Ordinance No. 13,999ORDINANCE NO. 13,999
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 THE GROUND LEASE AND LICENSE
AGREEMENT WITH THE BAYTOWN MUNICIPAL DEVELOPMENT
DISTRICT; AND PROVIDING FOR THE EFFECTIVE DATE THEREOF.
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WHEREAS, the City acquired the land covered by the Lease (the "Leased Land") in
1995 for the following purposes: "the construction, improvement and expansion of municipal
building facilities, parking, landscaping, utilities, fire lanes, marina and other associated
municipal improvements ... for the purpose of a public park project'; and
WHEREAS, since its acquisition by the City, the Leased Land has not been dedicated or
used for park purposes or as a park, recreation area, scientific area, wildlife refuge, or historic
site; and
WHEREAS, circumstances have materially changed since the acquisition of the Leased
Land, and the use of the Leased Land for park purposes is now unfeasible, unwise, and
unnecessary; and
WHEREAS, the City Council finds that the development of the Leased Land as part of
the Baytown Hotel and Convention Center Project, including, but not limited to, parking,
landscaping, utilities, fire lanes, other associated municipal improvements, is the most feasible
and prudent use of the property; and
WHEREAS, the City hereby authorizes the lease of the Leased Land to the District under
terms and conditions that will promote and maintain the authorized public purposes of the City
as described in the Lease, and will support the marina and other associated municipal
improvements on Bayland Island; NOW THEREFORE,
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF BAYTOWN,
TEXAS:
Section 1: That (i) all matters and facts set forth in the recitals hereinabove are found
to be true; (ii) such recitals are hereby approved and made part of this ordinance for all purposes
and are adopted as part of the judgment and findings by the City Council of the City of Baytown;
and (iii) the City Council hereby abandons the use of the Leased Land for park purposes and
authorizes the use of the Leased Land for municipal purposes as expressed in the Ground Lease
and License Agreement authorized in Section 2 hereof.
Section 2: 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 Ground Lease and License
Agreement with the Baytown Municipal Development District. A copy of said agreement is
attached hereto as Exhibit "A," and incorporated herein for all intents and purposes.
Section 3: This ordinance shall take effect immediately from and after its passage by
the City Council of the City of Baytown.
INTRODUCED, READ and PASSED by the affirmative vote of the City Council of the
City of Baytown this the 24th day of January, 2019.
BRANDON CAPETILLO, May6r
ATTE T:
L ICIA BRYSCH, City erk
APPROVED AS TO FORM:
616NACIO RAMIREZ, SR., VAttorney
R:\Karen\Files.City Council Ordinances\2019Vanuary 241GmundLeasewithMDD.doc
f%S
Exhibit "A"
GROUND LEASE AND LICENSE AGREEMENT
Dated as of , 2019
by and between
THE CITY OF BAYTOWN, TEXAS,
as Landlord,
and
BAYTOWN MUNICIPAL DEVELOPMENT DISTRICT,
as Tenant
BAYTOWN CONVENTION CENTER HOTEL
ARTICLE 1. GENERAL LEASE TERMS; REPRESENTATIVES OF THE PARTIES ..............2
Section 1.1. Definitions and Usage.............................................................................2
Section 1.2. Governing Provisions..............................................................................2
Section 1.3. Landlord Representative.........................................................................2
Section 1.4. Tenant Representative.............................................................................3
ARTICLE 2. GRANT OF LEASEHOLD ESTATE AND LICENSES..........................................4
Section2.1. Lease.......................................................................................................4
Section2.2. Licenses...................................................................................................4
Section2.3. Tenant's Access and Maintenance Area.................................................4
Section 2.4. Landlord's Right to Compel Title...........................................................4
Section2.5. Reservations............................................................................................4
ARTICLE 3. LEASE TERM; POSSESSION OF LEASED PREMISES AND LICENSED
AREAS....................................................................................................................5
Section3.1. Lease Term..............................................................................................5
Section3.2. Renewal Term Option.............................................................................5
Section 3.3. Delivery of Possession; Covenant of Quiet Enjoyment ..........................6
Section 3.4. Acceptance of Premises on an "AS IS, WHERE IS" Basis....................6
Section 3.5. Tenant Release........................................................................................8
ARTICLE4. RENT.........................................................................................................................9
Section4.1. Rentals.....................................................................................................9
Section 4.2. Intentionally Omitted..............................................................................9
Section 4.3. Books and Records/Landlord Audit........................................................9
Section 4.4. Additional Rentals...................................................................................9
Section 4.5. Place and Method of Payment...............................................................10
ARTICLE 5. USE AND OCCUPANCY; PERMITTED USES...................................................10
Section 5.1.
Permitted Uses During Construction Term...........................................10
Section 5.2.
Permitted Uses During Operating Term...............................................10
Section5.3.
Prohibited Uses.....................................................................................11
Section 5.4.
Continuous Operation During the Lease Term.....................................11
Section 5.5.
Compliance with Governmental Rules and Permitted
Encumbrances.......................................................................................15
Section5.6.
Excavations...........................................................................................16
Section5.7.
Light and Air.........................................................................................16
Section 5.8.
Estoppel Certificate for Operator..........................................................16
Section5.9.
Deliverables...........................................................................................17
Section 5.10.
Confidentiality......................................................................................17
Section 5.11.
Operation of Convention Center Improvements...................................17
Section 5.12.
CC Down Times....................................................................................17
Section 5.13.
Compliance with the Operating Agreement..........................................18
Section 5.14.
Minimum Hotel Performance Standards...............................................18
Section 5.15.
Completion of the Hotel Project Improvements Work.........................20
ARTICLE 6. IMPOSITIONS; NET LEASE.................................................................................20
Section 6.1. Taxes and Assessments.........................................................................20
Section 6.2. Tenant's Right to Contest Impositions..................................................20
Section 6.3. Failure of Tenant to Pay Impositions....................................................22
Section6.4. Net Lease...............................................................................................22
ARTICLE 7. INSURANCE AND SURETY BONDS..................................................................23
Section7.1.
Policies Required..................................................................................23
Section 7.2.
Blanket or Master Policy.......................................................................35
Section 7.3.
Failure of Tenant to Maintain...............................................................36
Section 7.4.
Additional Policy Requirements...........................................................36
Section 7.5.
Proceeds of Insurance; Insurance Trustee.............................................37
Section 7.6.
Landlord Insured as Additional Insureds under Liability
Insurance of Space Tenants and Subtenants.........................................40
Section 7.7.
Release by Tenant.................................................................................41
ARTICLE 8. OWNERSHIP OF PROJECT IMPROVEMENTS AND PERSONALTY;
ADDITIONAL
WORK; ACCESS........................................................................43
Section 8.1.
Title to the Project Improvements.........................................................43
Section 8.2.
Additional Work by Tenant..................................................................44
Section 8.3.
No Substitute for Permitting Processes or other Governmental
Functions...............................................................................................46
Section 8.4.
Work Performed on Project..................................................................46
Section 8.5.
Landlord's Joinder in Permit Applications...........................................46
Section8.6.
Mechanics' Liens and Claims...............................................................47
Section 8.7.
Access to the Project Improvements for Landlord................................48
Section 8.8.
Record Drawings and Other Documents...............................................48
ARTICLE 9. REPAIRS AND MAINTENANCE; UTILITIES; REMEDIAL WORK ................49
Section 9.1.
Repairs and Maintenance......................................................................49
Section9.2.
Utilities..................................................................................................50
Section 9.3.
Tenant's Remedial Work; Notice of Environmental Events;
WasteDisposal......................................................................................51
ARTICLE 10. CASUALTY DAMAGE........................................................................................52
Section10.1.
Damage or Destruction.........................................................................52
Section 10.2.
Insurance Proceeds................................................................................52
Section 10.3.
Non -Abatement of Rent........................................................................54
Section10.4.
Option to Terminate..............................................................................54
ARTICLE 11. CONDEMNATION...............................................................................................56
Section 11.1.
Condemnation of All or Substantially All............................................56
Section 11.2.
Condemnation of Part ...........................................................................57
Section11.3.
Temporary Taking.................................................................................58
Section11.4.
Condemnation Proceedings...................................................................58
Section 11.5.
Notice of Condemnation.......................................................................58
Section 11.6.
Condemnation by the City....................................................................59
11
ARTICLE 12. ASSIGNMENT; SUBLETTING...........................................................................59
Section 12.1.
Assignments of Tenant's Interest; Subleasing......................................59
Section 12.2.
Assignment; Subletting; Control of Interests in Tenant ........................ 59
Section 12.3.
Information and Assurances Required; Review by Landlord ............... 60
Section 12.4.
No Waiver of Rights by Landlord.........................................................62
Section 12.5.
Conditions to Effectiveness of Any Transfer........................................62
Section12.6.
Space Leases.........................................................................................62
Section 12.7.
Non -Disturbance of Space Leases........................................................63
Section 12.8.
Acceptance of Rent...............................................................................63
Section 12.9.
Transfers by Landlord...........................................................................63
Section 12.10.
Estoppel Certificate...............................................................................63
ARTICLE 13. SPECIAL COVENANTS......................................................................................64
Section 13.1.
Maintenance of Rights of Way, Easements and Licenses.....................64
Section 13.2.
Compliance with Anti -Forfeiture Laws................................................64
Section 13.3.
Governmental Authorizations...............................................................65
Section 13.4.
Payment of Property Taxes, Insurance, and City Facilities Lease
Rentals...................................................................................................
65
ARTICLE 14. LEASEHOLD MORTGAGES..............................................................................66
Section 14.1.
Tenant's Limited Right to Grant Liens.................................................66
Section 14.2.
Consent of Leasehold Mortgagee Required..........................................67
Section14.3.
Default Notice.......................................................................................67
Section14.4.
Notice to Leasehold Mortgagee............................................................67
Section14.5.
Procedure on Default.............................................................................67
Section 14.6.
Third Party Beneficiary .........................................................................69
Section14.7.
New Lease.............................................................................................69
Section14.8.
New Lease Priority................................................................................70
Section 14.9.
Liability of New Tenant........................................................................70
Section 14.10.
Further Assurances; Estoppel Certificate..............................................70
Section14.11.
Space Leases and Subrents...................................................................71
Section14.12.
Legal Proceedings.................................................................................72
Section14.13.
Notices...................................................................................................72
Section 14.14.
Non -separation of Leasehold Estate, Licenses, and Project
Documents............................................................................................72
Section 14.15.
Consent to Hotel Bond Trustee as Leasehold Mortgagee.....................73
Section 14.16.
Additional Bonds..................................................................................73
ARTICLE 15. DEFAULTS AND REMEDIES.............................................................................73
Section15.1.
Events of Default...................................................................................73
Section15.2.
Remedies...............................................................................................76
Section 15.3.
No Indirect Damages.............................................................................78
Section15.4.
Waiver of Consumer Rights..................................................................78
Section 15.5.
Limited Recourse Against Landlord.....................................................79
Section 15.6.
Declaratory or Injunctive Relief............................................................79
Section 15.7.
Effect of Termination............................................................................79
Section 15.8.
Notice of Default to the Operator..........................................................79
Section 15.9. Effect of Offset......................................................................................80
ARTICLE 16. SURRENDER OF POSSESSION; HOLDING OVER.........................................80
Section 16.1. Surrender of Possession........................................................................80
Section 16.2. Removal of Personalty..........................................................................80
Section16.3. Holding Over.........................................................................................81
ARTICLE 17. GENERAL PROVISIONS....................................................................................81
Section 17.1.
