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Ordinance No. 13,866ORDINANCE NO. 13,866 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF BAYTOWN, TEXAS, AUTHORIZING THE CITY MANAGER TO EXECUTE AND THE CITY CLERK TO ATTEST TO A MASTER DEVELOPMENT AGREEMENT WITH GARFIELD PUBLIC/PRIVATE LLC, AND THE BAYTOWN MUNICIPAL DEVELOPMENT DISTRICT, FOR THE BAYTOWN HOTEL AND CONVENTION CENTER PROJECT; AUTHORIZING PAYMENT BY THE CITY OF BAYTOWN IN ACCORDANCE THEREWITH IN AN AMOUNT NOT TO EXCEED TWO MILLION FIVE HUNDRED THOUSAND AND NO/100 DOLLARS ($2,500,000.00); MAKING OTHER PROVISIONS RELATED THERETO; AND PROVIDING FOR THE EFFECTIVE DATE THEREOF. ************************************************************************************* BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF BAYTOWN, TEXAS: Section 1: That the City Council of the City of Baytown, Texas, hereby authorizes the City Manager to execute and the City Clerk to attest to the Master Development Agreement with Garfield Public/Private LLC, and Cedar Trinity, Corporation 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 2: That the City Council of the City of Baytown authorizes payment in an amount not to exceed TWO MILLION FIVE HUNDRED THOUSAND AND NO/100 DOLLARS ($2,500,000.00) for the hotel design and development costs pursuant to the Agreement authorized in Section 1 hereof. Section 3: That the City Manager is hereby granted general authority to approve any change order involving a decrease or an increase in costs of FIFTY THOUSAND AND N0/100 DOLLARS ($50,000.00) or less; however, the original contract price may not be increased by more than twenty-five percent (25%) or decreased by more than twenty-five percent (25%) without the consent of the contractor to such decrease. Section 4: This ordinance shall take effect immediately fro d after its passage by the City Council of the City of Baytown. INTRODUCED, READ and PASSED by the affirmative vote the City Council of the City of Baytown this the 13th day of September, 2018. 1-2 DONCARLOS, t L TICIA BRYSCH, Ci Clerk C)o L �f e APPROVED AS TO FORM: NACIO RAMIREZ, S Ycity Attorney 1XOBFSOALegaRKarenTilesWity Council%..Ordinances\20181September 13\MDA.doc Exhibit "A" MASTER DEVELOPMENT AGREEMENT among City of Baytown, Texas ("City") and Baytown Municipal Development District ("Hotel Owner") and Garfield Public/Private LLC ("Garfield") (Baytown Hotel and Convention Center Project) TABLE OF CONTENTS Page ARTICLE 1 DEFINITIONS 6 1.1. Preamble ............. ........................... .. 2. 1.tion of Terms..............................................................................................................6 ARTICLE 2 THE PROJECT 14 22.1. Project Development..........................................................................................................14 .2. Project Phases....................................................................................................................17 ARTICLE 3 PROJECT DEVELOPMENT ACTIVITIES 19 33.1. Garfield Services..............................................................................................................19 3.2. Budget Adjustments...........................................................................................................22 .3. Project Agreements............................................................................................................22 ARTICLE 4 CONSTRUCTION ACTIVITIES 25 44.1. Construction Phase............................................................................................................25 .2. General...............................................................................................................................27 4.3. Pre -Opening Activities .................. 4.4. Post Construction Phase.....................................................................................................29 ARTICLE 5 PROJECT FINANCING 30 5.1. Project Development Phase................................................................................ 5.2. Closing. •••••••••......30 ............................................................................................................................31 ARTICLE 6 PURCHASING SERVICES 32 6.1. Purchasing Services...........................................................................................................32 -1- 6.2. Payment for FF&E — City Facilities..................................................................................33 6.3. General Provisions.............................................................................................................34 ARTICLE 7 CITY GOVERNMENTAL AUTHORITY 36 7.1. No Relinquishment of Municipal Regulatory Authority . ................................................36 7.2. No Limitation on City's Governmental Functions.. ..........................................................36 7.3. Notice to Proceed...............................................................................................................37 7.4. Infrastructure......................................................................................................................3 7 7.5. Zoning................................................................................................................................37 7.6. Permits...............................................................................................................................37 7.7. City Cooperation................................................................................................................38 ARTICLE 8 SCOPE OF GARFIELD'S RESPONSIBILITIES 38 8.1. Standard of Care .................... .................................................................................... 8.2. Contractors, Specialists and Consultants ....... ...... 8 8.3. Operation and Maintenance of the Hotel...........................................................................39 ARTICLE 9 PAYMENT OF COSTS 39 9.1. Payment of City Costs.......................................................................................................39 9.2. Cost Savings ...................................... .................................................................................40 9.3. City Contribution Limitation.............................................................................................40 9.4. Payment of Development Fee............................................................................................40 ARTICLE 10 REPRESENTATIONS 41 10.1. Representations and Warranties of the City .....................................................................41 10.2. Garfield's Representations and Warranties.41 10.3. Representations and Warranties of Hotel Owner.............................................................42 ARTICLE 11 TERMINATION PROVISIONS 43 11.1. Termination Events............................................................................................................43 ARTICLE 12 EVENTS OF DEFAULT AND REMEDIES 45 12.1. Terms.................................................................................................................................45 12.2. Default by Garfield............................................................................................................46 1212.3. Default by Hotel Owner.....................................................................................................47 .4. Default by the City .............................................................................................................48 12.5. Remedies........................................... ...................................................................... 12.6. Accounting"""""' 9 54 ARTICLE 13 MISCELLANEOUS 54 13.1. Assignment........................................................................................................................54 13.2. Hotel Owner Agency.........................................................................................................54 13.3. Modification.................. ................................................... 13.4. Procurement of Goods and Services from Historically Underutilized Businesses ............ 55 13.5. Leadership in Energy and Environmental Design.............................................................55 13.6. Intellectual Property...........................................................................................................55 113.7. Controlling Provisions.......................................................................................................56 3.8. Insurance............................................................................................................................56 13.9. Waiver................................................................................................................................56 13.10. Severability ........................................................................................................................56 13.11. Exhibits..............................................................................................................................56 13.12. Documents ................................. ........................................................................................56 13.13. Other Documentation.......................................................................... 13.14. Interpretation ............................................................ ..........................................................57 13.15. City Approval, Action, or Decision...................................................................................57 13.16. "Including...........................................................................................................................57 13.17. Notices...............................................................................................................................57 13.18. Entire Agreement...............................................................................................................58 13.19. Further Assurances.............................................................................................................58 13.20. Counterparts.......................................................................................................................59 13.21. No Joint Venture................................................................................................................59 13.22. Governing Law..................................................................................................................59 13.23. INDEMNITY ................... .................................................................... 13.24. Limitation on Hotel Owner Liability Exhibit A - Description of Property and Project Exhibit B - Performance Standards and Competitive Set Exhibit C — Final Report -3- MASTER DEVELOPMENT AGREEMENT THIS MASTER DEVELOPMENT AGREEMENT (the "Agreement"), is made as of this day of September, 2018, by and among the City of Baytown, Texas, a political subdivision of the State of Texas (the "City"); Baytown Municipal Development District, a political subdivision of the State of Texas and of the City of Baytown ("Hotel Owner"); and Garfield Public/Private LLC, a Texas limited liability company ("Garfield") (any of them individually, a "Party," or collectively, the "Parties"). RECITALS: WHEREAS, the City has determined that it is in the best interests of the City to construct a full-service, upscale hotel and convention center, with related public infrastructure and facilities and certain surface parking, landscaping, hardscaping and other amenities (the "Project") that will function as a convention center hotel; WHEREAS, the City issued a request for proposals Number 03-14-17 (the "RFP") for the planning, design, construction, and commissioning the Project; and WHEREAS, Garfield submitted a proposal of a development team that includes architects, engineers, a construction contractor, and a private bond investor for the hotel which the City determined provided the best value for the City on the basis of the published selection criteria and the ranking evaluations, to provide professional services of a team to design, construct, and operate a convention center and a convention center hotel; and WHEREAS, the City and Garfield entered into a Pre -Development Services Agreement, dated July 17, 2017, indicating the intent of the parties thereto to develop the Project (the "Pre - Development Services Agreement"); and WHEREAS, as contemplated in the Pre -Development Services Agreement, the Parties are entering into this Agreement and this Agreement supersedes the Pre -Development Services Agreement and all previous Master Development Agreements for the Project, except to the extent any such obligations are re -stated in this Agreement, in which event those obligations shall survive as provided herein; and WHEREAS, the Parties intend that the development of the Project will proceed as follows: (i) the City will lease to Hotel Owner pursuant to the Ground Lease, a tract of land located adjacent to the City's convention center in Baytown, Texas, on which an upscale, full-service Hotel will be constructed, (ii) Garfield, on behalf of the Hotel Owner, will act as developer to construct the publicly owned Hotel on the Hotel Site with a minimum of 200 rooms,(iii) Garfield, pursuant to this Agreement, will act as developer to construct the public, City -owned convention center facilities, certain surface parking and certain public facilities and infrastructure as set forth in Exhibit A (the "City Facilities") on other land owned by the City, (iv) the City will lease the City Facilities to the Hotel Owner, for use as public meeting and convention center facilities and public parking spaces for use in connection with the Project; and -4- WHEREAS, the City desires that Hotel Owner (with Garfield as the developer) undertake the ownership and development of the Project in order to serve the needs of the City by helping ensure that there is adequate meeting and event space available to residents of the City and to promote tourism and the convention and hotel industry within the City. The Project will generate municipal hotel occupancy taxes, a portion of which may be used to pay debt service on City obligations issued to construct certain public improvements relating to the Project; and WHEREAS, Garfield will act as the developer for the Hotel Owner in the development, construction, furnishing and equipping of the Hotel, and will act as development manager to the City in the development, construction, furnishing and equipping of the City Facilities; and WHEREAS, the City has determined that the City's proposed convention center cannot be fully, effectively and economically utilized without the construction and operation of a convention center hotel adjacent to the City's convention center; and WHEREAS, the Hotel Owner is engaged in an on-going effort to provide new resources to plan, acquire, establish, develop, construct and/or renovate one or more development projects beneficial to the district's territory and is authorized under Chapter 377 of the Texas Local Government Code to undertake the development, construction, ownership, and operation of the Hotel; and WHEREAS, the City believes and has determined that the development, construction, ownership, and operation of the Hotel by the Hotel Owner will benefit the City and its residents; and WHEREAS, the City has requested that Hotel Owner cooperate with the City and Garfield to develop, construct, lease and operate the City Facilities, and develop, construct and own the Hotel as part of a single integrated project so long as the Hotel Owner has obligations outstanding with respect to the Project; and WHEREAS, the Hotel Owner now desires to develop, construct, and own the Hotel and to issue debt obligations to provide for the Hotel Construction Phase Financing (as defined herein) and to contract with Garfield to develop and construct the Hotel; and WHEREAS, the City intends to finance the City Facilities through the issuance of municipal obligations in one or more series and from lawfully available revenues to provide for the development, construction, furnishing and equipping of the City Facilities; and WHEREAS, the Hotel Owner intends to issue tax-exempt bonds, the proceeds of which shall be sufficient for the purpose of acquiring, developing, constructing, furnishing and equipping the Hotel; NOW, THEREFORE, in consideration of the foregoing, the mutual covenants herein contained, and for other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows: -5- ARTICLE 1 DEFINITIONS I.I. Preamble. The fmdings set forth in the recitals of this Agreement are hereby found to be true and correct. 1.2. Definition of Terms. When used in this Agreement with an initial capital letter or letters, each of the following terms shall have the meaning given it below. "Agreement" means this Master Development Agreement among the City, Garfield and Hotel Owner. "Applicable Appraisal District" means the Harris County Appraisal District or its successor. "Appropriate Taxing Authorities" means those entities that assess ad valorem taxes in the City of Baytown, Harris County, Texas, including, but not limited to, the City of Baytown, the Goose Creek Consolidated ISD, Harris County, the Harris County Flood Control District, the Port of Houston Authority, the Harris County Hospital District, the Harris County Department of Education, and the Lee College District. "Asset Management Agreement" means the asset management agreement to be entered into by and between the Hotel Owner and Garfield (or its affiliate). "Booking Agreement" has the meaning set forth in Section 3.3.4. "Brand" means the upscale hotel brand of the Hotel as approved by the City Council and Board of Directors of the Hotel Owner. Such Brand shall never be below that of the Competitive Set. "City" means the City of Baytown, Texas, a home -rule municipal corporation located in Harris and Chambers Counties, Texas. "City Contribution" means the City's combined net proceeds of the issuance of the City's debt obligations, in one or more series, to be used to construct the City Facilities; provided that the City shall not be obligated to contribute more than $21,100,000.00 (which amount is inclusive of the Design and Development Funds) in net proceeds to fund the design, development and construction of the City Facilities. The net proceeds of the City's obligations to fund the City Facilities will be based on a par amount that will be supported by revenues the City has dedicated to the payment of the debt, based on current City projections and market conditions. In no event shall the City Contribution be in excess of the actual costs to develop the City Facilities or the maximum amount stated hereinabove. "City Delay" means any delay in completion of construction of the Project resulting from any act or delay of the City, its employees or agents, other than delays resulting from (i) acts that the City or its employees or agents are expressly permitted or obligated to perform pursuant to the IrZ City's police power or pursuant to this Agreement, or (ii) the failure by the City to perform timely any of its obligations under this Agreement, other than those functions of the City acting in its governmental capacity. "City Facilities" means the public meeting rooms, ballroom, and convention center areas along with related infrastructure, other public facilities and surface parking as set forth in Section 2.1.1(a) and in Exhibit A. "City Facilities Budget" means the budget for the design, development and construction of the City Facilities prepared by Garfield and approved in writing by both the City and Hotel Owner. The City Facilities Budget and any amendments or changes thereto will only be effective if and to the extent approved in writing by both City and Hotel Owner. "City Facilities Lease" means the lease between the City, as lessor, and Hotel Owner, as lessee, regarding the use, occupancy and operation of the City Facilities, including the surface parking as described in Exhibit A (but not including the parking on the Marina Parking Site). "City Financing Closing" means the closing of the issuance of the City's debt obligations, the proceeds of which the City will use to fund the City Contribution, such that net proceeds of such obligations are available to the City. Such Closing shall occur on a date that is not later than seven (7) business days after the Hotel Owner Financing Closing; provided, however, in no event shall such City Financing Closing occur prior to the Hotel Owner Financing Closing. "City Representative" means the City Manager of the City or such other person as may be designated in writing by the City Manager of the City as its representative for the Project. "City Specialists and Consultants" means the planning, architectural, engineering, interior design and other specialists and consultants engaged by the City to act as its representatives with respect to the Project. "Competitive Set" means the hotels that (i) are upscale, full-service, convention center hotels (not including so-called "budget" or "limited service" hotels or motels) and (ii) have at least two hundred (200) keys, (iii) contain features, finishes and amenities that are available in hotels of similar age that are at all times during the term of the Ground Lease maintained in a condition no less than that required by the Hotel Operating Standard and are considered to be upscale, full- service, convention center hotels and (iv) are located within the State of Texas. For purposes of this Agreement, such Competitive Set shall be those as set forth in Exhibit B and in the Ground Lease, as maybe adjusted, upon written approval of the City, as provided therein or as otherwise modified with written approval of the City to be consistent with the requirements of the Operator as set forth in the Project Operating Agreement. "Completed" means, with respect to any portion of the Project, when the Project Architect certifies in writing to the applicable Party(ies) that the construction of such portion of the Project is substantially completed in accordance with the Development Plan to permit use thereof for the purposes for which it is intended, which date may precede the full completion of all punch list items, landscaping and similar design and development functions. -7- "Construction Deadline" means the date on which the Construction Phase commences, such date being no later than 60 days after the City Financing Closing, subject to Force Majeure. "Construction Phase" is described in Section 2.2.3. "Contractors" means, collectively, the General Contractor and its subcontractors for construction of the Project. "Design and Development Funds" means City -provided funds not to exceed $1,600,000.00 in cash for the payment of Project Development Phase costs of the City Facilities incurred prior to the availability of funds to the City from the City Financing Closing. "Design Professionals" means the planning, architectural, engineering, interior design and other specialists and consultants engaged by Hotel Owner, Garfield, General Contractor, and/or the City pursuant to the Proposal for the design and construction of the Project, including the Project Architect. Budget. "Development Budget" means, collectively, the Hotel Budget and the City Facilities "Development Fee" means the fee to be paid by the City to Garfield for the work and services to be performed by Garfield under this Agreement in the design, development and construction of the City Facilities as described in Article 9. This fee shall be in the amount of 4.25% of the City -approved City Facilities Budget, with the exception of the following budget line items, to the extent applicable to the City Facilities: legal