disposal o Cable Televisime • Secuity • Alarm Page I of 10 FRESNO GRIZZLIES SUBLEASE AMENDMENT PROPOSED TERM ShREET December I, 20M • Operations Housekeeping Supplies • Video Board and Equipment (Not Capital) Pest Control Reimbursable Expenses shall generally consist of the items identified above, and shall be consistent with the Team's account numbers identified in Exhibit A. The Team shall account for Reimbursable Expenses in a manner consistent wife hismncal practice. The Team and City shall meet and confer at least annually, but no later than Oc ober 3) of each year, on general operating and maintenance standards and be City shall provide feedback on the Team's performance. City shall have the authority to require the Team to rurality the policiesrapproich to general operating and maintenance as appropriate to mat the standards required m the Stadion Sublease Agreement, as amended hereby. The City shall have be right to invoke a "self-help" remedy pursuant m Team Failure to Perfmmt below. If the City's some of operating expenses and routine maintemmce and repair is less than $500,000 in any given year, the City may elect in its sole and absolute discontent, to contribute the difference between $500,000 and the Ciry's share in that given year into a capital repair, replacement and improvement reserve bond (Capital Reactive Fund). Replacements and repairs, replacements and improvemem s (Capital Improvements) Improvements as set forth in the Stadium Sublease Agreement The Team shall maintain the Stadium in a safe, clean, allractive, and first elms manner so as to cause it to remain in a condition comparable to that of other MiLB facilities of similar design and age, ordinary tont and tear excepted The Team shall maintain (or cause often maintain) the Stadium in a manner mat is consistent with all applicable requirements imposed by MiLB and all other entitles and agencies with jurisdiction over the Team Or Stadium, and with the original design and construction program of be Stadium. The Teem shall make (or cause others to make) all necessary or appropriate repairs, renewals and replacements as required by the Stadium Sublease Agreement, whether interior or exterior, cedinary or exnaordu ary, foreseen or unforeseen, in a prompt and timely manner The Team shall maintain any and all insurance Page 2 of 10 FRESNO GRIZZLIES SURCEASE AMENDMENT PROPOSED TERM SHEET December 1, 2009 Stadium In order to provide financial relief to the Team and to protect the City's original investment in the Stadium, the City shall invest $100.000 annually in the Capital Reserve Fund that shall be used to meet the obligations of the Team. The City's investment shall be made in four (4) equal quarterly installments of S25,000, Prior to the start of the 2010 baseball season. the City and the Team shall meet and jointly dewlap a five (5) year Capital Improvemems plan The five (5) year Capital Improvementa plan will he modified, as; appropriate, on an annual basis; no later than October 31 °' of each year, as determined jointly by the City and the Team. The Team shall submit its requests for Capital Improvements an the City. The City shall retain final approval over Capitol Improvements and expenditures from the Capital Reserve Fwd, which approval will not be unummonably withheld. The Capital Improvements plan may h modified Gam time to time during each year as necessary and appropriate to adtlttss required and necessary Capitol Improvements, subject tothe approval of flue City, which approval will not be um usonably withheld During the lest five (5) years of the Ten, the City will act reasonably in imposing requirements for Capital Improvements, recognicing the age and useful life of the Stadium; provided, howiscn that the Team's repair and maintenance obligations shall not he diminished during this period. The City shall have the right to invoke a "self-help" remedy pursuant to Team Failure to Perform below. without ttmtMg any other provision at this term 8hee, and In addition to any other rights or remedies available to City for any default on the part of the Team under the Stadium Sublease Agrecmmt, if of any dme the Team fails to perform any obligation to be performed under the Stadium Sublease Agreement (including, but not limited to: Stadium management, maintenance, repairs, replacements, Improvements, etc), which failure continues without core following written notice from City for a period of thirty (30) days, then, the City may. at its sole option, but shall not be obligated to, perform such obligation for and on behalf of the Team. Notwithstanding the foregoing, however, if within such period the Team givesnotice to the City that such failure is caused by Force Majeure or that care of such failurecannot reasonably be completed within such period then Page 3 of 10 FRESNO GRIZZLIES SUBLEASE AMENDMENT PROPOSED TERM SHEET December 1, 2009 Page 4 of 10 of such Fore Majeure delay or extended mss period, as the case may be, and for so long thereafter as the Team continues diligently to prosecute such cute or the resolution of such event of Force Majeure; pmvidN, however, that the City sba11 not be required to forbear if the Team's failure to perform Taxes a rwsonably perceived direst to public health, safety or welfare. Team Obligation to D the City performs any obligation squired m be peffomsd by Relmbune-0Ity Team, the Team shall reimburse City within thirty (30). business days following demand, the sum so paid, or the reasonable expense incurred by the City in performing such obligation, together with interest thereon at the maximum legal per annmn rate, if such payment is not made within such period, computed Win the date of the City's demand unfil payment is made. Aitematiwly, the City may, E its sole and absolute discretion, eke? m oRseVreduea my payments otherwise due to Ec Team Goa the City to reirdame the City for reasonable expenses incurred by the City in performing Team's obligation, together with interest thereon at the maximum legal per annum rate. New Video Board I The City shall provide the Tears up to a maximum of $500,000 to Seorebmrd replace the Sadam video board I scorebeerd with a first class, smtcof-Waren system approved by the City, which approval will not be unreasonably withheld, conditioned or delayed. The City's shall only be mto replace the Stadium video board must Ivestment scoreboard and f no other purpose. The Team shall replace the video board / scoreboard prior to the 2010 baseball season. Commencing December 1, 2010 and for nide (9) consecutive years themaftm w such date, We Team shall reimburse the City $50,000. The Team may elect to reimburse the City out of the Capitol Reserve Fund The Team shall pay In We City any non- reimbmsed umouats immediately upon sale or offer vmsfrr of the contmBing notional in the Team. Artr/Park/Evtertelomeht The Team shall impose and collect a SIN APES fee on all paid /Sturts(APES) Fee tickets (Including tracksh en) for all Team events, except as noted below. The City shall exercise its right to waive me APES fee for Grizzlies full season ticket holders and penial season ticket holders (mid plans that include 10 or more regular season g es). The City shall have We option to increase the APES fee by up to, but not more door, $0.50 every five years after the Execution of this agreemmt. The Team shall remit to the City to APES Res co0ected on a quarterly basis. APES fees shall be validated Enough annual anent (see below) and/or rhmu h other sources such m Pacific Coast League reparis Page 4 of 10 FRESNO GRIZZLIES SUBLEASE AMENDMENT PROPOSED TERM SHEET December 1, 2009 Page 5 of 10 submitted by the Team and/or Tickets.com (or equivalent) reports submitted to the Team as reasonably requested by the City. Parking no Team shall m net parking revenues from the City controlled spaces as set forth in Exhibit B for Team events at the Stadium. The Team shall have the right to establish parking rens for Team events. The City shall receive net parking revenues from the City controlled spaces for City events. The City shall have the right to establish parking rates for City events. Concessions If the City elects to use Ovations (or a successor concessionaire) to provide concessions for City events, tbe City shall receive 358A of gross concessions revenuers for City events, as originally no forth in the First Amendment to the Concessions Agreement that was not exeuumd. The City acknowledges that the Team cannot assure such personage; however, the Team shall cooperate with City in its efforts to achieve such result. Advertising The City shall receive signage at the Stadium to promme City entities and/or events. The City shall also receive scoreboard time and amouncemems during Team events to promote such entities earner events. The Team shall pemmmntly display, in a visible and tasteful manner. "City of Fresno" on the video board I scoreboard. The City shall have the right, at its sole cost and expense, to prominently display on fixed signage the fallowing message at the main entrame ofOe Stadium. I "The City of Fresno Welcomes You to Chukchansi Park" Signage arm. fiequency and riming of messages shall be negotiated in good faith by the parties. City shall retain game day I teorImody advertising for City events subject to exclusivity agreements for Team sponsorships in excess of $200,000 (anbjal to escalation on an annual basis equal to the lesser of 311b or regional Consumer Price Index (CPI)). Profit Sharing— The Teashall pay m the City annually as additional Operations wnsim Christian the greater of. 1) 200/6 of earnings before interesp tuxes, depreciation. and amortization (EBITDA) over S500,000; or Page 5 of 10 Sale FRESNO GRIZZLIES SUBLEASE AMENDMENT PROPOSED TERM SKEET December 1, 2009 3) $2.00 per ticket for paid attendance over 300,000 at Tram events, EBITDA and gross revenues shall he determined by the Team's independent Certified Public Accommaal(CPA), consistent with Generally Accepted Accounting Principles (GAAP). Gross revenues shell he defined as any and all revenues related to the Team and Stadium operatiore received by the Team (and affiliated entities) including trade/barter. The gross revenue and Per ticket times above are subject to arcual escalation equal to the lesser of 3.0% or the