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MDD Resolution No. 358RESOLUTION NO. 358 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE BAYTOWN MUNICIPAL DEVELOPMENT DISTRICT AUTHORIZING THE PRESIDENT TO EXECUTE A HOTEL DEVELOPMENT AGREEMENT WITH GARFIELD PUBLIC/PRIVATE LLC, FOR THE BAYTOWN HOTEL AND CONVENTION CENTER PROJECT; AUTHORIZING PAYMENT OF AN AMOUNT IN ACCORDANCE THEREWITH; MAKING OTHER PROVISIONS RELATED THERETO; AND PROVIDING FOR THE EFFECTIVE DATE THEREOF. ************************************************************************************* BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE BAYTOWN MUNICIPAL DEVELOPMENT DISTRICT: Section 1: That the Board of Directors of the Baytown Municipal Development District hereby finds that the expenditures authorized herein are for improvements, which satisfy the purposes for which the funds can be expended pursuant to Chapter 377 of the Texas Local Government Code and/or Section 3888.102 of the Special District Local Laws Code. All required findings pursuant thereto are hereby declared to have been made and adopted as findings of the Board of Directors. Section 2: That the Board of Directors of the Baytown Municipal Development District hereby authorizes the President to execute the Hotel Development Agreement with Garfield Public/Private LLC, for the Baytown Hotel and Convention Center Project. A copy of said agreement is attached hereto as Exhibit "A," and incorporated herein for all intents and purposes. Section 3: That the Board of Directors of the Baytown Municipal Development District hereby authorizes the payment of an amount in accordance with the agreement referenced in Section 2 hereof. Section 4: This resolution shall take effect immediately fr l and after its passage by the Board of Directors of the Baytown Municipal Development District. INTRODUCED, READ and PASSED by the affirmative vgtq of the Board of Directors of the Baytown Municipal Development District, this the 13th day of Sept;6b4r, 2018. A T: L ICIA BRYSCH, Assistant Secretary APPROVED AS TO FORM: NACIO RAMIREZ, SR., G era Counsel H. DONCARLOS, R: %Karen\Files.City Council\Municipal Development District\Resolutions\2018LSeptember\MDD Resolution - HDA.doc Exhibit "A" HOTEL DEVELOPMENT AGREEMENT by and between BAYTOWN MUNICIPAL DEVELOPMENT DISTRICT a political subdivision of the State of Texas and the City of Baytown, Texas as Owner and GARFIELD PUBLIC PRIVATE LLC, a Texas limited liability company, as Development Manager for the BAYTOWN CONVENTION CENTER HOTEL dated as of September____, 2018 TABLE OF CONTENTS Paae ARTICLEI DEFINITIONS..................................................................................... 1 Section1.1. Definitions.................................................................................. 1 ARTICLEII DEVELOPMENT.................................................................................. 7 Section 2.1. Master Development Agreement and Design -Build Agreement Coordination.................................................................................................7 Section 2.2. Development Functions................................................................ 8 Section 2.3. Acceptance of Engagement........................................................... 9 Section 2.4. Substantial Completion and Final Completion..................................12 Section 2.5. Procurement and Installation of FF&E............................................13 Section2.6. Reports.....................................................................................14 ARTICLE III IMPLEMENTATION............................................................................14 Section 3.1. Approval of Design Development Documents..................................14 Section 3.2. Cooperation of Owner.................................................................15 Section 3.3. Decisions of Owner in Connection with the Project ...........................15 Section 3.4. Approvals of Owner Representative...............................................15 Section 3.5. Emergencies..............................................................................16 ARTICLE IV DEVELOPMENT MANAGER'S COMPENSATION........................................16 Section 4.1. Development Fee........................................................................16 Section 4.2. Expenditures for the Project.........................................................16 ARTICLE V DRAW REQUESTS; ACCOUNTING; BUDGETS; TAXES..............................17 Section 5.1. Draw Requests...........................................................................17 Section 5.2. Working Funds; Bank Accounts.....................................................18 Section 5.3. Accounting and Financial Services.................................................18 ARTICLE VI TERM; TERMINATION........................................................................19 Section6.1. Term........................................................................................19 Section 6.2. Termination by Owner for Cause...................................................19 Section 6.3. Suspension of Hotel by Owner......................................................20 Section 6.4. Remedies of Owner.....................................................................21 Section 6.5. Actions Upon Termination and Expiration.......................................22 Section 6.6. Dispute Resolution......................................................................22 Section 6.7. Limitation on Damages................................................................23 Section 6.8. Governing Law; Venue................................................................23 Section 6.9. Certain Rights............................................................................23 ARTICLE VII COVENANTS OF OWNER; DEFAULT OF OWNER....................................23 Section 7.1. Covenants of Owner....................................................................23 Section 7.2. Default of Owner........................................................................23 ARTICLE VIII INSURANCE AND INDEMNITY..........................................................24 Section8.1. Insurance..................................................................................24 Section 8.2. Waiver of Subrogation.................................................................25 Property Description Section8.3. Indemnity.................................................................................26 Hotel Schedule Section8.4. Notice.......................................................................................28 Approved Parties ARTICLE IX REPRESENTATIONS..........................................................................28 Costs Incurred Section 9.1. Development Manager Representations.........................................28 Governmental Authorizations Section9.2. Survival....................................................................................30 Hotel Budget ARTICLEX LAWS ..............................................................................................30 Exhibit H Section 10.1. Compliance by Development Manager and Owner .......................... 30 Section 10.2. Development Manager's and Owner's Employees ...........................30 ARTICLE XI MISCELLANEOUS.............................................................................30 Section 11.1. Entire Agreement......................................................................30 Section 11.2. No Partnership; Competition.......................................................30 Section11.3. Notice.....................................................................................31 Section11.4. Assignment..............................................................................32 Section 11.5. Force Maieure Event..................................................................32 Section 11.6. Counterparts; Facsimile Execution; Modification ............................32 Section 11.7. Successors and Assigns.............................................................32 Section11.8. Captions..................................................................................32 Section11.9. Waivers...................................................................................32 Section 11.10. Partial Invalidity......................................................................33 Section11.11. Survival.................................................................................33 Section 11.12. Owner Agency........................................................................33 Section 11.13. Limitation on Owner Liability..................................................... 33 Section 11.14. Governmental Function............................................................33 Section 11.15. Conflicts with Master Development Agreement ............................33 Section 11.16. No Restrictions.......................................................................34 Exhibit A Property Description Exhibit B Hotel Schedule Exhibit C Approved Parties Exhibit D Costs Incurred Exhibit E Governmental Authorizations Exhibit F Hotel Budget Exhibit G Development Manager's Compensation Exhibit H FF&E Services Exhibit I Construction Manager Responsibilities HOTEL DEVELOPMENT AGREEMENT THIS HOTEL DEVELOPMENT AGREEMENT made as of June , 2018 (the "Effective Date"), by and between the Baytown Municipal Development District ("Owner"), a political subdivision of the State of Texas and the City of Baytown, Texas, and Garfield Public/Private LLC ("Development Manager"), a Texas limited liability company (each of them individually, a "Party" or collectively, the "Parties"). WITNESSETH WHEREAS, pursuant to the terms and provisions of a Master Development Agreement among the City of Baytown, Texas ("City"), Owner, and Development Manager, Development Manager has been engaged by the City to serve as its development manager for the development of the Project, including the City Facilities, the Parking Facilities Component and the Hotel; and WHEREAS, Development Manager and Owner will enter into the Design -Build Agreement (as defined below) with DPR Construction, a general partnership, for the design, permitting and construction of the Hotel (as defined below); WHEREAS, Owner desires to engage Development Manager as its exclusive independent contractor to supervise the design, development and construction of the Hotel; WHEREAS, Development Manager desires to accept such engagement as an exclusive independent contractor, upon the terms and subject to the conditions hereinafter set forth; and WHEREAS, Owner and Development Manager intend this Agreement to work in concert with the Master Development Agreement (as defined below), and the Design - Build Agreement with respect to the development, design and construction of the Hotel, the integration of the Hotel with the rest of the Project, and the performance by the Development Manager of its obligations under the Master Development Agreement and the Design -Build Agreement. NOW THEREFORE, in consideration of the premises and the mutual covenants and agreements herein contained, and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby mutually agree as follows: ARTICLE I DEFINITIONS Section 1.1. Definitions. The following terms, when used in this Agreement, shall have the respective meanings indicated below. All other capitalized but undefined terms shall have the meaning set forth in the Master Development Agreement. "Affiliate" shall mean a Person or Persons directly or indirectly, through one or more intermediaries, controlling, controlled by or under common control with the Person or Person(s) in question. The term "control," as used in the immediately preceding HOTEL DEVELOPMENT AGREEMENT Page 1 sentence and elsewhere in this Agreement, means, the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of the controlled Person, whether through the ownership of voting securities, equity interests or by contract. "Agreement" shall mean this Development Agreement, together with all amendments hereto, all Exhibits and Schedules attached hereto and all other instruments and documents incorporated herein by reference, as the same may be amended, modified or otherwise revised from time to time. "Architect" shall mean BOKA Powell, LLC, a Texas limited liability company, and its permitted successors and assigns. "Available Moneys" shall have the meaning set forth in the Design -Build Agreement. "Bond Indenture" shall have the meaning set forth in the Design -Build Agreement. "Bond Trustee" shall have the meaning set forth in the Design -Build Agreement. "Cause" shall have the meaning set forth in Section 6.2. "Change Order" shall mean written orders changing the construction, cost or time for performance of any item in connection with the design, development, construction, furnishing, equipping and opening of the Hotel, including, without limitation, "Change Orders" as defined in the Design -Build Agreement. "City" shall have the meaning set forth in the Master Development Agreement. "City Council" shall mean the City Council of the City. "City Facilities" means the public, city -owned meeting and ballroom facilities, common areas and related infrastructure, including furniture, fixtures, and equipment associated with such facilities, as more fully described in the Master Development Agreement. "City Representative" means the City Manager of the City or such other person as may be designated in writing by the City Manager as representative of the City for the Project. "Claim" shall mean any and all actions, suits, claims, penalties, losses, liabilities or damages. "Completion Date" shall mean the date on which Final Completion has been achieved. "Construction Contingency" shall have the meaning set forth in the Design -Build Agreement. "Construction Deadline" shall have the meaning set forth in the Master HOTEL DEVELOPMENT AGREEMENT Page 2 Development Agreement. "Construction Documents" shall have the meaning set forth in Section 3.1.6 of the Design -Build Agreement. "Construction Monitor", if any, shall mean the construction monitor engaged by Owner Representative to monitor the progress of the Project, initially "Construction Phase" shall have the meaning set forth in the Design -Build Agreement. "Construction Phase Compensation" shall have the meaning set forth in Section 7.3 of the Design -Build Agreement. "Cost Overruns" means the amounts by which the actual Hotel Costs shall be in excess of the Hotel Budget. "Contract Documents" shall have the meaning set forth in the Design -Build Agreement and shall include, without limitation, the documents, plans, drawings, specifications, renderings, studies, budgets, forecasts and schedules developed, and to be developed, in connection with the Hotel, with the prior consultation and written approval of Owner. "Dates of Completion" means the dates of Substantial Completion and Final Completion of the Project (which includes the Hotel) set forth in Article 1 of the Design - Build Agreement. "Design -Build Agreement" or "DBA" shall mean that certain Design -Build Agreement and General Conditions among Owner, Development Manager, and the Design -Builder (Where the Basis of Payment is the Cost of Work Plus a Fee with a Guaranteed Maximum Price Option), dated as of the date hereof, as the same may be