fees, pre -opening marketing, Garfield Development Fee, Garfield construction supervisor project manager costs, Garfield FF&E Services Fee, construction loan interest, miscellaneous closing costs and working capital. "Development Plan" means the detailed plan concerning the Project and all items which will be required to cause Final Completion of the Project, which shall include, without limitation, the final drawings and specifications, development schedule, and Development Budget established during the Project Development Phase, as approved by the City, as the same shall have been amended as provided herein during the construction phase of the Project. "Effective Date" means the date of execution of this Agreement by the last Party to sign this Agreement. "Event of Default" or "Events of Default" are defined in Article 12. "FF&E" means those items of furnishings, fixtures, equipment, accessories and materials for use in the operation of the Project or any portion thereof. "FF&E Budget" means the preliminary cost estimate to be developed for purchasing the FF&E for the City Facilities, 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, which shall be included in the City Facilities Budget, as applicable. Such budget shall be sufficient to make the City Facilities fully operational for the purpose for which they were constructed. "FF&E Services Fee" means the $165,000 fee for additional services provided by Garfield with regard to the oversight of the purchase, storage and installation of the FF&E as set forth herein. "FF&E Schedule" is defined in Section 6.1.1. "FF&E Specifications" is defined in Section 6.1.2. "Final Completion" means, with respect to any portion of the Project, completion of all punch list items, delivery and installation of all remaining FF&E and obtaining all final permits which remain undone or not complete following Completion thereof. "Final Report" means the report delivered to the City pursuant to the Pre -Development Services Agreement between the City and Garfield, which report is attached hereto as Exhibit C. "First -Class Manner" means the standard for maintenance of any part of the Project that is consistent with and satisfied by the brand standards required by the Brand and the Operator, in the Project Operating Agreement. Such standards shall never be below that of the operator standard of the Competitive Set as of the Effective Date. "Force Majeure" means war, riots, civil commotion, strikes, labor disputes, embargoes, natural disasters, acts of God or any other cause or contingency similarly beyond the reasonable control of the Parties. "Franchise Agreement" means that certain hotel franchise agreement between Hotel Owner and the Hotel brand franchisor, as approved by the City, relating to the license and franchise of the concept and system associated with the establishment and operation of the Hotel under the Sheraton or Marriott name. "Garfield" means Garfield Public/Private LLC, a Texas limited liability company, or its affiliate or upon its default under this Agreement, any replacement developer who may subsequently undertake the obligations of "Garfield" under this Agreement in accordance with Section 2.1.3(b) herein. "General Contractor" means DPR Construction, Inc., a Texas corporation. "GMP Contracts" means the two separate guaranteed maximum price design/build contracts for (1) the City Facilities and (2) the Hotel. "Governmental Authority" means any Federal, state or local governmental entity, authority (including any Appropriate Taxing Authority) or agency, court, tribunal, regulatory commission or other body, whether legislative, judicial or executive (or a combination or permutation thereof) and any arbitrator to whom a dispute has been presented under Governmental Rule, pursuant to 10 the terms of the Ground Lease or the City Facilities Lease, as applicable, or by agreement of the Parties. "Governmental Function" means any regulatory, legislative, permitting, zoning, enforcement (including police power), licensing or other functions which the City, its employees or agents is authorized or required to perform in its capacity as a home rule municipality in accordance with Governmental Rule. "Governmental Rule" means any statute, law, treaty, rule, code, ordinance, regulation, permit, interpretation, certificate or order of any Governmental Authority, or any judgment, decision, decree, injunction, writ, order or like action of any court, arbitrator or other Governmental Authority. Governmental Rules shall include, but not be limited to, the City codes. "Ground Lease" means that certain lease of the Hotel Site to Hotel Owner as lessee by the City as lessor. "Hotel" is defined and described in Section 2.1.1(b). "Hotel Budget" means the budget for development and construction of the Hotel, prepared by Garfield and Hotel Owner and approved in writing by the City and the Hotel Owner as same may be modified pursuant to this Agreement and the Hotel Development Agreement with concurrent notice to the City Representative of any such modification. "Hotel Construction Phase Financing" means those certain tax-exempt bonds or other form of financing issued by the Hotel Owner, upon written approval by Hotel Owner's Board of Directors, the net proceeds of which will be used for financing 100% of the costs of completing (a) the design, development and construction of the Hotel (including related financing costs, capitalized interest, reserves for debt service and working capital, and related attorneys' fees and expenses) pursuant to the Hotel Budget and (b) the development and construction of the City Facilities, but only to the extent the actual costs of the City Facilities exceed the amount of the City Contribution. "Hotel D&D Costs" is defined in Section 2.2.1(b). "Hotel Design Fee" is defined and described in Section 2.2.1(b). "Hotel Development Agreement" means that certain hotel development agreement between Hotel Owner and Garfield pursuant to which the Hotel will be developed. "Hotel Operating Standard" means the operation of the Hotel and the City Facilities on a full-service basis in a manner consistent with the standards of operation of the Competitive Set and the Project Operating Agreement; provided, however, neither Garfield nor Hotel Owner shall be required as a result of the aforesaid covenant to (a) provide amenities or facilities that are impracticable as a result of the physical constraints of the Project, (b) undertake any actions prohibited by the Ground Lease or the Brand, or (c) perform any structural alterations to the Project, except to the extent otherwise required by the Ground Lease, including Maintenance and Repair Work. -10- "Hotel Owner" means Baytown Municipal Development District, a political subdivision of the State of Texas and the City. "Hotel Owner Financing Closing" means the closing of the Hotel Construction Phase Financing, which must occur not later than March 31, 2019, or such later date as may be extended in writing by mutual agreement of Hotel Owner and the City Representative, up to an additional thirty (30) days, but in any event, to occur prior to the City Financing Closing. "Hotel Owner Financing Contribution" means the combined net proceeds from the issuance of the Hotel Construction Phase Financing. "Hotel Owner Financing Documents" means the trust indenture(s) for the Hotel Construction Phase Financing, any related bond purchase agreement and all other loan agreements, security documents or instruments pursuant to which Hotel Owner Financing Contribution is made. "Hotel Owner Representative" means the General Manager of the Hotel Owner or such other person as may be designated in writing by the General Manager of the Hotel Owner as its representative for the Project. "Hotel Site" means that portion of the Property on which the Hotel shall be constructed, as described in the Ground Lease. "Initial Occupancy" means the first night a person pays for the use or possession of or for the right to use or possess a room or space at the Hotel. "Intellectual Property" means all intellectual property rights of any kind, including patent rights (whether design or utility), copyrights, trademark and service mark rights, trade dress rights, utility model rights, moral (personal) rights, rights ofpublicity, trade secret rights, industrial design rights, and web site and internet domain rights. "Leasehold Mortgagee" means the Trustee appointed pursuant to the Hotel Owner Financing Documents as further described in Section 12.5.4. "Maintenance and Repair Work" means: (a) Keep and maintain, or cause to be kept and maintained, the City Facilities and the Hotel and all improvements thereto in good working repair, order and condition in accordance with the Hotel Operating Standard; (b) Promptly make, or cause to be made, all necessary repairs, interior and exterior, structural and non-structural, foreseen as well as unforeseen, to the City Facilities and the Hotel to keep them clean and in a condition such that the Hotel may be operated in accordance with the Hotel Operating Standard and in compliance with all applicable Governmental Rules; and (c) Perform all alterations, upgrades, improvements, renovations or refurbishments to the City Facilities and the Hotel and all improvements thereto necessary to keep them in a condition -11- no less than that required by the Hotel Operating Standard, including any capital expenditures necessary to accomplish same. "Marina Parking Site" means the 1.92 -acre parking area adjoining the City Facilities as shown on Exhibit A, which area is subject to an existing parking agreement with the adjoining Marina, which spaces will be public parking spaces open to the public. "Marina Site Parking Agreement" means the parking rights agreement between the City, as lessor, and Hotel Owner, as lessee, regarding the use of approximately 230 spaces located on the Marina Parking Site. "Notice to Proceed" means written notice from the City Representative and Hotel Owner to Garfield to commence construction of the Project, as provided in Section 4.1. "Operator" means Interstate Hotels & Resorts, Inc., or its affiliate, or such other management entity for the Hotel and City Facilities as may be proposed by Hotel Owner and as approved in writing by the City, such approval not to be unreasonably withheld. "Parties" means Hotel Owner, Garfield, and the City. "Permitted Non -Funding Event" means the following events which cause the City or the Hotel Owner to not issue its debt obligations to fund the City Contribution or the Hotel Construction Phase Financing, respectively: (i) At the time of the proposed sale of the debt in the public securities market, there shall have occurred (i) any new material outbreak of hostilities (including, without limitation, an act of terrorism), (ii) the escalation of hostilities existing prior to the date hereof or (iii) any other extraordinary event, material national or international calamity or crisis, or any material adverse change in the financial, political or economic conditions affecting the United States, the City, or the Hotel Owner, (ii) At the time of the proposed sale of the debt in the public securities market, a natural disaster shall have occurred within the City that has caused a material disruption in the operation of the City, or the Hotel Owner and a state of emergency has been declared by a lawful authority that includes all or a portion of the corporate boundaries of the City or the Hotel Owner, (iii) At the time of the proposed sale of the debt in the public securities market, a general suspension of trading in securities on the New York Stock Exchange or any other national securities exchange; (iv) At the time of the proposed sale of the debt in the public securities market, a general banking moratorium declared by federal, State of New York, or the State of Texas officials authorized to do so; (v) At the time of the proposed sale of the debt in the public securities market, any amendment to the federal or state Constitution or action by any federal or state -12- court, legislative body, regulatory body (including the Texas State Comptroller), or other authority has occurred materially adversely affecting the validity, enforceability, or the collection of the revenues to pay principal of and interest on the bonds to be issued by the City or the Hotel Owner, as applicable; (vi) The Attorney General of the State of Texas fails to approve the debt obligations financing the City Contribution or the Hotel Construction Phase Financing, as applicable; or (vii) This Agreement has been terminated pursuant to the provisions herein. "Pre -Development Phase" means the period from July 17, 2017, until the Effective Date of this Agreement, during which period the Parties have diligently attempted to accomplish and mutually agree upon all the matters enumerated in the Pre -Development Services Agreement. "Pre -Development Services Agreement" is defined in the Recitals. "Project" means, collectively, the Hotel and the City Facilities together with the FF&E to be installed therein and the landscaping, hardscaping and other amenities to be included in the Development Plan. "Project Agreements" means this Agreement, the project delivery contract(s) for the design and construction of the Hotel and the City Facilities, the Hotel Development Agreement, the Asset Management Agreement, the Project Operating Agreement, the Ground Lease, the Franchise Agreement, and the City Facilities Lease, the Booking Agreement, and the Marina Site Parking Agreement. "Project Agreements Deadline" means December 14, 2018, as such date may be extended by Hotel Owner Representative, Garfield and the City Representative. "Project Architect" means BOKA Powell, LLC. "Project Development Phase" means the period of time commencing upon the Effective Date of this Agreement and ending on or before the Construction Deadline as such date may be extended by mutual agreement of the Parties, during which the Parties shall diligently attempt to accomplish and mutually agree upon all the matters enumerated in Article 4 hereof. "Project Funding Deadline" means April 20, 2019, unless such date shall be extended by agreement of Hotel Owner, and the City Representative. "Project Operating Agreement" means the qualified management agreement for the Project, to be executed by and between Hotel Owner and Operator, which shall be subject to the approval in writing of the City Representative, such approval not to be unreasonably withheld, delayed or conditioned. -13- "Property" means the 7.745 -acre tract of land situated in the City, Harris County, Texas, owned by the City and more fully described in Exhibit A attached hereto, together with the Marina Parking Site. "Proposal" means Garfield's development proposal submitted to the City in response to RFP Number 03-14-17. ARTICLE 2 THE PROJECT 2.1. Project Development. 2.1.1 Summary of Proposed Development. Subject to the terms and conditions of this Agreement and of the other instruments and agreements to be entered into pursuant to this Agreement, the City, Hotel Owner, and Garfield shall cause the Project to be developed and constructed as follows: (a) City Facilities. The City shall commit the City Contribution for design, development and construction, in the manner provided in this Agreement, of the following: (i) Public conference rooms and meeting space of approximately 33,600 sq. ft., including a ballroom of approximately 12,000 square feet, and public facilities or infrastructure ancillary to the conference rooms and meeting space as identified on the conceptual design as set forth in the Final Report, consistent with the Hotel Operating Standard (the "City Facilities"); and (ii) A parking lot with approximately 324 spaces adjacent to the Hotel and the public meeting rooms, ballroom, and convention center portion of the City Facilities together with approximately 200 spaces located on the Marina Parking Site portion of the Property, all of which parking shall be public parking. The City Facilities shall be constructed of a quality consistent with the Hotel Operating Standard, and otherwise in accordance with designs, plans and specifications approved in writing by the City and Hotel Owner as provided herein, and in accordance with all Governmental Rules. The City Facilities are public facilities and must be open to the public as required by state law. (b) Hotel. Hotel Owner intends to issue debt obligations to finance and expend the Hotel Owner Financing Contribution, for development and construction of an upscale, full-service Hotel consistent with the Hotel Operating Standard, having at least two hundred (200) rooms to include guestrooms and suites, appropriate support facilities such as a restaurant(s), a lounge(s) or bar(s), supporting back -of -the -house areas, and food preparation facilities, to the extent -14- not constructed as City Facilities, together with such other amenities and features characteristic of a full-service hotel, to be operated pursuant to the Project Operating Agreement. The Hotel shall be constructed of a quality consistent with the standards of quality and efficiency of the Competitive Set, subject to the approved Development Budget and otherwise in accordance with designs, plans and specifications approved in writing by the Parties and the Operator, as provided herein, and in accordance with all applicable Governmental Rules. 2.1.2 Coordinated Desi n Team. Garfield will manage development of the City Facilities with the Hotel and will manage or will cause the General Contractor to manage the Design Professionals, including the coordination of their efforts with the City Specialists and Consultants and/or City staff. The City's development team will have access to Garfield throughout the development of the Project and will have oversight responsibilities with respect to the City Facilities and will manage all payments with respect to the City Facilities. The City hereby acknowledges that Garfield will have to coordinate certain approval of construction and design criteria for the Project with Hotel Owner and Operator, and hereby further acknowledges that the Operator will have certain approval rights with respect to many aspects of the construction and development of the Project, as may be set forth in the Project Operating Agreement or related documents executed by Hotel Owner. Notwithstanding the above, the City staff and Hotel Owner shall cooperate with each other and with Garfield and with Garfield's coordination of the construction of the Project. The City may retain, at its sole cost and expense (which will not be included in the City Contribution), additional City Specialists and Consultants necessary to advise the City on the development of the Project. 2.1.3 Appointment of Garfield. (a) The City hereby selects Garfield as development manager for the Project in accordance with the selection of Garfield and the General Contractor, Project Architect, and Operator as the City's development team pursuant to the Request for Proposal issued by the City, with respect to design, development and construction of the City Facilities, and to perform the duties and services of Garfield set forth herein, all in accordance with the terms and conditions of this Agreement. Garfield shall be an independent contractor and nothing contained in this Agreement shall be construed to create a partnership, joint venture, or agency relationship between Garfield and the City. Garfield agrees to coordinate all development activities with City staff. (b) Upon the occurrence of any material and uncured Event of Default by Garfield or a Replacement Developer (as defined below) under this Agreement or the Hotel Development Agreement, Hotel Owner shall have the right (but not the obligation) to assume all duties, rights and obligations of Garfield or a Replacement Developer (as defined below) under this Agreement or the Hotel Development Agreement. If the Hotel Owner elects to assume all duties, rights and obligations of Garfield or a Replacement Developer as described above, it shall give notice to Garfield (or the Replacement Developer) and, the City of its election -15- to assume all duties under this Agreement or the Hotel Development Agreement within 30 days of the uncured Event of Default. Alternatively, if Hotel Owner does not wish to assume the obligations of Garfield or a Replacement Developer under this Agreement, then Hotel Owner or the City may recommend a Replacement Developer. Upon the occurrence of any material and uncured Event of Default by Garfield or a Replacement Developer under this Agreement or the Hotel Development Agreement, Hotel Owner shall have the right to cause the removal and replacement of Garfield with respect to the Hotel with the consent of the City. Any Replacement Developer for the Hotel proposed by the Hotel Owner or the City shall be mutually acceptable to the City and Hotel Owner. The Hotel Owner shall give written notice to the City setting forth the identity and qualifications of the proposed Replacement Developer within 30 days of the material and uncured Event of Default. The City shall have the right to cause the removal and replacement of Garfield with respect to the City Facilities. If the City recommends a Replacement Developer, the City shall give notice to Hotel Owner setting forth the identity and qualifications of the proposed replacement within 30 days of the default by Garfield that is not cured during the applicable cure period, if any. The replacement of Garfield or a Replacement Developer shall be subject to review and written approval by the City, which approval shall not be unreasonably withheld, delayed or conditioned. Following approval by the City of the Hotel Owner's proposed replacement ("Replacement Developer"), Replacement Developer shall execute an assumption of Garfield's or the successor developer's obligations under this Agreement (and all related development agreements with the City to which Garfield or any successor developer is a party) which arise from and after the date of assumption, which assumption shall be in a form reasonably acceptable to the City Representative. Any consent required of the Hotel Owner under this Section 2.1.3(b) shall not be unreasonably withheld, delayed or conditioned. This Section 2.1.3(b) does not modify or waive any portion of Section 12.2.13 of this Agreement. (c) Any Replacement Developer shall have the following minimum qualifications: (i) Successfully developed three or more full-service, public or public/private hotel developments supporting convention centers of 200 keys or more; (ii) Must be approved by General Contractor, Project Architect and Operator, if any; (iii) Experience within the State of Texas developing public/private transactions; (iv) References from municipal public/private projects; -16- staff from two Texas (v) A corporate balance sheet demonstrating value of $5,000,000.00; and (vi) A willingness to accept development risk, including construction loan liability and carve outs. 2.1.4 Sole General Contractor Required. Because it is anticipated that the structures constituting the Project are interconnected, and accordingly, one entity is needed to coordinate construction and to ensure the successful development of the Project, a single General Contractor and Project Architect is needed and such contractor and architect shall be the General Contractor and Project Architect. 