regional CPI. The net income benchmark is al subject W escalation. Benchmark figures above shall be validated through emmel audit (see below) and/or through other sources such. as Pacific Coast League reports submitted by the Team and/or Tickets.com (or equivalent) reports submitted W the Team as reasonably requested by the City. (a) the Presno Baseball Club, LLLP (the "LLLP") or Fresno Baseball Club Management. LLC (the "LLC) of its stock or assets; aM/or (b) my partner in the LLLP or member of the LLC (an Internet Owner') of its partnership interest in Ne LLLP or membership interest in We LLC, (my such sale or transfer pursuant W (a) or (b) to be defined as a Capital Transection) the City shall he entitled to receive a share of the excess of such proceeds Gam any such Capital Transaction over We total net investment, as ser forth below. The total net investment shall be defined as the initial cash investment made in the Team, plus any operating losses, less any operating profits (such pmfitsand losses collectively defined as EBITDA), less any distributions made W the Interest Owners (Total Net Investment). The Total Net Investment as of December 31, 2008 is $9,336,156. The excess of the pmceeds from any Capital Transaction over We Total Net Investment shall be definM as the Net Surplus The City shall receive the following amounts upon consummation of any Capital Trmsactimn Page 6 of 10 FRESNO GRIZZLIES SUBLEASE AMENDMENT PROPOSED TERM SHEET December 1, 2009 Page 7 of 10 20092010-50% of Net Surplus 2011 —30%of Net Surplus 2012-20°/e of Net Surplus 2013:mdthereafter 10%ofNet Surplus TLe Total Net Invesunent shall be determined and agreed upon annually by the City and From after amual audit (ace below) u completed wafer through other sources such as Pacific Coast League reports submiued by the Two. Renegotiation of Image If the Team or my of its owners attempts, directly or indirectly, in Triggers Purchase Right m segmiate. the Stadium Sublease Agreement at my time during the Term, be City shall have We right to purchase the Team or ideafify a potential buyer for the From at fair market value. Such right most be exercised, if at 0, within 120 days after the attempt to renegotiate. Fair market value shall be determined by m udependent valuation expert that has substantial experience valuing spores ftavehises/assets. Team Transfer Upon my sale or ether frmsfer of the Team, or my controlling interest memin, the new ownmad must assume my and all obligations under be Stadium Sublease Agreement. The City shall have a ro mnable night of approval of any new oontrolling Team corneas). The Team shall make reasonable efforts to sell to local ownership im marts if possible. SFGiants Team shall use best efforts to host as exhibition game with its MLB affiliate (Giants) each year during be Term. An Sur Game Team shall use best efforts to host the Triple A All Star game in Fresno within the next five (5) years and, upon execution and delivery of the Sublease Amendment, shall deliver to the City a letter from the President of be Pacific Coast League supporting an All Star game for Fresno within such time forme. Outstanding ObUtiafiois The Team shall timely make any and all payments due to the City as reguved by the Stndllm Sublease Agreement. Such payments include, but may not be limited to, the following: • November Rent ($75,000) • December Rent ($75,00D) • December Clean Up Payment ($650,000) Page 7 of 10 FRESNO GRIZZLIES SUBLEASE AMENDMENT PROPOSED TERM SHEET December 1, 2009 Page 8 of 10 • Parking Payment 00,]86) • City Consulfing/Legal Fees (Estimated at $125,000 - $150,000 to Date) • Other Audit Rights Commencing with the year 2010 and for each year thereafter during the Term, the Team shall have an annual audit of its financial statements completed by a CPA. consistent with GAAP. The audit shall becompleted in a timely roamer. The City shad have the right to review the audit and supportingwork papers to assess ongoing viability of the Teem and to validate compliance with the terms and conditions of the Stadium Sublease Agreement, as amended hereby. The City review shall be conducted at the Team's offices. The Team shall timely provide th the City a copy of the opinion letter for each annual audit. If the Team fails to comply with she foregoing, due City shall have the right to conduct such audit at the Trans expense and the Teem shall cautious with the City in the performance of such audit. Upon completion of the Train's audit for the 2010 season, the City shall engage an independent financial advisor or accountant with sports industry experience he review the Team's audited financial statements. If it is reasonably determined by the independent financial advisor or accumorm, in consuls tom with the City and the Team's auditors, that the audited financial statements nominally very from the reprtsenUtions made by the Team, and the historical and proclaimed financial statements provided for review by the Team in connection the Stadium Sublease Agreement, as amended hereby, the City shall have the fight to annul this amendment The City shall have 30 days after in review of the Team's 2010 audit m exercise this fight If the City examines its right to annul this amendment to the Stadium Sublease Agreement, the inion shall trombone the City as if this amendment did not exist and the current Stadium Sublease Agreement was in place for the 2010 season. Better Busimies Act In correction with the implementation of this Term Sheet and Compliance prior to the execution and delivery of the proposed Sublease Amendment, the Team shell cooperate with the City to meet the requirements of the Better Business Act including providing information required by the City to protect its interests under the Act and reimbursing the City for the fees and expenses of the nsultmts retained by the City to assist in evaluating, negotiating and documenting the proposed Sublease Amendment. Page 8 of 10 FRESNO GRIZZLIES SUBLEASE AMENDMENT PROPOSED TERM SHEET December 1, 20M Page 9 of 10 In order to further protect the internis of be City, the amendment shall also provide that: (a) the summers of the LLLP shall deliver to the City, at the partners' election, either unconditional, irrevocable banlc letters of credit or personal gueranteea in the aggregate amount of S1,500,OW (Guaranteed Amount) as security for default under the Stadium Sublease Agreement. If be Team has not defaulted on any of its obligations, the Guammteed Amount shall only remain in place until after the City's review of the Teams audit for the year including the 2014 (b) in addition to any rights in the Stadium Sublease Agreement, if at any time during the Term be Team defaults under any debt obligation or material contract to which it is a party, the City shell have the right no declare a default under the Stadium Sublease Agreement "all related agreements (including the Pledge Agreement) and pursue all of its remedies thereunder. (c) in addition to be limitations and restrictions regarding Teem debt as outlined in the Stadium Sublease Agreement. the Teem shall be prohibited from obtaining any loans or advances or accepting any investment in the Team form the Chukchaosi Economic Development Authority or any of its departments or affiliates, without the prior written consent of The City. Transections with During the. Term of the Stadium Sublease Agreement, the Team ABlllafes must obtain the prior wrinem approval of the City before entering into any vamaacriov with an affillam of the Team which involves any payment or provision of goods or .services by the Team in excess of 525,000. The Team and any affiliates shall maintain trimmer, business operations and financial records with n commingling of funds. The Team shall cause any atfslimes with which it does tnmsactions to deliver to the City it annual firtar¢ial statements (examined). Sublease Amendment The provisions of this Term Sheet reflect the basic business deal Process between the parties and shall be imcurpomeed into an Amended and Restated Stadium Sublease Agreement, which shall also reflect such other modifications as are reasonably necessary IT accommodate the moms hereof and to appropriately clearly the terms of be existing Stadium Sublease Agreement The Tesm and the City shall negotiate w good falN to finalize the Amended Page 9 of 10 FRESNO GRIZZLIES SUBLEASE AMENDMENT PROPOSED TERM SHEET December 1, 2009 and Restated Stadium Sublease Agaanem. CITY OF FRESNO By: Tide. Dale: FRESNO BASEBALL CLUB MANAGEMENT, LLC By: Tale: Dale: Page 10 of I0 :l::,:lr :!<•::::: SRerRG99! \)[wMOW § §2\\/ //2\) ) } - - , ! � 5R2a2©!Q9 �j 8J2\6 Jd! ) no REPORT TO THE CITVCOUNCIL AGENDA ITEM NO. 5:30 p.m. A COUNCIL MEETING 12/17/09 APPROVED BY DEPARimsNTORemwv December 17. 2009 CITYMANAGER FROM: Andrew Souza, City Manager City Manager's Office vevnlmmti uumi James C. Sanchez, City Attorney me /�'/roP City Attorney's Ofee ovawem=-a�'°"ae BY: Laurie A. Avedisian Depyt Crty Attormsy City Attorney's Oflics ' SUBJECT: FRESNO BASEBALL CLUB SUBLEASE AMENDMENT On December 3. 2009, following lengthy negotiations between the City negotiation commillm and the Fresno Baseball Club ("FBC"), the Fresno City Council received a Term Sheet proposing to amen the existing Sublease between the City an FSC dated October 13, 2005 and amended on November 18, 2008. Highlights of the December 1, 2009 Term Sheet Included the following paints: 1. Term extended for additional 5years - 2. Rent remains at$1,500000, paid monthly. 3. Team remains responsible for costs of operations, but City will reimburse Team for 50% of certain operating expenses up to $500000 annually. 4. Team's repair and maintenance obligations remain same, however City will invest $100000 In a capital reserve fund. 5. If Team fails to perform any obligation, City has right to perform on behalf 0 Team an seek reimbursement from Team. B. City shall provide up to $500000 to replace me video scoreboard, which shall be paid beck by Team at $50.000 per year. 7. Team shall charge APES fees of $1 per ticket on all paid tickets except season tickets and mini plans. City may increase APES fees up to $0.50 every 5 years. 8. Team shall receive parking revenues from City controlled parking for Team events. 9. City to receive 35% of concession revenues from Ovations. 