Chase Field Letter of Intent
Chase Field Letter of Intent
Chase Field Letter of Intent
Re:
Purchase and Sale of Stadium Facility Known as Chase Field, Phoenix, Arizona
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appraised value. If Buyer declines to do so, the Letter of Intent shall terminate unless Seller
gives notice to Buyer that Seller would like to continue negotiations.
4.
Earnest Money Deposit. An earnest money deposit of $6,000,000 in the form of a
letter of credit payable to Seller and in a form reasonably acceptable to Seller and Escrow Agent
shall be delivered into Escrow (as described in Paragraph 5) within five (5) business days
following execution of the Final Agreement. The letter of credit shall be returned to the Buyer
following Buyers deposit of the full Purchase Price in Escrow.
5.
Opening of Escrow; Closing. An escrow for the Transaction (the Escrow) shall
be established upon execution of the Final Agreement with First American Title Insurance
Company (Escrow Agent). The closing of Buyers purchase of the Property (Closing) shall
occur thirty (30) days following the expiration of the Feasibility Period, but no earlier than the
later to occur of (a) the date that is thirty (30) days after execution of the Final Agreement by
Buyer and Seller, and (b) the satisfaction or waiver of all closing conditions set forth in the Final
Agreement.
Notwithstanding the foregoing, following Buyer's satisfactory review of the
Property and related due diligence materials, the parties may agree to accelerate the Closing to a
mutually agreeable date.
6.
Title. Title to the Property shall be conveyed to Buyer by special warranty deed,
subject only to current, non-delinquent real property taxes and assessments, reservations in
patents and all Permitted Exceptions, as such term shall be defined in the Final Agreement. All
leases and material agreements affecting the Property shall be assigned to and assumed by Buyer
at Closing. The assignment of any lease or material agreement requiring the consent of a third
party to the assignment of such lease or material agreement is subject to obtaining the consent of
such third party.
Seller shall discharge all financial obligations, liens and encumbrances
applicable to the Property on or before Closing, but this obligation shall not encompass
obligations, liens and encumbrances that may attach to Tenant Improvements as defined in the
Real Estate Management Agreement (REMA); to Team Facility Extras as defined in the
Facility Management Agreement (FMA); or to the Plaza Building as defined in the REMA.
There are certain parcels in the assemblage of properties that make up the Facility site for which
the condemnation deeds were not recorded. Therefore, this issue will need to be addressed in
conjunction with this transaction.
7.
Sellers Information. Within ten (10) days after approval of this Letter of Intent
by Seller, Seller shall supply Buyer with the following information with respect to the Property:
a. A current extended coverage preliminary title report, issued by Escrow Agent
(the Title Report), accompanied by legible copies of all documents referred
to in the Title Report. Buyer shall have thirty (30) days following receipt of
the Title Report and an ALTA/NSPS survey of the Property (to be obtained at
Buyers expense) (the Survey) to review the status of title as shown by the
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Title Report and Survey, and provide any objections thereto to Seller. Seller's
option to cure any such objections shall be set forth in the Final Agreement.
b. Copies of all contracts, agreements, development agreements, leases,
documents, reports, studies, plans, drawings, specifications, soil studies,
drainage studies, engineering reports, environmental reports, flood control
studies, utilities information and other documents relating to the Property
which are in Sellers possession or are otherwise in the control of or
reasonably obtainable by Seller, and are required to be assumed by Buyer as
set forth in Section 6 hereof.
8.
Feasibility Period. Buyer shall have until October 31, 2016 (the Feasibility
Period) in which to investigate the Property, review the information provided by Seller pursuant
to Paragraph 7, and review all matters that Buyer deems appropriate and relevant with respect to
its purchase, development and financing of the Property, in Buyers sole and absolute discretion.
Buyer shall have the absolute right to terminate the Transaction prior to expiration of the
Feasibility Period if Buyer is dissatisfied, for any reason whatsoever or for no reason, in its sole
and absolute discretion, with any aspect of the Property or the feasibility of development and
operation of the Property, by giving Seller and Escrow Agent written notice of Buyers election
to terminate the Transaction and, if applicable, the Final Agreement. Upon Buyers termination
of the Final Agreement, Buyer shall receive the immediate return of the letter of credit.