2.2. Project Phases. The Parties shall undertake the design, planning, development and construction of the Project and perform their various obligations as outlined in this Agreement in accordance with the following schedule of phases: 2.2.1 Proiect Development Phase. (a) Following the Effective Date, detailed design development, planning and budgeting for the Project shall occur during the Project Development Phase, with the objective of preparing plans and specifications for the Project sufficiently completed and detailed to obtain guaranteed maximum price bids and to establish a detailed Development Budget therefrom. During the Project Development Phase, and on or before the Project Agreements Deadline, the Parties shall also prepare, negotiate and finalize the Project Agreements for the funding, development, construction, completion and ongoing occupancy, use, operation, maintenance and repair of the Project. On or before the Project Funding Deadline (if the Project is not terminated as set forth in Article 11), the Parties shall proceed to the Hotel Owner Financing Closing and the City Financing Closing. (b) Following the execution of the design/build contract for the City Facilities by the City and the design/build contract for the Hotel by the Hotel Owner and subject to Section 3.3.9 hereof, the City shall have available the Design and Development Funds for the design and development costs of the City Facilities as well as the funds for the design and development costs of the Hotel (the "Hotel D&D Costs"). As further provided in Section 3.3.9 herein, Hotel Owner shall pay a hotel design fee to the City in an amount equal to the Hotel D&D Costs up to a maximum of $2,600,000 (the "Hotel Design Fee") out of the proceeds of the Hotel Construction Phase Financing or other lawfully available source of funds in return for the transfer of any work product resulting from the expenditure of such Hotel D&D costs. The Hotel D&D costs initially paid by the City are in addition to the City's Contribution. The funds advanced by the City on behalf of the Hotel Owner to cover the Hotel D&D Costs shall be paid in accordance with the procedures set forth in Section 9.1 below. 2.2.2 Closine. -17- (a) On or before the Project Funding Deadline, the City shall sell its debt obligations to fund the City Contribution as evidenced by the approval of the City's ordinance authorizing the issuance of the City's debt obligations, and Hotel Owner shall sell its debt obligations to fund the Hotel Construction Phase Financing as evidenced by the execution of a bond purchase agreement. (b) The proceeds of such financing contributions shall be available no later than the Hotel Owner Financing Closing and the City Financing Closing and shall be made available for disbursement as development of the Project proceeds in accordance with the design/build contract or otherwise applied toward the Project as agreed among the Parties in writing. (c) The Ground Lease shall become effective, pursuant to which the City will lease the Hotel Site to Hotel Owner, as lessee. (d) The City Facilities Lease shall become effective pursuant to which the City will lease the City Facilities to Hotel Owner, as lessee. (e) The other Project Agreements shall become effective. 2.2.3 Construction Phase. Following the City Financing Closing and the Hotel Owner Financing Closing, Garfield shall cause the completion of final design and construction plans and specifications for the Project, including obtaining separate GMP Contracts for the City Facilities and for the Hotel, and shall be directed to commence construction of the Project in accordance therewith and with Article 4. During construction, Garfield shall act as development manager for the Project on behalf of Hotel Owner and the City and shall coordinate and oversee all aspects of the design, development and construction of the Project in conjunction with the General Contractor and the Design Professionals all in accordance with Article 4, and provide services with respect to FF&E for the Project as set forth in Article 6. In connection with the Project, Garfield shall at all times employ an adequate number of qualified persons to perform the construction and development services necessary to complete the Project and devote substantial time to the City Facilities and the balance of the Project. Garfield shall have a construction supervisor/project manager for the Project that is approved by the City and the Hotel Owner who is available to consult with and report to the City and the Hotel Owner. The cost for the construction supervisor/project manager allocated to the City Facilities shall be included as part of the City Facilities Budget (which cost is in addition to, and not included as part of, the Development Fee). Any replacement construction supervisor'project manager for the Project shall require the written approval of the City and the Hotel Owner. 2.2.4 Post Construction. Prior to the Project Funding Deadline, Hotel Owner will engage Operator to oversee, when the Project is completed, the use, operation, management, maintenance and repair of the Hotel and City Facilities subject to and in accordance with the Project Operating Agreement, the Ground Lease, the Booking Agreement, the City Facilities Lease, and any reciprocal use, access and operating agreements entered into by the Parties with respect to the various facilities. -18- ARTICLE 3 PROJECT DEVELOPMENT ACTIVITIES 3.1. Garfield Services. Garfield shall coordinate with City staff and Hotel Owner staff and with the Design Professionals to obtain a final site plan for the Project acceptable to the City and Hotel Owner, and final construction drawings and specifications for the Project acceptable to City staff, Hotel Owner and Garfield. The Project construction drawings shall be segregated into those for the City Facilities and those for the Hotel such that the expenditure of the City Contribution and Design and Development Funds can be allocated and tracked to the construction drawings and specifications for the City Facilities and such that the General Contractor of the design and construction team can enter into separate design/build contracts for the City Facilities and for the Hotel. 3.1.1 City Facilities. Garfield shall provide the following services during the Project Development Phase to the City with respect to the City Facilities: (a) Providing descriptions of the categories of the FF&E, operating supplies, fixed asset supplies and the like anticipated to be required for the City Facilities for approval by the City Representative and Hotel Owner, (b) Obtaining cost estimates from the Design Professionals and Contractors and preparation of revisions to the City Facilities Budget for the construction phase in light of design development. The City will not fund costs exceeding the City Contribution, and the City Facilities Budget shall be approved in writing by the City. Budgeted costs may be redistributed between line items, including the redistribution of contingencies, to the extent authorized by the financing documents authorizing the City's debt obligations. However, if any increase or decrease in any line item in the City Facilities Budget exceeds 10% from the original budgets as approved in writing by the City, the revised budget must be approved in writing by the City Representative, such approval not to be unreasonably withheld or delayed. In no event shall there be an increase in the budget for the City Facilities that exceeds the total budget as originally approved in writing by the City unless such excess costs are approved by Hotel Owner and paid for and funded by the Hotel Owner Financing Contribution; (c) Preparation of a development schedule for the City Facilities, in conjunction with the development schedule for the Hotel; (d) Timely submitting to City staff and Hotel Owner, for their written approval, construction drawings, plans and specifications for the City Facilities including landscaping plans, mechanical and electrical drawings, architectural appearance, interior design schemes and specialized area plans for communication systems, security systems, and the like, with sufficient information and detail to obtain guaranteed maximum pricing from the General Contractor; -19- (e) Negotiating, reviewing, evaluating and finalizing the GMP Contracts with the General Contractor, it being understood that it is anticipated that there shall be separate GMP Contracts for (i) the Hotel, and (ii) for the City Facilities. Hotel Owner agrees to retain or cause to be retained the General Contractor pursuant to a GMP Contract for the construction of the Hotel. The City agrees to retain the General Contractor pursuant to a GMP Contract between the City, Garfield and the General Contractor entered into pursuant to the City's selection under the Request for Proposal issued by the City for the construction of the City Facilities. Garfield shall administer such contract on the City's behalf as the development manager for the City during the construction phase of the applicable GMP Contract. The contract for the City Facilities shall require the General Contractor to provide payment and performance bonds in accordance with general Texas law applicable to municipalities and the contract(s) with the Project Architect shall name the City and Hotel Owner as an additional insured and shall provide that the City may, upon Garfield's or Hotel Owner's default and termination of this Agreement, enter into a new contract with the Project Architect and General Contractor for the City Facilities. The GMP Contracts must be in an amount equal to or less than the net construction proceeds of the City's debt obligations and the Hotel Construction Phase Financing, respectively. Any GMP Contract costs exceeding the available bond proceeds shall be funded through the Hotel Construction Phase Financing, subject to termination of this Agreement as set forth in Section 11.1.3; and (f) Obtaining, on behalf and with the cooperation and assistance of City staff, all building, development and other permits necessary to commence construction of the Project. 3.1.2 Hotel. Garfield shall cause the design and development of the Hotel during the Project Development Phase pursuant to the Hotel Development Agreement. Prior to commencement of construction of the Hotel, Garfield shall provide the City Representative and Hotel Owner the documents listed below as well as any other documents reasonably required, and where necessary shall make the requisite filings of such documents with appropriate officials: (a) A copy of a term sheet or letter executed by the Operator whereby Operator agrees to manage and operate the Hotel in the event Garfield or Hotel Owner defaults under the documents relating to the Hotel Construction Phase Financing or the Project Operating Agreement, provided that written notice of default and an opportunity to cure the default is given pursuant to such financing documents and agreement; (b) Submission of, negotiating, reviewing, evaluating and finalizing the GMP Contract for the Hotel with the General Contractor, it being understood that there shall be separate construction contracts for the City Facilities and for the Hotel. Garfield agrees to retain the General Contractor pursuant to GMP Contracts for the construction of the City Facilities and the Hotel. The design/build contract -20- for the Hotel 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, such as subcontractor default insurance, and in the comparable documents typically used for similar projects in terms of size, scope and cost. (c) Conceptual design drawings of the Hotel and the Hotel Budget which shall be within the design standards of the Brand. Such conceptual design drawings along with the planned building and fagade materials shall be submitted to the City Council for approval. To the extent that the design of the Hotel is materially revised from the conceptual drawings and materials approved by the City Council and Operator, additional City Council and Hotel Owner written approval must be obtained for the changes, provided, however, the City Representative and Operator shall be notified of, and have access to, all revisions to the conceptual drawings and materials, regardless of scope or design materiality. No revision shall be made to the conceptual drawings or materials approved by the City, until either (i) the City Council has approved the material change in writing or (ii) at least ten (10) days have elapsed from the City's receipt of notification of the non -material change and the City Representative does not object in writing to the revision being characterized as non -material. Should the City Representative object, the change will be deemed material and subject to the approval of the City Council. In no event shall there be an increase in the budget for the City Facilities that exceeds the City Contribution unless such increase is paid for and funded by the Hotel Owner Financing Contribution. (d) Two copies each of (i) the plan of development and construction drawings and specifications for the Hotel which Garfield will submit to City staff in accordance with the City's zoning regulations, and (ii) the application for the foundation permit for the Hotel; (e) A certificate of insurance evidencing that all insurance required hereunder or pursuant to the Ground Lease with respect to the Project has been procured; M The Hotel Budget; (g) Preliminary operating projections for the Project; (h) A development schedule for Hotel in conjunction with the development schedule for the City Facilities; (i) An executed copy of the Project Operating Agreement; 0) An executed copy of the Booking Agreement; -21- (k) Copies of the Hotel Owner Financing documents; and (1) Such other documentation, including plans and specifications, schematic drawings and renderings of the Hotel, as may reasonably be requested by the City Representative or Hotel Owner to ensure the orderly development of the Project. Garfield must submit Hotel plans and specifications at the same time as the City Facilities plans and specifications. 3.1.3 Budget Updates. a) Garfield shall cause both the City Facilities Budget and the Hotel Budget to be updated as soon as practicable following the completion of the schematic design documents and the design development documents, respectively. Such updated budgets shall be delivered timely to both the City and Hotel Owner for their review and approval, in accordance with the development schedule for the City Facilities and Hotel prepared by Garfield in accordance with Sections 3.1.1(c) and 3.1.2(h) above. 3.2. Budget Adjustments. (a) After receipt of the guaranteed maximum prices for the Project, the Development Budget shall be finalized and adjusted, provided any such adjustments must be approved in writing by both City Representative and Hotel Owner. In no event, however, shall the City Contribution exceed $21,100,000.00 (which amount is inclusive of the Design and Development Funds for the City Facilities) in net proceeds of the City's debt obligations for the design, development and construction of the City Facilities. Any costs of the City Facilities exceeding the City Contribution, if approved in writing by the Hotel Owner, shall be provided for in the Hotel Construction Phase Financing. (b) Payment of design costs incurred for the Project shall be made as set forth in Section 5.1.2 and in Article 9. 3.3. Proiect Agreements. After the Effective Date of this Agreement the Parties shall diligently negotiate mutually acceptable forms of the following agreements to be approved by City and Hotel Owner and to be entered into or become effective on or before the Project Agreement Deadline: 3.3.1 Ground Lease. The City, as "landlord" therein, and Hotel Owner, as "tenant" therein, shall enter into the Ground Lease. 3.3.2 Marina Parking Site Agreement. The City, as lessor, and Hotel Owner, as lessee, shall enter into the Marina Site Parking Agreement regarding the use of approximately 230 spaces located on the Marina Parking Site, which spaces will be public parking spaces open to the public. -22- 3.3.3 City Facilities Lease. The City, as "landlord" or "lessor" therein, and Hotel Owner as "tenant" or "lessee" therein, shall enter into the City Facilities Lease for the public meeting rooms, public convention center space, surface parking and such other related public improvements as determined by the City Representative and approved in writing by the City. (a) The tenant under the City Facilities Lease shall pay to the City the sum of $1.00 per year plus the additional rent for the term of the Lease and all extensions thereto (which shall be coterminous with the Ground Lease). 3.3.4 Booking Agreement. The City and Hotel Owner shall enter into a Booking Agreement setting forth reservation and room block requirements for the benefit of the City Facilities and the Hotel that is sufficient to meet the public purpose requirements for the issuance of the City's debt obligations for the City Facilities. Operator shall be directed by Hotel Owner to comply with Hotel Owner's obligations to the City under the Booking Agreement. 3.3.5 Hotel Development Agreement. Garfield and Hotel Owner shall enter into the Hotel Development Agreement. Such agreement shall set forth the responsibilities of Garfield in respect of the development of the Hotel, which provisions will be consistent with the terms of this Agreement. 3.3.6 DesiWBuild Contracts. The City, Garfield and the General Contractor shall enter into a design/build contract for the construction of the City Facilities; and Hotel Owner, Garfield and the General Contractor shall enter into a design/build contract for the construction of the Hotel. 3.3.7 f Intentionally Omitted 3.3.8 Ground Lease Terms. The City Facilities Lease and Ground Lease, as applicable, shall provide, at a minimum, for: (a) a thirty (30) year base term; (b) an obligation of Hotel Owner (with Operator as its manager) to operate and maintain the Hotel and City Facilities in a First -Class Manner for the terms of the leases. Such obligations shall include an affirmative obligation for Hotel Owner to refresh the Hotel FF&E at appropriate intervals as is necessary to maintain the Hotel in a First Class Manner and shall clearly state that the City shall have no obligation or responsibility, financial or otherwise, to operate or maintain the Hotel or City Facilities during the terms of the City Facilities Lease and Ground Lease; (c) a clear list of events of default by the tenant and specific remedies for such default; -23- (d) an obligation by the tenant to maintain the Brand and to maintain and operate the Hotel in a First -Class Manner, and cross default provisions for defaults under the Hotel Construction Phase Financing documents and the Project Operating Agreement, if any; (e) provisions as reasonably required by the Leasehold Mortgagee providing that the Leasehold Mortgagee shall be given a concurrent copy of any notice of default by Hotel Owner under the City Facilities Lease Agreement, and the right, at its option, to cure any such default in the place and stead of Hotel Owner, and a reasonable time as may be required by the Leasehold Mortgagee to effect such cure and enforce their rights under financing documents, provided the Project Operating Agreement remains in full force and effect during the period of such cure; (f) a set of performance standards for the Hotel and a definition and method of determining the Competitive Set; substantially in the form attached hereto as Exhibit B and as set forth in the Ground Lease, as may be modified therein or as otherwise modified to be consistent with the requirements of the Operator as set forth in the Project Operating Agreement and approved by the City in writing; (g) the tenant under the Ground Lease shall pay to the City the sum of $1.00 per year plus the additional rent for the term of the Lease and all extensions thereto; (h) [Intentionally Omitted]; (i) [Intentionally Omitted]; 0) an obligation of the Hotel Owner to pay surplus revenues to the City as additional rent under the Ground Lease as set forth in this Section 3.3.80). If any Project revenues remain available under the bond trust indenture, with respect to the Hotel Construction Phase Financing, after the payment of all amounts due thereunder and making of all deposits into the funds required thereunder, such surplus revenues shall be deposited into a surplus fund (the "Surplus Fund") created and maintained under the bond trust indenture for further distribution to the City or the redemption of bonds issued for the Hotel Construction Phase Financing as further provided in the bond trust indenture for the Hotel Construction Phase Financing. The City Representative shall have the right to review and approve the flow of funds under the bond indenture for the Hotel Construction Phase Financing prior to its approval and execution; (k) [Intentionally Omitted]; (1) upon repayment in full of all amounts outstanding under the Hotel Construction Phase Financing, whether at a date before or after the stated maturity, upon optional redemption or otherwise, annual rental payments to the City pursuant -24- to the Ground Lease, for the remaining term of the Ground Lease shall be increased to an amount equal to 100% of the Net Cash Flow (as defined in the Ground Lease), derived annually from the operations of the Hotel; and (m) notwithstanding Section 3.3.8(1) above, following full repayment of the Hotel Construction Phase Financing and unless Hotel Owner has additional bonds outstanding with respect to the Hotel, the Ground Lease shall automatically terminate at 11:59 pm on the day following the repayment in full of the obligations issued to finance the Hotel and all other amounts owing by Hotel Owner under the bond indenture for such obligations, or such other date as may be mutually agreed to by the City and the Hotel Owner. Upon such termination, ownership of the Hotel, and all rights and obligations associated with such ownership, shall automatically revert to the City. 3.3.9 Hotel Owner Financing Contribution and Citv Contribution. On or before 60 days following the Effective Date of this Agreement, the City shall have (i) its Design and Development Funds available for expenditures of the design and development costs of the City Facilities and (ii) funds available for expenditures of the Hotel D&D Costs. Provided, however, that the City shall only expend its Design and Development Funds and funds for the Hotel D&D Costs after the City's approval of the design/build contract for the City Facilities and the approval by the Hotel Owner of the design/build contract for the Hotel. On or before the Project Funding Deadline and following the development of the budget set forth in the Hotel Development Agreement, the Hotel Owner shall have entered into an agreement for the sale of debt obligations to fund its Hotel Construction Phase Financing and the City shall sell its debt obligations to fund the City Contribution, respectively, such that proceeds of such financing shall be available by the Hotel Owner Financing Closing and the City Financing Closing. Within five (5) days following the funding of the Hotel Construction Phase Financing, the Hotel Owner shall pay to the City the Hotel Design Fee in accordance with Section 2.2.1(b) above. 3.3.10 Project Operating Agreement. Hotel Owner shall have obtained a Project Operating Agreement with the Operator that is approved in writing by the City. The Project Operating Agreement shall state that the Operator shall maintain the Project to the standards required of the Brand and shall provide for a furniture, fixture and equipment reserve fund on the Brand's standard terms. 