10. City to receive certain advertising rights in Stadium. 11. City to receive the greater of the following as profit shanng. a) 20% of earnings before interest, taxes, depreciation, and amortization over $50000 b) 20% of Team gross revenues over $7250,000 C) $200 per ticket for paid standards over 300,000 at Team events 12. City to receive the following percentages of net profit on sale of Team or Interest therein: a) 200912010-50% b) 2011-30% c) 2012-20% d) 2013 and thereafter -10% 13. It Team attempts to renegotiate Stadium Sublease during Its term, City may either purchase the Team or find a buyer for Team at Fair Market Value. Report to Council re Fresno Baseball Club Sublease Amendment December 17, 2009 Page 2 14. New cement) must assume obligations of Team upon sale or transfer. 15. Team to use best efforts to host exhibition game with Giants and! All Star game. 18. Team to pay City all outstanding obligations as due under the current Stadium Sublease (approximately $863,]05 through the and of 2009). 17. Team shall have an annual audit of its financial statements by a CPA. If first audit shows varlation from representations by Team during negotiations, City can annul amendment. 18. Team shall comply with terms of Better Business Act, Including providing information and reimbursement to City for consulting fees. Team shall also provide either an irrevocable letter ot credit or personal guarantees In the amount of $1,500.000. 19. Team must receive City approval of any transaction with an affiliate over $25,000. The attached Term Sheet dated December 11, 2009 contains the following refinements prepared by the City negotiation committee to the December 1, 2009 Term Sheet: 1. Fresno Baseball Club ("FBC") is required to structure any future sale of the team as a stack sale, rather than an asset sale, so as not to trigger the termination right set forth in the Chukchansi Naming Rights Agreement This allows for a transfer that will leave intact the Chukchansi Naming Rights Agreement and associated $1.00,000 par year revenue. 2. The outstanding obligations were updated to reflect that November rent waz paid, as wall as the actual cost to date of outside consulting and legal fees. The negotiation committee recommends that Council approval of the Term Shell be pondtionetl upon submission of a Business Plan by January 31, 2001 The above -noted items complete the Better Business Act pros and can be approved by a five vote maloMy of the Council. The letter from Chukchansi clarifying that the termination rights under the Sponsorship, Markefing Rights and Stadium Naming Rights Agreement dated August 19, 2008 apply only In the event of an asset sale and not in the event of a Ili sale is also attached. Attachments. Fresno Grizzlies Sublease Amendment Proposed Term Sheet dated December 11. 2009 Letter from Chukchansi Economic Development Authority dead! December 9. 2009 LAA M[51aa5nsneeF lyn aqa FRESNO GRT LIES SUBLEASE AMENDMENT PROPOSED TERM SHEET December11,2009 Term The Tenn of Oe Stadium Sublease Agreement shall be extended by rive (5) years (35 years from Commencement Date) on be terms and conditions set bunch in the Stadium Subbases Agreement, except as amended hereby. Fixed Residual! Fixed! Ramal shall remain $1,500,000 per Year. Rent shall be paid in twelve (12) monddy, payments of $125,000. Annual Mvintenammand The Tenant (Team) shell continue to he teeprmible for all Repair cluttering expenses and routine maintenance uM repairs of the Stadium as set forth in the Stadium Sublease Agreement/ The Team shall operate be Stadium in a safe, clean, amactive, and that class manner comparable to that of other AAA MILD firrififies. The Team shall oistrum (or cause others to operate) the Sodium in a manner that complies with all applicable requirements imposed by MiLB aM all other entities and agencies with jurisdiction over the Team or Stadium. In order to provide Material relief to the Team and to protect the City's original investment in the Stadium, the City shell reimburse the Team for 50%a of the operating expenses and murine mainmtmnce and repairs of the Stadium to a maximum of a $500.000 mutual reimbursement (not subject to esoalanon). Reimbursements shall be made quarterly, subject to annual adjustment based on the Term's audit/ The operating expenses and murine maintenance and repairs of the Stadium subject to reimbursement (Reimbursable Expenses) shall include: • Geneml Rcpa mdMaiatemm(Not Capimi) o Grounds Maintenance o Field Maintenance o Vehicle Maintenance o Other Utilities o Electricity o Gas o Water o Waste Disposal o Cable Television Security Alarm Pap Iof10 FRESNO GRIZZLIES SUBLEASE AMENDMENT PROPOSED TERM SHEET December 11, 2009 • Operations Housekeeping Supplies • Video Board and Equipment (Nm Capital) Pest Combat Reimbursable Expenses shall generally consist of the items Identified above, and shall be consistent with the Tam's account numbers identified in Exhibit A. The Tom shall account for Reimbursable Expenses in a manner consistent with hismrical practice. The Team and Cityshall meet and confer at mast annually, but no later than Comber 31 of each year, on gnreml operating and maintenance studams and the City shall provide feedback on the Team's performance. City shall have the authority m require the Team m modify the policics/approazh to general operating and maintenance as appropriate m meet the mercants requited in the Stadium Sublease Agreement as amended hereby. no City shall have the right to invoke a "vgfr eip" remedy pursuant to Team Failure to Per -mm below. If the City's share of operating expenses and routine maintenance and repair is less than $500.000 in any given your the City may elect, in its sole and absolute discretion, to contribute the difference between 5500.000 and the City's share in that given year into a capital repair, replacement and improvement reserve fund (Capital Reserve Fund). Replacements and repairs, replacements and improvements (Capital Improvements) Improvements as; an forth in the Stadium Sublease .Agreement The Team ¢hell maintain the Stadium'infix. clan our Live, and first class manner so m to cause it to remain In a condition comparable to that of other MILB facilities of similar design and age, ordinary wcar and tear exuepmd. The Team shall maintain for cause others to maintain) the Stadium in a manner that is consistent with all applicable requirements imposed by MILB and all other entities and agencies with jurisdiction over the Team or Stadium, and with the original design and construction program ofthe Stadium. The Team shall make (or cause others to make) all neco sary or appropriate repairs, renewals and replacements as required by the Stadium Sublease Agreement, whether interim or exterior. omirmry or extmon inary, foreseen or unforesem th a prompt and timely manner. The Town shall maintain env and all insurance Page 2 of 10 FRESNO GRIZZLIES SUBLEASE AMI PROPOSED TERM SHEET December 11, 2009 In order to provide finaxial relief to the Team and to protect the City's original investment in the Stadium, the Cay shell invest 5100,000 annually in the Capital Reserve Fund that shall he used to meet the obligations arms Tem. The City's investment shall he made in Pour (4) equal contrary, installments of $25,000. Print to the start of the 2010 hasball season, the Cory and the Team shall men and jointly develop a five (5) year Capital Improvements plan. The five (5) year Capital Improvements plan will he modified, as appropriate, nn an annual besot, no later thin October 31 a of tach year. as determined jointly by the City and the Team. The Team shall submit its requests for Capital lmprosementa to Ne City. The City shall regain final approval err Capital Improvements and expenditures poor Ne Capital Reserve Fund, which approval will not be unreasonably withheld. The Capital Improvements plan may he modified Fort time to time duriag each year as necessary and appropriate to address required and moeseare Capiml Improvements, subject to the approval of the City, which approval will trot he unreasonably withheld. During Ne lest five (5) years of the Tema, the City will act reassembly in imposing requirements for Capital Improvnn rmas recognizing the age and useful life of the Stadium: provided, however, that the Team's repair and maintenance obligations shall not be diminished during this period. The City shetl have the right to invoke a "self-help" remedy pursuant to Team Failure to Perform below. Without limiting any other Provision of this Tem Shen, and in addition In any other rights or remedies available to City for any default on the pen of the Team under the Stadium Sublease Agreement, if at any time the Team fails in perform my obligation to be performed under the Stadium Sublease Agreement (including. but not limited in: Smdium management maintenance, repairs, mplacememe, improvements, etc.), which failure continues without cure following written notice from City for a period of thirty (30) daya then, Ne Cay may. at its sale option, but shall not be obligated to, perform such obligation for and on behalf of the Team. Notwithstanding the foregoing, however, if within such period the Teem gives notice to the City Fiat such failure is caused by Force Majeure or that cure of such tailum cannot reasonably be completed within such period, than Page 3 of 10 FRESNO GRIZZLIES SUBLEASE AMENDMENT PROPOSED TERM SBEET December 11, 2009 Page 4 of 10 of such Force Majeure delay or extended cure period, as Ne case may be, and for so long thereafter as the Team continues diligently to prosecute such cure or Ne resolution of such event of Farce Majeure; provided, however, Met the City shall not he touched to forbear if the Team's failure to perform poses a reasonable Perceived threw to public most. odery or welfare. Team Obligation to If the City performs any obligation required to be performed by Reimburse City Team. the Team shall reimburse City within thirty (20) business days following demand, the sort sa paid, or the reasonable expense incurred by the City in performing such obligation, together with interest thereon at to maximum legal per annum rate. if such payment is not made within such period, computed Mom the date of the City's demand until Payment