LETTER WITH COUNTY AND SCORPION BAY HOLDINGS RE UMA.PDF

SCORPION BAY HOLDINGS, LLC
17207 N. Perimeter Drive, Suite 200
Scottsdale, Arizona 85255
September 29, 2015
Mr. R.J. Cardin
Director
MARICOPA COUNTY PARKS AND RECREATION DEPARTMENT
41835 North Castle Hot Springs Road
Unit Operations Center
Morristown, Arizona 85342
Re: Use Management Agreement (Agreement Number C-30-06-012-1-00)
Dear Mr. Cardin:
I am writing on behalf of Scorpion Bay Holdings, LLC ("SBH") in connection
with the Use Management Agreement, dated December 7, 2005, as amended by that certain
Amendment One to Use Management Agreement, dated March 12, 2008 ("First Amendment"),
and the Assignment of Use Management Rights, dated September 23, 2015 ("Assignment")
(collectively, the "UMA").
SBH is excited for the opportunity to work with the County and to improve the
level of recreational services offered to the public at the Scorpion Bay Marina. To that end, SBH
is attempting to obtain a loan ("Loan") from Compass Bank, an Alabama banking corporation
("Compass Bank"), to fund SBH's acquisition of rights under the UMA (including the existing
improvements) and to expand the Marina with additional improvements. Since SBH was not an
original party to the UMA, and in order to avoid the potential for confusion, SBH and Compass
Bank would like to confirm the following understandings under the UMA and the Recreational
Management Agreement between the United State Department of the Interior and Maricopa
County, Arizona, dated June 29, 1990 ("RMA"):
1. Maricopa County, Arizona ("County") agrees that SBH may encumber, by
chattel mortgage, UCC Security Agreement or other security-type instrument, the following to
assure the payment of a promissory note or other obligations of SBH: (i) SBH's interest in the
UMA as "Concessionaire", pursuant to an Assignment of Use Management Agreement in the
form substantially as attached to this letter as Tab 1; and (ii) all furniture, fixtures, equipment
and inventory, and improvements that can be disassembled and removed without damage to the

Mr. R.J. Cardin
September 29, 2015
Page 2
underlying real estate. County hereby consents to the transfer of all of SBH's right, title and
interest in, to and under the UMA to Compass Bank, or an entity owned by, controlled by or
affiliated with Compass Bank (a "Compass Bank Party"), solely for the purpose of Compass
Bank exercising its rights and remedies, including foreclosure, upon a default under Loan, and
not for the purposes under Section 18( C ) of the UMA or any purpose related to management of
the UMA or any other purpose.
2. By this letter, SBH identifies Compass Bank as SBH's lender in
connection with the Loan for all purposes under the UMA. County shall give any notice that
County is required to give to a lender, if any, pursuant to the UMA to Compass Bank at 2850
East Camelback Road, Suite 140, Phoenix, Arizona 85016, Attention: Darren George.
3. Based on SBH's notice to the County that Compass Bank is a lender under
the UMA, Compass Bank is entitled to exercise its rights under: (i) Section 15 of the UMA upon
any bankruptcy filing by SBH; (ii) Section 21(B)(3) of the UMA; and (iii) Sections 27(A)&(B)
and Section 41 of the UMA.
4. Pursuant to its rights under Section 13(b) of the RMA, County shall
submit a request to the United States Bureau of Reclamation ("Reclamation") for written
acknowledgement that (i) Reclamation approved the UMA and (ii) the UMA will survive any
termination of County's management responsibility under Section 14 of the RMA. Compass
Bank has specifically required this request as a condition to making the Loan. SBH will prepare
a draft request for the County's consideration and delivery to Reclamation.
5. County confirms it has not delivered a termination notice to Reclamation
under Section 14(d) of the RNIA.
6. County confirms that: (i) it has not received written notice of a material
violation from Reclamation under Section 14(a) of the RMA; and (ii) to the best of County's
knowledge, the County has not engaged in a material violation of, or is similarly in default
under, the RMA, and the County knows of no event or condition which, with the passage of time
or the giving of notice or both, would constitute a material violation by the County under the
RMA.
7. County confirms that, during the two (2) years prior to the date of this
letter, there have been no "substantial losses in LPRP operations" as that phrase is defined under
Section 14(e) of the RMA, and no "substantial losses in LPRP operations" is ongoing.
8. There are no other agreements in existence between County and Borrower
other than the UMA.
9. The UMA has not been altered, amended or modified, except as set forth
in the First Amendment, and is presently in full force and effect.

Mr. R.J. Cardin
September 29, 2015
Page 3
10. As of this date, to County's actual knowledge, County has fulfilled all of
its duties and obligations under the UMA to be fulfilled as of this date and is not in default under
the terms, conditions, covenants and obligations of the UMA. As of this date, to County's actual
knowledge, SBH has fulfilled all of its duties and obligations under the UMA to be fulfilled as of
this date and there is no default under the terms, conditions, covenants and obligations of the
UMA which relate to or arise from SBH or the Assignment. If the County determines that
SBH's predecessor under the UMA violated or breached any duties and obligations under the
UMA prior to the effective date of the Assignment, such violation or breach will not impact the
County's approval of the Assignment or the validity of the UMA (as to SBH) and the County
will look only to SBH's predecessor under the UMA to recover any applicable damages or
payments arising from such violation or breach.
11. During the term of the Loan, County shall not enter into any agreement
with Borrower to modify the UMA or any attachment thereto without the prior written consent of
Lender, which shall not be unreasonably conditioned, delayed or withheld.
SBH appreciates the opportunity to work with the County and assume
management of operations at the Scorpion Bay Marina. In order to facilitate the Loan and
SBH's transition into management, please indicate your confirmation of the matters outlined,
above, by your signature below. County understands that the matters set forth in this letter are
material to Compass Bank's decision to make (or not make) the Loan and that Compass Bank
can rely on this letter.
Very truly yours,
SCORPION BAY HOLDINGS, LLC
By:
Gary S. Elbogen, Authorized Agent

Mr. R.J. Cardin
September 29, 2015
Page 4
MARICOPA COUNTY PARKS AND RECREATION DEPARTMENT
By:
Name: R.J. Cardin
Title: Director
1782.007 / County Confirrnation Letter (Final)

Mr. R.J. Cardin
Betsy Pregulman, Esq.
September 29, 2015
Page 5
MARICOPA COUNTY BOARD OF SUPERVISORS
Chairman Date
ATTEST
Clerk of the Board Date
Approved as to Form:
Attorney for Maricopa County Date