3.3.11 Franchise Agreement. Hotel Owner shall have obtained a Franchise Agreement with the Hotel brand franchisor that is approved in writing by the City. ARTICLE 4 CONSTRUCTION ACTIVITIES 4.1. Construction Phase. Upon satisfaction of all of the conditions and requirements to be completed during the Project Development Phase and execution of the GMP Contracts for the Hotel and the City Facilities, Garfield shall cause construction of the Project to commence -25- promptly upon receiving the Notice to Proceed from the City with respect to the City Facilities and from Hotel Owner with respect to the Hotel and in any event, no later than the Construction Deadline, and will expeditiously pursue completion of construction with a completion date not later than five hundred forty (540) calendar days following such notice, subject to extension as reasonably necessary to account for any City Delay or Force Majeure. Garfield shall consult with the City and Hotel Owner regarding any proposed changes and modifications to the final drawings and specifications of the Project which may result in a material change in the design or character of the City Facilities or increase the City Contribution. Garfield may approve City Facilities change orders in its discretion provided that: (a) such change orders are within budgeted contingencies within the City Facilities Budget and do not exceed the City Contribution, (b) such change orders do not alter the scope of the City Facilities as previously approved by the City, and (c) the City Representative is given prior written notice of the change and an opportunity to object to the same. Notwithstanding, any change order that increases any line item in the City Facilities Budget by more than 10% must be submitted to the City Representative for approval. Once construction of the Project commences, Garfield shall serve as development manager and shall provide the following services with respect to the Project: 4. 1.1 City Facilities. Garfield shall provide the following services during the construction phase to the City with respect to the City Facilities: (a) Construct or cause to be constructed the City Facilities in conformance with the final plans and specifications approved by the City; (b) Cause all electric and telephone utility lines and equipment for the Property to be placed under ground within public rights-of-way or utility easements located within the Property lines; (c) Apply for or cause to be applied for the balance of the building permits, utility permits, utility easements, certificates of occupancy and all other licenses and permits required for the operation of the City Facilities; and (d) Providing on-site supervision including, at a minimum, an on-site construction supervisor/project manager; (e) Making periodic visits to the job site to review the work and progress of construction with the Contractors and the Design Professionals; (fl Responding to any questions from City staff, the City Representative, Hotel Owner or Operator regarding the work or progress of construction, construction methods, scheduling, and the like; (g) Coordinating the turnover of the City Facilities, as and when the same are appropriately completed, to Hotel Owner as the lessee under the City Facilities Lease; (h) Coordinating efforts by all appropriate persons to complete the City Facilities in accordance with the final drawings and specifications, as the same may -26- be amended from time to time with the approval of all necessary persons, such efforts to include assisting in the scheduling of inspections and the preparation of punch lists; and (i) Obtaining, or causing the Project Architect or General Contractor to obtain, on behalf of the City, a temporary, if applicable, and permanent certificate of occupancy (or other appropriate and necessary governmental permission to occupy) with respect to the City Facilities. 4.1.2 Hotel. During construction of the Hotel and pursuant to the Hotel Development Agreement, Garfield and Hotel Owner, where applicable, shall: (a) Construct or cause to be constructed the Hotel in conformance with the final plans and specifications approved by Hotel Owner and in accordance with the conceptual design and materials approved in writing by the City, all rights of review or approval of the Operator, all applicable Governmental Rules and the provisions of the Ground Lease; (b) Cause the Hotel to be constructed, to pay all development costs of the Hotel as they come due, and under no circumstances require the City to pay for any labor or material ordered or purchased by Garfield or Hotel Owner in and about the construction of the Hotel; (c) Cause all electric and telephone utility lines and equipment for the Property to be placed under ground within public rights-of-way or utility easements located within the Property lines; (d) Apply for or cause to be applied for the balance of the building permits, utility permits, utility easements, certificates of occupancy and all other licenses and permits required for the operation of the Hotel, including an alcoholic beverage permit; and (e) Pay for the hardscape and landscape as set forth in the plans and specifications. 4.2. General. During the construction phase of development of the Project, Garfield shall do the following: 4.2.1 Provide the City Representative and Hotel Owner with monthly written progress reports that reflect construction progress and all costs due or paid under the Development Budget during the preceding month and which also reflect a comparison of aggregate costs paid for budgeted items through the end of the preceding month with total budgeted costs for such items; 4.2.2 Prepare and submit to the City Representative and Hotel Owner supplements and refinements to the Development Budget for the City's Representative and Hotel Owner's written approval as development of the Hotel and City Facilities moves -27- through its various phases to completion, provided Garfield shall have the right to reallocate the costs of developing the Project among the various line items in the City Facilities Budget provided that: (a) such reallocation does not cause the City Facilities Budget to exceed the City Contribution, (b) such reallocation does not alter the scope of the City Facilities as previously approved by the City, (c) such reallocation is authorized by the financing documents for the City Contribution and the Hotel Construction Phase Financing Documents, and the City Representative is given prior written notice of the change and an opportunity to object to the same. Notwithstanding any provision hereof, any reallocation that increases any line item in the City Facilities Budget by more than 10% must be submitted to the City Representative for approval, such approval not to be unreasonably withheld or delayed. In no event shall there be an increase in the budget for the City Facilities that exceeds the City Contribution unless such increases are paid for and funded by the Hotel Owner Financing Contribution; 4.2.3 Notify the City Representative and Hotel Owner promptly of any actual or anticipated increase in the Development Budget of which Garfield becomes aware; 4.2.4 Notify the City Representative and Hotel Owner promptly of any actual or anticipated change or delay in the Development Plan of which Garfield becomes aware; 4.2.5 Pay, or cause to be paid, from proceeds of the Hotel Construction Phase Financing all cost overruns with respect to amounts exceeding the City Contribution with respect to the City Facilities as previously approved by Hotel Owner in accordance with this Agreement and with respect to amounts exceeding the approved Hotel Budget as approved by Hotel Owner in accordance with the Hotel Development Agreement; 4.2.6 Assist in refining the design of the Project (or assist in the process of approving any changes to the design of the Project) by providing information based on Garfield's hotel development and operating experience; 4.2.7 Supervise the timely and efficient performance of Contractors and the Design Professionals under their respective contracts with Garfield or the City, as the case may be, to confirm that all work is being performed in a professional and workmanlike manner, and 4.2.8 Assure that all design and construction criteria that are specifically required by the Brand, if any, or the Operator are correctly integrated into the design and construction of the Project, and that any on-site inspections and approvals specifically required by the Brand or Operator are arranged and carried out on a timely basis. 4.3. Pre -Opening Activities. The Parties each recognize that certain activities must be undertaken in advance of Final Completion of the Project so that the Project can function in an appropriate and orderly manner. Accordingly, the Project Operating Agreement shall require the Operator to undertake, or cause to be undertaken, the following steps, procedures and activities: -28- 4.3.1 recruit, train and employ, through Operator, the staff required for the operation of the Project; 4.3.2 undertake pre -opening promotion and advertising, including opening celebrations and related activities. Operator shall provide on-site or locally assigned personnel to conduct such activities beginning at least ten (10) months prior to the projected opening of the Project; Project; 4.3.3 test and, if necessary, implement modifications to the operations of the 4.3.4 apply for the initial licenses and permits required for the operation of the Project; and 4.3.5 in general, render such other miscellaneous services incidental to the preparation and organization of the Project's operations as may be reasonably required for the Project to be adequately staffed and capable of operating upon opening. The costs for 4.3.1, 4.3.2, 4.3.3, 4.3.4 and 4.3.5, shall be allocated between the Hotel and the City Facilities based upon construction value. 4.4. Post Construction Phase. Hotel Owner shall make application with Applicable Appraisal District to qualify for total exemption from all real property ad valorem taxes associated with Hotel Owner's interests in the Project, and the City shall cooperate with Hotel Owner in such process as reasonably necessary. In addition, upon Final Completion Garfield shall provide City staff and Hotel Owner with the following: 4.4.1 A copy of the final certificate of occupancy for the Hotel and City Facilities from the appropriate officials of the City; 4.4.2 Along form release of mechanics' liens executed by the General Contractor applicable to the entire Project, or a letter in form reasonably acceptable to Hotel Owner, and City staff from a title insurance underwriter acceptable to Hotel Owner and City staff stating that it will issue title policies to Hotel Owner and the City, as applicable, and a mortgagee's title policy to the trustee for the Hotel Construction Phase Financing, without excepting filed and unfiled mechanics' liens from coverage under such policies; 4.4.3 A certification from the Project Architect that the Hotel and City Facilities have reached Final Completion in accordance with the final plans and specifications; and 4.4.4 An "as -built" survey of all improvements for the City Facilities prepared by a registered surveyor or engineer. 4.4.5 A full and complete set of "as -built" plans for the Hotel and any accessory structure(s). -29- ARTICLE 5 PROJECT FINANCING 5.1. Proiect Development Phase. 5.1.1 Costs Prior to Effective Date. Other than costs incurred pursuant to the Pre - Development Services Agreement, the City shall not pay any design, development or construction costs for the City Facilities prior to the Effective Date of this Agreement; provided, however, following the Effective Date and subject to Section 3.3.9 hereof, City shall pay for any design, development, or construction costs included in the City Facilities Budget, as approved by the City, regardless of when incurred. 5.1.2 Payment of Costs. Payment of design and development costs incurred during the Project Development Phase for the City Facilities shall be made by the City pursuant to its normal construction payment procedures. No design and development costs shall be paid by the City prior to the approval of the design/build contracts for the City Facilities and the Hotel. However, when and if the City is obligated to pay in accordance with this Agreement, the design and development costs shall be paid pursuant to Section 9.1. 5.1.3 Financing. (a) On or before 60 days following the Effective Date of this Agreement as provided in Section 3.3.9 hereof, the City shall have available the Design and Development Funds for the design and development of the City Facilities, as well as funds for the Hotel D&D Costs. (b) On or before the Project Funding Deadline, Hotel Owner will arrange its Hotel Construction Phase Financing to construct the Hotel and ancillary facilities and improvements within the Hotel Budget (including funds to pay the Hotel Design Fee to the City in accordance with Section 3.3.9 above) and the City shall sell its debt obligations to fund the City Contribution as set forth in Section 5.1.4. (c) Notwithstanding any provisions of this Agreement, the Parties acknowledge that the incurrence of debt obligations by Hotel Owner is subject to the sole discretion of Hotel Owner's Board of Directors. 5.1.4 City Financing Contribution. In the event there has been no termination of this Agreement pursuant to Article 11 herein, and based on the approved Development Budget, the City agrees that it shall, and is prepared to, within five (5) business days of the Hotel Owner's closing of the Hotel Construction Phase Financing, provide the City Contribution (to be funded as development progresses in accordance with the approved City Facilities Budget) in an amount equal to the City Facilities Budget provided that the City shall never be obligated to contribute more than $21,100,000.00 to the design, -30- development and construction of the Project. The City's obligation to commit the City Contribution to the Project is further subject to Hotel Owner's sale of the Hotel Construction Phase Financing and to the City's ability to obtain and provide the City Contribution on terms and conditions acceptable to the City. Garfield and Hotel Owner recognize that the City has only $21,100,000.00 to invest in the design, development and construction of the City Facilities, including the Design and Development Fee and FF&E, now and in the future, and that the City shall have no further financial obligation to the Project. Notwithstanding any provisions of this Agreement, the Parties acknowledge that the issuance of debt by the City is a governmental function and subject to the sole discretion of the City Council. 5.1.5 [Intentionally Omitted] 5.1.6 [Intentionally Omitted] 5.1.7 Evidence of Hotel Owner Financing. On or before the Project Funding Deadline and the sale of the City's debt obligations to fund the City Contribution, Hotel Owner shall execute reasonably acceptable bond documents evidencing the sale of debt obligations for the Hotel Construction Phase Financing. Hotel Owner's obligation to obtain and provide for the Hotel Construction Phase Financing is subject to the Hotel Owner's ability to issue debt obligations on terms and conditions acceptable to the Hotel Owner. Such bond documents shall not contain any conditions to closing on the Hotel Construction Phase Financing other than those (i) customarily found in bond purchase agreements and bond documents in negotiated financing transactions in the Texas bond market for similar projects, (ii) customarily included in indentures and loan agreements for bonds for similar projects the interest on which will be exempt from federal income tax, and (iii) required to comply with Texas law. Notwithstanding any provision of this Agreement, the Parties acknowledge that the issuance of debt obligations by the Hotel Owner is a governmental function and subject to discretion of the Hotel Owner's Board of Directors. 5.2. Closine. Hotel Owner Financing Closing and City Financing Closing shall occur as follows: 5.2.1 Issuance of Debt. On or before the Project Funding Deadline, subject to the City's discretionary determination to fund the City Financing Contribution, the City shall sell its debt to fund the City Contribution, and Hotel Owner, subject to the Hotel Owner Board's discretionary determination to fund the Hotel Owner Financing Contribution, shall sell the Hotel Construction Phase Financing such that funds are available for the construction of the City Facilities and Hotel by the City Financing Closing and the Hotel Owner Financing Closing, respectively. The proceeds of such financing contributions shall be invested in accordance with their respective terms and shall be made available for disbursement for construction of the City Facilities and the Hotel. The disbursement of the City Contribution shall be controlled by the City pursuant to its established disbursement process and procedures. The failure to proceed with the City Financing Closing and the Hotel Owner Financing Closing shall result in a termination of this Agreement pursuant to Section 11.1 herein. -31- ARTICLE 6 PURCHASING SERVICES 6.1. Purchasing Services. During development of the Project, Garfield shall perform or cause to be performed the following services with respect to FF&E to be installed in the City Facilities and the Hotel: 6.1.1 FF&E Schedule. The Development Plan prepared by Garfield with the approval of City Representative and Hotel Owner shall include a prototypical schedule setting forth by category the types of FF&E for the Hotel and the City Facilities (hereinafter referred to as the "FF&E Schedule"). 6.1.2 FF&E Specifications. The FF&E shall be those items specified in specifications therefor (hereinafter referred to as "FF&E Specifications") as coordinated by Garfield and approved in writing by City Representative and Hotel Owner. 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 Operating Standard and will meet the standards of the Brand. Garfield shall serve as or shall appoint a purchasing agent for the FF&E for the Project, who shall coordinate purchasing of the FF&E for (i) the City Facilities pursuant to purchase orders naming the City as owner and (ii) for the Hotel pursuant to purchase orders naming the Hotel Owner as owner. 6.1.3 Approval of FF&E Specifications. Garfield shall cause the FF&E Specifications to be delivered, prepared and submitted to City Representative and Hotel Owner for their approval as promptly as reasonably practicable during the Project Development or Construction Phases. 6.1.4 Pricing and Procurement. Garfield shall diligently seek to obtain the most favorable prices and terms available in connection with the purchase of the FF&E. 6.1.5 Delivery Schedule. Garfield shall prepare a projected delivery schedule for goods purchased based on production and delivery dates furnished by suppliers. Garfield shall use reasonable efforts to coordinate the schedule with the construction schedule under the design/build contracts and place purchase orders within sufficient time to allow delivery in accordance with the projected construction schedule. 6.1.6 Records. Garfield 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 City Facilities and the Hotel. Garfield shall make available these records for audit, inspection and copying by the City Representative or Hotel Owner, or any other persons designated by the City Representative or Hotel Owner, upon five (5) business days' notification. Following Final Completion of the City Facilities or Hotel, as applicable, or termination of this Agreement and/or upon written request of Hotel Owner or City -32- Representative from time to time, Garfield shall deliver to the City Representative or Hotel Owner an electronic copy of all such records. Garfield shall retain an electronic copy of such records for a period of at least three (3) years from Final Completion, 6.1.7 Inventory. Garfield shall provide an inventory of goods and materials to the City Representative or Hotel Owner, or such other persons, as may be designated by the City Representative or Hotel Owner, within one hundred twenty (120) days after delivery of the last item of FF&E for the City Facilities and the Hotel, as applicable. 6.1.8 Coordinator. Garfield shall provide an on-site coordinator at the Project to coordinate FF&E delivery and installation. For its purchasing services under this Article 6, Garfield shall be paid the FF&E Services Fee, which is in addition to, and not included in, the Development Fee. This FF&E Services Fee shall be paid in substantially equal monthly installments during the Construction Phase. 6.2. Payment for FF&E — City Facilities. 6.2.1 Purchase of FF&E The City shall purchase the FF&E for the City Facilities of the type and quantity described in the FF&E Schedule as prepared by Garfield and approved by the City Representative and Hotel Owner in accordance with the FF&E Budget and this Agreement. The City agrees to reimburse Garfield, in its capacity as development manager for the City, actual FF&E costs based upon invoices received for purchases of FF&E for the City Facilities, for payments required not to exceed the amounts specified in the FF&E Budget, as part of the City Financing Contribution. Garfield shall substantiate and provide verifications to the City of goods received. Purchase of FF&E for the City Facilities are exempt from sales taxes. 6.2.2 Costs. The FF&E costs for the City Facilities shall be identified in the Project Development Phase as a part of the City Facilities Budget. Any costs paid by the City shall be part of and subject to the limits of the City Contribution. Any costs of the FF&E for the City Facilities above the City Contribution shall be paid by Hotel Owner and included in the Hotel Construction Phase Financing. 6.2.3 Payment. It is understood that all purchase orders and agreements for FF&E for the City Facilities executed by the City shall specify the FF&E as being acquired for the account of the City (provided the City shall not be required to contribute to or expend any amount in connection with the City Facilities in excess of the City Contribution), and Garfield shall not be responsible for payment of any such purchase orders and agreements, except to the extent of funds therefor actually received from the City or except to the extent that such amounts exceed the total amount of the City Contribution. 6.2.4 All FF&E for the City Facilities shall be subject to the terms and provisions of the City Facilities Lease. -33- 6.3. General Provisions. 6.3.1 Contractor Failure. Garfield shall not 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 City Facilities; provided, however, Garfield shall be responsible for such failure(s) if and to the extent, the same is caused by Garfield's malfeasance, neglect or failure. 6.3.2 Cancellation. The City 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. 6.3.3 No Warranty. Garfield shall use reasonable diligence in making recommendations regarding the procurement of FF&E for the City Facilities, but Garfield extends no guarantees and makes no warranty, express or implied, of merchantability or fitness for a particular purpose or otherwise with respect to any of such FF&E purchased hereunder. Claims made against such guarantees as may be offered by the manufacturers or vendors of FF&E for the City Facilities must be settled directly with the manufacturers or vendors. Garfield shall assist and coordinate with City Representative, however, in the processing, prosecution and enforcement of such claims provided it incurs no additional costs, expenses or liability on account thereof. Where Garfield has not previously paid for FF&E which has been received by the City and, if prior to such payment, Garfield determines that the goods are defective or otherwise do not conform to the contract, Garfield 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. 6.3.4 Risk of Loss. Unless otherwise agreed to in writing, all FF&E for the City Facilities shall be shipped to the City Facilities or a bonded warehouse arranged for by Garfield or General Contractor on behalf of the City. Garfield shall provide for all such FF&E to be shipped "DDP (Baytown, Texas, USA)" pre -paid. 6.3.5 Overages. The City hereby 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 Garfield has no control. The City agrees to accept such overages and to pay for its share of the same; provided, however, in no event shall the City ever be liable for any costs in excess of the City Contribution. All overages in FF&E for the City Facilities shall be the property of the City. Allowances for such overages shall be included in the FF&E Budget. 