is made. Alternatively, Ne City may. in its sole and absolute discretion, elect to nlTsetlreduce any payments otherwise due to the Team from the City in reimburse the City for reasonable expenses incurred by the City in performing Teems obligation, together with interest thereon at maximum legal per annum one, New Video Board / The City shall provide the Team up to a maximum of $500,000 m SeorebaerJ replace the Stedium video board / worehand! with a fust class, state-of-the-art system approved by the City, which approval will not be unreasonably withheld, conditioned ordelayed. The Cry's investment shall only be used to replace Ne Stadium video board / scoreboard and Por no other purpose. The Team shell replace the video board / scoreboard prior in the 2010 baseball season. Commencing December T. 2010 and for nine (9) consecutive years thereafter an such date, the Team shall relmbum the City 550.000. The Team may elect to reimburse the City out of the Capital Reserve Fund. The Team shall Pay to Me City any non - reimbursed amounts immediately upon sale or other transfer of the controlling moment in Me Tem. Art4PvrWEntertaimment The Team shall impose and wllat a $1.00 APES fee on all paid Natant JAPES) Fee tickets (including tradWermr7 for all Team events, except as noted. below. The City shall exercise its right to waive Me APES 1'ee for Griulies full urian ticket holders 'and Penial woso ticket holders (mini plans that include 10 or mom regular season games). The City shall have Me option to increase the APES five by up to, but not more than, $0.50 every five years after Ne execution ofdtis agreement. The Team shall remit m the City Me APES fees collectM on a quarterly basis. APES fees shall be volitional through annual audit (ace below) and/or thmu h other murces such as Pacific Coast Lee see reports Page 4 of 10 FRESNO GRIZZLIES SUBLEASE AM1D:NDMENT PROPOSED TERM SHEET December 11, 2009 Page 5 of 10 suhmitted by the Team smeller Tickata.eom (or equivalent) reports submitted ro the Team as reasonably requested by the City. Parking The Team .shall rehome parking revenues fithe City enrolled spaces as set forth in Exhibit B for Team mountain the Stadium. The Team shall have the right to establish parking rates for Teem events. The City shall receive net parking revenues from the City controlled spaces for City events. The City shall Save the right to establish parking fates for City events. Conamibaa If the City elects to use Ovations (or a successor concessionaire) W provide concessions for City events, the City shall receive 35% of gross caneessions revenues for City evens, as originally set Porth in the First Amendment to the Concessions Agreement that was not avewtM. The City acknowledges that the Team cannot assure such percentage; however, the Team shall ceopemh with City in its entente to achieve such result. Adventsing The City shall motive signage at the Stadium to promote City entities and/or events. The City shall also receive scoreboard time and announcements during Teem events to promote such entities and/or events. The Team shall permanently display, in a visible and nnePol nner. "City of Fresno" en Ne video hoe.0 /scoreboard. The City shall have the right, at its sole cost and expense, to Imminently display on fixed signage the following message at the main entranceofthe stadium. I "The City of Fresno Welcomes You to Chukchansi perk" Signage sin, Fmluency and timing of messages shall be negotiated In good faith by the panics. City shall Merin game day I temporary advertising for City events — subject to exclusivity agreements for Team sponsorships in cess of S200,0(q(subject to escalation on an annual hasis equal to rhe lesser of 3.0%or regional Consumer Price Index (CPI)). Proal Sharing— The Ton "I pay to the City annually as additional OperaBooansideeration We Senator of. O 20% of eamings before interest, taxes, depreciation and monivation(EBITDA) over $50,000; or Page 5 of 10 Sale FRESNO GRIZZLIES SUBLEASE AMENDMENT PROPOSED TERM SHEET Dotal 11, 2009 3) $2.00 per Hokin for paid attendance ova 300,000 at Team events. EBITDA and gross revenues shall be deremrined by the Tca n's indeprndent Certified Public Accountant (CPA), consistent with Generally Accepted Accounting Principles (CAAPI. Gross revenues shall be defined! as an ay and all a revenues related the Teamend Stadium memlions received by the farm proud rtFratedentities) including nadclbaner. The grass revenue and per ricket figures above are subject to annual escalation equal to the lesser of 3.056 or the regiuml CPI. The net income benchmmk is not subject to escalation. Benchmark figures above shall be validmed through arcual audit (sec below) andAr through other sources such as Pacific Coon League report submitted by the Team and/or Tlckms.com (or equivalent) reports submitted a the Team as reasonably requested by the City. (a) the Fresno Baseball Club. LLLP (the "LLLP") or Fresno Baseball Club Management, LLC (the "LLC) of its sack or assets; undlor (b) any partner in the LLLP or member of the LLC (an 'Interest Owners) of its partnership interest in the LLLP or membership Interest in the LLC, (any such We or transfer pursuant to (a) or (b) to be defind as a Capital Transaction) the City shall be entitled to receive a share of the excess of such proceeds from ally such Capital Transaction over the trial net Investment, as ser Such below. The total net invmment shall be defined as the initial cash investment made in me Teem, plus any operating lasses less any operating pmfirs (such profits and losses collectively defined as EBITDA), tau ally distributions made an the Interest Owners (Toral Net Investment). The Tom! Net Investment as of December 31.2008 is $9,334,156. The excess of the proceeds tram any. Capital "I"ramiction over the Total Net Investment shall be defined as the Net Surplus. no City shall receive the fallowing amounts upon consummation of any Capital Transaction: Page 6 of 10 FRESNO GRIZZLIES SUBLEASE AMENDMENT PROPOSED TERM SHEET December 11. 2009 Page 7 of 10 20092010— 5W* Of Net Surplus 2011-300%aFNm Surplus 2012-20%of Net Surplus 2013 and therevfler— In%of Net Surplus The Total Net Investment shall he determined and agreed upon annually by the City and Team after annual audit (see below) is ompleted and/or through other sources such As Pacific Contort League reports submitted by the Team. Revegotfiav Of Lune Ifflc Testator any of its Owners attempts. directly or indirectly,m Triggers Purchase Right Mongolism the Stedlum Sublease Agreement at any time during the Term, the City shall have the right to purchase the Team or identity a potential buyer for the Team at fa} market value. Such right mug he exercised, ifat all, within 120 days after the attempt to renegotiate. Fair market value shall be determined by an independent valuation expen that hes substantial experience valuing sports fnumbiseslargem Tum Transfer Upon any sale or other transfer of Me Tum, or say controlling interest therein, the new marshal man assume any and all obligations under the Stadium Sublease Agreement The City shall have a reasonable right of approval of any new controlling Tum owner(sy PBC shall be required to structure any sale or other transfer of Me Team u a sale of ownership interests (stock) in the Team, or a merger or other similar monition involving the Team pursuant to which Me surviving entity continues to be obligated to perform under the Agreement ser as not to trigger Me terminmion right set forth in paragraph II of the Sponsorship, Marketing Rights and Sodium Naming Rights Agreement dried August 19, 20M between the Chukchansi Economic Development Authority (CERA) and FBC. The Team shall make amoable efforts to sell to tactor ownership interests if possible. SF Givnb Team shall use hell efforts to host an exhibition game with its MLB aRliate (Giants) each your during the Term. A11 Star Game Team shall use beg efforts to hon Me Triple A All Star game in Fresno within the next five (5) years and, upon execution and delivery of Me Sublease Amendment, shall deliver to Me City a lever form the President of to Pacific Contort League supporting an All Sem game for Fresno within such time fierce. Page 7 of 10 FRESNO GRIZZLIES SUBLEASE AMENDMENT PROPOSED TERM SHEET December 11, 2N9 Outstanding Obligations The Team shall timely make any and all payments due to the City as required by the Stadium Sublease Agreement. Such payments include, but may not he limited to, the following: • November Rent ($i5.000) -Paid • December Rent ($75A00) • D nnlver Clean Up Paymrnt($650.000) • Parking Payment ($63,786) • City Consulting/Legal Fees ($156.W) Other AuditMgb% Commencing with the year 2010 and for men year thereafter during be Term, the Team shall have an annual audit of its financial statements completed by a CPA consistent with GAAP. The audit shall be completed in a timely manner. The City shall have the right to review the audit and supporting work papers an assess ongoing viability of the Team and to validate compliance with the terms and conditions of be Stadium Sublease Agreement, as amended hereby. The City review shall be conducted at be Team's oFlices. The Team shall timely provide to the City a copy of the opinion letter for each manual audit. If the Team foils to comply with the foregoing, the City shall have the night m conduct such audit at the Team's expense and the Team shall cooperate with the City in the warfotmwce of such audit. Upon completion of the Team's audit for the 2010 season. be City shall engage an independent financial advisor or accowtwt with $pons industry experience to review be Tram's auditdl financial statements. If it is reasonably determined by the independent financial advisor or reservations, in consultation with the City and the Team's auditors, that the audited financial statements materially very firm the representations made by the Team, and the historical and Projected financial commands provided for review by the Team in correction the Stadium Sublease Agreement, as amended hereby, the City shall have the right to annul this amendment The City shill have 30 days after its review of the Team's 2010 audit to exembe this right If the City exercises dis right to annul this amendment to the Studium Sublease Agreement. the Team