amended, modified or otherwise restated from time to time. "Design -Builder" shall mean DPR Construction, a general partnership, and its permitted successors and assigns, the entity selected by City, Owner and Development Manager in the Master Development Agreement and engaged as the design/build contractor for the Project. "Design Phase Compensation" shall have the meaning set forth in Section 7.2 of the Design -Build Agreement. "Design Professionals" shall have the meaning set forth in the Master Development Agreement. "Development Budget" shall have the meaning set forth in the Master Development Agreement. "Development Fee" shall mean the fee to be paid by Owner to Development Manager for the work and services to be performed by Development Manager under this Agreement in the development and construction of the Hotel and related facilities as HOTEL DEVELOPMENT AGREEMENT Page 3 described in Article IV. This fee shall be in the amount of $1,339,371.00, plus $174,512.00 for additional services provided by Development Manager with regard to the purchase, storage and installation of FF&E as set forth in the FF&E Agreement. "Development Manager" means Garfield Public/Private LLC, a Texas limited liability company and its permitted successors and assigns. Hotel. "Disputes" shall have the meaning set forth in Section 6.6. "Documents" shall have the meaning set forth in Section 5.3(b). "Final Completion" shall have the meaning given in Section 2.4 hereof. "FF&E" means the furniture, fixtures and equipment purchased to be used in the "FF&E Agreement" shall have the meaning set forth in Section 2.5. "FF&E Schedule" shall have the meaning set forth in Section 2.5. "FF&E Services" shall have the meaning set forth in Section 2.5. "Force Majeure" shall have the meaning given in the Design -Build Agreement. "Ground Lease" shall mean that certain Ground Lease and License Agreement between Owner as tenant and the City as landlord, as described in the Master Development Agreement. "Hotel" shall mean the upscale, multistory, full-service hotel with a minimum of 200 rooms to be developed, designed and constructed hereunder, as the same is more fully described herein and as part of the overall Project as described in the Design -Build Agreement and in the Master Development Agreement. "Hotel Bonds" shall mean any bonds to be issued by Owner for part of or all of the funding of the costs to construct and complete the Hotel in accordance with this Agreement. "Hotel Budget" shall mean the budget for the Hotel Costs, as approved by Owner, and as same may be updated and modified with the prior written approval of Owner Representative in accordance with the terms of this Agreement. It is agreed and understood that the Hotel Budget shall incorporate and shall include the Construction Contingency and shall be subject to the approval of the City pursuant to the terms of the Master Development Agreement. "Hotel Costs" shall mean costs of the design, development, construction, furnishing, equipping, and opening of the Hotel, including hard costs, soft costs, FF&E, OS&E and Pre -Opening Costs. "Hotel Schedule" shall mean the portion of the Project Schedule pertaining to the Hotel, attached as Exhibit "B" hereto, as the same is updated, modified and/or extended HOTEL DEVELOPMENT AGREEMENT Page 4 with prior written approval of the Owner "Hotel Site" shall have the meaning set forth in the Master Development Agreement. "Independent Contractors" shall have the meaning set forth in Section 2.3(m) and, to the extent applicable to the Hotel, shall include the Design Professionals. "Insurance Requirements" shall have the meaning set forth in Section 8.1. "Justified Suspension" shall mean any suspension of the Hotel design, construction or development caused by the reasons set forth in Section 12.4 of the Design -Build Agreement. "Laws" means all procedural and substantive federal, state and local laws, moratoria, initiatives, referenda, ordinances, rules, regulations, standards, orders and other governmental requirements (including those relating to the environment, health and safety, or handicapped persons), applicable to all or any portion of the Project, or the ownership, use, operation, maintenance, sale, lease or other disposition thereof, including all permits, licenses, approvals, entitlements and other governmental authorizations applicable to the ownership, construction, use, operation or maintenance of all or any portion of the Project, including any development agreement, indemnity, surety or performance bond or other similar assurances to governmental agencies in connection with the obtaining of entitlements and other governmental approvals for the Project or the Work. "Master Development Agreement" shall mean that certain Master Development Agreement among the City, Owner, and Development Manager dated as of September 13, 2018, as the same may be further amended, restated or modified from time to time in accordance with the terms of this Agreement. "Operator" means that entity entering into a contract with the Owner with the approval of the City to operate the Hotel. "OS&E" means the Owner's operating supplies and equipment purchased to be used in the Hotel. "Owner" shall have the meaning specified in the introduction to this Agreement. "Owner's Directed Contingency Reserve" shall have the meaning set forth in the Design -Build Agreement. "Owner Representative" shall have the meaning set forth in Section 3.3. "Parking Facilities Component" shall have the meaning set forth in the Design - Build Agreement. "Periodic Report" shall have the meaning set forth in Section 2.6. "Person" shall mean any natural person, firm, corporation, limited liability HOTEL DEVELOPMENT AGREEMENT Page 5 company, partnership, association, trust, governmental unit or other entity. "Pre -Opening Costs" shall mean the cost of performing the Pre -Opening Services as more fully set forth in the Hotel Budget. "Pre -Opening Services" means the Operator's pre -opening services relating to the Hotel. "Project" means the design and construction of a coordinated unified development consisting of three components: (1) the City Facilities, (2) the Hotel, and (3) the Parking Facilities Component. "Project Agreements" shall have the meaning set forth in the Master Development Agreement. "Project Contingency" shall have the meaning set forth in the Design -Build Agreement. "Project Development Phase" shall have the meaning set forth in the Master Development Agreement. "Project Operating Agreement" shall have the meaning set forth in the Master Development Agreement. "Project Schedule" shall mean the schedule prepared by Development Manager and approved by the Owner (and, with respect to the City Facilities and the Parking Facilities Component, the City) for the development of the Project, as the same is updated, modified and/or extended with prior written approval of the Owner (and, with respect to the City Facilities and Parking Facilities Component, the City). "Property" shall have the meaning set forth in the Master Development Agreement and as attached hereto as Exhibit "A". "Purchasing Agent" shall have the meaning set forth in Section 2.5. "Specified Cost Overruns" means the portion of Cost Overruns resulting from (i) Force Majeure, or (ii) delays or changes in approved drawings and specifications or other Contract Documents, the Hotel Budget, or the Hotel Schedule, that are required or caused by Owner which are not a result of the Development Manager's failure to perform its obligations under the Project Agreements or this Agreement in a timely manner. "Substantial Completion" shall have the meaning given in Section 2.4 hereof. "Work" shall mean the construction of the Hotel in substantial accordance with the Contract Documents including the "Work" as described in the Design -Build Agreement. HOTEL DEVELOPMENT AGREEMENT Page 6 ARTICLE II DEVELOPMENT Section 2.1. Master Development Agreement and Design -Build Agreement Coordination. Owner and Development Manager acknowledge that the Master Development Agreement has been entered into by City, Owner, and Development Manager to outline the overall development of the Project and to cause the engagement by the City of the Development Manager as the City's development manager for the Project in general, and the City Facilities and Parking Facilities Component in particular. Owner and Development Manager further acknowledge that Owner, Development Manager and Design -Builder entered into the DBA for the design and construction of the Hotel in coordination with the design and construction of the City Facilities and Parking Facilities Component under a separate design -build agreement with the City. The management and coordination of the Construction Contingency and Project Contingency between and among the various components of the Project are also covered by the DBA. As of the Effective Date hereof, Owner and Development Manager covenant and agree as follows with respect to the Hotel, the Project, the Design -Build Agreement and the Master Development Agreement: (a) Development Manager shall fully and timely comply with all duties and obligations of the Development Manager as set forth in the Master Development Agreement and the Design -Build Agreement. Development Manager shall provide prompt written notice to Owner in the event that Development Manager shall become aware of any default by any party under the Master Development Agreement or by the City under the design -build agreement for the City Facilities and Parking Facilities Component. In addition, Development Manager shall provide to Owner a copy of any notice, letter, demand or other formal communication received by Development Manager from the City or any party on behalf of the City. (b) The Development Manager shall not enter into any amendment, modification, change order or supplement, nor shall the Development Manager give any consent or approval under any Project Agreement (including but not limited to the Design -Build Agreement), the effect of which would modify the Contract Documents, scope of work, quality, insurance, cost estimates, price (including the Hotel guaranteed maximum price), Fees, payment processes and draws, schedules, or date for completion of any portion of the Project, without the prior written consent of Owner (including email consent of Owner). (c) In the event that Development Manager has (i) an obligation to make a recommendation to the City under the Master Development Agreement (for example, a recommendation on the selection of a contractor), or (ii) the right to consent or approve of any matter of a substantive material nature under the Master Development Agreement, Development Manager shall provide Owner written notice of such recommendation, consent or approval. (d) In the event that Development Manager has (i) an obligation to make a recommendation to the Owner under this Agreement (for example, a recommendation on the selection of a contractor), or (ii) the right to consent or HOTEL DEVELOPMENT AGREEMENT Page 7 approve of any matter of a substantive material nature under this Agreement, Development Manager shall provide the City Representative notice of such recommendation, consent or approval. (e) In the event that this Agreement is terminated by Owner or Development Manager as provided herein, then upon request by Owner, Development Manager shall cause any and/or all of Development Manager's right, title and interest with respect to the Project (excluding any bonds of Owner owned by the principals or affiliates of Development Manager) and any agreement relating to same, including without limitation, the Project Agreements, as may be requested by Owner, to be assigned and transferred to Owner or to its designee subject to the Project Agreements. Development Manager shall cooperate with Owner to obtain the consent to such transfer and an estoppel agreement from any third party deemed necessary or desirable, in Owner's sole discretion, including the City with respect to the Project Agreements. (f) In the event of any default by Development Manager under any Project Agreement, whether such event constitutes a default under this Agreement, the Development Manager agrees and authorizes Owner, at Owner's sole option and not as a requirement, to take any and all actions which Owner deems necessary or desirable to cure the default by the Development Manager under such Project Agreement, subject to the Master Development Agreement. (g) Development Manager agrees and acknowledges that the Owner is party to, and beneficiary of, the terms and provisions of the Master Development Agreement and shall have the right to enforce same against the Development Manager. Section 2.2. Development Functions. (a) Owner hereby engages Development Manager as an independent contractor for the development and coordination of the design and construction of the Hotel, and grants to Development Manager, subject to the terms, conditions and limitations hereinafter set forth, the right and authority to negotiate and submit to Owner for approval of any and all contracts necessary to perform all development, design and construction services required for the completion of the Hotel including, without limitation, the functions hereinafter set forth. Development Manager shall perform all developmental services, in a manner at least equal to the standard of care and quality required under the Master Development Agreement and of developmental services rendered by Persons performing the same or similar types of developmental services for upscale hotels in Baytown, Texas area. Development Manager, in accordance with its status as an independent contractor, covenants and agrees that it will conduct itself in a manner that is consistent with such status, that it will neither hold itself out as, nor claim to be, an officer, partner, agent or employee of Owner by reason hereof. (b) Development Manager shall act in good faith and in the best interests of the Owner and shall apply prudent and reasonable business practices in the performance of its duties hereunder and under the Project Agreements, and shall devote sufficient time to cause the completion of the Hotel in accordance HOTEL DEVELOPMENT AGREEMENT Page 8 with the Hotel Schedule and for an amount not to exceed the Hotel Budget (subject to approved costs and extensions of time due to Force Majeure and Specified Cost Overruns) and the balance of the Project in accordance with the Project Schedule and the Development Budget (subject to costs and delays permitted under the Master Development Agreement) not to exceed Available Moneys. (c) In connection with the performance of its duties hereunder, Development Manager shall endeavor to expedite the development, design, construction and completion of the Hotel; to protect Owner against unnecessary costs, expenses and delays; to maintain close communications and coordination with Owner, the City, the Architect, the Design -Builder and all Design Professionals; and to perform all duties and obligations of Development Manager as set forth in the DBA, communicating timely with Owner as required by the Project Agreements. Development Manager shall use its best efforts to employ and engage qualified Persons and shall cause its employees to devote their personal attention to the Project to the extent reasonably necessary to assure that Development Manager's obligations hereunder and under the Master Development Agreement are