6.3.6 Garfield Indemnity. GARFIELD HEREBY INDEMNIFIES AND AGREES TO HOLD THE CITY, HOTEL 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, -34- 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 GARFIELD' 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 THAT GARFIELD HAS PURCHASED IN THE NAME OF THE CITY THAT DOES NOT CONFORM WITH THE FF&E SPECIFICATIONS, (III) ANY BREACH OF ANY REPRESENTATION OR WARRANTY OF GARFIELD HEREIN CONTAINED, OR (IV) ANY CLAIM ARISING OUT OF EMPLOYMENT, NON -EMPLOYMENT OR DISCHARGE OF GARFIELD'S EMPLOYEES OR AGENTS. IT IS THE EXPRESSED INTENTION OF THE PARTIES HERETO THAT THE INDEMNITIES PROVIDED FOR IN THIS PARAGRAPH INCLUDE AN INDEMNITY BY GARFIELD TO INDEMNIFY AND PROTECT THE CITY AND THE HOTEL OWNER FROM THE CONSEQUENCES OF GARFIELD'S OWN NEGLIGENCE, WHETHER THAT NEGLIGENCE IS THE SOLE OR A CONCURRING CAUSE OF THE RESULTING INJURY, DEATH OR DAMAGE. SUCH INDEMNITY SHALL NOT APPLY, HOWEVER, TO LIABILITY OF A PARTY THAT IS CAUSED BY OR RESULTS FROM THE NEGLIGENCE OF THAT PARTY. IN THE EVENT THAT ANY ACTION OR PROCEEDING IS BROUGHT AGAINST THE CITY FROM WHICH THE CITY IS INDEMNIFIED, GARFIELD FURTHER AGREES AND COVENANTS TO DEFEND THE ACTION OR PROCEEDING BY LEGAL COUNSEL ACCEPTABLE TO THE CITY. This indemnity shall survive the expiration or termination of this Agreement. 6.3.7 Records. Garfield shall assist the City with the maintenance of proper, accurate and complete accounting records including purchasing receipts and delivery tickets made in connection with the purchase of the FF&E for the City Facilities. Upon receipt and acceptance of the FF&E for the City Facilities, Garfield will promptly deliver the receipt to the City Representative. Garfield shall maintain proper, accurate and complete accounting records, including competitive bids and proposals, purchase orders, purchasing receipts and delivery tickets made in connection with the purchase of the FF&E for the City Facilities. Garfield shall make available these records for audit, inspection and copying by the City Representative, or any other persons designated by the City Representative upon five (5) business days' notification. Following Final Completion of the Project or termination of this Agreement, Garfield shall, at Garfield's sole cost, deliver -35- to the City a copy of all such records. Garfield shall retain copies of such records for a period of three (3) years after Final Completion. ARTICLE 7 CITY GOVERNMENTAL AUTHORITY 7.1. No Relinquishment of Municipal Re latory Authority. Notwithstanding anythingcontained in this Agreement to the contrary, the City's review and (if applicable, approval) of proposed architectural plans, specifications, site plans, plats, drawings, or other submittals from Garfield or other persons in connection with this Agreement shall constitute approval for purposes of this Agreement only, and not be deemed to constitute approval, or replace, the City's right to review and approve same, under City's regulatory authority and/or police power under Texas or local law. 7.2. No Limitation on Citv's Governmental Functions. Garfield and Hotel Owner recognize the authority of the City under its charter and ordinances to exercise its police powers in accordance with Governmental Rule to protect the public health, safety, and welfare. Such powers extend to Garfield's or its General Contractor's construction activities on City property, and Garfield recognizes the City's authority to take appropriate enforcement action in accordance with Governmental Rule to provide such protection. Whenever, in the City's judgment such action is required, the City shall immediately notify Garfield (with a copy to Hotel Owner) to resolve the situation. No lawful action taken by the City pursuant to these police powers shall subject the City to any liability under this Agreement, including without limitation liability for costs incurred by the General Contractor, Garfield or Hotel Owner, and as between Garfield and the City, any such costs shall be the sole responsibility of Garfield and the General Contractor. 7.2.1 City and Hotel Owner Governmental Functions. The Parties acknowledge that (i) all references to "City" herein (which, for the purposes of this provision, shall be deemed to include any references in this Agreement to City as the owner of the fee interest in the Property) shall refer only to City in its capacity as owner of the Property and (ii) all references to "Hotel Owner" herein (which, for the purposes of this provision, shall be deemed to include any references in this Agreement to Hotel Owner as the owner of the leasehold interest in the Property and the owner of the Hotel) shall refer only to Hotel Owner in its capacity as lessee of the Property. The terms "City" and "Hotel Owner" together with the duties and rights assigned to each under this Agreement, thus exclude any action, omission or duty of the City or Hotel Owner when performing its Governmental Functions. Any action, omission or circumstance arising out of the performance of the City or the Hotel Owner of its Governmental Functions may prevent City or Hotel Owner from performing its obligations under the Agreement and shall not cause or constitute a default by City or Hotel Owner under this Agreement or give rise to any rights or claims against the City or Hotel Owner in its capacity as a party to this Agreement, it being acknowledged that Garfield's remedies for any injury, damage or other claim resulting from any such action, omission or circumstances arising out of the Governmental Functions of the City or Hotel Owner shall be governed by the laws and regulations concerning claims against the City as a home rule city and against the Hotel Owner, as a political subdivision -36- of the State of Texas and the City. In addition, no setoff, reduction, withholding, deduction or recoupment shall be made in or against any payment due (i) by Garfield or Hotel Owner to City or (ii) by Garfield or City to Hotel Owner under this Agreement as a result of any action or omission of the City or Hotel Owner, as applicable, when performing its Governmental Function. 7.2.2 No Waiver. No representation, consent, approval or agreement by City, the Hotel Owner, or their respective representatives shall be binding upon, constitute a waiver by or estop the City or the Hotel Owner from exercising any of its rights, powers or duties in connection with its Governmental Functions nor will any portion of any action by their designee(s) be deemed to waive any immunities granted to the City or the Hotel Owner when performing its Governmental Functions, which are provided under Applicable Law, including Section 101.0215(a), TEXAS CIVIL PRACTICE AND REMEDIES CODE, as may be amended or replaced. Further, any consent to jurisdiction by City or the Hotel Owner is only with respect to matters arising in its capacity as a party to the Agreement and expressly does not constitute a waiver of the City's or the Hotel Owner's governmental immunity or a consent to jurisdiction for any actions, omissions or circumstances, in each case arising out of the performance of the Governmental Functions of the City or the Hotel Owner. 7.3. Notice to Proceed. After such time as the City shall have approved in writing the Development Plan and the Development Budget, the City Financing Closing and the Hotel Owner Financing Closing shall have occurred and Garfield shall have obtained all necessary permits for the commencement of construction of the Project, Hotel Owner and the appropriate City Representative shall give Garfield written Notice to Proceed with the construction of the Project. 7.4. Infrastructure. All connection fees, and tap fees for the City Facilities and the Hotel shall be waived by the City. All impact fees for the Hotel shall be paid by the Hotel Owner. The cost of utilities usage, permanent and temporary, for the City Facilities after the date hereof and prior to the opening of the Project shall be a cost of the City Facilities to be paid by City as part of the Development Budget for the City Facilities. The cost of utilities usage, permanent and temporary, for the Hotel and any other privately -owned facilities or infrastructure after the date hereof and prior to the opening of the Project shall be a cost of the Hotel to be paid by Hotel Owner. From and after the opening of the Project, the cost of utilities used in the operation of the Hotel, City Facilities shall be paid by Operator or Hotel Owner. 7.5. Zoning. Garfield shall assure that the Property is properly zoned for use as a hotel and convention/civic center with associated parking to permit development in accordance with the Development Plan. City Representative and Hotel Owner shall cooperate with and assist Garfield as reasonably required in connection with obtaining the zoning approvals required for development of the Project. 7.6. Permits. The appropriate City staff and Hotel Owner staff, to the extent applicable, shall execute and cooperate with Garfield and all Contractors in connection with the issuance of all building permit applications, plans of development, utility permit applications, utility easements, requests for certificates of occupancy and such other documents as may reasonably be -37- required for Garfield, Hotel Owner or General Contractor to obtain building permits, licenses, approvals, certificates, utility services and other permits and authorizations as may be necessary for the development, construction and operation of the Project. It shall be the ultimate responsibility of Garfield to secure all such licenses and permits required to be obtained by Garfield, General Contractor or Hotel Owner or the City with respect to construction, completion and occupancy of the City Facilities, including any necessary building, occupancy, sewer and utility permits. Garfield shall secure or cause to be secured all such licenses and permits required to be obtained with respect to the construction, completion and occupancy of the Hotel, including any necessary building, occupancy, sewer and utility permits. Notwithstanding any provision of this Agreement or any other Project Agreement to the contrary, the City covenants and agrees that any and all fees chargeable by the City for building permits, approvals, connection fees, tap fees, and certificates in connection with the development and construction of the Project are hereby waived in their entirety. 7.7. City Cooperation. The City shall, except as stated below, at the cost and expense of the Hotel Owner cooperate with the Hotel Owner with respect to documentation reasonably necessary to obtain and maintain financing for the performance of the obligations of the Hotel Owner hereunder. The City's cooperation shall include conducting meetings and timely reviewing, approving, and executing documents which substantiate the terms of this Agreement (including, but not limited to, any meetings, consents, or agreements reasonably necessary for the issuance of debt obligations in connection with the Hotel Construction Phase Financing, and making information and material available to facilitate financing and contractual obligations with third parties to the extent reasonable in the circumstances. If requested to do so by the Hotel Owner, the City shall use its reasonable efforts to cause the City's independent public accountants to consent to the preparation, use, and inclusion of certain financial information regarding the Project in connection with the public or private offering of securities, as the case may be. Nothing in this Section 7.7 will require the City to incur any additional obligations or liabilities or take any action, give any consent or enter into any document inconsistent with the provisions of this Agreement. ARTICLE 8 SCOPE OF GARFIELD'S RESPONSIBILITIES 8.1. Standard of Care. In performing its services hereunder with respect to development and construction of the Project, neither Garfield nor Hotel Owner (nor any of their agents, employees or representatives) makes any representations or warranties, express or implied, regarding the sufficiency of any design, plans or drawings prepared by others, but agrees to work with such persons to correct such designs, plans or drawings with such corrections to be made at no additional expense to the City, if and to the extent such corrections are not required due in whole to the fault of the City, or its employees, agents, or other contractors or consultants. Any responsibility of Garfield hereunder for development and construction of the City Facilities shall be for services directly performed by it; shall be limited solely to deficiencies that are directly attributable to Garfield's failure to exercise the reasonable care usually exercised by individuals and firms providing similar services; and in no event shall Garfield be liable for defects in materials or workmanship in the Project. Garfield shall use reasonable good faith to protect the economic interests of the City with respect to design, development and construction of the City Facilities. -38- Upon completion of the Project or its earlier termination, Garfield shall assign (i) to Hotel Owner all warranties from the Contractors and any and all suppliers of goods and/or services to the Hotel (for Hotel Owner to use in connection with its obligations to maintain and repair the Hotel as the owner thereof), and (ii) to the City all warranties from the contractors and any and all suppliers of goods and/or services to the City Facilities (which warranties the City shall assign to Hotel Owner in connection with Hotel Owner's obligations to maintain and repair the City Facilities as lessee under the City Facilities Lease). Garfield shall cooperate fully with Hotel Owner and the City in pursuing such warranties, including without limitation, providing copies of documentation needed to support such claim. 8.2. Contractors S ecialists and Consultants. Garfield shall use reasonable care to ensure that all Contractors and Design Professionals selected in connection with the design and construction of the Project shall be highly qualified to do the work they are engaged to perform, and Garfield shall make reasonable inquiries as to such persons' background, experience and reputation to assure they are well qualified to undertake such work. 8.3. Operation and Maintenance of the Hotel. Hotel Owner shall continuously operate and maintain or cause to be operated and maintained, the Hotel and City Facilities in a First -Class Manner and in accordance with the Hotel Operating Standard for the term of the Ground Lease and City Facilities Lease. Hotel Owner agrees not to seek any waivers of the standards contained in the Project Operating Agreement, if any, or from the Brand and to not seek or adhere to any lessening of operational and maintenance standards by the Operator or the Brand without the approval of the City. Hotel Owner's obligation to operate and maintain the Hotel and the City Facilities in a First -Class Manner and in accordance with the Hotel Operating Standard shall survive the expiration of this Agreement. ARTICLE 9 PAYMENT OF COSTS 9.1. Payment of City Costs. Garfield's requests for payments that are due and payable on contracts with the contractors for the City Facilities shall be made by Garfield in written draw requests submitted to the appropriate City staff pursuant to an agreed upon draw schedule, which is approved by the City Representative in writing, during the term of this Agreement provided, however, that the City shall not be obligated to pay any draw requests for the City Facilities if construction of the Hotel is not in accordance with the approved project schedule or is not being constructed on a schedule necessary to substantially complete the Project by the date set forth in Section 4.1 herein. The City shall pay costs pursuant to its contract with Garfield and the General Contractor for the City Facilities. Each such draw request shall include documentation of all costs and expenses, including construction value, in reasonably sufficient detail to permit City staff to determine the appropriateness of such reimbursement payment and, with respect to draw requests during the period of construction of the City Facilities, shall include a certification by the Project Architect of the status of completion of the City Facilities in accordance with the Development Plan, and a partial release of mechanic's liens from the General Contractor with respect to all portions of the Project for which payment to the General Contractor has been made. Once verification of each cost detailed in the draw request has occurred, including on-site confirmation, -39- the draw request shall be forwarded for written approval to the City Representative. After written approval, the draw request shall be submitted to the City's Finance Department for payment. Progress payments during construction are made within thirty (30) days of receipt of an approved draw request pursuant to City policy, as long as the payment request contains sufficient detail for City approval. The City shall pay the amounts set forth in such draw requests to Garfield and/or General Contractor, as applicable, for their payment to contractors or for the reimbursement of payments previously made to contractors pursuant to the City's customary payment process for City construction projects. Hotel Owner shall pay for all cost overruns to the City Facilities Budget, as such City Facilities Budget has been approved by Hotel Owner, solely from the proceeds of the Hotel Construction Phase Financing. 9.2. Cost Savings. Cost savings realized in Development Budget categories for the City Facilities during the course of development thereof will be applied as set forth in the design/build contract for the City Facilities. 9.3. City Contribution Limitation. In no event shall any payment required by this Article obligate the City to make any payment in excess of the City Contribution. In the event such amounts exceed the City Contribution, such payment shall be the obligation of Garfield or Hotel Owner, with such obligation to be payable solely from the proceeds of the Hotel Construction Phase Financing. Should there be any other condition that makes it impossible for City to fund all or any portion of the City Contribution, Garfield and Hotel Owner shall have no right to demand the City Contribution from any other funds of the City. 9.4. Payment of Development Fee. The Development Fee due to Garfield from the City hereunder shall be paid in installments according to the following schedule: 9.4.1 Forty-five percent (45%) of the Development Fee shall be paid in equal monthly installments during the Project Development Phase; 9.4.2 Forty-five percent (45%) of the Development Fee shall be paid to Garfield in equal monthly installments during the Construction Phase; 9.4.3 Five percent (5%) of the Development Fee shall be paid to Garfield upon the Substantial Completion as defined in the GMP Contract for the City Facilities; and 9.4.4 Five percent (5%) of the Development Fee shall be paid to Garfield upon Final Completion as defined in the GMP Contract for the City Facilities. Payments of the Development Fee that become due during the course of the development and construction as provided in this Section 9.4 are payable by the City within thirty (30) days after the appropriate City staff receives a draw request from Garfield pursuant to the draw schedule for same in accordance with Section 9.1. Each installment of the Development Fee will be deemed earned upon the date the payment obligation accrues in accordance with this Section 9.4. -40- ARTICLE 10 REPRESENTATIONS 10.1. Representations and Warranties of the City. The City hereby represents and warrants to Garfield and Hotel Owner that the following statements are true as of the date hereof. 10.1.1 Due Authority. No Conflict. The City has all requisite power and authority to develop, own, and operate the City Facilities and to execute this Agreement and to carry out its obligations hereunder and the transactions contemplated hereby. This Agreement has been, and the documents contemplated hereby will be, duly executed and delivered by the City and constitute legal, valid and binding obligations enforceable against the City in accordance with the terms subject to principles of governmental immunity, equity and the enforcement of equitable rights. The consummation by the City of the transactions contemplated hereby is not in violation of or in conflict with, nor does it constitute a default under, any of the terms of any agreement or instrument to which the City is a party, or by which the City is bound, or of any provision of any applicable law, ordinance, rule or regulation of any governmental authority or of any provision of any applicable order, judgment or decree of any court, arbitrator or governmental authority. 10.1.2 No Litigation. No litigation is pending or, to the knowledge of the City, threatened in any court to restrain or enjoin the construction of the Project or the City's issuance or delivery of the City's debt issuance, or otherwise contesting the powers of the City or the authorization of this Agreement or any agreements contemplated herein or which might affect the City's ability to consummate the transaction contemplated hereby. 10.2. Garfield's Representations and Warranties. Garfield represents and warrants to the City and the Hotel Owner that the following representations and warranties are true as of the date hereof. 10.2.1 Due Organization of Garfield. Garfield is a limited liability company validly existing under the laws of the State of Texas and is duly qualified to do business in the State of Texas; and that the person executing this Agreement on behalf of is authorized to enter into this Agreement. 10.2.2 Due Authority: No Conflict. Garfield has all requisite power and authority to execute and deliver this Agreement and to carry out its obligations hereunder and the transactions contemplated hereby. This Agreement has been, and the documents contemplated hereby will be, duly executed and delivered by Garfield and constitutes Garfield's legal, valid and binding obligations enforceable against Garfield in accordance with their terms. The consummation by Garfield of the transactions contemplated hereby is not in violation of or in conflict with, nor does it constitute a default under, any term or provision of the organizational documents of Garfield, or any of the terms of any agreement or instrument to which Garfield is a party, or by which Garfield is bound, or of any provision of any applicable law, ordinance, rule or regulation of any governmental -41- authority or of any provision of any applicable order, judgment or decree of any court, arbitrator or governmental authority. 10.2.3 Consents. No consent, approval, order or authorization of, or declaration or filing with any governmental authority is required on the part of Garfield in connection with the execution and delivery of this Agreement or for the performance of the transactions herein contemplated by the respective Parties hereto except as contemplated in Articles 4 and 5 herein. 10.2.4 Litigation. To the best knowledge of Garfield, after reasonable inquiry, there are no pending or, to the best knowledge of Garfield, threatened, judicial, municipal or administrative proceedings, consent decree or, judgments which might affect Garfield's ability to consummate the transaction contemplated hereby. 10.2.5 Legal Proceedings. To the knowledge of Garfield, after reasonable inquiry, no preliminary or permanent injunction or other order, decree, or ruling issued by a governmental entity, and no statute, rule, regulation, or executive order promulgated to enacted by a governmental entity, shall be in effect which restrains, enjoins, prohibits, or otherwise makes illegal the consummation of the transactions contemplated by this Agreement. 