shall reimburse the City as if this amendment did not add and the current Stadium Sublease Agreement wasin place Por the 2010 season. Hefter Busineae Act In connection with the implementation of this Term Sheet and Compliance prior to the execution and delivery of the proposed Sublease Pap 8 of 10 FRESNO GRIZZLIES SUBLEASE AMENDMENT PROPOSED TERM SHEET December It, 2009 Page 9 of 10 Amendment, the Team shall caopemm with the City to meet the requirements of the Better Business Act, including providing information required by the City to Motes.' hs interests under the Act and reimbursing the City for the fees and expenses of the consultants retained by the City to assin m evaluating, negotiating and documenting the proposed Sublease Amendment. In order ro further protect the inteasa of the City, the amendment shall also provide that (a) the partners of the LLLP shall deliver to me City, m the Purports' election, either unconditional, Ire table book letters of credit or personal guarantees in me aggregate amount of $1,500,000 (Guarameed Amount) as security mr default under the Sindium Sublease Agreement. If the Tram has not dePomend on any of its obligations, the Guara4ed Amount shall only remain in place until after the City's review of Ne Team's audit for the year including the 2014 (b) in addition to any rights or me Stadium Sublease Agreement if at any time during the Teem the Tmm defaults under my debt obligation or maternal contract to which it is a paty, the City shall have the fight to declare a default under the Stadium Sublease Agreement and all related agreements (including the Pledge Agreement) and pursue all of its remedies thereunder. (c) in addition to the limitations and restrictions regarding Team debt as outlined in the Sodium Sublease Agreement, Ne Team shell he prohibited firm obtaining any loans or advances or accepting sty investment in the Team from the Chukchansi Errammic Development Amho ity or any of its depaNnrnts tor affiliates, without the prior written woman of Me City. Tranme[bon with During the Term of Be Stadium Subles¢ Agreement, the Team Affilirtw must obtain tht prior writer approval of the City before entering into 'any tmnsac0on with an affiliate of the Team which involves any payment or provision of goods or services by the Team in excess of $25,000. The Team and any aftllimes shall matter separate business operations mad financial record with n commingling of Ponds. The Team shall cause any affiliates with which it docs trmuamiana in deliver to me City its annual financial mare emu (unaudited). Sublrme Amendment The provisions of this Term SM1eet reFlect me basic business tleal Page 9 of 10 FRESNO GRIZZLIES SUBLEASE AMENDMENT PROPOSED TERM SHEET December It, 2W0 Process bmwttn the partes and shall he incorporated into an Amended and Restated Stadium Sublease AgreemeraL which shall also rent arch other modieca ions as are masmubly necessary, to ccommodate the terns hereof and to appropriately clarify the terms of the existing Stadium Sublease Agreement. The Team and the Cry shall negotiate in good Rich to finatiae the Amended and Restated Sredium Sublease AgmemenL CITY OF FRESNO By: Title: Date: FRESNO BASEBALL CLUB, LLLP, Por Itself and as Sole Member of Fresno Baseball Club. LLC Bv: Fresno Baseball Club Management. LLC, as General Partner By: Cummings Baseball Group, LLC, as Managing General Partner By: Christopher P. Cummings. Manager Date: FRESNO BASEBALL CLUB, LLC By: Christopher P. Cummings, Residant Date: Page 10 of 10 PICAYUNE RANCHERS- OFTHE CHl1KCHANSf INDIANS - CHUKCHANSI ECONOMIC DEVELOPMENT AUTHORITY P.O. BOX 1060• COarcegold. CA 93614 • (559) 642-3681 e FAX (559)642-3683 December 9, 2009 Fresno Baseball Club. LLC d/b/a Fresno Grizzlies Attention: Christopher Cummings 1800 Tulare Street Fresno, CA 93721 Re: Clarification of Sponsorship, Marketing Rights and Stadium Naming Rights Agreement Dear Mr. Cummings The Purpose OfIms letter is to clarify Paragraph 11 (Assignment) (see attached) in the Sponsorship, Marketing Rights and Stadiurn Naming Rights Agreement dated August 19, 2006, as amended by letter dated September 6, 2006 (the "Agreement'), between the Cl ukcheosi Economic Development Authority (CEDA) and the Fresno Baseball Club, LLC, which owns and Operates the Fresno Gri lies Triple A affiliated baseball team. The maigmnent Pmvidon in Paragraph 11 allows CEDA to terminate the Agreement in the event of any sale or banisher of all or substmttidly all of the toasts of the Fresno Baseball Club, LIC. CEDA represents and agrees that, by its terms, this termination provision does not apple in the event of conveyance of any or all ownership interest in the Fresno Baseball Club, LLC. That is, the termination provision does not apply so long as Fresno Baseball Club, LLC. is the legal entity Owning and doing business as the Fresno Grizzlies Triple A affiliated baseball team, and the Fresno Baseball Club, LLC, retains ownership ofall or subsmatially all the assets of the Fresno Grizdies Triple.A affiliated baseball main. Chukchanai Ermnomfe Development Authority By:(itA/A,r._�O 1' By:_„1iy47 Moms Reid} M+•r 6.6rv.K As IF Chair n / As IN: Sesce1-a� Lir uqtin xeadee f:,et+std BnxbAll Orth LIC AFFIDAVIT AND CERTIFICATION OF CHRISTOPHER P. CUMMINGS STATE OF CALIFORNIA COUNTY OF BEFORE ME, the undersigned authority duly authorized m administer oaths, personally appeared Christopher P. Cummings. ("Affiant"), who being first duly swam on oath, deposes and says that: I. I am, through Cummings Baseball Group, LLC, the manager ofFramo Baseball Club Management LLC, a Delaware limited liability company ("FBCM"), the general Farmer of Fresno Baseball Club, II.LP (the "LLLP" ), which LLLP, through Fresno Baseball Club, LLC ("FBC"), is the owner and operator of the Fresno Grizzlies, a professional baseball franchise. 2. Simultaneously with the execution and delivery to the City of Fresno of this Affidavit and Certification, I am delivering to the Fresno City Attorney a schedule showing the members arsd partners, respectively, and then currew ownership percentages in FBCM and the LLLP. 3. 1 understand that this Af idi vii and Cetificatioa is given in connection with a Term Sheet dated December 16, 20119, outlining a proposed amendment to the Agreement dated January 3, 2001, as amended, between the City of Fresno ("City") soil FBC ("Stadium Sublease Agreement"), and that the City will rely hereon in its consideration of the Term Sheet and proposed amendment. 9. As the President of FBC, I am the person primarily responsible for: (a) negotiating on behalf of FBC and tie LLLP, the Term Sheet outlining the proposed amendment to the Stadium Sublease Agreement and (b) providing financial and other infbrrnation to the City on which the City relied in negotiating the Term Sheet. 5. With respect to she financial and other information provided to the City in connection with the Tenn Sheet, I hereby certify that. (a) To the best afmy knowledge and belief, the financial statements for the LLLP, FBC (including the 2009 year-to-date statements) and certain oftheir affiliates (the "Financial Statements") accurately reflect the financial performance and condition of the respective entities as of the dates and for the periods indicated Except fm matters disclosed to the City in wntm& them has been no. material adverse change in the business, financial position, results of operation or prospects of FBC, as reflected on the balance sheet for FBC dated December 31, 2108. M) The Financial Statements provided or the City were Me basis for and ere consomend win the Federal Tax Returns filed for the respective entities for the periods indicated. Such Federal Tax Returns accurately set fern, in accordance with Me Internal Revenue Code and the regulators thereunder, no groes income, adjusted gross income and taxable income for each our year. (c) The Financial Statements have been prepaml in accordance win generally ucepted accounting principles applied on a consistent basis and accurately reflect Me results of operations and operating characteristics of Me respective critics. (d) Except for obligations payable to Me City as requite by the Tenn Sheet all accounts payable of the LLLP and FBC am current (e) The $825,000 [am made to the LLLP in 2009 by Einkley C. Shoes has been convened to equity and no part of Me principal thereof or interest Merron is a debt obligation of Me LLLP or has my priority over other LLLP capital. (0 The mal outstanding balance(principal and brand) of Me loaax from Brawn Brothers Hamman & Co. to Me LLLP has been converted to equity and no pan of Me principal thereof or interest thtoeav is a debt obligation of Me LLLP or FEC or has any priority over onto capital. (g) To the best of my knowledge and belief, a 11 of the information provided to Me City M connection win Me negotiation of Me Tem Sheet m we and accurate in all material respects. 6. 1 have provided to the limited Partners of the LLLP copies of Me Term Sheet and all information that they have requested in comection win Me negotiation Menti. 1 have also given such limbed partners Me opportunity to discuss Me Tenn Sheet win me. ]. To Me best of my knowledge and belief, Me limited perners of the LLLP understand Me Term Shed and the likelihood not they will be required to make significant additional capital contributions to Me LLLP, even if the City approves the Tam Sheet and the definitive documents contemplated thereby me forehead, executed and delivered. 8. To the bed of my knowledge and belief, Me cash flow projections for 2009 and 2010 and subsequent years prepared by me on behalf of Me LLLP and FBC ere realistic and achievable. 9. Them is no action, suit or proceeding Pending or, 0 Me best of my knowledge, threatened against the LLLP or FBC m, to Me beet of my knowledge and belief airy of their respective partners and members, which, if adversely determined, would have a=,trial, adverse effect on Me business, financial Position, results of operation or prospects of Me LLLP or FBC. 10. To the best of my knowledge and belief. the LLLP and FBC are in fall compliance with the terms of the Fresno Gdadies Francbre and I have not received any notice from Me Pacific Coast League or any haseball authmlry to the contrary. No condition exists or event has occurred which, in itself or win the givingof notice or lapse of time or ban, would result in the suspension, revocation, impairment Folio We Or TOU muewal of the Franchise. No baseball authority governing the Fresno Gnzzlics or its Franchise has threatened or commenced any action to revoke, rescind or suspend the Franchise and, to the best of my knowledge and belief, an such action is contemplated. 