Representations of the Parties Regarding Brokerage Fees and
Commissions.........................................................................................81
Section17.2.
Representations and Warranties............................................................81
Section17.3.
Governing Body Approval....................................................................84
Section17.4.
Non-Appropriation................................................................................84
Section 17.5.
Interest on Overdue Obligations...........................................................85
Section 17.6.
Delays and Effect of Delays..................................................................85
Section17.7.
Recording of Memorandum of Lease...................................................87
Section 17.8.
Intentionally Omitted............................................................................87
Section 17.9.
Employment of Consultants..................................................................87
Section 17.10.
Alcoholic Beverage Permits..................................................................87
Section 17.11.
Acknowledgement of Confidential Nature...........................................87
Section 17.12.
Open Records........................................................................................88
Section17.13.
Survival.................................................................................................88
V
APPENDICES. SCHEDULES AND EXHIBITS
APPENDICES:
APPENDIX A Rules of Usage and Glossary of Defined Terms
APPENDIX B
Governing Provisions
APPENDIX C
Addresses for Payments and Notices/Description of Accounts
APPENDIX D
Insurance Plan Additional Requirements
EXHIBITS:
EXHIBIT A-1
Description of Site at Ground Level
EXHIBIT A-2
Description of the Licensed Areas, if any
EXHIBIT A-3
Description of Adjacent Convention Center Site
EXHIBIT A-4
Intentionally deleted
EXHIBIT A-5
Description of Tenant's Access and Maintenance Area
EXHIBIT A-6
Description of Landlord's Access and Maintenance Area
EXHIBIT B
Form of Non -Disturbance and Attornment Agreement
EXHIBIT C
Additional Items of FF&E
EXHIBIT D
Form of Memorandum of Ground Lease and License Agreement
EXHIBIT E
Form of Assignment and Assumption Agreement
EXHIBIT F
Permitted Encumbrances
EXHIBIT G
Parking Land
Vi
GROUND LEASE AND LICENSE AGREEMENT
THIS GROUND LEASE AND LICENSE AGREEMENT (the "Ground Lease") is made
and entered into effective as of the _ day of , 2019 (the "Effective Date"), by and
between THE CITY OF BAYTOWN, TEXAS, a Texas municipal corporation and home -rule
city of the State of Texas principally situated in Harris County, Texas ("Landlord" or
acting by and through its governing body, the City Council of the City of Baytown ("City
Council"), and BAYTOWN MUNICIPAL DEVELOPMENT DISTRICT, a political subdivision
of the State of Texas, acting by and through its governing body, the Board of Directors of the
Baytown Municipal Development District ("Board of Directors") and the City ("Tenant").
Tenant and Landlord collectively are referred to herein as the "Parties" and individually as a
"Party".
RECITALS
A. The City has determined that the construction of an upscale full service, minimum
200 -room convention center headquarters hotel and related function space and improvements by
Tenant will benefit the City and its residents.
B. In response to a request for proposals Number 03-14-17 initiated by the City, the
City Council (selected Garfield Public/Private LLC, a Texas limited liability company)
("Developer"), to provide professional services for the design, construction, and operation of the
Hotel (as hereinafter defined) as the preferred developer for the development of the Hotel and
related convention center facilities and authorized the City to enter into negotiations for the
development of the Hotel and related convention center facilities generally in accordance with the
major terms of such proposal.
C. Tenant 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 and
Section 388.102 of the Special District Local Laws Code to undertake the development,
construction, ownership, and operation of the Hotel.
D. Landlord, Developer and Tenant have entered into that certain Master
Development Agreement dated September 13, 2018, (the "Development Agreement") setting
forth certain agreements of Landlord and Developer with respect to such matters, including the
terms, conditions and provisions pursuant to which Developer shall design, develop, construct,
furnish and open, or cause to be designed, developed, constructed, furnished and opened the
Project Improvements (as hereafter defined).
E. Landlord and Tenant are executing and entering into the City Facilities Lease
(hereinafter defined) of even date herewith wherein Tenant shall lease the City -Owned
Improvements (as hereinafter defined) from Landlord, and Landlord and Tenant are executing and
entering into the Marina Site Parking Agreement (hereinafter defined) wherein up to 230 spaces
on the Marina Parking Site (as hereinafter defined) will be made available for Tenant's use in
connection with the ownership and operation of the Hotel.
F. The City owns the Leased Premises.
G Tenant intends to issue tax-exempt bonds, in one or more series for the purpose of
acquiring, developing, constructing, furnishing, equipping and renewing the Hotel and to pay that
portion of the cost of developing the Project that is not funded by the City (collectively, with any
bonds issued for the purpose of refunding such bonds, the "Hotel Bonds").
H. Tenant desires to enter into this Ground Lease for the primary purpose of
developing, constructing, owning and operating the Hotel Project Improvements (as defined
herein).
I. In conjunction with the design, development, construction, furnishing and opening
of the Hotel Project Improvements pursuant to the Development Agreement and in light of the
anticipated ownership and operation thereof, Tenant desires to (i) lease the Leased Premises from
the City, and (ii) receive licenses in and to the Licensed Areas from the City, all for the purposes
and uses related to the Hotel Project Improvements permitted hereunder, on, subject to and in
accordance with the terms hereof.
AGREEMENTS
For and in consideration of the respective covenants and agreements of the Parties herein
set forth, and other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged by the Parties, Landlord and Tenant, intending to be legally bound, do
hereby agree as follows:
ARTICLE 1.
GENERAL LEASE TERMS:
REPRESENTATIVES OF THE PARTIES
Section 1.1. Definitions and Usage. Capitalized terms used in this Ground Lease and
not otherwise defined shall have the meanings assigned to them in the Glossary of Defined Terms
attached hereto as Appendix A. which also contains rules as to usage that shall be applicable
herein.
Section 1.2. Governine Provisions. The governing provisions set forth in Appendix B
attached hereto shall apply to and govern this Ground Lease for all purposes and shall apply to and
govern each of the other Project Documents that states in substance that it is governed by
Appendix B hereto.
Section 1.3. Landlord Representative. For so long as the City is Landlord under this
Ground Lease, (a) Landlord hereby designates the City Manager or his/her designee to be the
representative of Landlord (the "Landlord Representative") with respect to matters pertaining to
this Ground Lease and the rights and approvals granted to Landlord hereunder, and (b) City
Council authorizes the City Manager or his/her designee to have the right, and Tenant agrees that
the City Manager or his/her designee shall have the right, from time to time, to change the Person
who is the Landlord Representative; provided, however, that Landlord shall give at least ten (10)
Business Days' prior Notice to Tenant of any appointment of a new Landlord Representative. In
the event the City is no longer Landlord under this Ground Lease, the successor Landlord shall
have the right, from time to time, to change the Person who is the Landlord Representative by
giving at least ten (10) Business Days' prior Notice to Tenant thereof. The only functions under
this Ground Lease of the Landlord Representative shall be as expressly specified in this Ground
Lease. With respect to any such action, decision or determination which is to be taken or made by
Landlord under this Ground Lease, the Landlord Representative may take such action or make
such decision or determination or shall notify Tenant in writing of the department, bureau, agency,
division, section or office of Landlord responsible for such action, decision or determination and
shall forward any communications and documentation to such department, bureau, agency,
division, section or office for response or action. Any one of the Persons from time to time serving
as the Landlord Representative, acting alone and without the joinder of the other Persons then
serving as the Landlord Representative, shall have the power to bind Landlord in those instances in
which this Ground Lease specifically provides for the approval, decision, confirmation or
determination of the Landlord Representative and in no other instances; provided, however, that
notwithstanding anything in this Ground Lease to the contrary, the Landlord Representative shall
not have any right to modify, amend or terminate this Ground Lease. Any written Approval,
decision, confirmation or determination hereunder by Landlord's Representative shall be binding
on Landlord and Tenant shall be entitled to rely on all approvals given and other actions taken by
the then current Landlord Representative without any obligation to confirm the Landlord
Representative's authority to grant such approval or take any such action.
Section 1.4. Tenant Representative.
Appointment of Tenant Representative. Tenant hereby designates the Deputy General Manager
of the Tenant or his/her designee to serve as the tenant's representatives (together with their
successors and assigns, each a ""Tenant Representative""), as Tenant's agents and
attorneys -in -fact to be the Tenant Representative to act on behalf of Tenant under this Ground
Lease with respect to matters pertaining to this Ground Lease and the rights and approvals granted
to Tenant hereunder, and (b) the Board authorizes the Deputy General Manager or his/her designee
to have the right, and Landlord agrees that the Deputy General Manager or his/her designee shall
have the right, from time to time, to change the Person who is the Landlord Representative;
provided, however, that Tenant shall give at least ten (10) Business Days' prior Notice to Landlord
of any appointment of a new Tenant Representative. The only functions under this Ground Lease
of the Tenant Representative shall be as expressly specified in this Ground Lease. With respect to
any such action, decision or determination which is to be taken or made by Tenant under this
Ground Lease, the Tenant Representative may take such action or make such decision or
determination or shall notify Landlord in writing of the department, bureau, agency, division,
section or office of Tenant responsible for such action, decision or determination and shall forward
any communications and documentation to such department, bureau, agency, division, section or
office for response or action. Any one of the Persons from time to time serving as the Tenant
Representative, acting alone and without the joinder of the other Persons then serving as the
Tenant Representative, shall have the power to bind Tenant in those instances in which this
Ground Lease specifically provides for the approval, decision, confirmation or determination of
the Tenant Representative and in no other instances and Landlord agrees to accept such actions
from a Tenant Representative as Tenant's authorized attorney-in-fact as binding upon Tenant;
provided, however, that notwithstanding anything in this Ground Lease to the contrary, the Tenant
Representative shall not have any right to modify, amend, extend or terminate this Ground Lease.
Tenant shall give Landlord at least ten (10) Business Days' prior Notice of the replacement or
appointment of a new Tenant Representative.
ARTICLE 2.
GRANT OF LEASEHOLD ESTATE AND LICENSES
Section 2.1. Lease. For good and valuable consideration, Landlord agrees to and does
hereby lease, let and demise to Tenant, and Tenant agrees to and does hereby receive and lease
from Landlord, on and subject to the terms, conditions and provisions of this Ground Lease, that
certain real property described on Exhibit A-1 attached hereto and incorporated herein, together
with the subterranean rights below the real property described on Exhibit A-1, all as more
particularly described by metes and bounds in Exhibit A-1 (the "Leased Premises") for the Lease
Term.
Section 2.2. Licenses. For good and valuable consideration, Landlord hereby grants to
Tenant, on and subject to the terms, conditions and provisions of this Ground Lease, licenses
(collectively, the "License") in and to Tenant's Access and Maintenance Area (collectively, the
"Licensed Areas") for the period of time (and only for such period of time) and for the limited
purposes specified below, which License shall be irrevocable during the applicable License Term.
Landlord has licensed to Tenant, commencing at 12:00 a.m. on the Effective Date and ending,
unless sooner terminated in accordance with the provisions of the Ground Lease as to Tenant's
Access and Maintenance Area, at the expiration of the Base Term, as extended. The Licensed
Areas shall only be a part of the Premises herein during such period of time as the License to the
Licensed Areas are in effect (the "License Term").
Section 2.3. Tenant's Access and Maintenance Area. For good and valuable
consideration, Landlord hereby grants to Tenant, a non-exclusive, irrevocable license over and
across Tenant's Access and Maintenance Area until the Lease Expiration Date to use the same as
reasonably necessary to perform Additional Work in accordance with the terms of this Ground
Lease.