10.3. Representations and Warranties of Hotel Owner. Hotel Owner hereby represents and warrants to Garfield and the City, that the following statements are true as of the date hereof. 10.3.1 Due Authority No Conflict. Hotel Owner has all requisite power and authority to execute this Agreement and to carry out its obligations hereunder and the transactions contemplated hereby. This Agreement has been, and the documents contemplated hereby will be, duly executed and delivered by Hotel Owner and constitute legal, valid and binding obligations enforceable against Hotel Owner in accordance with the terms subject to principles of equity and the enforcement of equitable rights. The consummation by Hotel Owner of the transactions contemplated hereby is not in violation of or in conflict with, nor does it constitute a default under, any of the terms of any agreement or instrument to which Hotel Owner is a party, or by which Hotel Owner is bound, or of any provision of any applicable law, ordinance, rule or regulation of any governmental authority or of any provision of any applicable order, judgment or decree of any court, arbitrator or governmental authority. 10.3.2 No Litigation. No litigation is pending or, to the knowledge of Hotel Owner, threatened in any court to restrain or enjoin the construction of the Hotel or Hotel Owner s issuance or delivery of the Hotel Construction Phase Financing, or otherwise contesting the powers of Hotel Owner or the authorization of this Agreement or any agreements contemplated herein or which might affect Hotel Owner's ability to consummate the transaction contemplated hereby. -42- ARTICLE 11 TERMINATION PROVISIONS 11.1. Termination Events. The following events shall allow for termination of this Agreement and the Project: 11.1.1 Termination Prior to Expenditure of Design and Development Funds. After the Effective Date of this Agreement but prior to the expenditure of any funds to cover the Hotel D&D Costs and the expenditure of any of the Design and Development Funds, this Agreement may be terminated by any Party. Upon termination pursuant to this provision, the City, Garfield and Hotel Owner acknowledge and agree that any costs advanced by the City, Garfield or Hotel Owner are not subject to reimbursement from the other Parties to this Agreement. 11.1.2 Termination Prior to Project Agreements Deadline. The City, Garfield or Hotel Owner may terminate the Agreement after the Effective Date of this Agreement and prior to the Project Agreements Deadline, and thereupon, this Agreement shall be of no further force or effect, and the City, Garfield and Hotel Owner acknowledge and agree that any costs advanced by the City, Garfield or Hotel Owner are not subject to reimbursement from the other Parties to this Agreement. 11.1.3 Termination Prior to Project Funding Deadline The City or Hotel Owner may terminate the Agreement after the Project Agreements Deadline and prior to the Project Funding Deadline and thereupon this Agreement shall be of no further force or effect. Upon a termination during this time period, the Hotel Owner, in connection with the Project, shall pay to the City the Hotel Design Fee in an amount equal to the Hotel D&D Costs incurred up to the date of termination up to a maximum amount of $2,600,000. Further, Garfield and the City specifically acknowledge that the Hotel Owner's obligations under this section shall not constitute a general obligation of the Hotel Owner or indebtedness under the constitution or laws of the State of Texas. Upon payment of the Hotel Design Fee, Garfield and the City shall convey and Hotel Owner shall receive ownership and possession of all work product produced as a result of the expenditure of the Hotel D&D Costs. 11.1.4 Termination For Excess Proiect Costs Prior to Financing. Prior to the Project Funding Deadline, if (i) the cost of the City Facilities is greater than the City Contribution, and Hotel Owner determines not to fund any budgeted costs in excess of the City Contribution, or (ii) the cost of the Hotel is in excess of what Hotel Owner can or will issue in Hotel Construction Phase Financing, then this Agreement shall terminate and City, Garfield and Hotel Owner acknowledge and agree Hotel Owner shall pay the City all Hotel D&D costs but that any other costs incurred by the City, Garfield or Hotel Owner are not subject to reimbursement from the other Parties to this Agreement. 11.1.5 Financing Commitments. In the event the Hotel Owner has not sold debt obligations to fund the Hotel Construction Phase Financing by the Project Funding -43- Deadline or closed on the Hotel Construction Phase Financing by the Hotel Owner Financing Closing for any reason other than a Permitted Non -Funding Event, then this Agreement shall terminate pursuant to (a) below. If the Hotel Owner fails to fund the Hotel Construction Phase Financing for a Permitted Non -Funding Event, then this Agreement shall be suspended and may be terminated pursuant to (b) below. If the City has not sold its debt by the Project Funding Deadline or closed on the City Contribution by the City Contribution Closing, for any reason other than a Permitted Non -Funding Event, then this Agreement shall terminate pursuant to (a) below. If the City fails to fund the City Contribution by the City Contribution Closing for a Permitted Non -Funding Event, then this Agreement shall be suspended and may be terminated pursuant to (b) below. The failure of the City to fund the City Financing Contribution or Hotel Owner to fund the Hotel Owner Financing Contribution shall not be an event of default under this Agreement. (a) If this Agreement is terminated as a result of a failure to sell or close the Hotel Construction Phase Financing or a failure by the City to fund its City Financing Contribution in each case for any reason other than a Permitted Non - Funding Event, then the Hotel Owner shall pay to the City the Hotel Design Fee in an amount equal to the Hotel D&D Costs incurred up to the date of termination up to a maximum amount of $2,600,000. Upon payment of the Hotel Design Fee, Garfield and the City shall convey and Hotel Owner shall receive ownership and possession of all work product produced as a result of the expenditure of the Hotel D&D Costs. The City and Garfield specifically acknowledge that the Hotel Owner's obligations under this section shall not constitute a general obligation of the Hotel Owner or indebtedness under the constitution or laws of the State of Texas. (b) If this Agreement is terminated because the City fails to fund its City Contribution by the City Contribution Closing or the Hotel Owner fails to fund the Hotel Construction Phase Financing for a Permitted Non -Funding Event, then for a period of two years from the date of the termination, this Agreement and the Project shall be suspended from the date of the original planned City Contribution Closing. If, within two years of such date, the Permitted Non -Funding event is resolved or is no longer in effect, (i) the Hotel Owner may fund the Hotel Construction Phase Financing if such funding is approved by the City and the City agrees to proceed to the City Contribution Closing and (ii) the City may fund the City Contribution, provided that the Hotel Owner Financing Closing has occurred. If Hotel Owner cannot obtain the Hotel Owner Financing Contribution within such two years, then this Agreement shall terminate and the Hotel Owner shall pay to the City the Hotel Design Fee in an amount equal to the Hotel D&D Costs incurred up to the date of termination up to a maximum amount of $2,600,000. Upon payment of the Hotel Design Fee, Garfield and the City shall convey and Hotel Owner shall receive ownership and possession of all work product produced as a result of the expenditure of the Hotel D&D Costs. The City and Garfield specifically acknowledge that the Hotel Owner's obligations under this section shall not constitute a general obligation of the Hotel Owner or indebtedness under the constitution or laws of the State of Texas. Except with respect to the payment -44- of the Hotel Design Fee, the City, Garfield and Hotel Owner acknowledge and agree that any costs advanced by the City, Garfield or Hotel Owner are not subject to reimbursement. If, however, during such two years, the Permitted Non -Funding Event is resolved or is no longer in effect and the Hotel Owner Financing Closing occurs and the City fails to fund the City Contribution within seven (7) business days of the Hotel Owner Financing Closing (the "New City Contribution Closing") for a reason other than a Permitted Non -Funding Event, then the City shall reimburse Hotel Owner for its third -party fees and design and development costs less all Hotel D&D costs not paid to date by the Hotel Owner in an aggregate amount not to exceed $2,600,000. Further, Hotel Owner and Garfield specifically acknowledge that the City's obligations under this section shall not constitute a general obligation of the City or indebtedness under the constitution or laws of the State of Texas. 11. 1.6 Termination Pursuant to Project Agreements. If the Project Agreements are not approved by the Project Agreements Deadline, this Agreement shall terminate. 11.1.7 Payment of Costs Upon Termination. Other than with respect to the payment of costs upon termination as set forth above, the Parties acknowledge and agree that any costs advanced by City, Garfield or Hotel Owner with respect to the Project are not subject to reimbursement from the other Parties to this Agreement for any reason in the event of a termination of this Agreement. 11.1.8 Termination upon Default. This Agreement shall terminate upon an Event of Default by any Party pursuant to Article 12 herein and City, Garfield and Hotel Owner acknowledge and agree that any costs advanced with respect to the Project are not subject to reimbursement to the defaulting Party from the other Parties to this Agreement for any reason in the event of a termination of this Agreement pursuant to a default by such Party. 11.1.9 Expiration of Agreement. This Agreement shall expire upon Initial Occupancy of the Hotel provided that all requirements and obligations have been fulfilled under this Agreement and that the other Project Agreements are in full force and effect. ARTICLE 12 EVENTS OF DEFAULT AND REMEDIES 12.1. Terms. The following terms shall have the following meanings under this Article: "Affiliate" means any entity owned by Garfield or owners of membership interests in Garfield, or any other entity that directly or indirectly controls, is controlled by, or is under common control with Garfield or such owners. "Change in Control" means the occurrence of any transfer of (i) the ownership, directly or indirectly, in the aggregate of more than fifty percent (50%) of the beneficial ownership interests of Garfield or (ii) the possession, directly or indirectly, of the power to vote ten percent (10%) or -45- more of the outstanding voting securities of Garfield or otherwise direct or cause the direction of the management policies of Garfield through ownership of voting securities or beneficial interests, by contract or otherwise. "Key Person" with respect to Garfield means (i) Ray Garfield and (ii) Greg Garfield. 12.2. Default by Garfield. The occurrence of any of the following shall be an "Event of Default" by Garfield under this Agreement: 12.2.1 The filing by Garfield of a voluntary proceeding under present or future bankruptcy, insolvency, or other laws respecting debtors, rights; 12.2.2 The consent by Garfield to an involuntary proceeding under present or future bankruptcy, insolvency, or other laws respecting debtor's rights; 12.2.3 The entering of an order for relief against Garfield or the appointment of a receiver, trustee, or custodian for all or a substantial part of the property or assets of Garfield in any involuntary proceeding, and the continuation of such order, judgment or degree unstayed for any period of ninety (90) consecutive days; 12.2.4 Garfield's failure to pay or cause to be paid when due any sum of money owed by Garfield to the City pursuant to this Agreement, and the continuation of such failure for thirty (30) days after written notice from the City as applicable, specifying the nature and extent of any such default with opportunity to cure; 12.2.5 The failure of Garfield to perform or to observe any covenant, obligation or requirement of this Agreement not otherwise specifically named as a default in this Section 12.2, and the continuation of such failure for thirty (30) days after written notice from the City specifying the nature and extent of any such default, or, if such default cannot reasonably be cured within such thirty (30) -day period, the failure either (i) to commence to cure such default within such thirty (30) -day period and to diligently continue to pursue such efforts to cure to completion, or (ii) to cure such default within a reasonable time after the expiration of the first thirty (30) -day period, in no event to exceed ninety (90) days after the written notice of default; 12.2.6 Any action or omission on the part of Garfield, any Key Person or any of their respective representatives or affiliates which amounts to gross negligence, fraud, bad faith, willful misconduct or any misappropriation or misapplication of funds which has a substantial adverse effect on the Project, as determined by the City in its sole discretion; 12.2.7 Criminal misconduct, which has an adverse effect on the business affairs of Garfield or the Project, as determined by the City in its sole discretion or(ii) commission of a felony by Garfield, any Key Person or any of their respective representatives or affiliates; 12.2.8 The termination of the Project Operating Agreement as a result of an event of default by Garfield thereunder, -46- 12.2.9 The failure of Garfield to begin construction on the Project by the Construction Deadline, or to achieve Final Completion within eighteen (18) months after the City gives Garfield the Notice To Proceed, unless the delay in completion is attributable to any City Delay, Force Majeure, or the institution of litigation concerning the Project or any component thereof by a third party and the continuation of such failure for thirty (30) days after written notice from the City specifying the nature and extent of any such default, or, if such default cannot reasonably be cured within such thirty (30) -day period, the failure either (i) to commence to cure such default within such thirty (30) -day period and to diligently continue to pursue such efforts to cure to completion, or (ii) to cure such default within a reasonable time after the expiration of the first thirty (30) -day period, in no event to exceed ninety (90) days after the written notice of default; 12.2.10 A termination of any Project Agreement resulting from an Event of Default by Garfield thereunder; 12.2.11 A Change in Control without the prior approval of the City; 12.2.12 Subject to the City's satisfaction of its payment obligations hereunder, the failure of Garfield to remove or cause to be removed any and all liens for work done or materials furnished with respect to the City Facilities within ninety (90) days after notice to Garfield of the filing thereof; or 12.2.13 Subject to the City Council's sole and absolute discretion, the City may, but is not obligated to, default and remove Garfield pursuant to Garfield's "for cause" default under any agreements related to the Project between Garfield and its Affiliates and Hotel Owner. Upon the occurrence of a "for cause" default under any of such agreements, Hotel Owner must notify the City Representative of the facts and circumstances of the default and the City Council shall make a determination regarding default by Garfield under this Agreement. If the City determines to default Garfield under this provision, the City shall notify Garfield pursuant to 12.5 herein. Upon the City Council's determination to default Garfield pursuant to this section, Hotel Owner must identify a Replacement Developer meeting the requirements of Section 2.1.3(c) and provide the City Council with assurances that should the City Council declare such a "for cause" default, such Replacement Developer will assume all obligations and responsibilities of Garfield under this Agreement at no additional cost or increased expenditure by the City, 12.3. Default by Hotel Owner. The occurrence of any of the following shall be an "Event of Default" by Hotel Owner under this Agreement: 12.3.1 The filing by Hotel Owner of a voluntary proceeding under present or future bankruptcy, insolvency, or other laws respecting debtors, rights; 12.3.2 The consent by Hotel Owner to an involuntary proceeding under present or future bankruptcy, insolvency, or other laws respecting debtor's rights; -47- 12.3.3 The entering of an order for relief against Hotel Owner or the appointment of a receiver, trustee, or custodian for all or a substantial part of the property or assets of Hotel Owner in any involuntary proceeding, and the continuation of such order, judgment or degree unstayed for any period of one hundred eighty (180) consecutive days; 12.3.4 Hotel Owner's failure to pay or cause to be paid when due any sum of money owed by Hotel Owner to the City pursuant to this Agreement, and the continuation of such failure for thirty (30) days after written notice from the City as applicable, specifying the nature and extent of any such default with opportunity to cure; 12.3.5 The failure of Hotel Owner to perform or to observe any covenant, obligation or requirement of this Agreement not otherwise specifically named as a default in this Section 12. 1, and the continuation of such failure for thirty (3 0) days after written notice from the City specifying the nature and extent of any such default, or, if such default cannot reasonably be cured within such thirty (30) -day period, the failure either (i) to commence to cure such default within such thirty (30) -day period and to diligently continue to pursue such efforts to cure to completion, or (ii) to cure such default within a reasonable time after the expiration of the first thirty (30) -day period, in no event to exceed ninety (90) days after the written notice of default; 12.3.6 Any action or omission on the part of Hotel Owner, or any of its representatives which amounts to gross negligence, fraud, bad faith, willful misconduct or any misappropriation or misapplication of funds; 12.3.7 Criminal misconduct which has an adverse effect on the business or affairs of Hotel Owner, as determined by the City in its sole discretion or (ii) commission of a felony by Hotel Owner, or any of its representatives; 12.3.8 The termination of the Project Operating Agreement as a result of an event of default by Hotel Owner; 12.3.9 A termination of any Project Agreement resulting from an Event of Default by Hotel Owner thereunder; and 12.3.10 Subject to the City's satisfaction of its payment obligations hereunder, the failure of Hotel Owner to remove or cause to be removed any and all liens for work done or materials furnished with respect to the City Facilities within ninety (90) days after notice to Hotel Owner of the filing thereof. 12.4. Default by the City. The occurrence of any of the following shall be an "Event of Default" by the City under this Agreement: 12.4.1 The filing by the City of a voluntary proceeding under present or future bankruptcy, insolvency, or other laws respecting debtors' rights; 12.4.2 The consent by the City to an involuntary proceeding under present or future bankruptcy, insolvency, or other laws respecting debtor's rights; -48- 12.4.3 The entering of any order for relief against the City or the appointment of a receiver, trustee, or custodian for all or a substantial part of the property or assets of the City in any involuntary proceeding, and the continuation of such order, judgment or decree unstayed for any period of one hundred eighty (180) consecutive days; 12.4.4 The City's failure to pay or cause to be paid when due any sum of money owed by the City to Hotel Owner or Garfield pursuant to this Agreement, and the continuation of such failure for thirty (30) days after written notice from Hotel Owner or Garfield, as applicable, specifying the nature and extent of any such default with opportunity to cure; 12.4.5 The failure of the City to perform or to observe any nonmonetary covenant, obligation or requirement of this Agreement and the continuation of such failure for thirty (30) days after written notice from Hotel Owner or Garfield specifying the nature and extent of any such default, or, if such default cannot reasonably be cured within such thirty (30) -day period, the failure either (i) to commence to cure such default within such thirty (30) -day period and to diligently continue to pursue such efforts to cure to completion, or (ii) to, cure such default within a reasonable time after the expiration of the first thirty (30) - day period, in no event to exceed one hundred eighty (180) days after the written notice of default; or 12.4.6 A termination of any Project Agreement resulting from an Event of Default by the City thereunder. 12.5. Remedies. Upon the occurrence and continuance of an Event of Default described in Section 12.2 or 12.3, the City may elect (after written notice to the Leasehold Mortgagee and subject to Hotel Owner's and Leasehold Mortgagee's respective rights to cure) to terminate this Agreement by giving written notice of such termination to Hotel Owner and Garfield, and this Agreement shall terminate as of the date specified in such notice (which date shall be on or after the date of the notice of termination); provided, however, that the City shall have no right to terminate the Agreement unless the City delivered to the Garfield and Hotel Owner a second notice which expressly provides that the City will terminate within thirty (30) days if the default is not addressed as herein provided. 12.5.1 Upon the occurrence of an Event of Default by the City under Section 12.4, Hotel Owner may elect to terminate this Agreement by giving written notice of such termination to the City and the Leasehold Mortgagee, and this Agreement shall terminate as of the date specified in such notice (which date shall be on or after the date of the notice of termination); provided, however, that Hotel Owner shall have no right to terminate the Agreement unless Hotel Owner delivered to the City a second notice which expressly provides that Hotel Owner will terminate within thirty (30) days if the default is not addressed as herein provided. -49- 12.5.2 Limited Waiver of Immunity. (a) Notwithstanding anything to the contrary herein, the City, Garfield and Hotel Owner hereby acknowledge and agree that to the extent this Agreement is subject to the provisions of Subchapter I of Chapter 271, TEXAS LOCAL GOVERNMENT CODE, as amended, the immunity of the City and of the Hotel Owner from suit is waived only as set forth in Subchapter I of Chapter 271, TEXAS LOCAL GOVERNMENT CODE. (b) Should a court of competent jurisdiction determine the immunity of the City or Hotel Owner from suit is waived in any manner other than as provided in Subchapter I of Chapter 271, TEXAS LOCAL GOVERNMENT CODE, as amended, the Parties hereby acknowledge and agree that in a suit against the City or the Hotel Owner for breach of this Agreement: (i) the total amount of money awarded is limited to actual damages in an amount not to exceed the balance due and owed by the City or the Hotel Owner under this Agreement; (ii) the recovery of damages against the City or the Hotel Owner may not include consequential damages or exemplary damages; (iii) the Parties may not recover attorney's fees; and (iv) the Parties are not entitled to specific performance or injunctive relief against the City or the Hotel Owner. 