11. All {tdorenarion heretofore finished by Ne LLLP or FSC to the City or its agents for ""lases of arm connection with the Term Sheet Or me transactions contemplated thereby is, end all such information hereafter famished by the LLLP, FBCM, or PSC re the City or its agents will be, we and accurate in all material respects. The LLLP, FBCM, FBC and 1 have disclosed to the City and its agents any and all facts known to me which materially adversely affect or may affect (to the extent it can be reasonably foreseen), the business, opnmtions or Financial condition of the LLLP and FBC, "ken as a whole, or the ability of the LLLP and FBC and their respective members and partners to perform their obligations under the oansactions contemplated by the Term Sheet. FURTHER AFFIANTSAYETH NOT. CHRISTOPHER P. CUMMMGS THE FOREGOING INSTRUMENT was sworn to and subscribed before me this day of 2009, by Christopher P. Cummings, who has proved m me an use basis ofsatisfeckr y evidence to be the person who appeared before me. NOTARY PUBLIC, STATE OF CALIFORNIA (Sigrum e) (AFFIX NOTAR SEAL) (Pmiated Name) (Commission Expiration Date) FRESNO GRIZZLIES SUBLEASE AMI PROPOSED TERM SKEET December 16, 2009 Term The Term of the Shoham Sublease Agreement shall be extended by five (5) years (35 years from Commencement Dam) on be terms and conditions set forth in the Stadium Sublease Agreement, except as amended hereby. Flied Rental Fixed Rental shall remain $1,500,000 par year. Rent shall be paid in twelve (12) monthly payments of 5125,000. Annual Maintenance and The Tenant (Found sba0 continue to be responsible for all Repair operating expenses and murine maintenance and repairs of the Stadium as set forth in the Stsulmn Sublease Agreement. The Team shill operate the Sodium in a safe, clean, attractive, and first class number comparable to that of other AAA fdrLB facilities. The Team shag operate (or cause others to operate) the Stadium in a manner that complies with all applicable requirements imposed by MiLB end all other entities and agencies wiWjuriedicuon over the Team or Shtlium. In order to provide financial relief to the Team and to protect the City's original investment in the Stadium, the City shall reimburse be Teem for 50Y of the operating expenses and mu0ne milmmecance and repairs of the Smdium to a maximum of a $500,000 arcual reimbursement (not subject m escalation). Reimbursements shag be made quarterly, subject to amus) adjustment based on be Team's audit. The operating expenses and routine rminmmnce and repairs of the Stadium subject to reimbursement (Reimbursable Expanses) shall include: • General Repabmd Mainteoance(Not Cephaly o Grounds Maintenance o Field Maimenance o Vehicle Madomnance • Other • Utilities o Electricity o On o Water o Waste Disposal o Cable Television Security Almon Page 1 of 11 FRESNO GRIZZLIES SUBLEASE AMENDMENT PROPOSED TERM SHEET December 16,2009 • Operations Housekeeping Page 2 of 11 Supplies • Video Brand and Equipment Mol Capital) Pest Control Reimbursable Expenses shall generally consist of the item identified above, and ahead be consistent with the Team's saount umbers idenfifiM in Exhibit A. The Team shall account for Reimbursable Expenses in a manner consistent with historical Practice. The Team and City shall meet and confer at Iran annually, but no lamr dun October 31 of each year, on general operating and maintenance standards and the City shall provide feedback on the Team's performance. City shell have the authority to require the Team to modify the policies/approach in general operating and maintenance as appropriate in meet the standards required in the Stadium Sublease Agreement, as amended hereby. The City shall have the right to invoke a "self-help" remedy paramour W Team Failure to Perform below. If the City's share of operating expenses and routine maintenance and repair is lens than $500,000 in any given year, the City may elect, in its sole and absolute discretion, to contribute the diffeance between $500,000 and the City's shown in dust given year into a capital repair, replacement and improvement reserve Sued (Capital Reserve Fwd). Caphal Repairs, The Team and the City shall continue m be responsible for capita Repbeemevta and repvrs, replacements and impmvemrnts (Capital Improvements) Improvemevn as set fond in the Stadium Sublease Agreement, The from shall maintain the Stadium in a safe, clean, attractive, and firat class manner so as to cause it to remain in a condition comparable to that of other MAH facilities of similar design and age, ordinary ascor and roar excepted. The Team shall maintain (or cause others in wivtain) the Stadium in a remove that is consistent with all applicable requirements imposed by MiLB and all other ciddes and agencies with jurisdiction over the Team or Stadium, and with the original design and construction pmgmm of the Stadium. The Team shall make (or cause others to make) all necoasary or appropriate repairs, anewals and replacements so required by the Southern Sublease Agreement, whether interior or exterior, ordinary or extraordinary, foreseen or unfiireuen, In a prompt and timely manner. The Team shall maintain any and all insurance Page 2 of 11 FRESNO GRIZZLIES SUBLEASE AMENDMENT PROPOSED TERM SHEET December 16, 2009 In order to provide financial relief to the Teem and to protect the City's original investment in Ne Stadium, fee City shall invest. $100,000 annually in the Capital Reserve Fund that shall her need to meet the obligations of the Team. The City's investment shall be made in four (0) equal quarterly installments of 525,000. Prior to the start of the 2010 baseball season, the City and the Team shall meet and jointly develop a five (5) year Capital Improvements plan. The five (5) year Capital Improvements plan will be modified, as appropriate, on an annual breis, no Inter than October 31" of curb year, as determined jointly by the City and the Team. The Team shall submit its requests for Capital Improvements to the City. The City shall retain final approval over Capital Improvements and expenditures Gore the Capital Reserve Fund, which approval will not be unreasonably withheld The Capital Improvements plan my be modified hour time to time during tach year as necessary and appmprinte in address required and necessary Capital Improvements, subject to the approval of the City, which approval will not be uvrueonably withheld During the last five (5) years of the Tem. the City will act reasonably in imposing requ rt mens for Capitol Improvements, recognizing the age and useful life of the Stadium; provided, however, that the Tennis repair and maintenance obligations shall not be diminished during this pend. The City shall have the right to invoke a "self help" remedy pursuant to Team Failure m Perform below. team tenure to Perform without holding my other provision of this Term Such and in addition to my other rights or remedies available to City for any default on the part of the Team under the Stadium Sublease Agreement, if at my time the Tum fails to perform any obligation to be performed under the Stadium Sublease Agtemeot (including, but not limited to: StaNum management, agement, maintenance, repairs, replacements, improvements, em.), which failure continues without cure following winner nonce firm City for a period of thirty (30) days, then, the City may, at its sole option, but shall not be obligated to, perform such obligation for and on behalf of the Team Notwithstanding the foregoing, however, H within such period the Tum gives notice to the City that such failure is cased by Force Majeure or that me of such failure carmelt reassembly be completed within such period, than Page 3 of 1I FRESNO GRIZZLIES SUBLEASE AMENDMENT PROPOSED TERM SHEET December 16, 2009 Page 4 of 11 of such Force M jeme delay or extended ewe period, as the cage may be, and for an long thereafter as the Team continues diligw0y to prosecute such cure or the resolution of such event of Force Majeure; provided however, that the City shall not be requued 10 fimbear if the Team's failure to perform poses a remormbly perceived threat o public health, safety or welfare. Team Ob11gatlrn In If the City performs any obligation required in be performed by Rebnbmse City Teem, the Team shall munburse City within thirty (30) business days following electoral, the sum so paid or the reasonable expense incurred by the City in performing such obligation, together with interest thereon at the maximum legal per annum rare, if such payment is not made within such period, computed fiom the date of the City's demand send Payment is made. AltemaBvely, the City may, in its sole and absolute discretion, elect to off t/reduce any payments otherwise due to the Team from the City to reimburse the city for reasonable expenses carred by the City in perforating Team's obligation, together with interest thereon at the maximum legal per swum rate. New Wed Board / The City shall provide the Team up to a maximum of $500,000 m Smrebrard replace the Stadium video board / scoreboard with a first class, staceof-thews system approved by the City, which approval will not be unreasonably withheld, conditioned or delayed. The City's investment shall only be used to replace the Stadium video board / scoreboard add for no other puryose. The Team shall replan the vidro Intend / scoreboard prior to the 2010 baseball secure. Commencing December 1, 2010 and for nine (9) consecutive years thereafter an such date, the Team shall reimburse the City $50,000. The Team may elect to reimburse the City am of the Capitol liaserve Fwd. The Teem shall pay to the City any non - nominated amounts immedutely upon sale or other transfer of the controlling interest in the Team. Aru/Park/Emerbih mens The Team shall impose and collect a $L00 APES f on all paid ISporh(APES) Fee tickets (including arsawl mor) lar all Team events, except m