Section 2.4. Landlord's Right to Compel Title. Landlord retains an unconditional
right to compel at any time the transfer to Landlord of title to (1) Tenant's ownership of the
Leasehold Estate and the Licenses created under this Ground Lease; (2) Tenant's ownership of the
Hotel Project Improvements (as defined in this Ground Lease); and (3) Tenant's rights, interests
and obligations under the other Project Documents (as defined in this Ground Lease). Upon such
transfer, the Landlord agrees to assume all of Tenant's obligations and duties in and under the
Project Documents and the Financing Documents, as appropriate.
Section 2.5. Reservations. Notwithstanding anything in this Ground Lease to the
contrary, Landlord hereby reserves (and neither the Leasehold Estate nor the Licenses shall
include) the Premises Reservations with respect to the Premises.
4
ARTICLE 3.
LEASE TERM: POSSESSION OF LEASED
PREMISES AND LICENSED AREAS
Section 3.1. Lease Term. The term of this Ground Lease (the 'Base Term") shall
commence at 12:00 a.m. on the Effective Date and shall end at 11:59 p.m. on the Lease Expiration
Date, unless extended or earlier terminated as provided herein. The term of each of the Licenses
shall commence at 12:00 a.m. on the Effective Date and shall end as provided at the conclusion of
the term for the License in question as provided in Section 2.2.
3.1.1. Construction Term. The construction term under this Ground Lease (the
"Construction Term") shall commence on the Effective Date and shall end on 11:59 p.m. on the
date all of the Conditions to Commencement of the Operating Term are fully satisfied.
3.1.2. Operatine Term. The operating term under this Ground Lease (the
"Operatine Term") shall commence on the date immediately following the date that all of the
following prerequisites are fully satisfied (collectively, the "Conditions to Commencement of
the Operatine Term") and end on the Lease Expiration Date, unless extended or earlier
terminated as provided herein:
3.1.2.1. Substantial Completion of the Project Improvements has occurred;
3.1.2.2. Tenant has delivered to Landlord a written certification, which has
been executed by a Responsible Officer of Tenant (the "Substantial Completion
Certificate"), certifying (i) that Substantial Completion of the Hotel Project Improvements
has occurred, along with a Substantial Completion Certificate from the Architect and (ii)
the date upon which Substantial Completion actually occurred. Tenant shall cause each of
the Conditions to Commencement of the Operating Term to be satisfied on or before the
Project Completion Deadline, unless Landlord provides its written consent to an extension
of such time period.
3.1.3. Early Termination. Notwithstanding Section 4.4.1.6 hereinafter, this
Ground Lease shall automatically terminate (subject to and in accordance with Section 15.7
hereof) at 11:59 pm on the date that all of the Hotel Bonds are paid in full and all other amounts
owing by Tenant under the Hotel Bond Indenture, or such earlier date as may be mutually agreed
to by the City and the Tenant. Upon such termination, ownership of the Hotel, and all rights and
obligations associated with such ownership, shall revert to the City.
3.1.4. Initial Occupancy. Tenant covenants that Initial Occupancy shall occur on
or before July 1, 2021.
Section 3.2. Renewal Term Option.
3.2.1. Provided that (a) the Ground Lease is in full force and effect, (b) no material
Tenant Default then exists and remains uncured on the date of exercise or on the date of
commencement of the Renewal Term, Tenant shall have one (1) option to extend the Term (as
extended, if at all, the "Lease Term") for an additional term of no more than thirty (30) years (the
"Renewal Term") based upon the term of the Tenant's then outstanding bonds; provided that the
City Facilities Lease provides for the same. Tenant shall invoke the Renewal Term only by
delivering written notice (the "Renewal Notice") to Landlord of such election at any time prior to
the date that is twelve (12) months prior to the expiration of the Base Term. If Tenant fails to
exercise the Renewal Term Option on or before the date that is twelve (12) months prior to the
expiration of the Base Term, or if Tenant purports to exercise the Renewal Term Option during an
Option Exercise Period, but the conditions to exercise of the Renewal Term Option have not been
satisfied on or before the commencement of the Renewal Term, all of Tenant's rights with respect
to the Renewal Term Option shall expire and terminate upon the Lease Expiration Date in
accordance with Section 3.1 of this Ground Lease. If Tenant exercises the Renewal Term Option
in accordance with the terms and conditions of this Section 3.2, the Lease Term shall be extended
for the Renewal Term upon the same terms, covenants and conditions as are contained herein for
the Base Term.
Section 3.3. Delivery of Possession, Covenant of Ouiet Eniovment.
3.3.1. Delivery of Possession. On the Effective Date, Landlord will deliver to
Tenant possession and occupancy of the Premises subject only to (i) the Permitted Encumbrances,
(ii) the rights of Landlord hereunder, (iii) all applicable Governmental Rules and (iv) as to the
Licensed Areas only, the terms and conditions of such Licenses as provided herein.
3.3.2. Covenant of Ouiet Enjoyment; No Warranty of Title. Landlord
covenants for the Lease Term that Tenant, upon paying the Rentals and upon keeping, timely
observing and performing the terms, covenants and conditions of this Ground Lease to be kept,
observed and performed by Tenant, shall and may quietly and peaceably hold, occupy, use and
enjoy the Leased Premises without ejection or interference by or from Landlord (or any Person
claiming by, through or under Landlord), subject to (i) the rights and reservations of Landlord
under this Ground Lease, (ii) the Permitted Encumbrances, (iii) all applicable Governmental
Rules, (iv) the power of eminent domain, (v) the police power of Governmental Authorities under
applicable Governmental Rules, (vi) Encumbrances arising by, through or under Tenant and (vii)
rights of Space Tenants arising by, through or under Tenant. Without limiting or reducing any of
Landlord's covenants contained in this Ground Lease, Tenant agrees that Landlord is leasing to
Tenant all of Landlord's right, title and interest to the Leased Premises and granting a license in
and to the Licensed Areas, all without warranty of title.
Section 3.4. Acceptance of Premises on an "AS IS. WHERE IS" Basis.
3.4.1. Condition of the Leased Premises and Licensed Areas; Disclaimer of
Representations and Warranties. TENANT ACKNOWLEDGES AND AGREES, EXCEPT
AS EXPRESSLY PROVIDED IN THIS GROUND LEASE:
3.4.1.1. THAT NEITHER LANDLORD NOR ANY AFFILIATE OR
RELATED PARTY OF LANDLORD MAKES OR HAS MADE ANY WARRANTY
OR REPRESENTATION, EXPRESS OR IMPLIED, CONCERNING (i) THE
PHYSICAL CONDITION OF THE PREMISES (INCLUDING THE GEOLOGY
OR THE CONDITION OF THE SOILS OR OF ANY AQUIFER UNDERLYING
THE SAME AND ANY ARCHEOLOGICAL OR HISTORICAL ASPECT OF THE
SAME), (ii) THE SUITABILITY OF THE PREMISES OR ITS FITNESS FOR A
PARTICULAR PURPOSE AS TO ANY USES OR ACTIVITIES WHICH TENANT
MAY MAKE THEREOF OR CONDUCT THEREON AT ANY TIME DURING
THE LEASE TERM, (iii) THE LAND USE REGULATIONS APPLICABLE TO
THE PREMISES OR THE COMPLIANCE THEREOF WITH ANY
GOVERNMENTAL RULES, (iv) THE FEASIBILITY OF THE PROJECT OR
THE HOTEL PROJECT IMPROVEMENTS WORK OR ANY ADDITIONAL
WORK, (v) THE EXISTENCE OF ANY CONTAMINATED MATERIALS OR
ENVIRONMENTAL CLAIMS, (vi) THE CONSTRUCTION OF ANY
IMPROVEMENTS ON THE PREMISES OR (vii) ANY OTHER MATTER
RELATING TO ANY IMPROVEMENTS AT ANY TIME CONSTRUCTED OR
TO BE CONSTRUCTED THEREON;
3.4.1.2. THAT NO REVIEW, APPROVAL OR OTHER ACTION BY
LANDLORD UNDER THIS GROUND LEASE SHALL BE DEEMED OR
CONSTRUED TO BE SUCH A REPRESENTATION OR WARRANTY;
3.4.1.3. THAT TENANT HAS BEEN AFFORDED FULL
OPPORTUNITY TO INSPECT, AND TENANT HAS INSPECTED AND HAS HAD
FULL OPPORTUNITY TO BECOME FAMILIAR WITH, THE CONDITION OF
THE PREMISES, THE BOUNDARIES THEREOF, ALL LAND USE
REGULATIONS APPLICABLE THERETO AND OTHER MATTERS
RELATING TO THE DEVELOPMENT THEREOF; AND
3.4.1.4. THAT SUBJECT ONLY TO THE PROVISIONS OF
SECTION 3.3.2, TENANT ACCEPTS, ON AN "AS IS, WHERE IS" BASIS, THE
PREMISES IN THE CONDITION IN WHICH THEY EXIST ON THE
EFFECTIVE DATE.
3.4.2. Tenant's Risks. TENANT AGREES THAT NEITHER LANDLORD
NOR ANY OF LANDLORD'S AFFILIATES OR RELATED PARTIES SHALL HAVE
ANY RESPONSIBILITY FOR ANY OF THE FOLLOWING (COLLECTIVELY, THE
"TENANT'S RISKS"), EXCEPT AS EXPRESSLY PROVIDED IN THIS GROUND
LEASE:
3.4.2.1. THE ACCURACY OR COMPLETENESS OF ANY
INFORMATION SUPPLIED BY ANY PERSON OTHER THAN THE EXPRESS
REPRESENTATIONS AND WARRANTIES CONTAINED IN SECTION 17.2.3
HEREOF;
3.4.2.2. THE CONDITION, SUITABILITY OR FITNESS FOR ANY
PARTICULAR PURPOSE, DESIGN, OPERATION OR VALUE OF THE
PREMISES;
3.4.2.3. THE COMPLIANCE OF THE PREMISES OR ANY OTHER
PROPERTY OF LANDLORD WITH ANY APPLICABLE LAND USE
REGULATIONS OR ANY GOVERNMENTAL RULE;
3.4.2.4. THE FEASIBILITY OF THE PROJECT, THE HOTEL
PROJECT IMPROVEMENTS WORK OR ANY ADDITIONAL WORK;
3.4.2.5. THE EXISTENCE OR ABSENCE OF ANY
CONTAMINATED MATERIALS OR STATE ARCHEOLOGICAL
LANDMARKS (AS SUCH TERM IS USED IN CHAPTER 191 OF THE TEXAS
NATURAL RESOURCE CODE) ON THE PREMISES OR ENVIRONMENTAL
CLAIMS WITH RESPECT TO THE PREMISES OR THE PROJECT
IMPROVEMENTS;
3.4.2.6. THE CONSTRUCTION OF ANY IMPROVEMENTS ON
THE PREMISES, INCLUDING THE PROJECT IMPROVEMENTS; AND
3.4.2.7. ANY OTHER MATTER RELATING TO ANY
IMPROVEMENTS AT ANY TIME CONSTRUCTED OR TO BE CONSTRUCTED
ON THE LEASED PREMISES.