12.5.3 Limitation on Damages. In no event shall any Party have any liability under this Agreement for any exemplary or consequential damages. 12.5.4 Notices to Leasehold Mortgagees. If at any time after any security agreement, pledge agreement, or collateral assignment (a "Mortgage") is executed granting a security interest in this Agreement and other Project Agreements, and Hotel Owner, Garfield or the secured party under the Mortgage notifies the City in writing of the existence of the Mortgage and furnishes the City with the address(es) to which the Leasehold Mortgagee desires copies of notices to Hotel Owner and/or Garfield under this Agreement be sent (each such secured party under a Mortgage of whom the City is given notice being a "Leasehold Mortgagee"), then the City shall thereafter mail (by certified mail) to each Leasehold Mortgagee or agent thereof, at the address so given, by any method of delivery permitted hereunder at the same time that the notices of default required to be sent pursuant to this Agreement. The City's failure to deliver copies of any notices to any Leasehold Mortgagee will not impair or negate the validity or effectiveness of any notice delivered to Hotel Owner and/or Garfield nor delay the City's right to pursue any available remedy other than termination of this Agreement, but will delay the start of any cure periods afforded to such Leasehold Mortgagee under this Section until such time as such notices are delivered to the Leasehold Mortgagee, or, with respect solely to those Events -50- of Default for which no cure period is applicable, delay the City's right to terminate this Agreement and/or the other Project Agreements for a period of thirty (30) calendar days. 12.5.5 Right to Cure. Any Leasehold Mortgagee, at its option, acting either directly or indirectly through a designee, may, but shall not be obligated to, cure the default and perform any other obligation of Hotel Owner or Garfield as necessary to prevent the termination of this Agreement and/or the other Project Agreements. All actions taken by Hotel Owner, Garfield or the Leasehold Mortgagee or its designee will be effective to prevent a forfeiture of the rights of Hotel Owner or Garfield hereunder or under the other Project Agreements as if timely done and performed by Hotel Owner or Garfield. Any Leasehold Mortgagee may, if Hotel Owner or Garfield desires, provide that, as between any Leasehold Mortgagee or its designee and Hotel Owner or Garfield, Hotel Owner, Garfield or the Leasehold Mortgagee or its designee, on curing any such default or defaults or performing any obligations on the part of Hotel Owner or Garfield, will be thereby subrogated to or put in the position of assignee of any or all of the rights of Hotel Owner or Garfield under this Agreement and the Project Agreements covered by Leasehold Mortgagee (subject to Section 12.5.7.) 12.5.6 Option for New Agreement. If this Agreement terminates for any reason, then Hotel Owner or Garfield shall, and the City shall use commercially reasonable efforts to, deliver notice of the termination to any Leasehold Mortgagee about which the City has been notified. Upon request by any Leasehold Mortgagee received by the City within ninety (90) days after the Leasehold Mortgagee's receipt of the notice of termination, the City will enter into a new development agreement (a "New Agreement") for the Hotel, City Facilities with the Leasehold Mortgagee or its designee (including without limitation, a Leasehold Mortgagee Designee, as hereinafter defined) on the same terms of this Agreement promptly after the Leasehold Mortgagee or its designee satisfied the conditions set forth in Section 12.5.7. If more than one (1) Leasehold Mortgagee exercises the foregoing option for a new agreement, the City shall enter into a new agreement with the Leasehold Mortgagee, or its designee, having the highest priority among those Leasehold Mortgagees who exercised the option. 12.5.7 Obligation to Cure. In order for any Leasehold Mortgage or its designee, including without limitation, a Leasehold Mortgagee Designee, to become a party to a New Agreement, whether pursuant to the Leasehold Mortgagee's right under Section 12.5.5, under Section 12.5.6, or otherwise, the Leasehold Mortgagee or its designee, including without limitation, a Leasehold Mortgagee Designee must first: (a) Cure any monetary default of Hotel Owner and/or Garfield; (b) Cure any non -monetary default of Hotel Owner or Garfield, excluding those that by their nature are incapable of cure by any other person or entity (provided that any new successor to Hotel Owner or Garfield shall not be permitted to continue such default of Hotel Owner or Garfield or any similar default with respect to the new successor to Hotel Owner or Garfield going forward); and -51- (c) Enter into a New Lease, as described in the Ground Lease. 12.5.8 Modifications; Surrender. Except in connection with exercising the City's remedies following an Event of Default for which any Leasehold Mortgagee(s) has received notice and been afforded any applicable cure periods hereunder as set forth in this Article 12, the City may not accept any surrender of or agree to any termination of this Agreement and/or the Project Agreements without the prior written consent thereto by any Leasehold Mortgagee(s). Any attempt to do so without such written consent will be void and of no force and effect. 12.5.9 Rights Cumulative. All rights of any Leasehold Mortgagee, Leasehold Mortgagee Designee, or Leasehold Qualifying Mortgagee Designee under this Agreement are cumulative and non-exclusive. 12.5.10 Leasehold Mortga ee Designee. As used in this Agreement, any "Leasehold Mortgagee Designee" shall include the designee selected by a Leasehold Mortgagee, and any third party that acquires the right under this Agreement from Leasehold Mortgagee by assignment, as a purchaser, by foreclosure, deed -in -lieu of foreclosure, sale or otherwise, provided that, in each case, City Representative has approved such designee in accordance with the terms of this Agreement (each a "Leasehold Mortgagee Designee"). Notwithstanding anything to the contrary herein the Leasehold Qualifying Mortgagee Designee (defined below) may assume the rights and obligations (except as set forth in Section 12.5.7 hereof) of Hotel Owner or Garfield under this Agreement and/or the other Project Agreements or become a party to a New Agreement without the prior written consent of the City Representative. Any other designee may do so only with the City Representative's prior written approval, not to be unreasonably withheld or delayed. The provisions of this Section 12.5. 10 shall apply both with respect to this Agreement and any New Agreement entered into under Section 12.5.6 or otherwise. A "Leasehold Qualifying Mortgagee Designee" means the Leasehold Mortgagee and any wholly-owned subsidiary of the Leasehold Mortgagee. 12.5.11 Consent of Leasehold Mortgagee Required. No cancellation or surrender of this Agreement by Hotel Owner or Garfield prior to the commencement of the Initial Term (as defined in the Lease) shall be effective as to any Leasehold Mortgagee unless resulting from a failure or refusal by a Leasehold Mortgagee to comply timely with the provisions of this Article 12 respecting the cure of Events of Default under this Agreement. No Leasehold Mortgagee shall be bound by any material modification of this Agreement or the other Project Agreements unless such modification is consented to by such Leasehold Mortgagee, which consent shall not be unreasonably withheld unless the modification adversely affects the value of the Leasehold Mortgagee's collateral. 12.5.12 Notice to Leasehold Mortgagee. Notwithstanding anything herein to the contrary, if any Event of Default shall occur, the City shall have no right to terminate this Agreement or the other Project Agreements unless the City shall deliver notice to Leasehold Mortgagee of the City's intent to so terminate at least thirty (30) calendar days in advance of the proposed effective date of such termination. This notice of termination -52- shall be in addition to any notices previously copied to the Leasehold Mortgagee and shall specify that it is the notice required by this Section 12.5.12. The provisions of Section 12.5.13 below shall apply if, within such thirty (30) calendar day termination notice period, any such Leasehold Mortgagee shall (a) pay or cause to be paid all amounts then due and in areas as specified in the termination notice to such Leasehold Mortgagee and which may become due during such thirty (30) calendar day period, and (b) cure or cause to be cured the default, in good faith and with reasonable diligence (excluding those that by their nature are incapable of cure by other person or entity) or (ii) commence to exercise its rights with respect to Hotel Owner or Garfield's interest in this Agreement by foreclosure, assignment in lieu thereof, preparing for a sale or transfer of Hotel Owner's interests or otherwise with respect to a Leasehold Mortgage (which may include a petition to lift any stay imposed in bankruptcy proceedings and any application to remove any injunction limiting its right to take such actions, so long as, in each case, the same is diligently and continuously pursued). So long as such Leasehold Mortgagee timely commenced cure under (i) above, and thereafter diligently pursued the same, the thirty (30) day period shall be extended for so long as Leasehold Mortgagee diligently prosecutes such cure up to but not to exceed an additional thirty (30) days from the expiration of the initial thirty (30) day period. So long as such Leasehold Mortgagee timely commenced the pursuit of the exercise of its rights under (ii) above, and thereafter diligently pursued the same, the initial thirty (30) dayperiod shall be extended to allow Leasehold Mortgagee to pursue the exercise of such rights, provided that it continues to diligently pursue same, but such extension shall not exceed an additional sixty (60) days from the expiration of the initial thirty (30) day period. 12.5.13 Procedure on Event of Default. (a) Transfers After Acquisition Upon Event of Default. Subject to the provisions of Section 12.5.7, any Leasehold Qualifying Mortgagee Designee or other permitted party to the Ground Lease or City Facilities Lease and/ or the other Project Agreements may, upon acquiring Hotel Owner or Garfield's rights under this Agreement and/ or the other Project Agreements, subject to the consent of the City to the extent required in this Agreement with respect to any such proposed transfer, sell and assign Hotel Owner or Garfield's rights under this Agreement and/or the other Project Agreements on such terms and to such persons (but without modifying this Agreement) and thereafter shall be relieved of all obligations Hotel Owner or Garfield under this Agreement and/or the other Project Agreements arising after the date of such transfer, provided (i) such transferee assumes in writing for the benefit of City all of the obligations of Hotel Owner or Garfield under this Agreement (except as set forth in Section 12.4.7(b) hereof) and the "Tenant" under the Ground Lease and City Facilities Lease and (ii) City is notified of such transfer and provided a copy of such assumption promptly following such transfer. (b) Foreclosure Event a Permitted Transfer. Notwithstanding any other provisions of this Agreement to the contrary, any Foreclosure Event shall be deemed to be a permitted transfer to the extent, and only to the extent, the -53- requirements set forth in this Agreement with respect to a transfer of Hotel Owner or Garfield's interest herein have been satisfied. (c) Post -Foreclosure Operation. Notwithstanding any other provisions of this Agreement, in the event of the acquisition of Hotel Owner's or Garfield's interest herein and/or in the other Project Agreements by any Leasehold Mortgagee Designee or any permitted purchaser at a Foreclosure Event, the operation of the City Facilities by or on behalf of any such acquirer of Hotel Owner or Garfield's interest herein under this Agreement shall be subject to the provisions and requirements of this Agreement and the Ground Lease and/or City Facilities Lease, as applicable. (d) "Foreclosure Event" shall mean and refer to any foreclosure of any lien or security interest or conveyance in lieu of foreclosure with respect to any Mortgage pursuant to which a Leasehold Mortgagee Designee acquires Hotel Owner or Garfield's rights, titles, interests and obligations (save and except those obligations that rise to the level of a non -monetary default of Hotel Owner or Garfield, which Leasehold Mortgagee or Leasehold Mortgagee Designee is not required to cure under Section 12.5.7(b) under this Agreement). A Foreclosure Event shall not relieve Hotel Owner or Garfield of any of its obligations under this Agreement. 12.6. Accounting. Upon the termination of this Agreement by reason of a default under Section 12.2, Garfield shall render an accounting to the City and Hotel Owner, and, without diminishing the rights and remedies referred to in Section 12.5, from and after such date, the City shall not have any further rights or obligations under this Agreement except as expressly provided in this Agreement. ARTICLE 13 MISCELLANEOUS 13.1. Assignment. This Agreement and the duties and obligations set forth hereunder are not assignable by any Party except as specifically contemplated in this Agreement; provided that Hotel Owner may pledge or assign its rights hereunder and under the Project Agreements as security for the Hotel Construction Phase Financing; provided it is expressly understood that the property owned by the City may not be used as security for such financing, provided, the leasehold estate of Hotel Owner under the Ground Lease may be used as security for such financing. 13.2. Hotel Owner Agency. Hotel Owner may retain and appoint such consultants and advisers that it, in its sole discretion, deems necessary or appropriate to advise or represent Hotel Owner on the development of the Project and otherwise perform any act and exercise any decision- making authority on behalf of Hotel Owner in relation to this Agreement or any other agreement related to the Project. Hotel Owner shall notify the City and Garfield as to its delegation in writing prior to the Project Agreements Deadline, and the City, and Garfield may rely on Hotel Owner's delegation for any purpose under this Agreement. Notices to Hotel Owner delivered pursuant to -54- the provisions of this Agreement shall be delivered to Hotel Owner's designated agent under this Section. Hotel 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. 13.3. Modification. The City may (in its sole and absolute discretion) modify the Project Agreements from time to time for the purpose of incorporating therein such additional mortgagee protective provisions as may be reasonably requested by Hotel Owner, if such modifications are reasonably acceptable to the City, impose no additional material obligations on the City, do not restrict any of the City's rights hereunder (including restricting remedies following an Event of Default), and are not inconsistent with any of the monetary terms of the Project Agreements or standards of performance set forth therein. Notwithstanding any provision in the Project Agreements to the contrary, the City is under no obligation to modify, amend or revise the terms of the Project Agreements, and its failure to do so, regardless of reason or lack thereof, shall not be a breach of the Project Agreements, and shall neither excuse Hotel Owner's or Garfield's performance under the Project Agreements, nor give rise to any claim, defense or offset by or on behalf of Hotel Owner or Garfield. Any changes to these documents must be approved by the City in its sole discretion before the sale of the City's debt obligations in the public market. 13.4. Procurement of Goods and Services from Historicall Underutilized Businesses. In developing and constructing the Project, Garfield agrees to comply and cause the General Contractor to comply with the City's Good Faith Effort Program. 13.5. Leadership in Energy and Environmental Design The construction of the Project shall be able to meet the U.S. Green Building Council LEED minimum level certification requirements. 13.6. Intellectual Property. The City will own all Intellectual Property related to the plans and specifications for the construction of the City Facilities (the "City Intellectual Property Rights"). Garfield and Hotel Owner hereby assign to the City all City Intellectual Property Rights that Garfield and Hotel Owner or any other member of the development team has or may acquire in the future. Hotel Owner will own all Intellectual Property related to the plans and specifications for the construction of the Hotel (the "Hotel Intellectual Property Rights"). Garfield and Hotel Owner hereby grant a perpetual irrevocable license to the City to use, solely with regard to the Project, all Hotel Intellectual Property Rights that Garfield, Hotel Owner or any other member of the development team has or may acquire in the future. The City hereby grants a license to Hotel Owner and its approved assignees to use, solely with regard to the Project, all City Intellectual Property Rights that the City has or may acquire in the future during the period in which the Ground Lease and City Facilities Lease are in full force and effect. 13.6.1 The Parties acknowledge and agree the aforesaid assignment and usage of the City Intellectual Property Rights are subject to the customary rights of and indemnification for the Project Architect, and are subject to the terms of the Ground Lease and City Facilities Lease Agreement. -55- 13.6.2 The Parties acknowledge and agree the aforesaid assignment and usage of the Hotel Intellectual Property Rights are subject to the customary rights of and indemnification for the Project Architect and are subject to the terms of the Project Operating Agreement and the Hotel Construction Phase Financing. 13.7. Controlling Provisions. To the extent of any discrepancy between this Agreement and the provisions of the other Project Agreements, the provisions of the other Project Agreements shall control. It is expressly understood and agreed that this Agreement supersedes all previous Master Development Agreements for the Project to which the City and Garfield were a party, except to the extent any such obligations are re -stated in this Agreement, in which event those obligations shall survive as provided herein. 13.8. Insurance. The City shall maintain insurance on the City Facilities in keeping with the levels of insurance typically maintained by the City for similar City -owned facilities operated in like manner. Hotel Owner shall cause insurance to be maintained during period of construction of the Hotel and during its operation, as set forth in the Ground Lease and City Facilities Lease Agreement. 13.9. Waiver. The failure of any Party to insist upon strict performance of any of the terms or provisions of this Agreement or to exercise any option, right or remedy contained in this Agreement, shall not be construed as a waiver or as a relinquishment for the future of such term, provision, option, right or remedy. No waiver by any Party of any term or provision of this Agreement shall be deemed to have been made unless expressed in writing and signed by such Party. 13.10. Sever. If any clause or provision of this Agreement is or becomes illegal, invalid, or unenforceable because of present or future laws or any rule or regulation of any governmental body or entity, then the remaining parts of this Agreement shall not be affected, unless such invalidity would create undue hardship on a Party or is essential to the rights of any of them, in which event such Party has the right to terminate this Agreement on written notice to the other Parties. 13.11. Exhibits. Each exhibit referred to in this Agreement is attached to and incorporated by reference in this Agreement. 13.12. Documents. Subject to any limitations which may be set forth in of the Project Operating Agreement, if any, all as built drawings, plans, specifications and other documents prepared for the City Facilities pursuant to this Agreement shall become or remain the property of the City whether or not the City Facilities are completed. Upon termination of this Agreement prior to Completion of the Hotel, the City shall be granted a perpetual license to use all plans, specifications and other documents prepared for the Hotel. Such plans shall only be used by the City on the Hotel Site. 13.13. Other Documentation. Each Party will provide to the other Parties any other information or documentation, reasonably requested and consistent with the terms of this Agreement. -56- 13.14. _Interpretation. For the purpose of construing this Agreement, unless the context indicates otherwise, words in the singular number shall be deemed to include words in the plural number and vice versa, words in one gender shall be deemed to include words in other genders, and the word "person" shall be deemed to include a corporation, partnership or other legal entity. Headings of Articles and Sections are inserted only for convenience and are not, and shall not be deemed, a limitation on the scope of the particular Articles or Sections to which they refer. 13.15. City Approval, Action or Decision. When this Agreement calls for the approval, action or decision of the City, it shall mean the approval, action or decision of the City Council unless the City Council has delegated the authority to provide or make such approval, action or decision to an officer or employee of the City. 13.16. "Including". In this Agreement, whenever general words or terms are followed by the word "including" (or other forms of the word "include") and words of particular and specific meaning, the phrase "including without limitation," and the general words shall be construed in their widest extent and shall not be limited to persons or things of the same general kind or class as those specifically mentioned in the words of particular and specific meaning. 13.17. Notices. All notices or other communications required or desired to be given with respect to this Agreement shall be in writing and shall be delivered by hand or by courier service, sent by registered or certified mail, return receipt requested, bearing adequate postage, or sent by nationally recognized overnight delivery service (such as Federal Express or UPS), or sent by email or facsimile, and properly addressed as provided below. Each notice given by mail shall be deemed to be given by the sender when received or refused by the Party intended to receive such notice; each notice delivered by hand or by courier service shall be deemed to have been given and received when actually received by the Party intended to receive such notice or when such Party refuses to accept delivery of such notice; each notice given by overnight delivery service shall be deemed to have been given and received on the next business day following deposit thereof with the overnight delivery company; and each notice given by facsimile shall be deemed to have been given and received upon transmission, provided confirmation of receipt is received back by the sending facsimile prior to 5:00 p.m. local time at the sending location, or on the next business day if after 5:00 p.m. local time at the sending location. Upon a change of address by either Party, such Party shall give written notice of such change to the other parties in accordance with the foregoing. Inability to deliver because of changed address or status of which no notice was given shall be deemed to be receipt of the notice sent, effective as of the date such notice would otherwise have been received. To the City: City of Baytown 2401 Market Street Baytown, Texas 77520 Attn: City Manager c1tvinanager «ba own.or -57- with a copy to: City of Baytown 2401 Market Street Baytown, Texas 77520 Attn: City Attorney le galkbaytown.ory To Hotel Owner: Baytown Municipal Development District 2401 Market Street Baytown, Texas 77520 Attn: Deputy City Manager with a copy to: City of Baytown 2401 Market Street Baytown, Texas 77520 Attn: City Attorney legal baytown.org To Garfield: Garfield Public/Private LLC 14785 Preston Road Suite 480 Dallas, Texas 75254 Attn: Greg Garfield, President e (�i. arfield ublic rivate.com with a copy to: Garfield Public/Private LLC 14785 Preston Road Suite 480 Dallas, Texas 75254 Attn: Daniel Hennessy, Esq. uric rivate.com 13.18. Entire Agreement. This Agreement constitutes the entire agreement among the Parties with respect to the Project and supersedes all prior understandings and writings, including, without limitation, the Pre -Development Services Agreement which shall be of no further force or effect upon execution of this Agreement, and this Agreement may be amended or modified only by a writing signed by the City, Hotel Owner and Garfield. 