9.
Conditions to Close. Buyers obligation to purchase and Sellers obligation to sell
the Property are each conditioned upon Seller and Buyer securing approval of the Transaction
from AZPB Limited Partnership, a Delaware limited partnership (the Team). Buyer shall be
authorized by Seller to negotiate with the Team regarding the Transaction and any amendments
to existing agreements between Seller and the Team (including any such agreements among
Seller, the Team and one or more third parties) during the Feasibility Period following Buyers
execution of the Access Agreement described in Paragraph 10 below. Additional conditions to
Closing are set forth in paragraphs 3, 22, 23 and 25.
10.
Access. Following the opening of Escrow, Buyer and Buyers representatives,
agents, and contractors shall have physical access rights to inspect the Property and to review all
matters concerning the Property which it deems appropriate with respect to its purchase of the
Property, including but not limited to conducting physical inspections and investigations of the
Property, such as soil tests, engineering feasibility studies and environmental studies, and
preparing an ALTA Survey. Buyer agrees to indemnify, defend, and hold harmless Seller for,
from, and against any and all claims arising out of Buyers exercise of such access rights,
including, without limitation, any claims relating to mechanics or materialmens liens, and to
provide commercial general liability insurance in a minimum amount of $2,000,000, combined
single limit per occurrence, insuring against claims for personal injury, death, and property
damage or destruction in connection with such access. The foregoing indemnity shall not apply
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15.
Title Insurance. At the Closing, Buyer shall receive an ALTA extended coverage
title insurance policy in the amount of the Purchase Price insuring fee simple title to the
Property, subject to current, non-delinquent real property taxes and assessments, Permitted
Exceptions, as such term shall be defined in the Final Agreement; provided, however, that
subject to the exceptions set forth in paragraph 6 above, the Property shall not be subject to any
monetary liens or encumbrances other than the lien for any real property taxes and assessments
not yet due and payable. The cost of the title insurance policy shall be paid by Buyer.
16.
Agreement Negotiations. Following execution of this Letter of Intent, Buyer will
prepare and deliver to Seller a first draft of the Final Agreement. Such draft Final Agreement
shall not be deemed an offer nor will it be binding in any way on either party. At any time,
either party may determine in its sole and absolute discretion that it no longer desires to proceed
with negotiations regarding the Transaction and Final Agreement, in which case such party may
terminate the negotiation, and thereafter neither party shall have any obligation to the other with
respect to the Property or any matters set forth in this Letter of Intent, except that both parties
shall continue to abide by Paragraphs 18 and 19 below and the indemnity provisions herein and
in the Access Agreement.
17.
Exclusive Negotiations. During the period from Sellers execution of this Letter
of Intent until expiration of the Feasibility Period (the Exclusive Period), or any earlier
termination of negotiations by Buyer, Seller shall not entertain offers from other prospective
purchasers of the Property except for the Team, if the Team chooses to do so. Seller may extend
the Exclusive Period from time to time, in its sole and absolute discretion, but is not required to
do so. Upon expiration of the Exclusive Period, if the parties have not entered into a Final
Agreement, neither Seller nor Buyer shall have any obligation to the other with respect to the
Property or any matters set forth in this Letter of Intent, except that both parties shall continue to
abide by Paragraph 19 below and the indemnity provisions herein and in the Access Agreement.
18.
Cost. Buyer and Seller each shall be responsible for and shall bear all of its own
costs and expenses incurred in connection with the negotiations concerning this Letter of Intent,
the Transaction and the Final Agreement including, without limitation, any and all consultants
and attorneys fees and costs.
19.
Disclosure. Except to the extent required by the Arizona Open Meetings Law,
A.R.S. Sections 38-431 through 38-431.09, and the Arizona Public Records Law, A.R.S.
Sections 39-121 through 39-161, or any other applicable law, in connection with due diligence or
in connection with discussions with relevant governmental agencies related to this Transaction,
without the prior written consent of the other party, neither Buyer nor Seller shall directly
disclose or permit the disclosure of the Transaction, except that each party may disclose such
information to their employees, attorneys, accountants, consultants, advisors, lenders or other
agents and representatives who are participating in the negotiation.