NEITHER LANDLORD NOR ANY OF ITS AFFILIATES OR RELATED
PARTIES SHALL BE LIABLE AS A RESULT OF ANY FAILURE BY ANY
PERSON (OTHER THAN LANDLORD OR SUCH AFFILIATE OR RELATED
PARTY) UNDER THIS GROUND LEASE TO PERFORM THEIR RESPECTIVE
OBLIGATIONS THEREUNDER. IT IS UNDERSTOOD AND AGREED BY
TENANT (FOR ITSELF OR ANY PERSON CLAIMING BY, THROUGH OR
UNDER IT) THAT IT HAS ITSELF BEEN, AND WILL CONTINUE TO BE,
SOLELY RESPONSIBLE FOR MAKING ITS OWN INDEPENDENT
APPRAISAL OF, AND INVESTIGATION INTO, THE FINANCIAL CONDITION,
CREDIT WORTHINESS, CONDITION, AFFAIRS, STATUS AND NATURE OF
THE PREMISES OR ANY OTHER PROPERTY.
Section 3.5. Tenant Release. TO THE EXTENT ALLOWED BY APPLICABLE
GOVERNMENTAL RULES, TENANT HEREBY AGREES TO RELEASE LANDLORD
AND ITS RELATED PARTIES FROM AND AGAINST ANY CLAIMS, DEMANDS,
ACTIONS, SUITS, CAUSES OF ACTION, DAMAGES, LIABILITIES, OBLIGATIONS,
COSTS OR EXPENSES THAT TENANT MAY HAVE WITH RESPECT TO THE
PREMISES OR THE PROJECT IMPROVEMENTS AND RESULTING FROM,
ARISING UNDER OR RELATED TO ANY ENVIRONMENTAL EVENT WITHIN THE
SCOPE OF TENANT'S REMEDIAL WORK OR TENANT'S RISKS, INCLUDING ANY
SUCH CLAIM UNDER ANY ENVIRONMENTAL LAWS, WHETHER UNDER ANY
THEORY OF STRICT LIABILITY OR THAT MAY ARISE UNDER THE
COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION AND
LIABILITY ACT OF 1980, AS AMENDED, 42 U.S.C.A. § 9601, ET. SEQ., AND THE
TEXAS SOLID WASTE DISPOSAL ACT, TEXAS HEALTH AND SAFETY CODE,
CHAPTER 361. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS
GROUND LEASE, THE WAIVER OBLIGATIONS OF TENANT DO NOT APPLY TO
ANY ACT OR OMISSION OF LANDLORD ACTING IN ITS GOVERNMENTAL
FUNCTION. FURTHER, NOTWITHSTANDING SECTION 3.4, LANDLORD SHALL
SIGN AS GENERATOR ANY MANIFEST FOR ANY CONTAMINATED MATERIALS
EXISTING AS OF THE DATE OF THIS GROUND LEASE, WHETHER OR NOT
DISCLOSED BY THE PHASE I, THAT TENANT REMOVES DURING ITS
CONSTRUCTION OF THE PROJECT IMPROVEMENTS.
ARTICLE 4.
RENT
Section 4.1. Rentals.
4.1.1. Amount. Tenant covenants and agrees to pay the following rentals as and
when specified below (collectively, the "Rentals"):
4.1.1.1. Basic Rentals. Basic Rentals, together with interest thereon, to
Landlord as provided in Section 4.1.2; plus
4.1.1.2. Additional Rentals. The Additional Rentals, together with interest
thereon, as provided in Section 4.4.
4.1.2. Calculation and Payment of Basic Rentals. During the Lease Term,
Tenant shall pay to Landlord an annual rental equal to ONE AND N011 00 DOLLAR ($1.00) (the
"Basic Rental") on or before January 31 of each year.
Section 4.2. Intentionally Omitted.
Section 4.3. Books and Records/Landlord Audit. Throughout the Lease Term,
Tenant shall keep, or cause to be kept, full, complete and proper books, records and accounts of
gross revenues and such other financial statements as required by and delivered to the Operator
with regard to the Project Improvements. Such books and records required by and delivered to the
Operator shall be kept at a central business location which has been disclosed to the Landlord
Representative pursuant to a Notice and, together with communications with the Operator that are
reasonably relevant to Landlord, shall be available to the Landlord and its agents and employees, at
all reasonable times during regular business hours and upon not less than three (3) Business Days'
Notice to Tenant, for inspection or audit by the Landlord or by an auditor whose fee for such audit
is not calculated on a contingent basis.
Section 4.4. Additional Rentals. Tenant covenants and agrees to pay, as additional
rental, all of the following (collectively, the "Additional Rentals"):
4.4.1.1. All Impositions as and when required to be paid under the terms of
this Ground Lease;
4.4.1.2. All Operating Expenses, and
4.4.1.3. All costs, expenses, liabilities, obligations and other payments of
whatever nature which Tenant has agreed to pay under the provisions of the Project
Documents as and when required to be paid pursuant to the terms hereof or thereof.
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4.4.1.4. There shall be established and maintained under the Hotel Bond
Indenture a Fund to be known as the Surplus Revenue Fund (the "Surplus Fund"). Any
Hotel revenues remain available under the Hotel Bond Indenture, after making all deposits
and payments required thereunder, shall be deposited in the Surplus Fund, and at the end of
each Lease Year, after complying with the prerequisites established in the Hotel Bond
Indenture for the transfer of funds to Landlord (including, without limitation,
disbursements required to be made out of the Surplus Fund under the terms of the Hotel
Bond Indenture and the retention of any funds required to be maintained in the Surplus
Fund under the Hotel Bond Indenture) as Additional Rental, such remaining revenues
shall be promptly released from the Surplus Fund (and the lien of Hotel Bond Indenture) to
Tenant for payment of such amount to Landlord as additional rent, such payment to be
made within thirty (30) days following its release from the Surplus Fund.
Section 4.5. Place and Method of Payment. Rentals shall be paid to Landlord without
notice or demand and all Rentals shall be paid in the manner and at the place set forth in Section 11
of Appendix B to this Ground Lease; provided, however that Impositions shall be paid directly to
the applicable authority by Tenant as and when due.
ARTICLE 5.
USE AND OCCUPANCY; PERMITTED USES
Section 5.1. Permitted Uses During Construction Term. During the Construction
Term, Tenant covenants and agrees that it shall use and occupy the Premises and the Hotel Project
Improvements solely for the purpose of (a) designing, developing, constructing, furnishing and
opening the Hotel Project Improvements pursuant to the terms and conditions of this Ground
Lease and the other Project Documents, and (b) the Permitted Uses and for no other purpose, but
not the Prohibited Uses (the "Permitted Construction Uses").
Section 5.2. Permitted Uses During Ouerating Term. Tenant covenants and agrees
that it shall use and occupy the Premises and the Hotel Project Improvements solely for the
following purposes, but not the Prohibited Uses (collectively, the "Permitted Uses"):
5.2.1. The use of the Premises and the Hotel Project Improvements as an upscale
convention center headquarters hotel on a full-service basis (and not as a so-called "budget" or
"limited service" hotel or motel) with at least 200 keys and containing at least the amenities
described in the Hotel Construction Documents relating to the Hotel Project Improvements, as
they may be modified consistent with the Hotel Operating Standard, together with the right to
provide additional facilities and incidental uses then found in convention center headquarters hotel
or reasonably related to a convention center headquarters hotel operation, including without
limitation, commercial retail operations, restaurant uses, health club and spas, and business and
communication centers;
5.2.2. Maintenance and Repair Work pursuant to Section 9.1 hereof; and
5.2.3. Additional Work pursuant to Section 8.2 and the establishment and
operation of such Additional Improvements in accordance with the above Permitted Uses.
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Section 5.3. Prohibited Uses. Tenant shall not use, nor permit the use of, the Premises
or the Hotel Project Improvements for any other or additional purpose that is not a Permitted Use,
without first obtaining the Approval of Landlord, which Approval may be granted, withheld,
conditioned or delayed in Landlord's sole and absolute discretion. Tenant acknowledges that the
Permitted Construction Uses and the Permitted Uses are subject to all Governmental Rules at any
time applicable to the Hotel Project Improvements and the Premises and that nothing in this
ARTICLE 5 or elsewhere in this Ground Lease or in the other Transaction Documents shall
constitute or be deemed to constitute a waiver by the City of the performance of its Governmental
Functions or of any such Governmental Rules or of the duty of Tenant to comply with such
Governmental Rules. Notwithstanding the Permitted Construction Uses or the Permitted Uses
hereunder, Tenant agrees that it shall not use or permit the use of the Premises or the Hotel Project
Improvements or any portion thereof for any of the Prohibited Uses.
The provisions of this Section 5.3 shall inure to the benefit of, and be enforceable by Landlord, any
Landlord Transferee, and any other permitted successors and assigns. No other Person, including
any transient guest or patron of the Project Improvements or the Leasehold Mortgagee, shall have
any right to enforce the prohibitions as to the Prohibited Uses.
Section 5.4. Continuous Operation Durinz the Lease Term.
5.4.1. Covenant to Operate. Subject to the provisions of Section 5.4.2 hereof,
commencing on the first day of the Operating Term and continuing thereafter during the remainder
of the Lease Term, Tenant covenants, at Tenant's sole cost and expense to:
(a) operate the Hotel Project Improvements, and cause the same to be
operated, diligently and continuously as an upscale convention center headquarters
hotel on a full-service basis (and not as a so-called "budget" or "limited service"
hotel or motel) with at least 200 keys by a Qualified Operator, in accordance with
the Hotel Operating Standard, without interruption for any reason other than Down
Times and Force Majeure;
(b) perform all Maintenance and Repair Work in accordance with
Section 9.1;
(c) possess all Personalty necessary for the operation of the Hotel
Project Improvements and maintain reasonable spare parts and inventory, in each
case consistent with the requirements of clause a of this Section 5.4.1 (except in
the circumstances in which a non -hotel use is permitted pursuant to Section 5.10
below);
(d) Tenant shall operate and maintain the Hotel Project Improvements
in a First -Class Manner for the term of the Ground Lease; and
(e) Tenant shall maintain the Brand and operate the Hotel in a
First -Class Manner.
5.4.2. Down Times. Tenant may temporarily cease to operate areas or all or
substantially all of the Hotel Project Improvements during the Lease Term for, and only for,
11
limited periods of down time ("Down Times") for the limited purpose of, and only for the limited
purpose of, one or more of the following circumstances for the applicable period specified below:
5.4.2.1. During the period following any fire or other Casualty or
condemnation or other exercise by a Governmental Authority of the power of eminent
domain to the extent, and only to the extent, commercially reasonable in order to repair and
restore the Hotel Project Improvements in accordance with the terms of this Ground Lease;
5.4.2.2. During any period of any Additional Work permitted pursuant to the
terms of this Ground Lease or otherwise Approved by Landlord;
5.4.2.3. During any period of renovation, alteration, repair and/or
reconstruction to the Convention Center that interferes with the operation of the Hotel
and/or the Project Improvements in a manner and to a degree that is inconsistent with the
Hotel Operating Standard and the other requirements of the Tenant or the Operator in the
Operating Agreement;
5.4.2.4. As a result of such other commercially reasonable interruptions as
are incidental to the normal operation of the Project Improvements; or
5.4.2.5. As a result of a default by the Operator under the Operating
Agreement, including, without limitation, any down time resulting from the termination
and subsequent replacement of the Operator in accordance with the terms of this Ground
Lease, provided that Tenant diligently undertakes efforts to replace the Operator with a
Qualified Operator, but in any event, such replacement must occur within 120 days of such
default to qualify as a 'Down Time".