fulfilled. (d) Notwithstanding anything contained herein to the contrary, Development Manager shall be responsible for the acts and omissions of the Design -Builder and its Design Professionals (including the Architect), contractors and subcontractors, and of the contractors and subcontractors of its Affiliates, and of the employees of independent contractors and subcontractors employed or retained in connection with the development services to be performed under this Agreement to the extent that Development Manager shall have failed to properly select (as distinguished from any selection mandated by Owner) or supervise the Design -Builder and such other contractors, subcontractors and employees thereof in accordance with the terms of this Agreement or the Master Development Agreement. Without in any way limiting the Development Manager's obligations under this Agreement, the Development Manager is not guaranteeing or warranting in any way the performance of the Design -Builder, Design Professionals, any contractors, subcontractors or others employed, engaged or retained by Owner, Development Manager, or Design -Builder, in connection with the Project. Section 2.3. Acceptance of Engagement. Development Manager hereby accepts engagement by Owner and agrees to act as Owner's independent contractor to perform or cause to be performed all of the obligations of the Development Manager under the DBA and this Agreement, including the following design, construction and development services, subject to the standards and obligations set forth in Section 2.2: (a) pursuant to Section 3.1.2(a) of the Master Development Agreement, obtain and provide Owner with a copy of a term sheet or letter executed by the Operator, whereby Operator agrees to manage and operate the Hotel in the event Development Manager or Owner defaults under the documents relating to the Hotel Bonds or the Project Operating Agreement; HOTEL DEVELOPMENT AGREEMENT Page 9 (b) prepare and file the application for the foundation permit for the Hotel; (c) coordinate, supervise, and manage the planning, design, development, construction, completion, furnishing, equipping and opening of the Hotel; (d) timely cause the Design -Builder to arrange for the Architect's preparation of the preliminary and final schedules, estimates, drawings and specifications in accordance with the DBA and Section 3.1.2(c) of the Master Development Agreement and the direction of Owner and submit the same for approval by Owner; (e) oversee all pre -development and entitlement activities, including zoning, permitting, licensing, soil -testing and pre -construction evaluation; (f) negotiate with all applicable utility companies, whether public or private, for the utility service to be provided to the Hotel and for the installation of all utility equipment in connection therewith; (g) review all material prepared and submitted to Owner and/or Development Manager by Design -Builder; (h) review, assist and participate with Owner Representative in the review and approval of the Contract Documents in accordance with the DBA; (i) manage and supervise commencement of the construction of the Hotel on or before the Construction Deadline, and the Substantial Completion and Final Completion of the Project no later than Dates of Completion; (j) consult, communicate with and keep informed the Owner, the Construction Monitor, and the City, as to the progress and status of the Project; (k) file or cause to be filed all required documents for the approval of all governmental authorities having jurisdiction over the Project; endeavor to secure or cause to be secured (with the cooperation of Owner and the City with respect to the Hotel), all necessary governmental permits, licenses, certificates, approvals and authorizations necessary for the completion and operation of the Project, including governmental approval; (1) maintain a continuing relationship and conduct all dealings with the City or any other governmental authorities having jurisdiction over the Hotel including, upon the written request and subject to the direction of Owner, contesting any law, ordinance, or regulation which Owner determines to adversely affect the Hotel or the balance of the Project; (m) coordinate and review the work and activities of the Design -Builder, Design Professionals, subcontractors, engineers, consultants, material suppliers, consultants, attorneys, title companies, escrow companies, and other personnel and independent contractors (collectively, "Independent Contractors") engaged HOTEL DEVELOPMENT AGREEMENT Page 10 for the design, development, construction, furnishing or equipping of the Hotel or any portion of the Hotel including, but not limited to, causing the inspection of the progress of construction at such intervals as reasonably required by Owner or the Construction Monitor; (n) arrange and attend weekly, bi-weekly and/or monthly construction progress meetings (as applicable) with Owner and the Construction Monitor and prepare a report with respect thereto for Owner; (o) review and monitor all construction schedules prepared by the Design -Builder for the Hotel so as to facilitate the orderly process of construction in keeping with the Hotel Schedule, the Project Schedule, and the completion of the Hotel on or before the Dates of Completion, (p) coordinate with the Design -Builder the preparation of all Draw Requests for timely submission in accordance with Article V hereof, (q) coordinate with Owner for the approval of expenditures necessary under the DBA, including those for Design Phase Compensation and Construction Phase Compensation and any expenditure from Construction Contingency and Project Contingency as set forth in the DBA; (r) review, monitor and coordinate the resolution of all contract, insurance and surety claims, except for final resolution or settlement of a claim which is subject to Owner's prior written approval; (s) monitor on a regular and continuing basis the cost of materials, labor, equipment, services and other costs in the planning, development, construction and marketing of the Hotel within the Hotel Budget; (t) retain, or cause to be retained, all inspectors and any other experts appropriate to inspect, test and evaluate the Hotel; (u) coordinate and supervise all phases of the design, development, construction, furnishing, equipping and opening of the Hotel; (v) collect from the Design -Builder and deliver to Owner the originals of all permits, licenses, guaranties, warranties, bills of sale and any other contracts, agreements, or commitments obtained or received by the Design -Builder for the account or benefit of Owner; (w) maintain, or cause to be maintained, appropriate security at the Hotel during all the design, development, construction, furnishing, equipping and opening of the Hotel; (x) maintain separate books, records and accounts with respect to the Hotel, including all invoices and waivers of lien for labor and materials associated with the Hotel; (y) prepare, or cause to be prepared, income and expense proformas; HOTEL DEVELOPMENT AGREEMENT Page 11 (z) coordinate Owner's testing engineers, recommend, based upon consultation with the Design -Builder and engineers, any required special testing, and approve invoices relating thereto; (aa) prepare, or cause to be prepared, Change Orders originated by Owner or those originated by Development Manager in accordance with this Agreement and evaluate and report to Owner as to Change Orders under the DBA; (bb) supervise the Design -Builder's preparation of "punch lists" of construction work requiring completion and correction from time to time and monitor and otherwise take steps necessary to insure that the Design -Builder completes and corrects said items; (cc) collect from the Design -Builder all operating instructions, manuals, field record information, as -built drawings, samples, shop -drawings and product data required to be provided by others to Owner in connection with the Hotel, and deliver the same to Owner; (dd) to the extent necessary, subject to Owner's prior written approval, make all necessary arrangements for and coordinate (i) all necessary surveys and soil and water testing and associated subsurface examination, and (ii) the availability of all necessary utilities; (ee) evaluate the completion of the work done on Owner's behalf in connection with the delivery of certificates of Substantial Completion and of Final Completion for the Construction Phase of the Hotel; and (ff) Coordinate and supervise the obligations of the Operator during the planning, design, development, construction, completion, furnishing, equipping and opening of the Hotel, including the performance of all Operator duties and obligations under the Design Review Agreement with the Operator and the duties and obligations of Operator under the Project Operating Agreement prior to the opening of the Hotel with regard to Operator's pre -opening services and Operator's purchase and installation of operating supplies and equipment ("OS&E"). Section 2.4. Substantial Completion and Final Completion. Development Manager shall engage Design -Builder to cause Substantial Completion and Final Completion of the Construction Phase of the Project to occur on or before their respective Dates of Completion. (a) For purposes of this Agreement, the Hotel will be deemed substantially complete ("Substantial Completion") when the Hotel has met the following requirements: (i) the Hotel has achieved "Substantial Completion" as described in the Design -Build Agreement; (ii) FF&E, and all life safety systems have been installed in substantial accordance with the terms of this Agreement; (iii) the Hotel is sufficient, suitable, and ready to be occupied for its intended purposes as evidenced by a certificate from the Architect and the approval thereof by the Construction Monitor and the Brand, if required; and (iv) a punch list of HOTEL DEVELOPMENT AGREEMENT Page 12 unfinished items has been prepared by Development Manager and approved by Owner. (b) For purposes of this Agreement, the Hotel will be deemed to be complete ("Final Completion") when: (i) all punch list items, as provided by the Development Manager pursuant to Section 2.4(a) hereof, have been completed as required by the Contract Documents under the DBA; (ii) the Hotel has achieved "Final Completion" as described in the Design -Build Agreement; (iii) any remaining FF&E has been installed; (iv) all final permits for the Hotel have been delivered to Owner; (v) all final lien waivers and all bills paid affidavits have been provided to Owner by the Development Manager, the Design -Builder, and the Architect; (vi) all warranties, manuals, as -built drawings, CADD drawings, equipment cuts, operating guides and any other documents necessary for the full operation of the Hotel are delivered to the Owner; and (vii) Development Manager provides a written certification to Owner that all of the foregoing conditions to Final Completion have been satisfied. Section 2.5. Procurement and Installation of FF&E. (a) Development Manager shall provide all necessary and appropriate assistance to Owner for the identification and retention of a purchasing agent (whether at the recommendation of Owner or by formal procurement) for the purchase and installation of all FF&E for the Hotel (a "Purchasing Agent"). The selection of the Purchasing Agent shall be subject to the approval of Owner, and shall be of the highest quality and experienced in equipping upscale hotels in Houston, Texas consistent with the highest industry standards. Development Manager shall coordinate with Owner in the negotiation, execution and delivery of a FF&E Services Agreement with the Purchasing Agent (the "FF&E Agreement"), which shall incorporate, as appropriate, the FF&E Services described in Exhibit "H" attached hereto (the "FF&E Services"). The FF&E Agreement shall not become effective without the written approval of Owner. Upon the execution, delivery and approval of the FF&E Agreement, Development Manager shall supervise and manage the implementation of the FF&E Services by the Purchasing Agent in coordination with the design, construction and permitting of the Hotel. (b) The Development Plan prepared by Development Manager with the approval of City Representative and Owner shall include a prototypical schedule setting forth by category the types of FF&E for the Hotel and the City Facilities (the "FF&E Schedule'. (c) The FF&E shall be those items specified in specifications therefor (hereinafter referred to as "FF&E Specifications") as coordinated by Development Manager and approved by City Representative and Owner. Development Manager shall secure design approvals from Operator, if and as required, and shall direct and monitor the interior designer(s). The FF&E Specifications shall specify the type of FF&E consistent with the design and style of the Hotel and of sufficient quality such that the Hotel and City Facilities will be developed in accordance with the hotel design and operating standards of the Operator and will meet the standards of the Competitive Set, as defined in the Master Development Agreement. HOTEL DEVELOPMENT AGREEMENT Page 13 (d) Development Manager shall work with the Purchasing Agent to cause the FF&E Specifications to be delivered, prepared and submitted to City Representative and Owner for their approval in accordance with Section 3.1 below as promptly as reasonably practicable in coordination with the construction schedule under the Design -Build Agreement. Section 2.6. Reports. (a) During the course of construction of the Hotel, Development Manager shall provide Owner, on or before the fifth (5th) day of each calendar month, a monthly report for the preceding month (the "Periodic Report"). Each Periodic Report shall be in the form approved by Owner, and shall include: (i) a narrative description of the progress of construction in the preceding month, together with progress photos; (ii) a variance report, comparing actual costs, on a category basis, with the costs and expenses set forth in the Hotel Budget, along with a reasonably detailed explanation of all material or significant variances (including the then current cumulative cost savings and the amount by which Hotel Costs exceed the applicable amounts set forth in the Hotel Budget for Work performed and all Work to be performed on a line -item basis) and all changes in any time schedules relating thereto, (iii) any Change Orders for the preceding month with the concomitant price change; (iv) any material observations made by Development Manager in the course of its physical inspections of the Hotel or any knowledge of material events received by Development Manager which transpire within the preceding calendar month; (v) any other material matter pertinent to the Hotel of which Development Manager has knowledge or information; and (vi) a certification that no notice has been received that any portion of the Hotel is in violation of any applicable Law and, to the actual knowledge of Development Manager, the Hotel is not in material violation of any Law, or, if such a notice has been received or if there be such a violation, a description thereof. The variance report described in the foregoing item (ii) may be in the format used in the current Draw Request submitted or to be submitted by Development Manager pursuant to Article V hereof. (b) Development Manager shall timely provide such other reports as may be reasonably requested