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20.
Disclosure of Buyer Ownership Interests. Within seven days of execution of
the Letter of Intent, Buyer shall disclose to Seller its ownership interests and organizational
structure and that of any affiliates to which it contemplates assigning Buyers right to acquire the
Property (Buyer Owners). Buyer must specify if any Buyer Owners also have an ownership
interest in the Team or any Team affiliates.
21.
Disclosure of Affiliations and Agreements with Team.
Within seven days of
execution of this Letter of Intent, Buyer shall disclose any and all affiliations and agreements it
may have with the Team or any Team affiliates. Buyer shall have a continuing duty to
immediately update this information through Closing.
22.
Team Must be a Party to Final Agreement. Under FUA Section 19.3, the Team
has approval rights over this Transaction. Further, in this Letter of Intent, Seller requires certain
Team actions as a condition of Closing, which Team must agree to in the Final Agreement.
Therefore, the Team must be a party to the Final Agreement.
23.
Facility Reserve Account Funds.
Because funds in the Facility Reserve
Accounts are public funds that cannot be spent on a privately owned building, the Final
Agreement must provide that the Team agrees to terminate the Facility Reserve Account Trust
Agreement (FRTA), with remaining funds to be distributed to the District as owner of such funds
pursuant to FMA Sections 17.4.1.2 and 17.4.1.4. As a condition of Closing, Team and Seller
must have completed and executed Exhibit FRTA 4, Certificate of FRTA Termination Date,
directing the Trustee to disburse remaining Facility Reserve Account funds to the Seller.
24.
Chilled Water Distribution System. Buyer acknowledges that a Chilled Water
Distribution System encumbers the Property and Buyer acknowledges that said Chilled Water
Distribution System provides chilled water to the Property as well as to the downtown Phoenix
area. Buyer acknowledges and agrees that any party with documented rights to the Chilled
Water Distribution System, or responsibilities for the Chilled Water Distribution System, shall
have perpetual and unlimited access on a 24/7 basis to use, maintain, improve, repair, or take
whatever steps are necessary to secure operate, maintain and use the Chilled Water Distribution
System for its intended services. The Buyer will undertake no activities or do anything to
interfere with such access or the rights as herein enumerated.
25.
Seller Requirements Re New Agreements Governing the Property. Seller requires
that certain provisions (the Required Provisions) be included in the agreement(s) between
Buyer and Team and Team affiliates governing the operation, maintenance, and repair of the
Property (collectively, the New Use Agreements). Seller approval of the New Use Agreements
between Buyer and Team and Team affiliates as to whether the Required Provisions are
adequately incorporated into the New Use Agreement is a condition of Closing. Seller must be
made a third party beneficiary of the required provisions with enforcement power. These
Required Provisions shall constitute covenants that run with the land, must be recorded, and may
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not be waived, modified or amended without Seller approval. Any notices of default concerning
the Required Provisions must also be given to Seller.
The Required Provisions include:
a. Facility Maintenance Standards and Facility Assessment Studies. Current
FMA Article 10 Facility Manager performance standards (the Performance
Standards) must be maintained, and an independent Facility Assessment
Study (FAS) comparable to the 2013 FAS must be conducted every two years
on the Property.
Because of recent issues with the Team, the FAS that was to be undertaken in
2016 has not proceeded and is overdue. The New Operating Agreement must
provide that a FAS comparable to the 2013 FAS must be undertaken within
three months of Closing and that an independent FAS of comparable quality
shall be performed every two years thereafter. The Property must be operated,
maintained and repaired as necessary to maintain an overall Facility Condition
Index (FCI) of Good as defined in the 2013 FAS. Seller shall have a
continuing full participation role in the FAS process, including participating in
all meetings, receiving all forms of communication related to the FAS,
participating in the FAS contractor selection process, having the right to
communication with the FAS contractor, receiving all reports relating to the
FAS including a complete copy of each FAS, and participating in follow up
communications and all planning regarding FAS recommendations. The New
Use Agreements must require implementation of FAS recommendations
necessary to maintain a Good FCI.
