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November 10,2015

Chris Melvin

Nixon Peabody

437 Madison Avenue
New York, NY 10022

Dear Chris:

Thank you for meeting with us on November 3 to discuss the New Stadium Term Sheet
draft dated September 25, 2015 that was proposed by the City of San Diego and the County of
San Diego.

The proposal contemplates a $1.1 billion football stadium in Mission Valley funded by
$350 million from the public, and $750 million collectively from the Chargers, the League, and
Stadium Builders Licenses Cost overruns would be the responsibility of the Chargers.

The stadium would be owned by the City and County Joint Powers Authority 
which would have oversight and rights of approval over all key stadium decisions including
design, construction, operations, management, and capital improvements. The Chargers would
pay a rent (amount yet to be proposed), would be responsible for operating and maintaining the
stadium to a ??rst class? standard at their expense, and would receive all NFL and non-NFL
revenue (except for civic events that the IPA may host at no cost to it). The Chargers would
enter into a non-relocation agreement coterminous with the lease and would be responsible for
demolition costs after termination of the lease.

As you know, the League would not be the counterparty to the lease. We thought that it
would be bene?cial, however, to provide some observations taking into account League policies,
comparisons to the economic bene?ts of other stadium projects, and issues that we expect NFL
owners would have in evaluating a stadium proposal. Please note that the following is not
intended to be a comprehensive list of comments and observations.

1. The steps needed to achieve project certainty (or to understand that project certainty
is not achievable) and the timing for doing so remain unclear. The term sheet does
not commit the City and County to a specific timetable or to any deadlines at all with
respect to obtaining EIR certification or any required environmental or other public
approvals or permits, including the contemplated public referendum. The risks
associated with timing and/or project completion include litigation related to the EIR,
litigation related to other aspects of the project including the City?s proposed sale of
Lease Revenue Bonds, the inherent uncertainty of a referendum vote, the status of the
City and County ?nances at the time of the referendum, and any potential impacts of
the downtown initiative.

Letter to Chris Melvin
November 10, 2015

Page 2

2. Speci?c proposals on ?nancial terms, currently unde?ned in the term sheet, would be

necessary for a meaningful evaluation of the proposal. Those terms include such
critical economic issues as base rent, facility rent, capital reserve obligations of the
Chargers, and whether there would be ticket and/or parking surcharges (note that such
surcharges would be considered a private contribution). Commitment of on-site
parking Spaces and Club rights and/or protections related to any future development
on stadium parking lots also need to be better understood. How these terms are
addressed, plus any improvements to the proposed ?nancial obligations of the I
Chargers, will be material in affecting the attractiveness of the proposal to the Club
and, by extension, the membership?s evaluation of the prOposal.

. In light of the substantial ?nancial and operational obligations of the Club, including

cost overruns, the following will need to be understood more fully:

a. Extent of JPA oversight and approval rights in design, construction, and
operation.

b. De?nition of ??rst class? standard for various terms, including stadium
management, and the consequences for not meeting the standard.

c. Whether there are requirements or risks that are not currently factored into the
project budget that could lead to additional costs construction standards,
local building requirements).

. Please provide additional ?nancial projections, sources and uses, and advancement of

design, as necessary to allow better insight into potential economics of the project,
including whether the projected $1.1 billion budget would be suf?cient to build the
stadium.

If you have any questions related to these points, please do not hesitate to contact us.

Jay Bauman Chris Hardart