During all Down Times Tenant shall use its commercially reasonable efforts to minimize
the disruption (i) of such Down Time, and (ii) to the areas of the Hotel Project
Improvements which remain open to the public, if any, and the services, aesthetic
appearances and public and guest access to and in such portions of the Hotel Project
Improvements. Tenant acknowledges that Down Times will not excuse its compliance
with the terms of the Booking Agreement and Landlord and Tenant agree to reasonably
cooperate and coordinate with the other Party with respect thereto. Tenant shall provide
Notice to Landlord in connection with any anticipated cessation of operations of all or
substantially all of the Leased Premises specifying (x) the reason(s) for such
interruption,(y) the anticipated period of interruption, and (z) any material effect that such
interruption will have under the Booking Agreement..
5.4.3. Continuous Conduct of Additional Work. During the Operating Term,
Tenant covenants to conduct or cause to be conducted all elements of any Additional Work
diligently and continuously, subject only to interruptions and delays caused by Excusable Tenant
Delay or Excusable Landlord Delay, and in a manner consistent with the requirements of this
ARTICLE 5.
5.4.4. Continuing Obligation. No cessation of operations pursuant to Down
Times shall relieve Tenant of any obligations under this Ground Lease (including the obligation to
pay Rentals unless expressly provided otherwise pursuant to the terms of this Ground Lease) other
12
than the relevant portions of the covenant of continuous operation contained in Section 5.4.1.
Tenant acknowledges and agrees that (a) its continuous use and occupancy of the Premises and the
Hotel Project Improvements and its payment of Rentals provide a significant benefit on which
Landlord in part economically depends, (b) violation of the covenants of continuous use,
occupancy and operation in Section 5.4.1 shall each be a material breach of this Ground Lease
subject to the terms and conditions of ARTICLE 15, and (c) Landlord considers such covenants of
continuous use, occupancy and operation a valuable contractual interest with which no other
landlord should interfere by attempting to induce Tenant to move to other premises.
5.4.5. Operation by Space Tenants. Tenant shall use reasonable efforts to
provide retail stores, restaurants and service businesses in the Hotel Project Improvements
consistent with the other retail stores, restaurants and service businesses operated in Comparable
Hotel Properties; provided, however, that the specific retail stores, restaurants and service
businesses and the hours/days of operation of such retail stores, restaurants and service businesses
may be changed if such is not customary for the Operator or in accordance with the Hotel
Operating Standard.
5.4.6. Operator Requirements. Tenant covenants and agrees that commencing
with a pre -opening period during the Construction Term reasonably customary in the hotel
industry (the "Pre-openinE Period") and continuing thereafter during the remainder of the Lease
Term, (i) Tenant will engage, and at all times retain, an Operator to operate the Premises and the
Project Improvements pursuant to the terms of an Operating Agreement that has been Approved
by the Landlord Representative pursuant to Section 5.4.7 and (ii) such Operator will, at all times
during the term of its Operating Agreement (to the extent not otherwise expressly set forth herein
to the contrary), satisfy the requirements of this Ground Lease relating to such Operator, including
the Operator Requirements. Each Operator engaged by Tenant to operate the Premises and the
Project Improvements must satisfy at the time of its engagement by Tenant, and at all times during
the term of its Operating Agreement (unless specifically set forth herein to the contrary) with
Tenant continue to satisfy, each and every one of the following requirements (the "Operator
Requirements"):
5.4.6.1. The Operator at the time of commencement of the Pre -opening
Period and the Commencement of Hotel Project Operations (the "Initial Operator") shall
be approved by the Landlord, such Approval not to be unreasonably withheld, conditioned
or delayed so long as all other requirements of the Project Documents have been met, if
any. Landlord hereby approves Interstate Management Company, LLC, d/b/a/ Interstate
MC, LLC or its Affiliate as the Initial Operator and acknowledges that Interstate
Management Company, LLC, d/b/a/ Interstate MC, LLC or or its Affiliate, as of the
Execution Date, meets the requirements of a Qualified Operator.
5.4.6.2. The Initial Operator and each successor Operator must be a
Qualified Operator at the time it enters in to a written Operating Agreement with Tenant for
the operation of the Project Improvements.
5.4.6.3. Except to the extent permitted pursuant to Section 5.4.7, during the
first ten (10) Lease Years of the Operating Term, (i) the Operator shall be either an indirect
wholly-owned Subsidiary of the Initial Operator or an Affiliate of the Initial Operator in
11
which the Initial Operator (or an entity which directly or indirectly controls Initial
Operator) has voting control and at least a fifty-one percent (51%) economic interest and
ownership (but for purposes of this clause (i), the term "Initial Operator" shall include any
successor to the Initial Operator by merger or by any change in ownership of the Initial
Operator, including as a result of a public offering) and (ii) the Premises and the Hotel
Project Improvements shall be operated [as a franchise of Marriott Hotels or any successor
Marriott Hotels as a result of any merger or any change in the ownership of the Initial
Operator, provided that (x) such successor is also the successor of the majority of
convention center hotels under the "flag" of the Marriott Hotels immediately prior to such
merger or such change in ownership;
5.4.6.4. The Operator shall have the full authority and responsibility to
operate the Premises and the Hotel Project Improvements on a day-to-day basis, subject
only to the limitations thereon contained in the Operating Agreement; and
5.4.6.5. The Hotel Project Improvements must be operated at all times in a
manner consistent with the Operating Standards.
5.4.7. Termination and Replacement of Operator. Tenant shall have the right
under this Ground Lease to terminate and replace the Operator without the consent of Landlord as
a result of a default under the Operating Agreement, if such default not been cured within the time
period provided for in the Operating Agreement, or upon the failure of Operator to meet financial
performance requirements which failure gives Tenant the right to terminate the Operating
Agreement, so long as the replacement Operator meets the definition of a Qualified Operator. Any
other termination of the Operator shall require the Approval of Landlord to such termination. In
the event (i) Tenant desires to terminate the Operator for a reason other than a default under the
Operating Agreement, or (ii) Tenant ever proposes a new Operator that does not satisfy the
Operator Requirements, Tenant must first obtain the Approval of Landlord as to any such
termination of such Operator, as applicable; provided, Notwithstanding the foregoing, in the event
Tenant terminates the Operator and must engage another Operator on an emergency basis (an
"Interim Operator") while it selects and engages a Qualified Operator to succeed the terminated
Operator, the Approval of Landlord of the Interim Operator shall not be required so long as the
Interim Operator is capable of effectively operating the Premises and the Project Improvements in
accordance with the Hotel Operating Standard, in Tenant's reasonable judgment, and the Interim
Operator is not engaged for a period of longer than one hundred eighty (180) calendar days.
5.4.8. Operating Agreement. Each Operating Agreement shall be subject to the
Approval of the Landlord Representative, such Approval not to be unreasonably withheld,
conditioned or delayed so long as all of the following requirements have been met:
5.4.8.1. Such Operating Agreement (other than an Operating Agreement
with an Interim Operator permitted on an emergency basis pursuant to Section 5.4.6) must
have a minimum term of at least five (5) years (subject to rights of termination exercisable
by Tenant on certain events or failure by the Operator to achieve specified performance
standards), except that, notwithstanding the foregoing, the initial Operating Agreement
shall be for a term of at least ten (10) years (subject to rights of termination exercisable by
14
Tenant on certain events or failure by the Operator to achieve specified performance
standards);
5.4.8.2. Notwithstanding the provisions of the Operating Agreement to the
contrary, if any, Tenant shall, and shall cause the Operator to operate the Premises and the
Hotel Project Improvements in accordance with the Hotel Operating Standard;
5.4.8.3. Notwithstanding the provisions of the Operating agreement to the
contrary, if any, Tenant shall cause the Operator to operate the Premesis and the Hotel
Project Improvements in accordance with the requirements of the Franchise Agreement;
and
5.4.8.4. Notwithstanding the provisions of the Operating Agreement which
may be contrary Tenant shall, and shall cause the Operator to, comply with the terms and
conditions of the Booking Agreement.
5.4.9. Tenant covenants that the Operating Agreement shall not be modified or
amended in any material respect without the prior consent of the Landlord Representative, which
consents shall not be unreasonably withheld, conditioned or delayed.
5.4.9.1. Right of Access. Landlord and its agents and employees shall have
the right to enter the Premises from time to time to inspect the Premises. Any such entry
and inspection shall occur during normal business hours on not less than one (1) Business
Day prior written, telephone or email notice (except during the existence or continuance of
a Tenant Default, during which such schedule and prior notice shall not be required) and
shall be done in a manner reasonably intended to minimize material interference with
Tenant's normal business operations.
Section 5.5. Compliance with Governmental Rules and Permitted Encumbrances.
5.5.1. Compliance with Governmental Rules, Maintenance of Governmental
Authorizations. Except to the extent Landlord has specifically agreed to be responsible for any of
the following pursuant to the express terms of this Ground Lease, Tenant shall throughout the
Lease Term, within the time periods permitted by Governmental Rule, comply or cause
compliance with all Governmental Rules applicable to the Premises or the Hotel Project
Improvements that are generally applicable to "full-service" hotels. Tenant shall, however, have
the right to contest the validity or application of any Governmental Rule or revocation of any
Governmental Authorization, and if Tenant promptly contests and if compliance therewith may
legally be held in abeyance during such contest without the imposition of any Liens on the
Premises or the Hotel Project Improvements, Tenant may postpone compliance until the final
determination of such contest, provided that such contest is prosecuted with due diligence, except
that Tenant shall not so postpone compliance therewith in such a manner as to, or if doing so would
(i) impair the structural integrity of the Hotel Project Improvements, (ii) subject Landlord to any
fine or penalty or to prosecution for a criminal act, (iii) expose Landlord to any civil liability or (iv)
cause the Premises or the Hotel Project Improvements to be condemned or vacated. Even though a
Lien against the Hotel Project Improvements may be imposed by reason of such noncompliance,
Tenant may nevertheless delay compliance therewith during a contest thereof. Tenant shall give
15
Landlord reasonable Notice (which in no event shall be less than five (5) Business Days) of its
intent to carry on such contest, specifying the Governmental Rule that Tenant proposes to contest,
the name of counsel representing Tenant in such contest and the delay, if any, that such contest will
cause in any repair, alteration or improvement of the Hotel Project Improvements.
5.5.2. Permitted Encumbrances. Tenant shall throughout the Lease Term,
comply or cause compliance with the Permitted Encumbrances.
5.5.3. Governmental Authorizations. Before commencement of any aspect of
any Additional Work or operation of the Hotel Project Improvements, Tenant shall at its expense
secure or cause to be secured any and all Governmental Authorizations, which may be required by
the City or other Governmental Authority having jurisdiction over such development, demolition,
construction, alteration or reconstruction work. The Approval by the City of any matter submitted
to the City pursuant to this Ground Lease, which matter is specifically provided herein to be
Approved by the City in its capacity as Landlord, shall not constitute a replacement or substitute
for, or otherwise excuse Tenant from, such permitting, licensing or approval processes; and,
conversely, no permit so obtained shall constitute a replacement or substitute for, or otherwise
excuse the Tenant from any requirement hereunder for the Approval of Landlord.
Section 5.6. Excavations. If, at any time, Tenant conducts any excavation on the
Premises or on any other land in connection with this Ground Lease, in connection with such
excavation, Tenant shall notify the owners of all lands, buildings and structures adjacent to the
Premises or other land to be excavated, and shall take all other actions and safeguards required of
an excavating landowner and undertake all other actions and safeguards required pursuant to any
applicable Governmental Rules.