by Owner and copies of all construction and development related reports that are required to be delivered to the City Representative pursuant to the Master Development Agreement. ARTICLE III IMPLEMENTATION Section 3.1. Approval of Design Development Documents. In accordance with the terms of Section 3.1 of the DBA, the Construction Documents, including all drawings and specifications, and any changes thereto made during the course of this Agreement, shall be subject to the express written approval of Owner, which written approval may be given by email, from Owner. No Work shall commence or be performed until Owner shall have first approved such Design Development Documents or any changes thereto (as applicable) for such Work, such approval not to be unreasonably withheld. Any such Work commenced prior to such approval shall be at Developer's risk for all costs required to remove and redo such Work which does not conform to previously approved Design HOTEL DEVELOPMENT AGREEMENT Page 14 Development Documents. Owner shall have five (5) business days in which to review the 100% complete Construction Documents or portion thereof, and five (5) business days in which to approve any change thereto. In the case of a change, all such changes shall be clearly identified by clouding changes in drawings and highlighting changes in text. Notwithstanding anything herein to the contrary, the failure of Owner to approve of the Construction Documents or any changes thereto shall not be construed as a deemed approval thereof. Section 3.2. Cooperation of Owner. Within five (5) business days after Owner's receipt of Development Manager's written request for any approval, authorization, consent or action by Owner (including any matter with respect to the Master Development Agreement) and all information material and reasonably necessary to Owner's decision on such request, Owner shall approve or disapprove of such request in writing, in Owner's sole and absolute discretion, and, if disapproved, provide written comments or corrections to Development Manager for re -submittal for Owner's approval within five (5) business days. Except with respect to the approval of the Construction Documents as set forth in Section 3.1 hereof, if Owner has not responded to the request in writing within the designated five (5) business day period, Development Manager shall notify Owner of Owner's failure to respond and resubmit the request. Following any disapproval by Owner of a specific portion or portions of such request, Development Manager shall re -submit a revised request(s) to address the objections of Owner in accordance with the process set forth above. Development Manager shall coordinate the review and comment process for such request and shall provide its advice and counsel to Owner concerning questions raised and comments made during the review process. Section 3.3. Decisions of Owner in Connection with the Proiect. The decisions of Owner in connection with the Project shall be made through, and communicated to, Development Manager by Ron Bottoms or Jose Pastrana, each of whom is hereby designated by Owner to act as Owner's authorized representative for the purposes set forth in this Agreement (each an "Owner Representative"). Development Manager shall be entitled to rely conclusively on written instructions received from Owner Representative as to any and all acts performed under this Agreement by Development Manager or any members of its organization. Section 3.4. Approvals of Owner Representative. (a) Development Manager has agreed to undertake the design, development, construction, furnishing, equipping, and opening of the Hotel in accordance with the terms of this Agreement in conformity with the Contract Documents and at a cost not to exceed the Hotel Budget. No Cost Overruns shall be permitted, nor shall any other actions be taken or obligation incurred for or on behalf of Owner with respect to the Hotel except in accordance with the terms of this Agreement. No modification of the Contract Documents, the FF&E Agreement, the Hotel Budget, Construction Contingency, Project Contingency, Design Phase Compensation, Construction Phase Compensation, the Hotel Schedule, the Project Schedule, or the Dates of Completion shall be permitted without the prior written consent of Owner. Any such modifications shall be evidenced by a written Change Order, which may be submitted by Development Manager or Owner, and shall not be effective until approved in writing by Owner, in its sole and absolute discretion, subject, however, to such Change Orders as HOTEL DEVELOPMENT AGREEMENT Page 15 may be necessary and appropriate for Specified Cost Overruns, or in accordance with Section 3.5 or Section 11.5 hereof. (b) Without the prior written consent of Owner, Development Manager shall not submit for approval, or approve of any Change Order, whether originated by City or Development Manager under the Master Development Agreement which (i) proposes to materially modify (A) the overall appearance, design or layout of the Project, (B) any roadways or rights of way to, from or affecting the Hotel, (C) the number of parking spaces in the Parking Facility, or (D) the cost, budget, or schedule for completion of the Project; (ii) would impact the cost, design, schedule, or timely completion of the Hotel, or which would otherwise necessitate a Change Order under this Agreement; or (iii) would materially impact value, quality, performance or structural and operational integrity of the Hotel or other portion of the Project. Section 3.5. Emergencies. In any emergency during which the Development Manager believes, in its reasonable, good faith judgment, that action is necessary to mitigate or prevent threatened damage, injury or loss, Development Manager shall be entitled to make or authorize expenditures or changes in connection therewith, without the prior approval of Owner. In such a case, Development Manager shall use its best efforts to make telephonic contact with Owner and Construction Monitor prior to taking any actions under this Section 3.5 and shall continue to do so thereafter so as to keep Owner Representative and Construction Monitor reasonably informed of any such actions. ARTICLE IV DEVELOPMENT MANAGER'S COMPENSATION Section 4.1. Development Fee. For and in consideration of the construction and development services rendered or to be rendered by Development Manager hereunder, Owner shall, to the extent there are Available Moneys and subject to and in accordance with the terms and provisions of this Agreement, pay to Development Manager the Development Fee according to the schedule attached hereto as Exhibit "G". Section 4.2. Expenditures for the Project. In connection with the Project, Development Manager shall at all times employ an adequate number of qualified Persons to perform the construction and developmental services necessary to complete the Hotel and the balance, of the Project and devote substantial time to the Hotel and the balance of the Project. Development Manager shall at all times have a dedicated full time construction supervisor/project manager for the Project that is approved by the Owner who is available to consult with and report to Owner. The cost for the construction supervisor/project manager shall be included as part of the Development Budget (but not included as part of the Development Fee). Any replacement construction supervisor/project manager for the Project shall require the approval of Owner. The construction manager shall be hired by Development Manager under a separate contract as approved by Owner, which contract shall include the Construction Manager Responsibilities as set forth in Exhibit "I". HOTEL DEVELOPMENT AGREEMENT Page 16 ARTICLE V DRAW REQUESTS; ACCOUNTING; BUDGETS; TAXES Section 5.1. Draw Reauests. (a) On a monthly basis during the term of this Agreement, Development Manager shall coordinate with the Design -Builder to submit Draw Requests for the payment of all Hotel Costs consistent with Article 10 of the Design -Build Agreement. All Draw Requests shall be in the form approved by Owner, which itemizes such amounts requested for payment consistent with the Hotel Budget, and identifying each person or entity for whom Development Manager is requesting payment and the amount thereof. Owner shall approve a Draw Request or provide specified objections or requests for clarification within five (5) business days of receipt of a complete Draw Request. (b) Upon approval of a Draw Request by Owner and the Construction Monitor, such Draw Request, (i) prior to the issuance of the Hotel Bonds, shall be disbursed by the City to the extent funds are available and authorized to be disbursed on behalf of Owner in accordance with the terms of the Master Development Agreement as it relates to Hotel D&D Costs; and (ii) from and after the issuance of the Hotel Bonds, shall be submitted to and disbursed by the Bond Trustee with the consent of the Owner and subject to and in accordance with the terms of the Bond Indenture or a separate construction disbursement agreement between the Bond Trustee and a disbursement agent, as the case may be. Subject of the terms and conditions of the Bond Indenture, all Draw Requests will be disbursed on or before three (3) business days prior to the requested disbursement date (which requested disbursement date may be modified to account for additional time to address objections or clarifications submitted by the Owner or the Construction Monitor), and to the extent directed by Owner, disbursements shall be made directly to the named payee(s) (c) Draw Requests for payment for design or construction services performed by the Design -Builder shall be accompanied by the application for payment submitted to the Development Manager by the Design -Builder for such construction services, with such supporting documentation as required by the Owner. Draw Requests that request payment for construction services performed by other Contractors shall be accompanied by an application for payment in a form approved by the Owner and shall request payment consistent with such Contractor's right to payment under the terms of such respective separate construction contract. Except with the consent of Owner, the Draw Request shall not seek payment for retainage Development Manager is entitled to withhold from the Design -Builder or other Contractor under the respective contract. The structures constituting the components of the Project will be connected with one another as part of an integral whole. Accordingly, the Architect, and many of the subcontractors, will be providing services on more than one portion of the Project and in certain situations a subcontract with a subcontractor may include work on more than one component of the Project. In HOTEL DEVELOPMENT AGREEMENT Page 17 these situations Development Manager shall cause the Design -Builder to allocate the cost of any such subcontract to accurately reflect the cost of the services performed for that portion of the Project. Development Manager shall provide (or cause the Design -Builder to provide) Owner with the reasons and justifications of each subcontract allocation with the applicable application for payment submitted by the Design -Builder pursuant to the DBA. (d) Owner and its agents and representatives shall have the right, but not the obligation, to inspect the status of completion of the Hotel in accordance with the Contract Documents, and particularly the drawings and specifications as a condition to its approval of any Draw Request. Development Manager shall cooperate with Owner and its agents and representatives in any such inspection. Section 5.2. Working Funds; Bank Accounts. All amounts paid to Development Manager for the payment of Hotel Costs pursuant to a Draw Request shall be used for the specific purposes specified in such Draw Request, and, as appropriate, shall be kept separate and shall not be commingled with any other funds of or available to Development Manager or any other Person. Section 5.3. Accountina and Financial Services. (a) Development Manager shall perform or cause to be performed those accounting and financial services as Owner may require to ensure Owner compliance with its obligations under the provisions of any financing documents and any other reporting obligations relating to the Hotel which Owner may have to the City or to investors and/or affiliates or any other similar parties. (b) Development Manager shall keep proper books and records of all transactions hereunder with respect to the development and construction of the Hotel as reasonably required by Owner to insure compliance with any financing documents and any other reporting obligations Owner may have to investors and/or affiliates. Development Manager shall keep proper books and records (separate from the books and records related to the Hotel) of all transactions with respect to the development and construction of the City Facilities and the Parking Facilities Component as reasonably required by Owner to insure compliance with the Master Development Agreement or any financing documents and any other reporting obligations Owner may have to investors and/or affiliates. Development Manager shall cooperate with Owner's accountants in any inspection and audit of the documents relating to the construction and development of the Hotel or the City Facilities or the Parking Facilities Component (collectively, the "Documents") and the preparation of financial statements and tax returns. (c) Owner and its representative, including Owner's accountants, shall have the right, upon notice to Development Manager, to inspect, copy and audit the Documents during Development Manager's business hours for the term of this Agreement and for the applicable retention period required by any applicable law, ordinance or regulation or by any governmental authority having jurisdiction over the Project. Originals of the Documents shall be kept for such purposes at Development Manager's address stated herein during the term of this Agreement. HOTEL DEVELOPMENT AGREEMENT Page 18 ARTICLE VI TERM; TERMINATION Section 6.1. Term. Unless previously terminated in accordance with the terms hereof, this Agreement shall commence as of the date hereof and shall continue until the Final Completion of the Hotel, including the installation of FF&E and OS&E sufficient for the Hotel to open for business to the satisfaction of Owner and in accordance with the requirements of the Operator. The Hotel Owner may terminate this agreement with or without cause upon written notice to the Development Manager. Section 6.2. Termination by Owner for Cause. Upon the occurrence of any one of the following events (such events shall constitute "Cause"), Owner shall have the right, in addition to other rights available to it under applicable law, to terminate this Agreement immediately upon written notice to Development Manager given at any time after the expiration of any applicable grace period with respect to any such event: (a) if Development Manager commits fraud, material misrepresentation, breach of fiduciary duty, an action involving negligence (provided such negligence is not cured within a grace period of thirty (30) days as set forth in Section 6.2(b)), reckless disregard, willful misconduct or is indicted for a felony; or (b) if Development Manager shall fail to observe, perform, or comply with any term, covenant, agreement or condition of this