noted below. The City shall exercise its right to waive the APES fee for Grizzlies PoII season ticker holders and partial season ticket holders (mini plans that include 10 or more regular season games). The City shall have the option to increase the APES fee by up t0, but not more than, $0.50 every five years aft" the The Teem shall mmiur Ne City the eESfeeofthisadona quarterly APES fees collected or a qwd"ly basis. APES Res shall be validated through annual audit (see below) nailer through other sources such as Pacific Coast Limus, reports Page 4 of 11 FRESNO GRIZZLIES SUBLEASE AMI PROPOSED TERM SHEET December 16, 2009 Page 5ofII submitted by the Team and/or Tickets.com (or equivalent) reports submitted to the Team as reasonably requested by the City. Arkipg The Team shell rec net parking revenues from the City controlled spaces as set forth in Exhibit B far Team events at the Stadium. The Team shall have she right to establish puking sates for Team events. The City shall revolve net puking revenues from the City controlled spaces for City events. The City shall have the right to establish parking rates for City events. Concessions If the City elects to use Ovations (or a successor wncessiom ) to provide concessions for City events, the City shall receive 35% of gross concessions revenues for City events, as originally set N high in e First Arim deman to the Concessions Agreement that was not executed. The City acknowledges Nat the Tram cmmot nature such percentage; however, Ne Teem shall cooperate with City in its efforts to achieve such result. Adverfaring The City shall receive signage at the Southern in promote City entities and/or events. The City shall also receive scoreboard time and en encs during Taxes events to promote such entities and/oreveres. The Team shall permanently display, in a visible and tasteful nignmer. "City of Fresno" on the video board /scoreboard. The City shall have Ne right, m its sole cost and expnase, to prominently display on fixed signage Ne following message at the main enhance of Ne Stadium_ • "The City of Fresno Welcomes You to Chukchuri Park" Signage aim, frclaeny, and timing of messages shall be negotiated is good faith by the parties. City shall retain game day / temporary advertising for City events — subject a exclusivity agreements for Team spntswships in excess of $200,000 (subject in escalation on an auual basis equal to Ne lesser of3.0%or regional Consumer Price Index (CPI)). PMW Sharing— The Team shall any to the City annually as additional Operations; consideration the greater of. 1) 20% of earnings before manage, nixes, depreciation, and emortvatlon(EBITOA) over $500,000; or Page 5ofII Sale FRESNO GRIZZLIES SUBLEASE AMENDMENT PROPOSED TERM SHEET December 16,20M 3) 52.00 per ricket for paid attendance over 30,000 m Team even. EBITDA and gross revenues shall be determined by the Term's independent Cedified Public Areoumat (CPA), consistent with Generally Accepted Accounting Principles (GAAP). Gross revenues shall ban Ina defined as any and all Mamas related b the Teamand Stadium operations received by the Team (and affilietcd comics) including undWerta. The gross revenue and per ticket figures above are subject M normal escalation equal to the lesser of M% or the regional CPI. The net income benchmark is not subject o osculation. Benchmark figures above shall be validated thmugh annual audit (see below) and/or through other sources such as Pacific Coast League reports submitted by the Team and/or Tickets.wm (or equivalent) repasts submitted to she Team as reasonably requerated by the City. (a) the Present Baseball Club, LLLP (die 'LLLP-) or Fresno Baseball Club Management. LLC (the "LLC) of its stock or assets; amber (b) any partner in the LLLP or member of the LLC (an "Ioterea Owner") of its partnership interest in the LLLP or membership interest in the LLC, (any such sale or transfer pmsuat to (a) or (b) m be defined as a Capital Transaction) the City shall be carried to receive a share of the excess of such proceeds from any such Capital Transaction over the total net investmen4 as sat forth below. The total net investment shall be defined as the initial cash investment made in the Team, plus any operating losses, less ay operating profits (such profits and lasses collectively defined as EBITDA), less any distributions made to the Interest Owners (Tom] Net Investment). The Total Net Investment as of December 31, 2008 is 89,334,156. The excess of We proceeds Sam any Capital Transaction over the Total Net Investment shall be defived as the Net Surplus. The City shall receive the following amounts upon consummation of any Capital Transaction: Page 6 of H FRESNO GRIZZLIES SUBLEASE AMENDMENT PROPOSED TERM SDEET December 16, 2009 Page 7 of 11 2009/2010 - 5016ofNel Surplus 2011 -30 0 of Net Surplus M12-20%of Net Surplus 2013 and thereafter- 10% of Net Stifles The Total Net Invemment shall he determined and agreed upon annually by the City and Teem after normal audit (see below) is completed and/or through other sources such as Pacific Coast rxague reports submitted by the Tem. Renegotiation of Lease If the Team or any of its owners attempts, directly or indirectly, to Triggen Purchase Right renegotiate the Stadium Sublease Agreement at my time during the Tem, the City shall have the right in purchase the Team or identify a potential buyer for the Team at fait market value. Such right must be exercised, if at all, within 120 days after the attempt to renegotiate. Fetr market value shell be detemtioed by an independent valuation expert that has substantial experience valuing sports frmchiseslassets. Team Transfer Upon my sale or other summer of the Time, or my controlling interest therein, the new aumar(s) must assume my and all obligations under the Stadium Sublease Agreement. The City shall have a reasonable right of approval of my new controlling Teem ownsids). ME shall be retorted to structure my sale or other transfer of the Teem as a sale of ownership interests (mock) in the Team, or a merger or other si lar busnaaztion involving the Team pursuant on which the surviving entity continues in be obligated to perform wader the Agreement so as not m trigger the termination right set forth in paragraph I 1 a the Sponsorship, Marketing Rights and Stadium Naming Rights Agreement dated August 19, 20M between the Chukchari Economic Development Authority (CEDA) and FBC. The Teem shall make reasonable efforts in sell In local ownership interests ifpossible. SF C1mty Team shall use beat efforts to host an exhibition game with its MLB affiliate (Giants) each year during the Tem. A11 Stsr Game Team shall use best a iris to host the Triple A All Star game in Fresno within the next five (5) years and, upon execution and delivery of the Sublease Amendment, shall deliver to the City a letter from the President of the Pacific Coast League supposing m All Star gine for Premo within such time hone. Page 7 of 11 FRESNO PROPOSED TERM SHEET December 16, 2009 Outstanding Obligations The Taxes shall timely make any and all Payments due to the City as acquired by the Stadium Sublease Agreement. Such paymews include, but may not be 0mited to, the fallowing: • November Rent ($75,000) - Paid • December Rent ($95,M) -Paid • December Clean Up Payment ($650,00D) -Paid • Parking Payment ($63,186) -Paid • City Cousulting/Legal Fees (S 156,663) -Paid Office Audit Rights Commencing with the you 2010 and for euh year thereafter during the Term, the Tum shall have an anm at audit of in finmmial statements completed by a CPA, consistent with GAAP. The audit shall be completed in a timely manna. The City shall have the right to review the audit and supporting work papers to aura ongoing viability of the Tum and to validate compliance wide the teats and conditions of the Stadium Subbases Agreement, to amended hereby. The City review shall be conducted at the Team's offices. The Team shall timely provide m the City a copy of the opinion letter for such annual audit. if the Tum fails to comply with the foregoing, the City shall have the right to conduct such audit at the Twin's expense and the Tum shall cooperate with the City in the performance of such audit. Upon completion of the Team's audit f the 2010 season, the City shall ugage an independent financial advisor or accountant with sports industry experience to review the Tam's audited financial statements. If it is reasonably demmdned by the independent faucial advisor or acwmttent in consultation with the City and the Team's auditor, that the audited financial statements materially vary from the reprom etions made by the Team, and the historical and projected financial statements provided for review by tyre Team in connection the Stadium Sublease Agreement, as amended hereby, the City shall have the right be annul this amendment. The City slash have 30 days after its review of the Team's 2010 audit to exercise this right If the City exercises its right b mmol this amendment to the Stadium Sublease Agreement. the Team shall reimburse the City as if this amendment did not exist and the current Stadium Sublease Agreement was in place for she 2010 season. Better Bwlmem Ari In connection with the ivWlemenmtion of this Term Sheet and Corseldhisswe I labor to the execution and delivery of the proposed Sublease Page 8 of 11 FRESNO GRIZZLEES SUBLEASE AMENDMENT PROPOSED TERM SHEET December 16, 2009 requimments of the Boner Business Act, including providing infrrraaGw required by the City to protect its interests under the Am and reimbursing the City Sir the fees and expenses of the consultants retained by the City to assist in evaluating, negotiating and documenting the proposed Sublease Amendment. In order to further protect the interests of the City, the amendment shell also provide that: (a) the partners of the LLLP shall deliver to the City, at the pourrus' election, either ucordifional, imevocable bank levers of credit or personal guarantees in the aggregate amount of 511500;000 (Guaranteed Arcanum) as additional security for default indoor the Stadium Sublease Agreement (Guaranty). Tbis additional security shall be in addition to my and all remdles the City currently bas order existing documents. If the partners elect to provide personal gummrees, each partner must provide