Section 5.7. Light and Air. No diminution or shutting off of light, air or view by any
structure that may be erected by Landlord or any other Person on lands in the vicinity of the
Premises shall in any manner affect this Ground Lease or the obligations of Tenant hereunder or
impose any liability on Landlord, provided, any such structure complies with all applicable
Governmental Rules.
Section 5.8. Estoppel Certificate for Operator. At Tenant's cost and expense,
Landlord agrees to execute and deliver to the Operator or Tenant's designee, from time to time
upon receipt of Notice of a request therefor, within ten (10) Business Days after receipt of such
Notice, an estoppel certificate intended to be relied upon by Operator or Tenant's designee stating:
5.8.1. Whether this Ground Lease is unmodified and is in full force and effect (or,
if there have been modifications, that this Ground Lease is in full force and effect as modified and
stating the modifications) (and, if so requested, whether the annexed copy of this Ground Lease is
a true, correct and complete copy of this Ground Lease);
5.8.2. To the current, actual knowledge of the individual executing such
certificate on behalf of Landlord, whether there are any Tenant Defaults (and specifying each such
default to which such individual is aware);
5.8.3. Landlord's current address for the purpose of giving Notice to Landlord;
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5.8.4. The date of the Lease Expiration Date; and
5.8.5. The date upon which the Effective Date, the Project Completion Date and
the commencement of the Operating Term occurred, respectively, if such events have occurred as
of the date of such estoppel certificate.
Section 5.9. Deliverables. Tenant agrees to deliver to the Landlord Representative
copies of the following promptly after receipt thereof:
5.9.1. Any report, summary or similar document relating to any inspection of the
Premises, the Project Improvements, and/or the operation or management thereof that is
undertaken by the Operator or in connection with the Operating Agreement;
5.9.2. Copies of all notices required or permitted to be given under the Operating
Agreement, including, without limitation, any notice of default; and
5.9.3. Beginning with the third full operating year following commencement of
the Operating Term, no later than January 31, and each subsequent year, the Compliance
Certificate (defined below).
Section 5.10. Landlord shall keep all materials delivered by Tenant confidential to the
extent permitted by applicable Governmental Rule.
Section 5.11. Operation of Convention Center Improvements. Tenant shall operate
and maintain the Convention Center Improvements in accordance with the City Facilities Lease
Section 5.12. CC Down Times. The Parties acknowledge that the Tenant or the Operator
may temporarily cease to operate areas or all or substantially all of the Convention Center
Improvements during the Lease Term for, and only for, limited periods of down time ("CC Down
Times") for the limited purpose of, and only for the limited purpose of, one or more of the
following circumstances for the applicable period specified below:
5.12.1. During the period following any fire or other casualty or condemnation or
other exercise by a Governmental Authority of the power of eminent domain to the extent, and
only to the extent, commercially reasonable in order to repair and restore the Convention Center
Improvements;
5.12.2. During any period of renovation, alteration, repair and/or reconstruction to
the Convention Center Improvements that are necessary or desirable consistent with the standards
set forth in Section 5.10; or
5.12.3. As a result of such other commercially reasonable interruptions as are
incidental to the normal operation of the Convention Center Improvements;
provided, however that during all CC Down Times the Tenant or Operator (x) uses its
commercially reasonable efforts to minimize the disruption of such CC Down Time, and (y) uses
its commercially reasonable efforts to minimize the disruption to the areas of the Convention
Center Improvements which remain open to the public, if any, and the services, aesthetic
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appearances and public and guest access to and in such portions of the Convention Center
Improvements.
Section 5.13. Compliance with the Operating Agreement. Tenant covenants to
comply with its duties, covenants and obligations set forth in the Operating Agreement, including,
without limitation, its obligations to maintain the Cash Management Agreement (defined below),
the Lockbox Fund (defined below), Operating Fund (defined below), Senior FF&E Reserve Fund
(defined below), Working Capital Fund (defined below), Subordinated FF&E Reserve Fund
(defined below), and Subordinated Management Fee Fund (defined below).
Section 5.14. Minimum Hotel Performance Standards.
5.14.1. Tenant covenants that notwithstanding any provision in the Operating
Agreement to the contrary, the Hotel shall be operated at a performance standard of an upscale, full
service hotel consistent with the Operating Standards (defined below). The following will serve as
benchmarks for minimum performance standards (collectively, the "Operating Standards"):
5.14.1.1. Beginning with the third full operating year following the
commencement of the Operating Term and thereafter throughout the Operating Term, the
annual RevPAR of the Hotel for each year shall equal or exceed the minimum percentage
of the annual RevPAR of the Competitive Set, which minimum percentage is set forth in
the Operating Agreement.
5.14.1.2. Provide a courtesy shuttle for destinations within 5 miles of hotel.
5.14.1.3. 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).
5.14.1.4. Comply with the Hotel Operating Standard.
5.14.1.5. Comply with the Booking Agreement.
5.14.2. 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 Tenant shall, from time to
time, agree upon the Competitive Set (defined below). The Initial Competitive Set 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. No change
to the Competitive Set shall be affective until agreed upon by Landlord in writing. If Tenant and
the City Appointee are unable to reach agreement on the Competitive Set, then it shall be
determined by expert resolution pursuant to Section 5.14.4 below.
5.14.3. Change in Competitive Set After Initial Occupancy. The City
Representative will be notified by the Tenant 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 Tenant 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
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approved by the City Representative, 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 Tenant is not supported by the data submitted to the City
Appointee, then the process described in Section 15.14.4 below shall apply to the determination of
a new Competitive Set. Upon notification, the City Appointee and the Tenant 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.
5.14.4. 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.
5.14.4.1. Designation of Expert. The City Representative, Tenant
Representative 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 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.
5.14.4.2. Procedures. The City Representative, Tenant Representative 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, Tenant Representative 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).
5.14.4.3. 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.
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Section 5.15. Completion of the Hotel Proiect Improvements Work. Tenant shall
diligently and timely perform the Hotel Project Improvements Work in a good and workmanlike
manner in accordance with the Hotel Operating Standards and free from all Liens and
Encumbrances. Tenant shall complete the Hotel Project Improvements Work on or before the
Project Completion Deadline.
ARTICLE 6.
IMPOSITIONS: NET LEASE
Section 6.1. Taxes and Assessments.
6.1.1. Impositions on Leased Premises and Licensed Areas. Tenant shall be
subject to, and responsible for, the payment of Property Taxes, if any, and any other Impositions
levied on or payable from and after the Effective Date and for the remainder of the Lease Term.
For the avoidance of doubt, as used in this Ground Lease, "Impositions" and "Property Taxes"
shall mean only those Impositions and Property Taxes, if any, levied, imposed or assessed upon
the Leased Premises, the Leasehold Estate, and the Hotel Project Improvements,.
6.1.2. Payment of Impositions. Throughout the Lease Term, Tenant shall pay, or
cause to be paid, all Impositions, if and only if such Impositions are levied on the Hotel Project
Improvements or the Leased Premises. Tenant shall pay all such Impositions directly to the taxing
authority or other payee therefor. Such payment shall be completed prior to the date on which
Impositions would become delinquent, subject to Section 6.2 below. If any Impositions legally
may be paid in installments prior to delinquency, whether or not interest shall accrue on the unpaid
balance thereof, Tenant shall have the option to pay such Impositions in installments. Tenant shall
furnish to Landlord, promptly upon receipt thereof, copies of all notices of Property Taxes. Within
sixty (60) Business Days after payment by Tenant of such Property Taxes, Tenant shall deliver to
the Landlord Representative reasonable evidence of the payment thereof. Other than with respect
to Property Taxes, Tenant shall be obligated to provide evidence of the payment of Impositions
only when specifically requested to do so by Landlord, at any time and from time to time, and then
only as to Impositions that have been paid, are payable or for which notice for the payment thereof
has been received within the twelve (12) months prior to the date of Landlord's request.
Section 6.2. Tenant's Right to Contest Impositions.
6.2.1. Notice. Tenant shall have the right in its own name, and at its sole cost and
expense, to timely contest the validity or amount, in whole or in part, of any Impositions by a Tax
Proceeding, provided Tenant gives Landlord at least ten (10) Business Days prior Notice of its
intention to contest and diligently prosecute such contest by a Tax Proceeding and at all times
effectively stays or prevents any non judicial or judicial sale of any part of the Leased Premises,
the Hotel Project Improvements, or the Leasehold Estate created by this Ground Lease or any
interest of Landlord in any of the foregoing, by reason of non-payment of any Impositions. Tenant
shall diligently pursue all such Tax Proceedings in good faith. Further, Tenant shall, incident to
any such Tax Proceeding, provide such bond or other security as may be required by the applicable
Governmental Authority. Tenant shall be responsible for any and all such Impositions and all
Claims, costs, fees, and expense related to any such Impositions or Tax Proceeding, including, any
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and all penalties and interest, and Tenant shall promptly pay any valid final adjudication enforcing
any Impositions and shall cause any such final adjudication to be timely satisfied prior to any time
period within which any non judicial or judicial sale could occur to collect any such Impositions.
6.2.2. Payment. Upon the entry of any determination, ruling or judgment in any
Tax Proceedings, it shall be the obligation of Tenant to pay the amount of such Imposition or part
thereof, as is finally determined in such Tax Proceedings, the payment of which may have been
deferred during the prosecution thereof, together with any Claims, costs, fees, interest, penalties,
charges or other liabilities in connection therewith. Nothing herein contained, however, shall be
construed so as to allow such Imposition to remain unpaid for such length of time as shall permit
the Leased Premises, the Hotel Project Improvements, or the Leasehold Estate created by this
Ground Lease or any interest of Landlord in any of the foregoing, or any part thereof, to be sold or
taken by any Governmental Authority for the non-payment of any Imposition. Tenant shall
promptly furnish the Landlord Representative with copies of all notices, filings and pleadings in all
such Tax Proceedings. If Landlord chooses to participate in any such Tax Proceedings, then
Landlord shall have the right, at its expense, to participate therein.
6.2.3. Reduction of Assessed Valuation. Tenant at its expense may, if it shall so
desire, endeavor at any time or times to obtain a reduction in assessed valuation of the Leased
Premises, the Hotel Project Improvements, any other Project Improvement, the Leasehold Estate
or the Licenses created by this Ground Lease for the purpose of reducing Impositions thereon.
Tenant shall be authorized to collect any tax refund payable as a result of any proceeding Tenant
may institute for any such reduction in assessed value and any such tax refund shall be the property
of Tenant (unless the same was paid by Landlord and not reimbursed by Tenant).
6.2.4. Rendition. Tenant is obligated to notify each Governmental Authority
imposing Impositions that all certificates, advices, bills or statements regarding Impositions
should be sent directly to Tenant. Landlord hereby grants and gives permission to Tenant to render
the Leased Premises and the Hotel Project Improvements and the other Projects Improvement
from time to time during the Lease Term or the License Term, as applicable.