Agreement, the Project Agreements, or the Contract Documents, which is to be observed, performed or complied with by Development Manager hereunder and such failure shall continue uncured (i) with respect to a monetary payment, for twenty (20) business days after notice thereof from Owner, and (ii) with respect to other than a monetary payment, thirty (30) days after notice thereof from Owner; provided, that with respect to curing other than a failure with respect to a monetary payment, if such failure is not susceptible of being cured within said thirty (30) business day period, such failure shall not constitute a basis for termination provided that Development Manager shall have commenced to cure within such thirty (30) business day period and thereafter shall complete the same with reasonable diligence. Notwithstanding the foregoing, in no event shall Development Manager be entitled to additional time to cure a default if the failure to cure the default within the initial thirty (30) business day cure period could have a material adverse effect on the Hotel, the City Facilities or Parking Facilities Component; or (c) subject to any applicable cure or grace period contained therein, the occurrence of any default or event of default by Design -Builder under the Design - Build Agreement, which default or event of default would permit Developer Manager or Owner to terminate the Design -Build Agreement; provided, however, that the foregoing shall not be Cause hereunder if Development Manager timely enforces its rights and remedies under the Design -Build Agreement, and such enforcement results in a reasonably adequate cure of the default or event of default under the Design -Build Agreement (as determined by Owner in its sole and absolute discretion) within 30 days of the occurrence of the default or event of default (after expiration of any applicable cure or grace period thereunder); or HOTEL DEVELOPMENT AGREEMENT Page 19 (d) institution by Development Manager of proceedings of any nature under any laws, whether now existing or subsequently enacted or amended, for the relief of debtors wherein Development Manager is seeking relief as a debtor; or (e) a general assignment by Development Manager for the benefit of creditors; or (f) the institution by Development Manager of a case or other proceeding under any section or chapter of the Federal Bankruptcy Code as now existing or hereafter amended or effective; or (g) the institution against Development Manager of a case or other proceeding under any section or chapter of the Federal Bankruptcy Code as not existing or hereafter amended or effective, which proceeding is not dismissed, stayed or discharged within a period of ninety (90) calendar days after the filing thereof or if stayed, which stay is thereafter lifted without a contemporaneous discharge or dismissal of such proceeding; or (h) a proposed plan of arrangement is adopted or other action by Development Manager is taken as a result of a general meeting of the creditors of a Development Manager; or (i) the appointment of a receiver, custodian, trustee or like officer, to take possession of assets of Development Manager if the pendency of said receivership would reasonably tend to have a materially adverse effect upon the performance by Development Manager of its obligations under this Agreement or the Master Development Agreement, which receivership remains undischarged for a period of thirty (30) business days from the date of its imposition; or (j) admission by Development Manager in writing of its inability to pay its debts as they mature; (k) attachment, execution or other judicial seizure of all or any substantial part of the assets of Development Manager, and remaining undismissed or undischarged for a period of thirty (30) business days after the levy thereof, if the occurrence of such attachment, execution or other judicial seizure would reasonably tend to have a materially adverse effect upon the performance by Development Manager of its obligations under this Agreement or the Master Development Agreement; or (1) failure by Owner to issue the Hotel Bonds due to a Permitted Non- Funding Event (as defined in the Master Development Agreement) or by City to issue debt obligations for the City Contribution (as defined in the Master Development Agreement). Section 6.3. Suspension of Hotel by Owner. If Owner suspends or stops design, construction or development of the Hotel for any reason or if City suspends or stops design, construction or development of the City Facilities or the Parking Facilities Component for any reason, Owner may direct Development Manager to stop HOTEL DEVELOPMENT AGREEMENT Page 20 Development Manager's services under this Agreement by giving Development Manager written notice, which shall specify the estimated period during which the services are to be stopped. Development Manager shall resume services upon the date specified in such notice, or upon such other date as Owner may thereafter specify. Stoppage of services under this Section shall not give rise to any claim against Owner, except that the liability of Owner to Development Manager shall be limited to the extent of any Available Moneys, for all fees accrued and unpaid, or reimbursable expenses incurred but unpaid, as of the effective date of such suspension. Except as provided below, Development Manager shall not be entitled to any fees hereunder for the period during which Development Manager's services are suspended. If such suspension continues for longer than two hundred seventy (270) days for any reason other than a Justified Suspension or a breach or default by the Development Manager under this Agreement or the Project Agreements, then at any time thereafter, the Development Manager shall have the right to terminate this Agreement by written notice to Owner; provided, however, such right to terminate shall expire, if not previously exercised, upon written notice to Development Manager from Owner directing Development Manager to re -commence services under this Agreement; provided, however, Development Manager's right to terminate under this Section shall, if requested by Owner be subject to and conditioned upon the Development Manager obtaining the consent and approval of the City to the substitution of the "Development Manager" under the Master Development Agreement. Following the suspension of any portion of the Hotel design, construction or development by reason of a Justified Suspension, Owner shall work with the Development Manager to adjust the Hotel Budget, the Development Budget, Hotel Schedule and/or the Project Schedule to reflect any changes in costs or timing directly or indirectly as a result of such suspension. Section 6.4. Remedies of Owner. (a) If Owner shall elect to terminate this Agreement prior to the Construction Deadline, then Owner shall, at the time of such termination, pay to the City the Hotel D&D Costs and pay Development Manager a reimbursement of those costs incurred and payable by Development Manager in accordance with the Hotel Budget, as of the date of such termination, and the portion of the Development Fee earned in accordance with Section 4.1, whereupon, subject to Section 6.5, Owner and Development Manager shall have no further rights, duties, liabilities or obligations whatsoever under this Agreement (b) If this Agreement shall terminate in accordance with its terms or if Owner shall elect to terminate this Agreement after the Construction Deadline, then Owner shall, within thirty (30) business days after such termination, pay to the City the Hotel D&D Costs and pay Development Manager all amounts due hereunder pursuant to the terms of this Agreement (including, without limitation, any accrued but unpaid portions of the Development Fee including any Accrued Development Fee that had been earned and held by Owner pursuant to Section 4.1 prior to the date of the termination), prorated as of the date of termination, whereupon, subject to Section 6.5, Owner and Development Manager shall have no further rights, duties, liabilities or obligations whatsoever under this Agreement. (c) In the event that Development Manager is terminated for Cause (Section 6.2) after the Construction Deadline in accordance with this Agreement, HOTEL DEVELOPMENT AGREEMENT Page 21 then any Development Fees payable for the months prior to the date of such termination, less any costs or fees that in any way relate to such Cause, shall be paid within thirty (30) business days after such termination. Additionally, Owner shall pay Hotel D&D Costs to the City within such thirty (30) day period. In the event of any such termination, Development Manager will have no right to receive any additional portion of the Development Fee, whereupon, subject to Section 6.5, Owner and Development Manager shall have no further rights, duties, liabilities or obligations whatsoever under this Agreement. Section 6.5. Actions Upon Termination and Expiration. (a) Within thirty (30) calendar days after expiration or earlier termination of this Agreement, Development Manager shall promptly account for and deliver to Owner any monies due Owner under this Agreement and shall deliver to Owner or to such other Person as Owner shall designate in writing, all materials, supplies, equipment, keys, contracts, Documents and other books and records (including bank and financial records maintained by Development Manager pursuant to Section 5.1 and Section 5.2) pertaining to this Agreement or to the development, design or construction of the Hotel, the City Facilities or the Parking Facilities Component, whether in possession of Development Manager or a Person engaged or employed by Development Manager. Development Manager shall also furnish all such information, take all such other actions and shall cooperate with Owner as Owner shall reasonably require in order to effectuate an orderly and systematic termination of Development Manager's duties and activities. (b) To the extent of Available Moneys, Owner will reimburse Development Manager for contractual obligations and expenses due to purchase orders placed and commitments properly made with respect to the Hotel in accordance with the provisions of this Agreement; provided, that, unless Owner in writing consented otherwise, all contracts made by Development Manager in connection with the Work to be performed hereunder shall provide either that Owner shall have the right to terminate the same if this Agreement is terminated, or that such contract is terminable at will. Development Manager shall promptly assign to Owner all of Development Manager's rights in those purchase orders, commitments and contracts if so requested in writing by Owner. (c) As provided above, Development Manager shall take such actions as Owner may reasonably require to obtain the consent of the City to, and effect the termination of the Development Manager and the substitution of a replacement "Development Manager" under the Master Development Agreement with a third party appointee of Owner. Development Manager shall also reasonably cooperate with Owner and execute and deliver such additional documents and instruments and other materials as the Owner may reasonably require in connection with such termination. Section 6.6. Dispute Resolution. Any dispute, claim or controversy arising out of or relating to this Agreement or the breach, termination, enforcement, interpretation or validity thereof, including the determination of the scope or applicability of this HOTEL DEVELOPMENT AGREEMENT Page 22 Section 6.6, shall be subject to the terms, conditions and procedures as set forth in Sections 13.1, 13.5, 13.6 and 13.7 of the Design -Build Agreement. Section 6.7. Limitation on Damages. In no event shall any party have any liability under this Agreement for exemplary or consequential damages. Section 6.8. Governing Law; Venue. This Agreement shall be governed by, interpreted under, and construed and enforced in accordance with the laws of the State, without regard to conflicts of law principles. Each party agrees that any suit, action or proceeding brought by such party against the other in connection with or arising from this Agreement or the Note shall be brought against any of the parties only in federal or state court located in the Harris County, Texas, and each of the parties hereto hereby consents to the exclusive jurisdiction of such courts in any such judicial action and waives any objection to venue laid therein. Section 6.9. Certain Rights. In the event Owner were to elect to negotiate the terms and conditions of a potential development of the Property in accordance with Section 11.1.5 of the Master Development Agreement, Owner covenants and agrees to negotiate with Development Manager in good faith a new Hotel development agreement on terms and conditions substantially similar to this Agreement. ARTICLE VII COVENANTS OF OWNER; DEFAULT OF OWNER Section 7.1. Covenants of Owner. The Owner covenants and agrees with Development Manager as follows: (i) Owner shall reasonably cooperate with Development Manager in Development Manager's performances of the construction and developmental services set forth in this Agreement; (ii) Owner shall deliver to Development Manager copies of all notices and other material information relating to the Hotel or any other portion of the Project promptly after the receipt thereof; (iii) subject to the provisions of Article VI, Owner shall pay the Development Fee to Development Manager at the times and in the manner specified in Article IV; and (iv) Owner shall duly comply with and perform in all material respects the terms and provisions on its part to be complied with or to be performed under this Agreement. Section 7.2. Default of Owner. If Owner fails to comply in any material respect with any of the terms and provisions on its part to be complied with or to be performed under this Agreement, and such failure continues uncured (1) with respect to a monetary payment, for ten (10) business days after notice thereof from Development Manager, and (ii) with respect to other than a monetary payment, thirty (30) business days after notice thereof from Development Manager, provided that with respect to curing other than a failure to make a monetary payment, if such failure is reasonably curable but is not susceptible to being cured within said thirty (30) business day period, such failure shall not constitute a basis for relief pursuant to this Section provided that Owner shall have commenced to cure within said thirty (30) business day period and thereafter shall complete the same with reasonable diligence, then in addition to all other rights and remedies available to Development Manager under law or in equity, Development Manager shall have the right to terminate this Agreement by giving thirty (30) business days' notice thereof to Owner, in which event (i) Owner shall immediately pay to Development Manager in cash or by check the accrued but unpaid portion of the HOTEL DEVELOPMENT AGREEMENT Page 23 Development Fee, and (ii) subject to Section 6.8, Owner and Development Manager shall thereupon be released of any further obligations or liabilities accruing hereunder and this Agreement shall terminate and have no further force or effect except with respect to obligations accruing hereunder prior to said termination. ARTICLE VIII INSURANCE AND INDEMNITY Section 8.1. Insurance. (a) During the term of this Agreement, Development Manager shall maintain