independent verification that dement stmtes sufliciam net won6 to support the Guaranteed Amount. if the Team has not defaulted on any of its obligations, the Guaranty shall ready remain in place until after the City's review of the Team's audit for the year including the 2014 season. Provided, however, that the letters of credit or pearand gumnrees shall terminate upon sale of the Team in a trmeecfion approved by the City wherein the new rumors agree m assume any and all obligations of the Team under the Stadium Sublease Agreement. If the Team def Its on any of its obligations, the City shall have the fight to pursue its remedies under this Guaranty, fu the event of a bankruptcy or reorganization procedure involving the Team, the City shall have the immediate rightto enforce the Guarmty. Provided, however, if the Team defaults and is not the subject of a bavanumey or vurgmivation procedure, the City must first proceed against the assets of the Team in satisfy the obligations guaranteed. If the assets of use Team are not sufficient to satisfy the obligations giamenteed or the obligations guaran4ed are not satisfied within 180 days after the notice of default, the City shall have the immetlut< fight or enforce the Germany. (b) m addition to my rights in the Stadium Sublease Agreement, if at any time during the Term the Tam defaula under my debt obligation or material avtmct to which it is a Page 9 of 11 FRESNO GRIZZLIES SUBLEASE AMENDMENT PROPOSED TERM SHEET December 142009 CITY OF FRESNO By: Title: Date: Page 10 of I l the Stadium Sublease Agreement and all related agreements (including the Pledge Agreement) and pursue all of its TemMies thereunder. (c) in addition to the grommets and restrwians regarding Team debt as outlined in the Stadium Sublease Agreement. the Team shall be prohibited from obtaining any loss or advances or accepting any investment in the Team from the Chukchansi Economic Development Authority or any of its departments or affiliates, without the prior written consent of the City. (d) the Team shell provide a d erred Inom ea plan reasonably acceptable to the City no later than January 31, 2010. Tramse0ons wNh Dunng the Tenn of the Stadium Sublease Agrcemem, the Team A10Bates most chow the prior written approval of the City before entvire into any tansactim with an affhlime of the Team which involves my payment or provision of goods or services by the Team in cattle of 525,000. The Team and my affiliates shml maintain sepambe business operations and financial records with n commingling of fords. The Team shall cause my affiliates with which it doer transactions to deliver to the City its annual financial statements (unaudited). Sublease Amendment The provisions of this Term Short reflect the basic business deal Process between the parties and shall be incorporated mm an Amended and Restated Stadium Sublease Agmement, which shall also rated such other modifications as are reasonably necessary to accommundate the terms hereof and to appropriately clarify the terms of the existing Smdium Sublease Agreement. The Team and f; City shall collocate in good faith to f alio the Amended and Restated Stadium Sublease Agreement. CITY OF FRESNO By: Title: Date: Page 10 of I l FRESNO GRIZZLIES SUBLEASE AMENDMENT PROPOSED TERM SHEET December 16, 2009 FRESNO BASEBALL CLUB, LLLP, for Itaalfand as Sole Member of Fresno Baseball Club, LLC By: Fresno Baseball Club Management, LLC, as General Partner By Cummings Basdrall Group, LLC, as Managing General Partner By: Christopher P. Cummings, Manager 03 FRESNO BASEBALL CLUB, LLC By: Christopher P. Cummings, President Date: Page 11 of 11 A AVFF AND CERTIFICATION OF CHRISTOPHER P. C116UdINGS STATB OF CALIFORMA COUNTY OF BEFORE ME, the undersigned authority duly authorizedi to administer oaths, pmsonany appeared Christopher P. Cummings ("Adient"), who being fust duly swom on oath, deposes and says that 1. Tam, through Cummings Baseball Group, LLC, the manager of Fresno Baseball Club Management, LLC, a Delaware limited liability company ("FBCM"), the general partner of Fresno Baseball Club, LLLP (the "LLLP"), which LLLP, through Fresno Baseball Club, LLC ("FBC"), is the owmr and operator of the Ficsoo Grizzlies., a professional baseball franchise. 2. Simultaneously with the execution and delivery to the City of Fresno of this Affidavit and Certification, I am delivering to the Fraoo City Attorney a schedule slowing the membra and Farmers, respecfively, and their current ownership percentages w FBCM and the LLLP. J. I understand that this AAtlavil and Certification is given in connection with a Teem Sheet dated December 16,20N, outlining a proposed amendment to the Agreement dated January 3,200 1. as amended, between the City of Fresno ("City") and FBC ("Stadium Sublease Agreement"), and that he City will rely hereon in its consideration of the Teem Shot and proposed amendment. 0. As the President of FBC, l am the pman primarily responsible for (a) negotiafing on behalf of FBC and the LLLP, the Term Sheet outlining the proposed amendment b the Smdiurn Sublease Agreement, and (b) providing financial and older iNbrrnmion to the City on which the City relied in negotiating the Term Sheet. 5. With respecl to the financial and other information provided to the City in connection with the Tom Sheet l hereby certify that (a) To the best of my knowledge and belief, me financial statements for the LLLP, FBC (including Ne 2009 year-to-date statements) and certain of their affiliates (the "Financial Sarements") accurately reflect the financial performance and condition of the respective entities as of the dares and for the periods indicated. Except for mum disclosed to the City in writing, there has been no material adverse change in the business, financial position, results of operation or prospects of FBC, as reflected on the balance sheet for FBC dated December 31, 2008. (b) The Financial Statements provided to the City were the basis for and are consistent with the Federal Tax games filed for the respective entities for the periods indicated. Such Federal Tax Returns accurately set forth, in accordance with the humml Revenue Code and the regulations therewder, the gross income, adjusted gross income and taxable income for each tax year. (c) The Financial Statements have been prepared in awasularice with generally accepted accounting principles applied on a consistent basis and accurately reflect the results of operations and operating characteristics of the respective entities. (d) Except for obligations payable to the City as required by the Term Sheet, all accounts payable of the LLLP and FOC are current. (e) The $825,0001oan made in the LLLP in 2009 by B alcley C. Shores has Nissan converted to equity and no pan of the principal thereof or innocent thereon is a debt obligation of the LLLP or bas my priority ova other LLLP caphd. (f) The wtnl outstanding balance (principal and interest) of the tears from Brown Brothers Berriman & Co. to the LLLP has been convened to equity and no pan of the principal thereof or interest thercon is a debt obligation of the LLLP or FBC or has any priority ova other capital. (g) To the best of my knowledge and belie{ all of the information provided to the City in connection with the negotiation of the Term Sheet is "a and accurate in all material respects. 6. I have provided to the limited partners of the LLLP copies of the Term Sheet and all information the they have requested in connection with the negotiation thereof. I have also given such limited partners the opportunity to discuss the Term Sheet with me. 7. To the best of my knowledge and belief, the limited partners of the LLLP understood the Tenn Sheet and the likelihood that they will be required an make significant additional capital contributions to the LLLP, even if the City approves the Term Sheet and the definitive documents contemplated thereby are finalized, executed and delivered. a. To the heat of my knowledge and belief, the cash flow projections for 2009 and 2010 and subsecluent years prepared by me on behalf of the LLLP and FBC are realistic and achievable. 9. There is no anion, suit or proceeding pending or, to the but of my knowledge, threatened against the LLLP or FBC or, m the best of my knowledge and belief any of their respective partners rand members, which, if adversely determined, would have a materieL adverse effect on the business, financial position, results of operation in prospects of the LLLP or FBC. 10. To the but of my knowledge and belief, the LLLP and FBC are in full compliance with the terms of the Fresno Grizzlies Franchise and I have not received any notice Gem the Pacific Cast League or any baseball authority to the money. No condition exists or event has occurred which, in itself or with the giving of notice or lapse of time or both, would result in the suspension, revocation, impairment, forfeiture or non -renewal of the Franchise. No baseball authority governing the Fresno Grizzlies or its Franchise has threatened or commenced any action to ravoke, resound or suspend the Franchise and, to the best of my knowledge and belief, no such action is contemplated. 11. All information heretofore famished by the LLLP or FEC to the City or its agents for purposes of or or coorection with the Tenn Sheet or the transactions contemplated thereby is, and aB such information hereafter furnished by the LLLP. FBCM, or MC to the City or its agents will be, we and accmie th al I material respects. The LLLP, FBCM, FBC and ] have disclosed to the City and its agents any and all facts known to me which materially adversely affect or may affect (m the extent it can be reasonably foreseen), rhe business, operation or financial condition of the LLLP and FBC, tern as a whole, or the ability of the LLLP and FBC and their respective members and partners to perform their obligation order the transactions contemplated by the Teem Street. FURTHER AFFIANT SAVETH NOT. CMSTOPEER P. CIIh WGS THE FOREGOING INSTRUMENT was awom m and subscribed before me this day Of , 2009, by Christopher P. Cummings, who has proved In me on the basis of satisfactory evidence to be the person who appeared before me. NOTARY PUBLIC, STATE OF CALIFORNIA (Signorine). (Printed Name) (AFFIX NOTARIAL SEAL) (Commission Expiration Date)