6.2.5. Joinder of Landlord not Required. Landlord shall not be required to join
in any Tax Proceeding or other Action or Proceeding referred to in this Section 6.2 unless required
by applicable Governmental Rule in order to make such Action or Proceeding effective, in which
event any such Tax Proceeding, Action or Proceeding may be taken by Tenant in the name of, but
without expense to Landlord, TENANT HEREBY AGREES BE RESPONSIBLE FOR ALL
COSTS, FEES, EXPENSES, CLAIMS, LOSSES OR DAMAGES BY REASON OF, IN
CONNECTION WITH, OR IN ACCOUNT OF, GROWING OUT OF, RESULTING
FROM, ANY SUCH TAX ACTION OR PROCEEDING. To the extent such cooperation is
required by applicable Governmental Authority for such action or proceeding, Landlord shall
cooperate in any such action or proceeding as reasonably requested by Tenant, at Tenant's sole
cost and expense, whether or not Landlord is joined pursuant thereto and Landlord agrees to take
no action that would be materially adverse to Tenant in any such Tax Proceeding where Tenant
seeks to reduce its obligation to pay Impositions. Landlord acknowledges and understands that the
terms and provisions of the Leasehold Mortgage may entitle or permit the Leasehold Mortgagee to
participate with or direct Tenant in or with respect to any of the actions or proceedings referred to
in this Section 6.2 and, in such circumstances, Landlord agrees to cooperate with the Leasehold
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Mortgagee in regard to such action or proceeding as reasonably necessary, upon receipt of Notice
from the Leasehold Mortgagee and at Leasehold Mortgagee's sole cost and expense.
6.2.6. Prima Facie Evidence. The certificate, advice, bill or statement issued or
given by any Governmental Authority authorized by Governmental Rule to issue the same or to
receive payment of an Imposition shall be prima facie evidence of the existence, non-payment or
amount of such Imposition.
Section 6.3. Failure of Tenant to Pay Impositions. Notwithstanding anything to the
contrary contained herein but subject to the terms of Section 6.2, in the event Tenant fails to pay
any Imposition payable by Tenant pursuant to the provisions of this Ground Lease before the date
the same becomes delinquent, Landlord may, after giving Tenant ten (10) Business Days' Notice
of its intention to do so and without waiving its other rights and remedies, pay or cause to be paid
any such Imposition which is delinquent and Tenant shall, within thirty (30) Business Days
following Landlord's demand and Notice, pay and reimburse Landlord therefor with interest at the
Default Rate from the date of payment by Landlord until repayment in full by Tenant.
Section 6.4. Net Lease.
6.4.1. No Landlord Oblintions. For so long as this Ground Lease remains in
effect and except for costs that Landlord has specifically agreed to pay pursuant to the express
terms of this Ground Lease, (i) Landlord shall not be required to make any expenditure, incur any
obligation or incur any liability of any kind whatsoever in connection with this Ground Lease, the
Premises, the Project Improvements or any Impositions applicable thereto, and (ii) it is expressly
understood and agreed that this is a completely net lease intended to assure Landlord the Rentals
herein reserved on an absolutely net basis.
6.4.2. Tenant's Obligations for Payment of Rentals.
6.4.2.1. Tenant hereby acknowledges and agrees that (i) except for the
express provisions of this Ground Lease pursuant to which Tenant is entitled to abatement
of Rentals, Landlord and Tenant have expressly negotiated that Tenant's covenants to pay
Rentals under this Ground Lease are separate and independent from Landlord's obligations
hereunder, including any covenant to provide repairs, services and other amenities, if any,
hereunder, or the occurrence of any event, occurrence or situation during the Lease Term,
whether foreseen or unforeseen and howsoever extraordinary or beyond the contemplation
of the Parties, including any Down Times (whether pursuant to Additional Work or
otherwise) and (ii) had the parties not mutually agreed upon the independent nature of
Tenant's covenants to pay all Rentals hereunder, Landlord would have required a greater
amount of Rentals in order to enter into this Ground Lease, if at all. AS SUCH, EXCEPT
FOR THE EXPRESS PROVISIONS OF THIS GROUND LEASE PURSUANT TO
WHICH TENANT IS ENTITLED TO AN ABATEMENT OF RENTALS, TENANT
WAIVES ANY RIGHT NOW OR HEREAFTER CONFERRED UPON IT AT LAW
OR IN EQUITY TO ANY ABATEMENT, DEDUCTION, SUSPENSION,
DEFERMENT, DIMINUTION OR REDUCTION OF, OR SET-OFF OR DEFENSE
AGAINST ANY RENTALS AND ANY OTHER SUMS FOR WHICH TENANT IS
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OBLIGATED UNDER THIS GROUND LEASE ON ACCOUNT OF SUCH
EVENT, HAPPENING, OCCURRENCE OR SITUATION.
6.4.2.2. Tenant covenants and agrees that it shall remain obligated under this
Ground Lease in accordance with its terms, and that it shall not take any action to
terminate, rescind or avoid this Ground Lease, notwithstanding the filing by Landlord of a
voluntary petition in bankruptcy; adjudication of Landlord as a bankrupt; approval as
properly filed by a court of competent jurisdiction of any petition or other pleading in any
action seeking reorganization, rearrangement, adjustment, or composition of, or in respect
of Landlord under the United States Bankruptcy Code or any other similar state or federal
law dealing with creditors' rights generally; or appointment of a receiver, trustee or other
similar official for Landlord or its Property.
ARTICLE 7.
INSURANCE AND SURETY BONDS
Section 7.1. Policies Required.
7.1.1. Policies Required For Hotel Proiect Improvements Work.
(a) Builder's All Risk Policy and Installation Floater Policy for Hotel
Project Improvements Work. Prior to the commencement of any Hotel Project
Improvements Work, and at all times during the performance of such Hotel Project
Improvements Work and for so long after the completion thereof that (i) any of
Tenant's contractors and subcontractors has not been paid in full in respect to the
Hotel Project Improvements Work and (ii) any Person has any repair obligations
with respect to such Hotel Project Improvements Work, Tenant shall, at its sole cost
and expense, obtain, keep and maintain or cause to be obtained, kept and
maintained, (1) a builder's "all risk" insurance policy affording coverage of all
Hotel Project Improvements Work, whether permanent or temporary, all Insured
Materials and Equipment related to the Hotel Project Improvements Work and
located on the Premises and all Contractors' Equipment related to the Hotel Project
Improvements Work (the "Builder's All Risk Policy for Hotel Project
Improvements Work") and (2) an installation floater insurance policy for all
Insured Materials and Equipment related to the Hotel Project Improvements Work
located other than on the Premises (the "Installation Floater Policy for Hotel
Proiect Improvements Work"), each against loss or damage due to Insured
Casualty Risks and such other perils covered by the broadest form of extended
coverage insurance generally available on commercially reasonable terms from
time to time with respect to similar work in Baytown, Harris County, Texas. The
Builder's All Risk Policy for Hotel Project Improvements Work and the
Installation Floater Policy for Hotel Project Improvements Work shall be written
on an occurrence and "replacement cost" basis, insuring one hundred percent
(100%) of the replacement cost of the Hotel Project Improvements Work and the
Insured Materials and Equipment, as applicable, using a completed value form
(with permission to occupy upon completion of work or occupancy), naming
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Tenant as the insured, the Landlord Insured and the Leasehold Mortgagee as
additional insureds, as their respective interests may appear and with any
deductible not exceeding FIFTY THOUSAND AND NO:100 DOLLARS
($50,000.00) per loss; provided, however, that, in the case of demolition and debris
removal coverage, Tenant shall carry coverage in not less than the full amount
necessary to demolish the Hotel Project Improvements Work and to remove all
debris that may exist after any Insured Casualty Risks. The Insurance Trustee shall
be designated as loss payee for all Insurance Proceeds which are to be delivered to
the Insurance Trustee in accordance with Section 7.5. The Builder's All Risk
Policy for Hotel Project Improvements Work and the Installation Floater Policy for
Hotel Project Improvements Work shall also (i) provide for reimbursement to the
City for any City services expended or expenses incurred as a result of any loss due
to any Insured Casualty Risks to the extent normally covered by a builder's risk
insurance policy, but in all events providing for reimbursement to the City for any
demolition, debris removal and clean-up work performed by or on behalf of the
City, (ii) comply with all other requirements applicable to it set forth in the
Insurance Plan Additional Requirements and (iii) comply with all other
requirements set forth in Section 7.4.
(b) Auto Policy for Hotel Project Improvements Work. In the event any
vehicles are to be used in connection with any Hotel Project Improvements Work
by any of Tenant's contractors and subcontractors, prior to the commencement of
the use of such vehicles in connection with such Hotel Project Improvements
Work, and at all times during such use through completion of such use, Tenant shall
cause the contractors and subcontractors to obtain, keep and maintain business
automobile liability insurance policies covering all vehicles, whether owned,
non -owned and hired or borrowed vehicles, used in connection with the Hotel
Project Improvements Work, naming the Landlord Insured and the Leasehold
Mortgagee as additional insureds, affording protection against liability for bodily
injury and death or for property damage in an amount not less than ONE MILLION
AND NO/100 DOLLARS ($1,000,000.00) combined single limit per occurrence or
its equivalent (collectively, the "Auto Policy for Hotel Project Improvements
Work"). In addition, the Auto Policy for Hotel Project Improvements Work shall
comply with all other requirements set forth in the Insurance Plan Additional
Requirements applicable to the Auto Policy and the requirements of Section 7.4;
provided, however, that, in addition to Auto Policy for Hotel Project Improvements
Work described above, in the event any Contaminated Materials will be
transported, loaded or unloaded by any of Tenant's contractors and subcontractors,
prior to such transport, loading or unloading, and at all times during such transport,
loading or unloading through completion thereof, Tenant shall cause the relevant
contractor or subcontractor to obtain, keep and maintain in its automobile liability
insurance policy a motor trucker or carrier pollution endorsement related to claims
arising out of the transporting and loading or unloading of such Contaminated
Materials.
(c) Workers' Compensation Policies for Hotel Project Improvements
Work. Prior to the commencement of any Hotel Project Improvements Work, and
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at all times during the performance of such Hotel Project Improvements Work and
for so long after the completion thereof that any Person has any repair obligations
with respect to such Hotel Project Improvements Work, in addition to the Workers'
Compensation Policy required under Section 7.1.4(d) below, Tenant shall cause
Tenant's contractors and subcontractors to obtain, keep and maintain workers'
compensation insurance policies and any and all other statutory forms of insurance
now or hereafter prescribed by applicable Governmental Rule, providing statutory
coverage under the laws of the State of Texas for all Persons employed by Tenant's
contractors and subcontractors in connection with the Hotel Project Improvements
Work and employers liability insurance policies with respect to same which afford
protection of not less than ONE MILLION AND NO/100 DOLLARS
($1,000,000.00) for bodily injury by accident (each accident), not less than ONE
MILLION AND N011 00 DOLLARS ($1,000,000.00) for bodily injury by disease
(each employee) and not less than ONE MILLION AND NO/100 DOLLARS
($1,000,000.00) bodily injury by disease (policy limit). In addition, these workers'
compensation insurance policies shall comply with the requirements applicable to
them set forth in the Insurance Plan Additional Requirements applicable to the
Workers' Compensation Policy and the requirements of Section 7.4.
(d) Aviation Policies for Hotel Project Improvements Work. In the
event any fixed or rotary wing aircraft is to be used in connection with any Hotel
Project Improvements Work by Tenant's contractors and subcontractors, prior to
the commencement of the use of such aircraft in connection with such Hotel Project
Improvements Work, and at all times during such use through completion of such
use, Tenant shall cause such Tenant's contractors or subcontractors, as the case
may be, to obtain, keep and maintain aviation insurance policies, written on an
occurrence basis, naming Tenant as the insured and the Landlord Insured and the
Leasehold Mortgagee as additional insureds and which contain a waiver of hull
damage in favor of the Landlord Insured, affording protection of not less than TEN
MILLION AND NO/100 DOLLARS ($10,000,000.00). In addition, such policy
shall comply with all other requirements set forth in Section 7.4.