or cause to be maintained in full force and effect the types and amounts of insurance as required under the Master Development Agreement and the Design -Build Agreement (the "Insurance Reouirements"). To the extent of a conflict in policy type, policy limits or coverage, the Development Manager shall secure or cause others to secure the policy with the higher policy limit and most comprehensive coverage. To the extent not obtained by Development Manager, Owner shall have the right, but not the obligation, as a Hotel Cost, to obtain and maintain all of the insurance required to satisfy the Insurance Requirements and each such policy shall comply with the provisions of this Section 8.1. The cost of the Insurance Requirements shall be included in the Hotel Budget as a separate line item and shall not be a part of the Development Fee. (b) Development Manager shall require the Design -Builder, the Architect, and each of the subcontractors retained by the Design -Builder, as applicable, to satisfy the insurance requirements set forth in Article 11 of the Design -Build Agreement, unless otherwise agreed in the Design -Build Agreement, prior to commencing any portion of work on the Hotel. Development Manager shall maintain certificates of insurance evidencing such insurance for the Design - Builder, Architect and each subcontractor. (c) In accordance with Section 11.5 of the Design -Build Agreement, Development Manager shall cause Builder's Risk Insurance to be maintained during all phases of construction of the Hotel, insuring the interest of Owner and the City, the Design -Builder, and subcontractors and other persons or interests as Owner or the City may designate against all risks of direct physical loss of or damage to the Hotel. Following completion of the Hotel, Owner shall obtain or cause to be obtained a policy of Commercial Property Insurance insuring the interest of the Owner and the City and other persons or interests as they may designate against all risks of direct physical loss or damage to the Project, as may be applicable. (d) Development Manager shall cause the Design -Builder to cause the Architect to obtain and maintain professional errors and omissions liability insurance (including contractual liability) and prior acts coverage with policy limits in an amount not less than $5,000,000 per claim and in the aggregate and with a deductible or self-insured retention of not more than $500,000. Such professional errors and omissions liability insurance shall be renewed so as to provide continuous coverage during the Term of this Agreement and for a period of at least two (2) years after completion of the services being rendered for acts and HOTEL DEVELOPMENT AGREEMENT Page 24 omissions during the provision of the services. In addition, Development Manager shall cause Design-Builder to obtain and maintain professional errors and omissions liability insurance with policy limits in an amount not less than $5,000,000 per claim and in the aggregate and with a deductible or self-insured retention of not more than $500,000. Such professional errors and omissions liability insurance shall be renewed so as to provide continuous coverage during the Term of this Agreement and for a period of at least two (2) years after completion of the services being rendered for acts and omissions during the provision of the services. (e) All of the insurance policies procured pursuant to the Insurance Requirements shall (i) name Owner and the City, their respective officers, directors, partners, members and employees as additional insureds on all policies except Professional Liability and Worker's Compensation, using additional insured endorsements approved by Owner and the City, (ii) be primary and non- contributory to any insurance or self-insurance maintained by the additional insureds, (iii) provide that each additional insured shall be afforded thirty (30) days' prior written notice by certified mail in the event of cancellation, non- renewal or reduction in coverage and (iv) not contain any exclusionary language or limitations that are applicable to any additional insured that are not applicable to the named insured. (f) All insurance required to be obtained and maintained hereunder shall be from insurers authorized to do business in the State of Texas having a "Best's Rating" of A-VIII or better, as set forth in the most current edition of Best's Key Rating Guide available on the date of such determination. (g) Insurance certificates and insurance policies evidencing the insurance required pursuant hereto have been obtained and are in full force and effect shall be delivered to Owner and the City promptly after same is obtained. (h) The inclusions, coverage and limits set forth by Owner in the Insurance Requirements are minimum inclusions, coverage and limits. The required minimum policy limits will not be construed as a limitation of rights under any insurance policy issued with higher limits, and no policy will be endorsed to include such a limitation. (i) All of the insurance coverage provided for herein shall be on forms and in amounts approved by Owner and shall be otherwise subject to Owner's prior approval. Owner may elect, at Owner's sole cost and expense, to insure Development Manager under policies carried by Owner. Section 8.2. Waiver of Subrogation. Development Manager will require its carrier of property insurance to waive any right of subrogation against Owner. Development Manager waives all rights against Owner for damages caused by risks covered by property insurance required to be procured under Section 11.5 of the DBA to the extent of actual recovery of any insurance proceeds of such insurance.. HOTEL DEVELOPMENT AGREEMENT Page 25 Section 8.3. Indemnity. (a) DEVELOPMENT MANAGER HEREBY INDEMNIFIES AND AGREES TO DEFEND AND HOLD OWNER, OWNER REPRESENTATIVE, AND THE CITY AND THEIR RESPECTIVE OFFICERS, DIRECTORS, MEMBERS, AGENTS AND EMPLOYEES, HARMLESS AND FROM AND AGAINST ANY AND ALL LOSS, COST, LIABILITY, CLAIM, DEMAND, DAMAGE OR EXPENSE (INCLUDING, WITHOUT LIMITATION, REASONABLE ATTORNEYS, FEES AND LITIGATION EXPENSES) WHICH ANY OF THE FOREGOING INDEMNITEES MAY INCUR OR SUSTAIN OR WHICH MAY BE CLAIMED OR ASSERTED AGAINST ANY OF THE FOREGOING ON ACCOUNT OF, IN CONNECTION WITH, OR ARISING FROM INJURIES, DEATH, LOSS OR DAMAGE TO PERSONS OR PROPERTY (INCLUDING, WITHOUT LIMITATION, THE HOTEL) INCLUDING ANY CLAIM FOR PAYMENT OR DEMAND FOR PAYMENT CAUSED BY OR IN ANY WAY WHATSOEVER ARISING OUT OF, OR RESULTING FROM (I) ANY NEGLIGENCE ON THE PART OF DEVELOPMENT MANAGER OR ITS MEMBERS, OFFICERS, DIRECTORS, CONTRACTORS, AGENTS, AND EMPLOYEES ARISING OUT OF OR RESULTING FROM THIS AGREEMENT OR ANY OF THE OTHER AGREEMENTS CONTEMPLATED TO BE ENTERED INTO WITH RESPECT TO THE PROJECT AS DESCRIBED HEREIN; (II) ANY FF&E FOR HOTEL THAT DEVELOPMENT MANAGER HAS PURCHASED IN THE NAME OF OWNER THAT DOES NOT SUBSTANTIALLY CONFORM WITH THE FF&E SPECIFICATIONS DUE TO THE NEGLIGENCE, CARELESSNESS OR WILLFUL MISCONDUCT OF DEVELOPMENT MANAGER (III) ANY MATERIAL BREACH OF ANY REPRESENTATION OR WARRANTY OF DEVELOPMENT MANAGER HEREIN CONTAINED, (IV) ANY CLAIM ARISING OUT OF EMPLOYMENT, NON -EMPLOYMENT OR DISCHARGE OF DEVELOPMENT MANAGER EMPLOYEES OR AGENTS, OR (V) ANY LOSS, COST, LIABILITY, CLAIM, DEMAND, DAMAGE OR EXPENSE (INCLUDING, WITHOUT LIMITATION, REASONABLE ATTORNEYS' FEES AND LITIGATION EXPENSES) ARISING OUT OR RESULTING FROM DEVELOPMENT MANAGER'S DEFAULT OR BREACH OF ITS OBLIGATIONS TO PAY OR PERFORM UNDER ANY CONTRACTS OR AGREEMENTS ENTERED INTO BY DEVELOPMENT MANAGER WITH RESPECT TO THE DEVELOPMENT AND CONSTRUCTION OF THE CITY FACILITIES; IT BEING ACKNOWLEDGED THAT OWNER WILL LEASE CERTAIN OF THE CITY FACILITIES FROM THE CITY, AND IS RELYING ON DEVELOPMENT MANAGER TO COMPLY WITH ITS OBLIGATIONS TO THE CITY AND DESIGN -BUILDER WITH RESPECT TO THE CITY FACILITIES. THIS INDEMNITY SHALL SURVIVE THE EXPIRATION OR TERMINATION OF THIS AGREEMENT. (b) Development Manager shall require that all contractors employed by Development Manager or by Owner at the recommendation of Development Manager in connection with the Project to agree in writing to indemnify and hold Owner, City, Development Manager, and their respective members, partners, officers, directors, agents, employees, contractors and subcontractors harmless from, and defend them against all Claims, and reimburse them for all expenses incurred (including the cost of litigation and reasonable attorneys' fees and disbursements) resulting from personal injury or death to Persons and damage to tangible property which occurs (i) on the Property, or (ii) in connection with the development of the Project caused by or resulting from the willful misconduct or negligent acts or omissions of the employed contractors, or employees, subcontractors or agents of such contractors, or (iii) in connection with off-site HOTEL DEVELOPMENT AGREEMENT Page 26 improvements benefiting the Project. Each such contractor employed by Development Manager hereunder shall pay for and defend any and all suits or actions threatened or instituted against Owner, Development Manager, and their respective members, partners, officers, directors, agents, employees, contractors and subcontractors, shall pay all reasonable attorneys' fees, litigation costs and all other expenses in connection therewith, and shall promptly discharge any judgments arising therefrom. No such indemnity by any contractor employed by Development Manager shall be deemed to limit in any way Development Manager's indemnities pursuant to Section 8.3(a). (c) TO THE FULLEST EXTENT PERMITTED BY LAW, DEVELOPMENT MANAGER SHALL DEFEND, INDEMNIFY AND HOLD HARMLESS OWNER, CITY AND INDEMNITEES FROM AND AGAINST ALL DAMAGES, LOSSES, COSTS, AND EXPENSES, INCLUDING BUT NOT LIMITED TO REASONABLE ATTORNEYS' FEES, ARISING OUT OF OR RESULTING FROM BODILY INJURY OR DEATH OF ANY EMPLOYEE OF THE DEVELOPMENT MANAGER OR ANY OF DEVELOPMENT MANAGER'S CONSULTANTS OR ANYONE DIRECTLY OR INDIRECTLY EMPLOYED BY THEM, BROUGHT BY SUCH INJURED EMPLOYEE OR THE EMPLOYEE'S WORKERS COMPENSATION INSURANCE CARRIER (HEREINAFTER REFERRED TO AS AN "EMPLOYEE INJURY CLAIM") TO THE EXTENT SUCH BODILY INJURY OR DEATH ARISES OUT OF OR RESULTS FROM, IN WHOLE OR IN PART, THE PERFORMANCE OF THE SERVICES UNDER THIS AGREEMENT AND REGARDLESS OF WHETHER SUCH CLAIM, DAMAGE, LOSS OR EXPENSE IS CAUSED,' OR IS ALLEGED TO BE CAUSED, IN WHOLE OR IN PART, BY THE NEGLIGENCE OF OWNER OR ANY INDEMNITEE, IT BEING THE EXPRESSED INTENT OF OWNER AND DEVELOPMENT MANAGER THAT IN SUCH EVENT, THE DEVELOPMENT MANAGER IS TO INDEMNIFY, HOLD HARMLESS AND DEFEND OWNER AND THE INDEMNITEE(S) FROM THE CONSEQUENCES OF THEIR OWN NEGLIGENCE, WHETHER IT IS ALLEGED TO BE THE SOLE OR CONCURRING CAUSE OF THE BODILY INJURY, DISEASE OR DEATH OF THE EMPLOYEE, NEGLIGENCE OF OWNER OR ANY INDEMNITEE. (d) The indemnification obligation assumed under this Section 8.3 shall not be limited by a limitation on amount or type of damages, compensation or benefits payable by or for the Development Manager or any other employer under worker's compensation acts, disability benefit acts or other similar employee benefit acts. (e) It is agreed with respect to any legal limitations now or hereafter in effect and affecting the validity or enforceability of the indemnification obligations under this Section or the Insured requirements set forth herein, such legal limitations are made a part of the contractual obligations and shall operate to amend the obligations to the minimum extent necessary to bring the provision into conformity with the requirements of such limitations, and as so modified, the obligations shall continue in full force and effect. Any endorsement to Development Manager's general liability policy prohibiting or limiting the coverages required herein shall be modified such that the policy will respond to the obligations of the Development Manager as set forth in this Section to the full extent allowed under Texas law. HOTEL DEVELOPMENT AGREEMENT Page 27 (f) The obligations contained in this Section 8.3 shall survive the expiration, completion, abandonment and/or termination of the Agreement and final completion of the Work and any other services to be provided pursuant to this Agreement to the extent and for the time periods allowed under Texas law. Section 8.4. Notice. Owner shall promptly notify Development Manager in writing of the existence of any matter that may be or create a Claim under Section 8.3. If a Claim: (a) involves or requires legal defense, the Development Manager shall undertake the vigorous legal defense against such Claim or Claims with legal counsel acceptable to Owner and City; and if such legal defense is provided by the Development Manager without reservation of rights, then the Owner or other indemnified person may not undertake to separately defend such Claim by any legal proceedings; or (b) involves or requires remedial action, then the Development Manager shall undertake such remedial action as it deems necessary and appropriate; provided, however, that the indemnified person may, without prejudicing, limiting, releasing or waiving the right of indemnification provided herein, may separately undertake the remedial action. Notwithstanding any of the foregoing to the contrary, the indemnified persons shall have the right to take all necessary actions to protect its interests without prejudicing, limiting, releasing or waiving the right of indemnification provided herein. Section 8.5. Payment and Performance Bonds. The Development Manager shall require the General Contractor to provide payment and performance bonds in accordance with Chapter 2253 of the Texas Government Code, and such protections, acceptable to the City and Operator, to assure total completion of the Hotel and payment of all sub -contractor claims, that meet or exceed the protections provided in TEX. GOVT CODE 2253 and other applicable law, such as subcontractor default insurance, and in the comparable documents typically used for similar projects in terms of size, scope and cost. ARTICLE IX REPRESENTATIONS Section 9.1. Development Manager Representations. Development Manager represents and warrants to Owner as follows: (a) Development Manager is duly good standing under the laws of the State business in the State of Texas, and has all necessary licenses and permits to perform Agreement and the Project Agreements. HOTEL DEVELOPMENT AGREEMENT Page 28 organized, validly existing, and in of Texas, is authorized to conduct requisite power and authority and all its duties and obligations under this (b) There are no actions, suits, proceedings, inquiries, or investigations, or to the knowledge of Development Manager, pending or threatened against or affecting Development Manager, in any court or by or before any governmental authority or arbitration board or tribunal that involve the likelihood of materially and adversely affecting the properties, business, prospects, profits, operations, or condition (financial or otherwise) of Development Manager, or the ability of Development Manager to perform its obligations under this Agreement or the Project Agreements, or that in any way would adversely affect the validity or enforceability of the Project Agreements. (c) Development Manager has delivered to Owner true and complete copies of (i) the Master Development Agreement and all other material documents, agreements and draft agreements relating to the Property, the Project, or any portion thereof