13.19. Further, Assurances. The Parties covenant to execute such additional documents and instruments as may be reasonably necessary to provide for the coordinated development, financing and operation of the Project. -58- 13.20. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which together shall comprise but a single document. 13.21. No Joint Venture. It is acknowledged and agreed by and among the Parties that the terms hereof are not intended to, and shall not be deemed to, create any partnership or joint venture among the Parties. The past, present and future officers, elected officials, employees and agents of the City do not assume any responsibilities or liabilities to any third party in connection with the development, design, construction or operation of any of the improvements contemplated by this Agreement. In addition, Garfield acknowledges and agrees that there shall be no recourse against any of the aforesaid parties, none of whom will incur any liability in respect to any claims based upon or relating to the Agreement. 13.22. Governina Law. The validity of this Agreement and any of its terms and provisions, as well as the rights and duties of the Parties, shall be governed by the laws of the State of Texas; and the exclusive venue for any action concerning this Agreement shall be in the State District Court of Harris County, Texas. 13.23. INDEMNITY. GARFIELD HEREBY INDEMNIFIES AND AGREES TO HOLD THE CITY AND HOTEL 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 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 GARFIELD 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 THE CITY FACILITIES THAT GARFIELD HAS PURCHASED IN THE NAME OF THE CITY THAT DOES NOT CONFORM WITH THE FF&E SPECIFICATIONS DUE TO THE NEGLIGENCE, CARELESSNESS OR WILLFUL MISCONDUCT OF GARFIELD (III) ANY BREACH OF ANY REPRESENTATION OR WARRANTY OF GARFIELD HEREIN CONTAINED, OR (IV) ANY CLAIM -59- ARISING OUT OF EMPLOYMENT, NON -EMPLOYMENT OR DISCHARGE OF GARFIELD EMPLOYEES OR AGENTS. IT IS THE EXPRESSED INTENTION OF THE PARTIES HERETO THAT THE INDEMNITIES PROVIDED FOR IN THIS PARAGRAPH INCLUDE AN INDEMNITY BY GARFIELD TO INDEMNIFY AND PROTECT THE CITY AND THE HOTEL OWNER FROM THE CONSEQUENCES OF GARFIELD'S OWN NEGLIGENCE, WHETHER THAT NEGLIGENCE IS THE SOLE OR A CONCURRING CAUSE OF THE RESULTING INJURY, DEATH OR DAMAGE. SUCH INDEMNITY SHALL NOT APPLY, HOWEVER, TO LIABILITY OF A PARTY THAT IS CAUSED BY OR RESULTS FROM THE NEGLIGENCE OF THAT PARTY. IN THE EVENT THAT ANY ACTION OR PROCEEDING IS BROUGHT AGAINST THE CITY FROM WHICH THE CITY IS INDEMNIFIED, GARFIELD FURTHER AGREES AND COVENANTS TO DEFEND THE ACTION OR PROCEEDING BY LEGAL COUNSEL ACCEPTABLE TO THE CITY. THIS INDEMNITY SHALL SURVIVE THE EXPIRATION OR TERMINATION OF THIS AGREEMENT. 13.24. Limitation on Hotel Owner Liability. Notwithstanding anything contained in this Agreement or any of the other agreements or documents referred to herein or otherwise, Hotel 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, any of the other agreements or documents referred to herein, the Project, the financing or otherwise, except and to the extent moneys are available therefor an applied thereto under and in accordance with the documents pursuant to which the Hotel Owner Financing Contribution is made. [Execution Page Follows] WITNESS the following signatures: ATTEST: LETICIA BRYSCH, City Clerk CITY OF BAYTOWN, TEXAS RICHARD L. DAVIS, City Manager BAYTOWN MUNICIPAL DEVELOPMENT DISTRICT By: Name: Title: GARFIELD PUBLIC/PRIVATE LLC By: Name: Title: Signature Page to Master Development Agreement Exhibit A Description of Property and Project [shall include all of the infrastructure to service the Project, including, without limitation, the new lift station to service the Project] Exhibit A Exhibit A U- O V 0 W Z� o0 oN O Oa� o_.. � ro a � � C 3 Z o V) a O ~ F Ow Z L.L1 a°L Z N � � I !a J a m LU W _ �a V am c�= CL Exhibit A Exhibit B Performance Standards and Competitive Set Headquarters Hotel Minimum Performance Standards As part of the Convention Center Complex, the headquarters hotel is expected to operate at a performance standard of an "up -scale hotel." The following will serve as benchmarks for minimum performance standards, unless amended by mutual agreement of the City and Tenant: Minimum Hotel Performance Standards: 1. Hotel brand of Sheraton or an equivalent up -scale brand. 2 Beginning with the third and fourth full operating years and thereafter throughout the term of the Lease, the RevPAR of the Hotel for the applicable operating years shall equal or exceed 92.510 of the RevPAR of the Competitive Set 3. Provide courtesy shuttle for destinations within 5 miles of hotel. 4. Maintain the performance standards of an upscale, full service hotel so as to qualify to be rated upscale or better in the Smith Travel Research ("STR") Chain Scales (or comparable rating scale if the STR Chain Scales is no longer applicable). Remedies for failure to achieve minimum Performance standards: 1. Written notice to Hotel Owner of any non-performance event. 2. 12 -month opportunity to cure. 3. After Notice and 12 -month cure period without the non-performance event being cured, the rent due under the Ground Lease shall increase to $25,000 per annum until such non- performance is cured or the Ground Lease is terminated pursuant to its terms. 4. 24 consecutive months of non-performance without cure after the aforesaid notice to Hotel Owner may result in notice to terminate by City Council action. 5. Hotel Owner shall promptly submit, following a City Council termination notice, an operating plan to achieve compliance within 6 months. If Hotel Owner does not achieve compliance within such 6 -month period, automatic termination of the Ground Lease without further action by Landlord; provided, however, these termination provisions shall not waive or modify in any way the provisions of the Project Agreements which provide default, termination, and/or new lease protection to any trustee or lender. Competitive Set 1. Competitive Set. The City Representative shall appoint an individual with expertise in the local hotel market to represent the City in matters related to the Competitive Set ("City Appointee"). The City (acting through its City Appointee) and Hotel Owner shall agree upon a set of hotels (the "Competitive Set"), which shall be a group of at least five hotels (including the Hotel) in the Hotel's competitive market area that are most comparable to the Hotel in location, Exhibit B quality, price and market segment (with due consideration given to age, quality, number of guest rooms, room size, facilities, amount of meeting space and business mix), provided that (i) no single hotel in the Competitive Set may account for more than 30% of the total guest rooms of all hotels included in the Competitive Set, (ii) each hotel in the Competitive Set must have been in operation for at least three years, (iii) no hotel in the Competitive Set shall include a residential component in the calculation of its RevPAR and (iv) on the date on which the Competitive Set is changed, the RevPAR of the Hotel shall not be less than the minimum percentage of the minimum RevPAR of the Competitive Set, as described in the Minimum Hotel Performance Standards set forth herein. The Initial Competitive Set described below in No.4 shall constitute the Competitive Set as of the date this Agreement is executed. During the Project Development Phase or Construction Phase or thereafter, a change to the Competitive Set may occur. Any change to the Competitive Set shall be agreed by the City in writing. If the Hotel Owner and the City Appointee are unable to reach agreement on the Competitive Set, then it shall be determined by expert resolution pursuant to No. 3 below. 2. Change in Competitive Set After Initial Occupant. The City Representative will be notified by the Hotel Owner of any proposed changes to the Competitive Set. If the proposed change to the Competitive Set results in an increase in RevPAR as a result of the new Competitive Set, the Hotel Owner must submit written evidence to document the increased RevPAR and must also submit data from Smith Travel Research or such other travel research data source as approved by the City Appointee, in its sole discretion, to substantiate the increased RevPAR. If the submitted data substantiates the RevPAR, then the New Competitive Set shall be deemed approved. If the proposed change to the Competitive Set does not result in increased RevPAR or the increased RevPAR identified by the Hotel Owner is not supported by the data submitted to the City Appointee, then the process described in No. 3 below shall apply to the determination of a new Competitive Set. Upon notification, the City Appointee and the Hotel Owner shall mutually agree on any changes to the Competitive Set. Any changes to the Competitive Set will be presented to the Operator. Any changes requested by the Operator shall be presented to the City Representative for review and approval. 3. Expert Resolution. Any dispute with respect to proper inclusion or exclusion of hotels to be included in the Competitive Set shall be resolved in accordance with this section. a) Designation of Expert. The City Representative, Hotel Owner or Operator (collectively the "Parties" or individually a "Party") may commence the expert resolution process by providing notice to the other Parties. The Parties shall have ten (10) days from the date of such notice to mutually agree on one nationally recognized hospitality industry consulting firm or individual as the expert. If they fail to agree, each Party shall have an additional 10 days to each select one nationally recognized hospitality industry consulting firm or individual to serve as that Party's expert. Within ten (10) days after the completion of the selection process by the Parties (but in any event no later than thirty (30) days after the date of the notice), the two firms and/or individuals so selected shall jointly designate another such nationally recognized consulting firm or individual to be the expert. If any Party fails to make its respective selection of a firm or individual within Exhibit B the 10 -day period provided for above, then the other Parties selection shall be the expert. In all cases, the experts selected shall be "qualified candidates" as described in this Section. To be a "qualified candidate" the expert shall (i) not have any conflict of interest with any Party and (ii) have at least ten (10) years' experience in the hospitality industry consulting business. b) Procedures. The City Representative, Hotel Owner and Operator may make written statements and provide supporting materials to the expert, which must be delivered as soon as practical to the other Parties. The other Parties may respond to such submissions. The City Representative, Hotel Owner and Operator shall make available to the expert all books and records relating to the issues in dispute and shall provide the expert with any information or assistance reasonably requested by the expert. The expert shall establish a time table for the making of submissions and replies and notify the Parties in writing of its decision within 30 days after the date on which the expert has been selected (or such other period as the Parties may agree). C) Decision by Expert. Each Party shall submit its proposed resolution of the dispute and the expert shall decide in favor of one of the Parties positions, and may not make any determination other than by choosing one of the proposals submitted by the Parties. The decision of the expert shall be final and binding upon the Parties. Initial Competitive Set. The Initial Competitive Set with respect to the Competitive Set shall be the Convention Center Hotel constructed pursuant to this Agreement, the Hilton NASA Clear Lake, the Hilton Garden Inn Clear Lake NASA, the Marriot Hobby Airport and the DoubleTree Hobby Airport. Exhibit B II N=►LM►1►=1ii ,a a J Z Q W ,x I- a L L 1O� W= W Z Z N �n O 0: 0 W L H z > w Z Q a o o Z w O W F-- Q 0 < W cr In = C. H W P D u W X W -0 Ln +� Cl) a (LIc a C +; > +� 41 •V C L C 2 m c m:c a CU y- � a a a E O O N -O +,- aj a �' ` pCp a = Q1 MD Y 0 41 m_ tm0 N N Ll �O t 3 Q 41 0 "O v1 C a m 0 L1 m C m -a aJ L- u o ,gin > CL b L M a v a U v c t C a �'' o a v ``� L L 3 y Ln v1 > -Q Y a t o L a += 0a t coo c -v m �. _ O O C C m 0 0 S- _L- .v v L a 3 ° m 1 s 3 V)CL)c `s o aj c a; c E a ° *' 3 EaJ +� o >.v c > Cu O a ,� 4-1 0 0 0 0 W m v o a4"' Q ro o Z �' v 41 m a c 2 m E cli 'u -0 ani c u c C L c c J m o 3 c E O °u a� -° Oy 0 -C a 0 f�a0 m L m o L Q mm +� v o a L U 3 H c m m"� a L o 0 Q E_ .` Q aL m m o m Oc C 4, O Ln 0 M C `- 0 U `1 C L N Q a a� cV m2r a:o ++ C c ++ u m > aJ CL m C m a `O oa 0 O ,� w 0 m M m u C M u +; CL) 4- �+ i .V 00 C a 0 a ai ° a •C M a s M ` D_ p C L a C a m m a C C a `O o L 00 '-^ c m cu -M t U m 1 v) O a C m 4-1 L 0 u CU `ten r�o v a U v a m a Ln ,� O° +W O N v L 0 u ° ,n ro > in 0 a c a a 3 w ; Ln aJa v 0 v o L M ° o 3 o 0 Q p a m m a m U ` a L V `C a „o C M41O m a 0 C7 2 o +l vii CL -0 +L., CQ G N Z u w CL G O lz CL Cr Q CZ G J W w CL V 0 u C C m C 4- 3 0 0 c cu mo .a _N ++ m v E +, E O u N c a a a E v O ,n CU a>J -a -a c m m m 7 +1 a a U u C O = �C a -C 3 LA w co N 00 Fl -� ^O cn -tN F' ge M O1 as 0 I� of tD � O1 Ln lD rO u u ro v a c m m"� a o a a _ u > u CL a a 41 E m ea a v +; CL) a cu u C t +; m o c c a 4- v tn c vci .0 a c a a _° — uLn 000 o 'o a m N U 3 C H a 3 +� '� 0. a` a o o 41 o E o` O O N (�0 a pa a `- L r -4C '++ N +l a L 41 v^ 0 41 �o -C 51' 9 - '� of a� ai ? 0 C ,n 0p y a c a C a 4, a ° o C a p 'C Y 4- a c 00 a E ++ 'Q 0 > C a 0. ,n " a v °> E u m . - O a U U +m+ o a C "O 0 " m a 0 O v L � u O c -0 -v a m a c o Q a a +L., c ° o E L Z .0 r aJ >. m C +0+ m u u m' ` L •m Y d O Co Ua l7 o' > c c a va v - I L 3 o a a L- c +1 ai QJ 4-1 C o 0aE u a a C fl_ C H d ba 0 G u a1 0 '` A `f- C of ° a r, ai 3 aj aj m c N � E o oan d D. aJ aJ Y C > 'O aUJ �'• QJ vai 0 O ` m> c +� 3 c c -0+, ° //Z^� u + a a 00 c ° 'L U m a Y da a On a "'� C V W 4"• a O d0 O L 7 a -0 a \ 0 2 41 O .0 ++ F' p m L C m im, Co O `J a +a' O° u a rL -p -0 L a-+ ho CLO m u J N r-4 41 U 00 O a y O C C a C t .. �, v a s m -0 u a a X amJ E� a �; N u c + a m 0? a c E tm o X o c" n0i 3 v 00 u a o H aa, 2- E cu E a CE Cr O +' a-0 O C O a s W 7 a a rr d a d` C L a o In C a m _ 41 m> c u U aJ Z Q Q H° U z° m vii o` to ami C7 2 m° a v = g n O a L a o E i �% F- L ■ cu ■ ■ ■ ■ ■ ■ ■ ■ Q o rO u u ro z a awe o:F-a LULU ON W = z Z (n N Ohm LU F wh-z w ZQ a VO Z) O ('j w O w < ix m = a L L .0 Y a O 00 .--� 0) .1 L y C 0) 3 ..0 � m . ^ � ._ - N a) `� � e-•1 O �-•� N C L N N >' to m 4- p a a to L 0 a H �a u m O O 7 m 0 a . i N N ` u1 C O C7 O O >, L cu N E a a >` m L C O `CU w 3 M >- +1 u 3 c u 4- ° 3 a a Li +, LL Q Ln - o. Ln 41 � 3 v n 0 M U rrn E 00 m O N 0> O u b a o U 0 OO M u LL L C C O 41 C CL U (a � L m E O c o, o m c a L Co 00 c ++ as m c O m 2 �q c 4- w "0 .- E O s a C C 4_ _L `- C� LA vOi a � O u a U a Ln LM " C a t C a 41 L p 41 m u a 7 O O H t L� m L a C .II s a +r v L > u 41 0 4' 4. - t v a E E #c OD > -- C p C a L L D u j +� Q tm = L a -p C O -0 -Q +' -O C C +a+ a 0 >O 4� C 00 M j h c c .� g a G E v t O 'o o % m u *= � a -D m Y O E L u p o0 UL v u +� C d N O o c u a 41 a 'E a '� L OAC a N m E a E m° m o 3 c a a a ° o a a tw o ° '3 cLv a o c •E c .v c o ea v m ° C. "O Q `—° v t u y +� C ii U CU O 41 a _c d O o E a � _ a°�J c i° a u °' ro p c a aci ° �• v ' n 41 w L o o a .' E d o Q O L E v O -� O aj = o > L U 'o m m m +, Z a` a v o O v > C7 -. a H s p o c m C = a >. c a U u Ln LL (7 13 a c m 40 + o O CU �; m Q m a o o v a o a ,o 0 o c -o o c `^ W p• L N -° Z a E �.'� u `t c a 41 7 C. C ` 0 d a. u a C. m U- c m QJ a Ln u ° O - O O N E g °� c c l7 m .° e = o '3 L a m G u .� L C L a J a > C a a � cco a a; C C c m aul a p ,� t0 -_ _ -p 1 � S p m C 3> O u ° E F= _C L m c a s +' c C. E LuaCL >, I— CL mes '' m 0 o_ 4'� 3 Q - u m m �, u = Q c _ a u c c o c= c rho s 41 aCL +� 3 3 c u_ o o Q E c a u° Y 3 c°° c O-0 s 3 ° 3 s Z m z a E= 0 3 ou p aj #c L 41 v c v E 0 a v> m 3° L m W -° -0 N r_ W d a -1 O u a 0 U 3 7 m U C a m a v o 2 a L C m a o 'c a -C E u 0 a t a r C3 a a :. L 7 -C m 41 a""° mm m F- a o ,° u° 3 H a C L L 0 00 i -•i 00 .-•i 00 .--� 0) .1 0) Cl) 0) O O O . 4 ml 0 N O O N e-•1 O �-•� N .-I O N N N N N O a ° 7 m 0 a . i N N ` u1 l0 ei N O M O O a N E II a m 7 o C �a LC_ M >- m T u L a u Q Z a Li U LL Q m m Ln 41 � I u a y a N 00 O O u b o u N or CL ° O > c esti p E c p E +j v z cu aci O -O > > > L c OC L E a u a v► 42 u a O .II 0 v i -- C p m u j +� Q tm = L > CCL p .c u U in m E m O a C7 j h .ac Ln N c .� g a G E v a ,� ° o LA c U �+ W O Q v 4-1 a C d N a 41 E a '� L OAC a N m E a E a m o aL- Ln u a a C a a tw v a o v a o c c O C E c o ea m ° C. "O Q y a a+ t u y +� C U O U 41 a _c v a c m O m a+ -0 -0 O N cua > a a E C O a u m ro a c a 4 a -O o` E 41 w ° o 4 v a v c o O ` ° v E v O -� > �e Q a E v aa) E a m u v L> 0 a` a oWc o L" p in > o E E c m o O 0 Q O a a Fm- U a O a U u Ln LL (7 Q LnL G b0 a a J Z W a a �F-a I-- W = W Z Z N j 0W m Zh"Z > EX w Z Q a OV O 3p> W oQo < ix m = a aJ ..0 m Y aJ O aJ aJ C t-' a1 ° v)4-1 y m aJ aj CL) cu p p 7 y O +L+ a+ L 41 aJ ++ 7 +_� L L L L v i 2 aj L �L, 4- u a c— c° u L °= ,� c 3 U C U i +� a a 0 n v o v � L +i 3 mai o ai v° CL ai � > =_ 42 '� 3 E m E —`�-' o .c 3 v cu 41,L•, � c X a `" = j ba -O t o °'^' N �� Q c n +, m C • > L i c 41 N> y n +' C aJ 7 O U w E C d 4- 41 �' O °U L mO m N N 3 da mL E L= U L 41 CL u m ui �°�' c 3 aci c acu ?° � c o o m n °n. ° 3_ o m O C 'O L L >� n QJ L O 7 O L 'O O C tUo l� x L aJ > O n co fC0 vi C '^ O 'p ,« ai c u° v Q u " v ai 41 n as c u v> 3= +; v O C m L Q dA t' ° C O u L 00 u v n L cm — L +1 4, v ~ v m m +_ +� u ami �' > 3 au' `o E c v - 3 o N aai c= y a .v u a m 0 ,� m u $ c p to C a �«- v o v v 41= QJ oo E a a a c r •-^ p N c o o� }, n L Y o L v ova }, ,�.u C F- CA c ,F u d m a p L O ° C ax1 � QJ ° U bD c -C 3 ,°„ E c 4-, o 3 LL41 � -a ,� c N '' a cu v ai s c Z A cu cu cu cu O m c o° WM v v c_0 u -tea 2 -p c � L n +� o ami 'm y=. C `t C m > 'p Ln m `~ L 'Op "° >� of m o O '�'' � +w+ L (7 > 4, O � 43 li ,C N p u 41 � Y = 7 ,'�' 7 O aJ d aJ 'C m m m 3 ++ 3 +' O U m` v p u aJ 'CU L 7 C C L 'U C y v m-0 T L %+ C y>` a) aL+ [a L p •C L m G C m O aJ V m O Vf Lf u +• a1 aJ '� � ai L c' N -p L aJ N n n L n E c aJ > U •� m C '°. ai U 41 +p+ p> j w> O. O L c v L H �' a E� O� ruo n •3 a' � w 2 3 2 Q° 3 a 2 cEo v umi vp u v ° E 0 M > p inm vi 3 ,v, c n v p 3 41MO cm G H U uu U L w nl O ~ O O O st N O Q Oi 4L O d E O LD � n 000 Do '� C om.. am, fL0 E 'O p "O E n 'o I J O O O O Ol O , C "I >' n O O U N Q M .--� ct Q n -* N O a p m L 41 m Q M N Ln Q M t/1 C G k67 Ln a, v c E i/� � m L O E c O i p>> C Qj ru CL CL aj_ va ocm ° v ai 4L O Im _ Y C 3 « e O Q) U v E v 4- Z v u :' E r -va v O n o r' a o 0 4' ° U rr4E in 'C O W p On c E Ov U N a+ y '^ tA Ln w p_ L} _ 4 Cf N d .m -0>' O +, aJ y v w M v- m a E � - U o f r m :5 Ln o L- x L Z c N Q v w o •tm C O a, 0 0 a.. in m L 7 ° O C Ln LL m W in V ar O ° n n LL > �' Z off' .«. Qj O U. 0 C o L.L CL j v C N E U o M � m N° O wv H voah LL a L41 D? o U a .a v CL .O 7 R. 'O v E ro u J LJ m bn a QW J ,x F- a V-O� W = Z Z N O jm z W F w ~ z > w Z Q a VO D O (j w O w Q W a m Z a Z CD cooW .■i Q 1■M no W ca CDZ ca 1 Z J Q Q w J ix F-a LLI t -ON Z S z O m ,. LU w ~ z > w z a a u Z) O LLI> O Q Luix m=a m two m _i -o "Q w a a 7 L ?� a s °; a c -O }, ++ C -p o m -cOEu.mro' u a> Q -0 0)a +, t +' N ci c a m m o m E Q a m C E 41 cor-V) a o0 m u 3 3 0 E C -o S °c. m 3°ai n a a IA _C >, C L a C - a m O m E CD bo o m 3 a °0 °' u ai o n W c v> .� L- a 3 ate,, o f C ? a OO C 'n 1 d a a c u a m C L a m m O_ O H �° o 'n C° %- n C a •c -0 H .. u° :3E m 3 m E 'n `o c m c a L Q a_ a w m a 0 u � N m CU +a, .0 u m ,a, oa o E m. ba C z v .5 E° o E .o` °' = a tw ` L cu a o� a O O. tW y "O H +J m� av E'n mQ Lnw m v 41 a C Ln o m CID Y o u u a m y v ,F U cu° U 7 C 4� U vU a to 4- N a a CL) ` � 3 3 � � C 0 O m Ln CL) 4 � m a = L M "n 'a • n m o= E += _ a m c a m o m =_ �- _ a 3 3 c L, Ln N tTo 3 .� o 3 -a o= O o oc *' -o °u u 3 3 Q u c °c +_ S E v L o Y 1 o 3 x O rn � W tw LA Y 41 c o °o o L 0 m Q a N o0 m m m _� m E v v° v v t m c- c` N m c E c °- 7 N� L H 'O 40 '^ o— o .3 3 c T '° aCi ° E aci o° v v o `~ Y o= 'c o n0 u 3 �, n .c - 3$ v v n o a a 4-1 m In.'� E a., O aci a ri 'n 00 a") E O a L +' p0 f0 O_ y o _v a— c E — +r L O u a +, 0 3 0&n 0 +J v o ° m o m s o 3 aa)i '� v '~ v O 'n C W 0 CL 7 h a^ L o v L Y u m— .0 +r ou c ♦- v O F 7 O C Q i C O 0) o� M v a > c u= v c° ww v a -0 U+ a m CL a >L vN u a oN 'n po0 ° u m L E 'y a 41 +4-1 tn.0 C S 4 m d0 > O 3 (� C a a C > o ++ c U 3 m 'n c m` a Ln a o' -0 m m e o` w '� o`n '^ o 3 00 7 m a O_ -0u a '�o L- m a E 'n on L 0 CL 4- U o O u a m U ~ a° 3 c ai O_ m C E'- 7 c u u O uCi ` o "O fm0 °0 'n C 3= a _ " o 4- v `J y u> aui ° � O u o .> 00 c�� C '^ ° 3 E 3 3 a e0 s w= o ,i u a o v ai m v u to tn 00 o U 'c u a� o C ,° ami a �' s f9 c 4-1 u W �! m L h- r -I L �. L m tCL o i+ a m a�-I 3 o O c O. L a L O_ CL) ++ L "- v p +m, -o E y x ai a ~ m o u ° m a c 3 r`o a a E c¢ m -0 .. O a m U o a .c +' +' N `�• ° 7 T C N 3 0 C 41 m LnC > c � L , u w a o m c a -a `^ L a += E ,00 ` Y � a -° = E ai C m E a -° i 'n m ra n a' a L C m a a + L L ° C 7_ m O ° u m- •m I C m 'n LL U c O ++ m O C 41 L to 0 `� 'n U �' L U ` C O C v o E o0 a o `- ° °_' " °° c O o t, m +' t` O C ° L c Y y u ami C +; c a N C F+ m V u -= y ` n a C L O a1 +' '3 +1 0 m a +O+ a s E T .0 U m "- m O O O ,m T > L cu o m u` tw m aai E °1 = ° u m o n o a w h V)_a a. a a a c c w o r`D v vi n }' o0 c 0° W E S a N n E 3 O "- -° a a T �^ w a 'n. u *c °a O m C 'c C N 3 E a v c O a.5 > L u o +� 'n a n c c'$> O u a — m v + r a a u em +� o a w Q a u o u o> �, m +� u a c a v� IL- .« c m 'n 3 0 m c` S '� 3 341 'm 0 CL ,° v > v aai N E:L�n m m two m _i -o "Q w a a 7 L ?� a s °; a c -O }, ++ C -p o m -cOEu.mro' u a> Q -0 0)a +, t +' N ci c a m m o m E Q a m C E 41 cor-V) a o0 m u 3 3 0 E C -o S °c. m 3°ai n a a IA _C >, C L a C - a m O m E CD bo o m 3 a °0 °' u ai o n W c v> .� L- a 3 ate,, o f C ? a OO C 'n 1 d a a c u a m C L a m m O_ O H �° o 'n C° %- n C a •c -0 H .. u° :3E m 3 m E 'n `o c m c a L Q a_ a w m a 0 u � N m CU +a, .0 u m ,a, oa o E m. ba C z v .5 E° o E .o` °' = a tw ` L cu a o� a O O. tW y "O H +J m� av E'n mQ Lnw m v 41 a C Ln o m CID Y o u u a m y v ,F U cu° U 7 C 4� U vU a to 4- N a a CL) ` � 3 3 � � C 0 O m Ln CL) 4 � m a = L M "n 'a • n m o= o a m o0 a> a m o a t w s 3 c L, v c 4a 0D O m O� u m c� _. m O E v L o Y 1 o a +J x O Y aJ �' a II. U a c N O. m 00 m _� L u c m 00 m m .S N a 'V G1 m ° 7 N� H 'O m L m c T M c aCi v°i aci u v a m c Y o= u = u �, n •t0 o a a u c m o un o a 4-1 m X E a., O aci a ri 'n 00 a") yU-_ O a) L +' p0 C �GCLO_ O_ . 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