b. Remedy for failure to Maintain Facility. Seller shall have the power to enforce
the Performance Standard and the Good FCI requirement by bringing an
action in the Arizona Superior Court in Maricopa County for specific
performance of these requirements.
c. Covenants to Continuously Play. The Teams covenant not to relocate from
Chase Field for the duration of the current term of the Facility Use
Agreement, through December 2027, must be maintained. Therefore, the
covenants under FUA Section 11.2.1 must be included in any New Use
Agreement.
d. Remedies and Third Party Beneficiary Rights. The remedy provision of FUA
Section 21.3.3 must be maintained in its entirety, and adding that the District
as well as all the cities and towns of Maricopa County are specifically made
third party beneficiaries of the Teams covenants under FUA Section 11.2.1.
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FUA Section 21.3.1, Survival of Rights and Remedies; FUA Section 21.3.4
providing that fees and costs of litigation are to paid by non-prevailing party;
and FUA Section 21.6 providing that rights and remedies are cumulative,
must also be included in the New Use Agreement.
e. Establishment of New Facility Reserve Account. Buyer must establish and
fund a facility reserve account in the amount of $15,835,798 that may only
be accessed for repairs necessary to maintain the Property to a Good FCI and
in accordance with the Performance Standards.
f. Outfitted Concession Space. REMA Section 23.3.3 provides a Facility
Manager representation and warranty that the Facility Manager will ensure
that at all times, including upon the expiration of the FMA, the Facility
includes fully outfitted and equipped concession spaces. The Facility Manager
meets this ongoing responsibility through its negotiated Concessionaire
Agreement, and it is essential to having a fully functioning stadium. The
requirement for fully equipped and functioning concession spaces must be
maintained.
g. Discounted Tickets to Civic Groups. Team must continue to provide
discounted tickets to civic groups as now required under FUA Section 9.1.2
h. Suite for Local Non-Profits. Buyer and Team shall continue to reserve the
current District Suite for use by local non-profits as now done through District
policy and REMA Section 12.6. Seller shall continue its current role of
selecting the community organizations that are invited to use the District
Suite.
i. Arizona Diamondbacks Foundation. Article 5 of the Activities Agreement,
provides that the Team establish a non-profit tax-exempt charity to benefit the
community and that the Stadium District Board of Directors has rights as
specified to appoint members to the charity board. Seller rights under Article
5 must be maintained. Buyer also shall have representation on the charitys
board of directors.
j. District Office Space. Seller shall be provided an office in the stadium
suitable for two persons and two parking spaces in the Administrative Parking
Area for District representatives to monitor the Performance Standard and
participate in FAS related matters.
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k. Community Events. Since opening, the Property has been made available for
certain events aimed at benefitting the local low income community (e.g.,
Hopefest) at no cost other than the incremental costs of putting on the event,
exclusive of overhead and markup. The New Use Agreements must provide
that three such events annually shall be permitted at the Property.
Notwithstanding anything to the contrary contained in this Letter of Intent, unless and
until a Final Agreement has been executed and delivered, neither Seller nor Buyer will be under
any obligation with respect to the Transaction by virtue of this or any other written or oral
expression by either of them or their representatives, except for the matters specifically agreed to
in Paragraphs 17, 18 and 19 of this Letter of Intent. We look forward to working with you
regarding a successful completion of the Transaction.
Very truly yours,
STADIUM REAL ESTATE PARTNERS,
II, LLC
____________________________________
By: Sorina Givelichian
Its: Managing Member
The undersigned hereby accepts the terms and conditions of this Letter of Intent and agrees to
continue negotiations with a view to entering into the Final Agreement as provided herein.
DATED this____ day of August, 2016.
By:
Clint Hickman, Chairman
ATTEST:
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By :
Fran McCarroll,
Maricopa County Stadium District
Official Record Keeper
APPROVED AS TO FORM:
Legal Counsel for the Maricopa County
Stadium District
By:
William J. Sims
Sims Murray, Ltd.
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EXHIBIT A
[Depiction of the Property to be inserted.]
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EXHIBIT B
Access Agreement
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