in Development Manager's possession or control, (ii) all material title reports, surveys, site plans, environmental reports, engineering reports, soil reports, and governmental approvals, variances, permits and other authorizations with respect to the Property, the Project, or any portion thereof in its possession or control; and (iii) Development Manager knows of no material facts in contradiction to the facts described in the forgoing clauses (i) and (ii). (d) The execution and delivery by Development Manager of the Project Agreements, the consummation of the transactions herein and therein contemplated, and the fulfillment of or the compliance with all of the provisions hereof and thereof (i) are within the power, legal right, and authority of Development Manager; (ii) are legal and will not conflict with or constitute on the part of Development Manager a violation of or a breach of or a default under, or result in the creation or imposition of any lien, charge, restriction, or encumbrance upon any property of Development Manager under the provisions of, any governing document, indenture, mortgage, deed of trust, pledge, note, lease, or loan, or installment sale agreement, contract, or other agreement or instrument to which Development Manager is a party or by which the Development Manager or its properties are otherwise subject or bound, or, to its knowledge, any license, law, statute, rule, regulation, judgment, order, writ, injunction, decree, or demand of any court or governmental agency or body having jurisdiction over the Development Manager or any of its activities or properties; and (iii) have been duly authorized by all necessary and appropriate corporate action on the part of Development Manager. The Project Agreements are the valid, legal, binding, and enforceable obligations of Development Manager. The officer or officers of Development Manager executing the Project Agreements are duly and properly in office and are fully authorized and empowered to execute the same for and on behalf of Development Manager. (e) To Development Manager's knowledge, there are no other material written agreements other than those referenced in Section 9.1(c) above that have been delivered to Owner in any way relating to the Property, the Project, or any part thereof. (f) Neither Development Manager nor any of its Affiliates will get a commission or other compensation in connection with any of the services HOTEL DEVELOPMENT AGREEMENT Page 29 performed other than those specified in this Agreement, the Contract Documents, or the Project Agreements. (g) Exhibit "E" lists all material governmental authorizations currently issued or granted, and governmental authorizations which remain to be issued, granted or taken (whether currently pending or to be applied for in the future). (h) To Development Manager's knowledge, all water, sanitary sewer, storm drainage, natural gas, electricity, telephone and other communication facilities necessary or desirable for the Project are, or will be, installed in street rights of way adjacent to the Property or in existing easements between street rights of way and the boundaries of the Property. (i) Development Manager has no knowledge of any existing fact or condition that (i) would be materially inconsistent with the contemplated development of the Project or (ii) would prevent, materially hinder or delay or materially interfere with the contemplated development of the Project. Section 9.2. Survival. The representations and warranties contained in this Article IX shall survive the execution and delivery of this Agreement. ARTICLE X LAWS Section 10.1. Compliance by Development Manager and Owner. Development Manager, at Owner's sole cost and expense, and Owner shall at all times comply with all applicable laws, ordinances and regulations affecting the Property. Section 10.2. Development Manager's and Owner's Employees. Development Manager and Owner shall each fully comply with all applicable laws, ordinances and regulations relating to workers' compensation, social security, unemployment insurance, hours of labor, wages, working conditions, and other employer-employee related subjects. ARTICLE XI MISCELLANEOUS Section 11.1. Entire Agreement. This Agreement, including all exhibits, attachments, schedules and addenda hereto, contains the entire understanding among the Parties with respect to the subject matter hereof and supersedes any prior proposals, understanding and agreements between them, either oral or written, respecting such subject matter. This Agreement shall be binding upon the Parties hereto and their respective representatives, successors and assigns. No rights, remedies or warranties under this Agreement are waived or modified unless expressly waived or modified in writing by the party to be charged. Section 11.2. No Partnership; Competition. Owner shall not by this Agreement in any way or for any purpose become a partner of Development Manager in the conduct of its business, or otherwise, or a joint venturer of, or a member of a joint enterprise with, Development Manager. Development Manager is and shall, for all purposes of this HOTEL DEVELOPMENT AGREEMENT Page 30 Agreement and the construction and development of the Project, be deemed an independent contractor of Owner. It is expressly understood and agreed by the Parties hereto that any Party may engage in any other business or investment, including the ownership of or investment in real estate and the development, operation and management of hotels, and that the other Parties hereto shall have no rights in and to any such business or investment or the income or profit derived therefrom. Section 11.3. Notice. All notices and other communications under this Agreement shall be in writing and shall be deemed given when (i) delivered by hand, (ii) transmitted by telecopier with automatic confirmation of transmission, (iii) delivered by Federal Express or other reputable express delivery service, or registered or certified mail, return receipt requested, or (iv) an attempted delivery by one of the means described in the foregoing clauses (i) and (iii) is refused by the addressee; provided, in any case, that the same is directed to the intended recipient at the address(es) or telecopier number(s) set forth for it below, or to such other address(es) or telecopier number(s) as a party may specify by notice given to the other parties pursuant to this provision. All parties shall be copied on all notices and other communications given hereunder. If to the Development Manager: Garfield Public/Private LLC 14785 Preston Rd Suite 480 Dallas, Texas 75254 Attn: Greg Garfield and Steve Galbreath greg.g@garfieldpublicprivate.com steve.g oarfieldpublicprivate.com With copies to: Garfield/Public Private LLC 14785 Preston Rd Suite 480 Dallas, Texas 75254 Attention: Ray Garfield and Daniel K. Hennessy, Esq. ray.g@garfieldpublicprivate.com dan.h@garfieldpublicprivate.com If to the Owner: Baytown Municipal Development District 2401 Market Street Baytown, Texas 77520 Attn: General Manager With copies to: City of Baytown 2401 Market Street Baytown, Texas 77520 Attn: City Attorney legal baytown.or4 HOTEL DEVELOPMENT AGREEMENT Page 31 Section 11.4. Assignment. Except as expressly authorized in this Agreement or the Master Development Agreement, this Agreement shall not be assigned by Development Manager, without the written consent of Owner which may be granted or withheld in Owner's sole discretion, and any attempted assignment without such written consent shall be void. Any approved assignee will assume all of Development Manager's obligations hereunder and shall be deemed to be the "Development Manager" under this Agreement from and after the date of the assignment and assumption of this Agreement. The parties hereto consent to Owner's collateral assignment of this Agreement to the Bond Trustee as a condition to the issuance of the Hotel Bonds. Section 11.5. Force Majeure Event. Wherever it is provided in this Agreement that Development Manager shall perform an obligation or cause or achieve a particular goal or result, Development Manager shall not be deemed to have failed to perform such obligation or to cause or achieve such goal if such failure was caused by Force Majeure. Development Manager shall maintain diligent records of all delays caused by Force Majeure, and shall immediately notify Owner upon the occurrence of an event of Force Majeure, and in any event within 48 hours. Delays in the Hotel Schedule or the Project Schedule caused by Force Majeure shall be evidenced by a Change Order. Section 11.6. Counterparts; Facsimile Execution; Modification. This Agreement may be executed in any number of counterparts, each of which shall constitute an original but all of which, taken together, shall constitute but one and the same instrument. A party may deliver executed signature pages to this Agreement by facsimile transmission to the other party, which facsimile copies shall be deemed to be an original executed signature page binding on the party that so delivered the executed signature page by facsimile. This Agreement may not be amended, supplemented, or terminated, nor shall any obligation hereunder or condition hereof be deemed waived, except by a written instrument to such effect signed by the party to be charged. Section 11.7. Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns. Whenever the terms "Owner", or "Development Manager" are used herein, they shall be deemed to mean and include Owner, Development Manager and their respective successors and permitted assigns in the same manner and to the same extent as if specified each time said terms appear herein. Section 11.8. Captions. The Article and Section captions set forth herein have been included solely for the convenience of the parties and shall not be used or referred to in the interpretation or construction of this Agreement or any provision hereof. Section 11.9. Waivers. Failure by either party to complain of any action, non- action or default of the other party hereunder shall not constitute a waiver of the aggrieved party's rights hereunder unless expressed in a writing executed by such aggrieved party. Waiver by either party of any right for any default of the other party, including a waiver deemed to occur as the result of an action or inaction, shall not constitute a waiver of any right for either a subsequent default for the same obligation or for any other default, past, present or future. HOTEL DEVELOPMENT AGREEMENT Page 32 Section 11.10. Partial Invalidity. If any term, covenant or condition of this Agreement, shall ever be held to be invalid or unenforceable, then in each event the remainder of this Agreement or the application of such term, covenant or condition to any other Person or any other circumstance (other than those as to which it shall be invalid or unenforceable) shall not be thereby affected and each term, covenant, condition and provision hereof shall remain valid and enforceable to the fullest extent permitted by Laws. Section 11.11. Survival. Articles I, VI, VIII and X shall survive the expiration or earlier termination of this Agreement. Section 11.12. Owner Agency. Subject to Section 3.2 hereof, the Owner may retain and appoint such consultants and advisers that it, in its sole discretion, deems necessary or appropriate to advise or represent the Owner, including the Construction Monitor, on the development of the Project and otherwise perform any act and exercise any decision-making authority on behalf of Owner in relation to this Agreement or any other agreement related to the Project. Notices to Owner delivered pursuant to the provisions of this Agreement shall also be delivered to Owner's designated agents under this Section. Owner may at any time designate additional consultants and advisers hereunder and may further revoke any designation at any time provided written notice of such designation or revocation is provided to the Parties. The Design -Builder and Development Manager may rely on Owner's delegation to Owner Representative for any purpose under this Agreement, provided that Owner Representative (acting in such capacity, and not as a representative of the holders of the Hotel Bonds) shall not have the power to act on behalf of or to bind Owner to (i) commence any legal action to enforce Owner's rights under this Agreement; (ii) appear, defend, compromise, settle or otherwise attempt to act on Owner's behalf in respect to any legal claim or proceeding brought against Owner under this Agreement; or (iii) perform any act on Owner's behalf that Owner is expressly prohibited from performing under the Master Development Agreement. Section 11.13. Limitation on Owner Liability. Notwithstanding anything contained in this Agreement or any of the other agreements or documents referred to herein or otherwise, Owner shall not be liable for any costs, expenses, losses, damages, claims or actions, or any kind or on any theory, under or by reason of or in connection with this Agreement or any Project Agreement, any of the other agreements or documents referred to herein, the Project, or otherwise, except and to the extent of Available Moneys. OWNER MAKES NO REPRESENTATION WHATSOEVER AS TO THE EXISTENCE OF AVAILABLE MONEYS, NOR THE SUFFICIENCY THEREOF FOR THE PURPOSES CONTEMPLATED UNDER THIS AGREEMENT. Section 11.14. Governmental Function. The issuance of the Hotel Bonds is a governmental function and subject to the sole discretion of the issuing entity's Board of Directors, and the failure, inability or determination not to issue the Hotel Bonds shall not be deemed or construed to constitute negligence, willful misconduct or bad faith under this Agreement or any other Contract Document. Section 11.15. Conflicts with Master Development Agreement. If any provision of this Agreement directly conflicts with any provision of the Master Development Agreement, the Master Development Agreement shall control. HOTEL DEVELOPMENT AGREEMENT Page 33 Section 11.16. No Restrictions. Nothing contained in this Agreement shall be construed so as to prohibit Development Manager, Owner, or any of their Affiliates, from owning, operating, developing, managing or investing in any other real estate development wherever located. Each party agrees that the other may engage in, or possess an interest in, another business venture or ventures of any nature or description, independently or with others, including, but not limited to, the ownership, financing, leasing, operating, management, syndication, brokerage and development of real property, and neither shall have any right by virtue of this Agreement in and to such other ventures or to the income or profits derived therefrom. [REMAINDER OF PAGE INTENTIONALLY BLANK] HOTEL DEVELOPMENT AGREEMENT Page 34 IN WITNESS WHEREOF, the parties hereto have executed this Hotel Development Agreement as of the date first above written. 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Fm 1g- 1m- p m EXHIBIT C AAogroved Parties Design Builder DPR Construction, A General Partnership Architect BOKA Powell, LLC Interior Design Looney & Associates C-1 EXHIBIT D Costs Incurred D-1 k k ; -- --- - --- -- ------ --- 2 � ea -- - - - -- -- - - - - -- -- - \ � . . ... .. , . ,. •## ■«§ § � § 7 --- - --- -- ------ --- \\\\\\ \\ \\\ \\\ | � _-- ' . --- .\ ,., .. .,,,., • - �-- \E\ \T})!i -; `�+ !o_m; !�& ,;°`■a ! . !a 70 m.)�l=�•-`!:, .� - !\\\ \� \ k k ; a as a :J ti SSE 3SOR kv.a r X CL t�yj w «r. »»Q»Q«««Q»»» $ FIR �m « --»»»-»--- rod _ ° - « - - -» »-»»---»»» uo a 8= » » k » 8 a � IN _ D5� tl r Sa Q �. 2 jg �y 4 2* 3 `g. $u9 c7m� 9 5 sc9 .1's AIN? 3e y a as a :J ti EXHIBIT E Governmental Authorizations Final Zoning Approval Building Permits Certificate of Occupancy Applicable Operating Licenses Applicable Utility Connection Permits E-1 EXHIBIT F Hotel Budget F-1 EXHIBIT F Baytown Hotel and Conference Center Conceptual Development Budget Hotel Conference Hard Costs 208 keys 34,OOOsf Total Construction -General Contractor $ 19,875,366 $ 11,365,948 $ 31,241,314 Site Work & Landscaping $ 569,352 $ 854,028 $ 1,423,380 Parking $ - $ 1,467,934 $ 1,467,934 Contractor Contingency $ 1,004,650 $ $0 $ 1,004,650 CGL Insurance & Builders Risk $ 548,263 $ 355,922 $ 904,185 Hazardous Material Insurance $ 102,000 $ 68,000 $ 170,000 Payment & Performance Bond $ 140,000 $ 131,700 $ 271,700 Kitchen/Laundry Equipment $ 22,239,631 $ 14,243,531 $ 36,483,162 Signage (Interior) $ 90,000 $ 60,000 $ 150,000 Change Order Reserve (for IGMP) $ 957,930 $ $0 $ 957,930 Construction Contingency (hold of construction) $ 672,444 $ $0 $ 672,444 Contract Escalation (for IGMP) $ 196,172 $ $130,781 $ 326,953 FF&E/OS&E/IT/Equipment $ 23,400 $ 15,600 $ 39,000 FF&E $ 3,228,577 $ 1,775,257 $ 5,003,834 OS&E $ 1,185,342 $ 1,045,090 $ 2,230,432 IT $ 551,616 $ 367,744 $ 919,360 Kitchen/Laundry Equipment $ 477,073 $ 396,888 $ 873,961 Site $ 1,339,371 $ 892,100 $ 2,231,471 Land $ 1 $ 0 $ 1 Due Diligence / Market studies $ 51,000 $ - $ 51,000 Survey, Geotech,etc $ 23,400 $ 15,600 $ 39,000 Title Policy $ - $ - $ - Design Fees $ 5,692,606 $ 3,098,777 $ 8,791,384 Architectural and Engineering Fees $ 1,652,150 $ 1,101,433 $ 2,753,583 KPFF (tower structure design) $ 65,000 $ 65,000 Fee Contingency $ 91,187 $60,792 $ 151,979 Inspections 3rd Party Testing & Inspection $ 126,600 $ 84,400 $ 211,000 Other Soft Costs Brand, Technical Service and Construction Services Fees $ 306,137 $ 204,091 $ 510,228 Brand Application Fee $ 87,400 $ - $ 87,400 Pre -Opening Budget $ 395,622 $ 388,748 $ 784,370 Legal Fees $ 165,000 $ 110,000 $ 275,000 Property Taxes during Construction $ - $ - $ - City Permit, Impact and Tap Fees $ 125,083 $ 83,389 $ 208,472 GPP Developer Fees $ 1,339,371 $ 892,100 $ 2,231,471 GPP accrued reimbursable expenses / ongoing developer travel $ 32,951 $0 $ 32,951 Construction Manager $ 193,536 $ 129,024 $ 322,560 Developer's Insurance $ 43,800 $ 29,200 $ 73,000 Project Contingency (owner's) $ 994,369 $0 $ 994,369 Total Soft Costs $ 5,692,606 $ 3,098,777 $ 8,791,384 Subtotal Net of Financing & Working Capital $ 35,291,391 $ 21,118,069 $ 56,409,460 EXHIBIT G Development Manager's Compensation Baytown CCH: GPP Fee Schedule Summary For Hotel Component Hotel Developer Fee: $1,339,371 45% during Pre -Construction (see design period draw schedule); 45% during Construction; 5% at Substantial Completion and 5% at Final Completion. Pre -Construction (Design) Period o $100.395 per month (Assumes 6 additional months) Construction Period o $37,648 per month (Assumes 16 months) o Additional $66,969 at Substantial Completion (5%) o Remaining $66,969 at Final Completion (5%) The Monthly payments are based on projected timelines o To the extent the pre -construction and/or construction periods are shorter than expected, the remaining portion of monthly fees will be paid in a lump sum o If timelines are longer than expected, the monthly payments will stop once the assigned percentage of $1,339,371 hotel development fee has been paid Legal Fees: $165,000 Pre -Construction Period o $45,000 initial payment o $16,500 (Assumes 6 additional months) Construction Period o $10,500 per month (Assumes payment over first 2 months of construction) Similar to the Hotel Developer fee, early completion of pre -construction and/or construction periods will result in accelerated payment, but delays in projected timeline will not increase the total amount FF&E Management Fee: $174,512 $10,907 per month paid over the 16 months of construction Construction Manager Fee: $193,536 Pre -Construction Period o $8,797 per month (assuming 6 months) Construction Period o $8,797 per month (Assumes 16 months of construction) G-1 Expenses to Date: $5,951, plus $24,000 budgeted for Design Period (total project) $32,951 to cover multiple trips to Baytown and Marriott meetings during Design Phase Expenses after the Effective Date and during Construction: Developer will invoice monthly at cost for all reimbursable expenses Developer incurs in connection with the Hotel, including third -party reproduction, delivery services, and all out- of-town travel, lodging, and meals, supported by appropriate documentation. G-2 EXHIBIT H FF&E Services 1.1 Purchasing Services. During the course of development of the Hotel, the Development Manager will cause the Purchasing Agent to perform the following services with respect to FF&E to be installed in the Hotel: 1.1.1 Definitions. (i) "FF&E Budget" means the preliminary cost estimate to be developed for purchasing the FF&E for the Hotel, and shall include, without limitation, any taxes and freight charges incurred in connection with the purchase and delivery of such FF&E, installation costs and reimbursable expenses relative thereto. The FF&E Budget shall be incorporated into, and noted in, the Hotel Budget, and may, at the direction of Owner, include additional amounts so designated by Owner, as the Owner's Directed Contingency Reserve. (ii) Any defined term used in this Exhibit H that is not otherwise defined in this Agreement has the meaning as set forth in the Hotel Development Agreement. 1.1.2 Pricing and Procurement. The Purchasing Agent shall diligently seek to obtain the most favorable prices and terms available in connection with the purchase of the FF&E. 1.1.3 Delivery Schedule. Development Manager shall prepare a projected delivery schedule for goods purchased based on production and delivery dates furnished by suppliers. Development Manager shall use reasonable efforts to coordinate the schedule with he construction schedule under the Design -Build Agreement and place purchases orders within sufficient time to allow delivery in accordance with the projected construction schedule. 1.1.4 Records. Development Manager shall maintain or cause to be maintained proper, accurate and complete accounting records including competitive bids and proposals, purchase orders, purchasing receipts and disbursements made in connection with the purchase of the FF&E for the Hotel. Development Manager shall make available these records for audit, inspection and photocopying by the City Representative or Owner, upon five (5) business days' notification. Following Final Completion of the Hotel or termination of this Agreement, Development Manager shall and at the City's or Owner's sole cost, as applicable, deliver to the City Representative or Owner a copy of all such records. Development Manager shall retain copies of such records for a period of three (3) years form Final Completion of the Hotel Project. 1.1.5 Inventory. The Purchasing Agent shall provide a full inventory of goods and materials to Owner or such other persons as may be designated by Owner, within one hundred twenty (120) days after delivery of the last item of FF&E for the Hotel. 1.1.6 Coordinator and Installation. When appropriate, the Purchasing Agent shall provide an on-site coordinator at the Hotel Project to coordinate FF&E delivery and installation. Development Manager shall oversee and review the installation and operation of all FF&E. H-1 1.2 Payment for FF&E- Hotel. 1.2.1 Purchase of FF&E. The Owner shall purchase the FF&E for the Hotel of the type and quantity described in an FF&E Schedule as prepared by Development Manager and the Purchasing Agent, and approved by Owner in accordance with the FF&E Budget and pursuant to the draw request procedures set forth in the Hotel Development Agreement. The FF&E Schedule shall be consistent with the Hotel Schedule under the Hotel Development Agreement. The Owner agrees to pay to Development Manager in its capacity as development manager for the Hotel, and the Purchasing Agent, in its capacity under the FF&E Agreement, the actual FF&E costs based upon invoices received for purchases of FF&E for the Hotel, for payments required not to exceed the amounts specified in the FF&E Budget, subject to and in accordance with the terms of the Hotel Development Agreement. Development Manager shall substantiate and provide verifications to Owner of goods received. 1.2.2 Costs. The FF&E costs for the Hotel shall be identified in the Project Development Phase as a part of the Hotel Budget. 1.2.3 Payment. It is understood that all purchase orders and agreements for FF&E for the Hotel executed by the Owner shall specify the FF&E as being acquired for the account of the Owner. Neither Development Manager nor the Purchasing Agent shall be responsible for payment of any such purchase orders and agreements, except to the extent of funds therefor actually received from the Owner. 1.3 General Provisions. 1.3.1 Contractor Failure. Neither Development Manager nor the Purchasing Agent shall be responsible for malfeasance, neglect or failure of any contractors or suppliers to meet their schedules for completion or to perform their duties and responsibilities under their respective agreements with respect to the FF&E for the Hotel. 1.3.2 Cancellation. The Owner acknowledges that cancellation and return of FF&E cannot be made except under terms and conditions acceptable to the manufacturer and/or vendor thereof, and that custom items of FF&E are non -cancelable and non -returnable. 1.3.3 No Warranty. The Purchasing Agent shall use reasonable diligence in making recommendations regarding the procurement of FF&E for the Hotel, but neither Purchasing Agent nor Development Manager extends any guarantees or makes any warranty, express or implied, of merchantability or fitness for a particular purpose or otherwise with respect to any such FF&E purchased hereunder. Claims made against such guarantees as may be offered by the manufacturers or vendors of FF&E for the Hotel must be settled directly with the manufacturers or vendors. The Purchasing Agent shall assist and coordinate with Owner, however, in the processing, prosecution and enforcement of such claims provided it incurs no additional costs, expenses or liability on account thereof. Where the Purchasing Agent has not previously paid for FF&E which has been received by the Owner and, if prior to such payment, the Purchasing Agent determines that the goods are defective or otherwise do not conform to the contract, the Purchasing Agent shall not pay for such FF&E and shall make all necessary provisions, at the vendor's expense, for return of such FF&E to the supplier. H-2 1.3.4 Risk of Loss. Unless otherwise agreed to in writing, all FF&E for the Hotel shall be shipped to the Hotel or a warehouse arranged for by Development Manager or by the Purchasing Agent, with the approval of Development Manager, on behalf of the Owner. Development Manager and Purchasing Agent shall provide for all such FF&E to be shipped to the Hotel or a warehouse arranged for by Development Manager or by the Purchasing Agent, with the approval of Development Manager, on behalf of the Owner. Development Manager and Purchasing Agent shall provide for such FF&E to be shipped "DDP (Baytown, Texas, USA)" pre -paid. 1.3.5 Overages. The Owner acknowledges that it is customary for manufacturers to ship additional quantities of certain types of FF&E (fabric, wallpaper, carpet, etc., commonly referred to as "attic stock") above and beyond the actual amount ordered. This is a common practice in the industry over which neither Development Manager nor the Purchasing Agent has control. The Owner agrees to accept such overages and to pay for its share of the same. All overages in FF&E for the Hotel shall be the property of the Owner, allowances for such overages shall be included in the FF&F Budget. 1.3.6 Purchasing Agent Indemnity. The Purchasing Agent shall indemnify and hold harmless the Owner and their respective officers, directors, members, agents, and employees harmless and defend from and against any and all loss, cost, liability, claim, demand, damage or expense (including, without limitation, reasonable attorneys' fees and litigation expenses) which any of the foregoing indemnities may incur or sustain or which may be claimed or asserted against any of the foregoing on account of, in connection with, or arising from (i) any gross negligence or willful misconduct on the part of Purchasing Agent or its members, officers, directors, contractors, agents, and employees in connection with Purchasing Agent's services under the FF&E Agreement (ii) any FF&E that Purchasing Agent has purchased in the name of the Owner that does not substantially conform with the FF&E specifications agreed upon in the FF&E Agreement. This indemnity shall survive the expiration or termination of the FF&E Agreement. H-3 EXHIBIT I Construction Manager Responsibilities 1. Review bidding of major subcontracts and scrutinize proposals. 2. Ensure all necessary insurance and bonds are obtained. 3. Ensure that all liens are waived or bonded. 4. Upon notice to proceed from Owner and issuance of necessary permits, monitor commencement of construction and the diligent and continuous prosecution of construction until final acceptance of the project by Owner. 5. Be onsite to administer, manage, coordinate and monitor construction activities. 6. Provide and review with Owner regular reports featuring input from all team members outlining the status and schedule of the Project. 7. Review any additional specifications and clarifications, work drawings, and shop drawings. 8. Manage and report to Development Manager day-to-day changes and issues that may occur throughout the course of construction. 9. Separately verify completion of work for which payment is requested. 10.Evaluate all change order requests. 11.Periodically observe the contractor's safety procedures, quality assurance and contract compliance. 12.Separately verify materials testing and third -party inspections as called for in the specifications. 13.Review and participate, as needed, in pay applications, punch list preparation, project close-out, and release of warranties. 14. Monitor the Design -Builder's efforts to coordinate and promptly correct and complete any incomplete work identified in punch list inspections. 15. Following the issuance of certificate of Substantial Completion for each building or designated portion thereof, evaluate the completion of the work and make recommendations to Development Manager and Owner. 16. Monitor the Design -Builder's efforts to obtain final permits and approvals. 17. Monitor Design -Builder's efforts to obtain the certificates of occupancy. 18. Monitor the Design -Builder's efforts to secure for Owner's benefit and assign to Owner all negotiated warranties and guarantees of the work by the design - Builder, subcontractors, suppliers, and manufacturers. 19.Observe, and assist as necessary, Design -Builder and Operator in start-up and testing for readiness of utilities, operational systems and equipment. 20. Coordinate delivery to Owner of guarantees, warranties, affidavits, releases, bonds, waivers, keys, operation and maintenance manuals, record drawings, maintenance stocks, as -built drawings, occupancy certificates and other project records and documents. I-1