(e) Inland Marine Policies for Hotel Project Improvements Work. In
the event any machinery, tools or equipment are to be used in connection with any
Hotel Project Improvements Work by Tenant's contractors and subcontractors, and
such machinery, tools or equipment are not or is not fully insured under the
Builder's All Risk Policy for Hotel Project Improvements Work or the Installation
Floater Policy for Hotel Project Improvements Work, then prior to the
commencement of the use of any such machinery, tools or equipment in connection
with any Hotel Project Improvements Work, and at all times during such use
through completion of such use, Tenant shall obtain, keep and maintain or cause to
be obtained, kept and maintained inland marine insurance policies in amounts
sufficient to protect such machinery, tools or equipment. In addition, such policy
shall comply with all other requirements set forth in Section 7.4.
(f) Commercial General Liability Policy for Hotel Project
Improvements Work. Prior to commencement of any Hotel Project Improvements
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Work and at all times during the performance of such Hotel Project Improvements
Work and for so long after the completion thereof that any Person has any repair
obligations with respect to such Hotel Project Improvements Work, in addition to
the GL Policy required under Section 7.1.4(a), Tenant shall cause Tenant's
contractors and subcontractors to obtain keep and maintain a commercial general
liability insurance policy ("GL Policy for Hotel Project Improvements Work"),
written on an occurrence basis and limited to the Hotel Project Improvements
Work, the Premises and the Hotel Project Improvements, naming such contractor
or subcontractor as the insured and Tenant, Landlord Insured, the Leasehold
Mortgagee as additional insureds, affording protection against liability arising out
of personal injury, bodily injury and death or property damage occurring, in, upon
or about the Premises or the Hotel Project Improvements or resulting from, or in
connection with, the construction, use, operation or occupancy of the Premises or
the Hotel Project Improvements and containing provisions for severability of
interests. The GL Policy for Hotel Project Improvements Work shall be in such
amount and such policy limits so that (i) the coverage and limits are adequate to
maintain the Excess/Umbrella Policy for Hotel Project Improvements Work
without gaps in coverage between the GL Policy for Hotel Project Improvements
Work and the Excess/Umbrella Policy for Hotel Project Improvements Work and
(ii) the minimum policy limits set forth in the Insurance Plan Additional
Requirements are satisfied. In addition, the GL Policy for Hotel Project
Improvements Work shall comply with all other requirements applicable to it set
forth in the Insurance Plan Additional Requirements and the requirements of
Section 7.4.
(g) Excess/Umbrella Policy for Hotel Project Improvements Work.
Prior to the commencement of any Hotel Project Improvements Work and at all
times during the performance of such Hotel Project Improvements Work and for so
long after the completion thereof that any Person has any repair obligations with
respect to such Hotel Project Improvements Work, in addition to the
Excess/Umbrella policy required under Section 7.1.4(e) below, Tenant shall cause
Tenant's contractors and subcontractors to obtain, keep and maintain an excess or
umbrella liability insurance policy ("Excess/Umbrella Policy for Hotel Project
Improvements Work"), written on an occurrence basis, in an amount not less than
TWO MILLION AND N0/100 DOLLARS ($2,000,000.00) per occurrence and in
the aggregate for personal injury, bodily injury and death or property damage
liability combined, such policy to be written on an excess basis above the coverages
required hereinabove with respect to the Auto Policy for Hotel Project
Improvements Work, the worker's compensation policy required pursuant to
Section 7.1.1(c) and the GL Policy for Hotel Project Improvements Work
(specifically listing such underlying policies) and following the form of such
underlying policies. The Excess/Umbrella Policy for Hotel Project Improvements
Work shall name Landlord Insured and the Leasehold Mortgagee as additional
insureds and, in addition, shall comply with all other requirements applicable to it
set forth in the Insurance Plan Additional Requirements and the requirements of
Section 7.4.
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(h) Additional Insurance. Prior to the commencement of any Hotel
Project Improvements Work, and at all times during the performance of such Hotel
Project Improvements Work and for so long after the completion thereof that any
Person has any repair obligations with respect to such Hotel Project Improvements
Work, Tenant shall cause Tenant's contractors and subcontractors to obtain, keep
and maintain such other and additional insurance (i) as is, from time to time,
required by all applicable Governmental Rules and (ii) that a reasonable and
prudent hotel manager (or owner of a Comparable Hotel Property, as applicable),
would reasonably be expected to obtain, keep and maintain or require to be
obtained, kept and maintained, in connection with similar activities in a
Comparable Hotel Property. Such other and additional insurance policies shall
name the Landlord Insured, the Leasehold Mortgagee as loss payees, mortgagee or
additional insureds in a manner consistent with their being named loss payees or
additional insureds in the policies required above in this Section 7.1 and shall
comply with all other requirements set forth in Section 7.4.
7.1.2. Policies Required For Additional Work.
(a) Builder's All Risk Policy and Installation Floater Policy for
Additional Work. In the event the reasonably anticipated total cost of any
Additional Work (calculated so as to include all sums payable under any Material
Additional Work Construction Contract related thereto) is equal to or exceeds ONE
HUNDRED THOUSAND AND NO/100 DOLLARS ($100,000.00), then prior to
the commencement of any Additional Work, whether or not such work is Material
Additional Work, and at all times during the performance of such Additional Work
and for so long after the completion thereof that (i) the Material Additional Work
Construction Contractor or any of Tenant's other contractors and subcontractors
has not been paid in full in respect to the Additional Work and (ii) any Person has
any repair obligations with respect to such Additional Work, Tenant shall, at its
sole cost and expense, obtain, keep and maintain or cause to be obtained, kept and
maintained, (1) a builder's "all risk" insurance policy affording coverage of all
Additional Work, whether permanent or temporary, all Insured Materials and
Equipment related to the Additional Work and located on the Premises and all
Contractors' Equipment related to the Additional Work (the "Builder's All Risk
Policy for Additional Work") and (2) an installation floater insurance policy for
all Insured Materials and Equipment related to the Additional Work located other
than on the Premises (the "Installation Floater Policy for Additional Work"),
each against loss or damage due to Insured Casualty Risks and such other perils
covered by the broadest form of extended coverage insurance generally available
on commercially reasonable terms from time to time with respect to similar work in
Baytown, Harris County, Texas. The Builder's All Risk Policy for Additional
Work and the Installation Floater Policy for Additional Work shall be written on an
occurrence and "replacement cost" basis, insuring one hundred percent (100%) of
the replacement cost of the Additional Work, the Insured Materials and Equipment
and the Contractor's Equipment, as applicable, using a completed value form (with
permission to occupy upon completion of work or occupancy), naming Tenant as
the insured, the Landlord Insured and the Leasehold Mortgagee as additional
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insureds, as their respective interests may appear and with any deductible not
exceeding FIFTY THOUSAND AND N0/100 DOLLARS ($50,000.00) per loss;
provided, however, that, in the case of demolition and debris removal coverage,
Tenant shall carry coverage in not less than the full amount necessary to demolish
the Additional Work and to remove all debris that may exist after any Insured
Casualty Risks. The Insurance Trustee shall be designated as loss payee for all
Insurance Proceeds which are to be delivered to the Insurance Trustee in
accordance with Section 7.5. The Builder's All Risk Policy for Additional Work
and the Installation Floater Policy for Additional Work shall also (i) provide for
reimbursement to the City for any City services expended or expenses incurred as a
result of any loss due to any Insured Casualty Risks to the extent normally covered
by a builder's risk insurance policy, but in all events providing for reimbursement
to the City for any demolition, debris removal and clean-up work performed by or
on behalf of the City, (ii) comply with all other requirements applicable to it set
forth in the Insurance Plan Additional Requirements and (iii) comply with all other
requirements set forth in Section 7.4.
(b) Auto Policy forAdditional Work. In the event any vehicles are to be
used in connection with any Additional Work by the Material Additional Work
Construction Contractor or any of Tenant's other contractors and subcontractors,
prior to the commencement of the use of such vehicles in connection with such
Additional Work, and at all times during such use through completion of such use,
Tenant shall cause the Material Additional Work Construction Contractor and
Tenant's other contractors and subcontractors to obtain, keep and maintain
business automobile liability insurance policies covering all vehicles, whether
owned, non -owned and hired or borrowed vehicles, used in connection with the
Additional Work, naming the Landlord Insured and the Leasehold Mortgagee as
additional insureds, affording protection against liability for bodily injury and
death or for property damage in an amount not less than ONE MILLION AND
N0/100 DOLLARS ($1,000,000.00) combined single limit per occurrence or its
equivalent (collectively, the "Auto Policy for Additional Work"). In addition, the
Auto Policy for Additional Work shall comply with all other requirements set forth
in the Insurance Plan Additional Requirements applicable to the Auto Policy and
the requirements of Section 7.4; provided, however, that, in addition to Auto Policy
for Additional Work described above, in the event any Contaminated Materials will
be transported, loaded or unloaded by the Material Additional Work Construction
Contractor or any of Tenant's other contractors and subcontractors, prior to such
transport, loading or unloading, and at all times during such transport, loading or
unloading through completion thereof, Tenant shall cause the relevant contractor or
subcontractor to obtain, keep and maintain in its automobile liability insurance
policy a motor trucker or carrier pollution endorsement related to claims arising out
of the transporting and loading or unloading of such Contaminated Materials.
(c) Workers' Compensation Policies forAdditional Work. Prior to the
commencement of any Additional Work, whether or not such work is Material
Additional Work, and at all times during the performance of such Additional Work
and for so long after the completion thereof that any Person has any repair
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obligations with respect to such Additional Work, in addition to the Workers'
Compensation Policy required under Section 7.1.4(d) below, Tenant shall cause the
Material Additional Work Construction Contractor and Tenant's other contractors
and subcontractors to obtain, keep and maintain workers' compensation insurance
policies and any and all other statutory forms of insurance now or hereafter
prescribed by applicable Governmental Rule, providing statutory coverage under
the laws of the State of Texas for all Persons employed by the Material Additional
Work Construction Contractor and Tenant's other contractors and subcontractors
in connection with the Additional Work and employers liability insurance policies
with respect to same which afford protection of not less than ONE MILLION AND
NO/100 DOLLARS ($1,000,000.00) for bodily injury by accident (each accident),
not less than ONE MILLION AND NO/100 DOLLARS ($1,000,000.00) for bodily
injury by disease (each employee) and not less than One Million and No/100
Dollars ($1,000,000.00) bodily injury by disease (policy limit). In addition, these
workers' compensation insurance policies shall comply with the requirements
applicable to them set forth in the Insurance Plan Additional Requirements
applicable to the Workers' Compensation Policy and the requirements of Section
7.4.
(d) Aviation Policies for Additional Work. In the event any fixed or
rotary wing aircraft is to be used in connection with any Additional Work by the
Material Additional Work Construction Contractor or Tenant's other contractors
and subcontractors, prior to the commencement of the use of such aircraft in
connection with such Additional Work, and at all times during such use through
completion of such use, Tenant shall cause such Material Additional Work
Construction Contractor and Tenant's other contractors or subcontractors, as the
case may be, to obtain, keep and maintain aviation insurance policies, written on an
occurrence basis, naming Tenant as the insured and the Landlord Insured and the
Leasehold Mortgagee as additional insureds and which contain a waiver of hull
damage in favor of the Landlord Insured, affording protection of not less than TEN
MILLION AND NO/100 DOLLARS ($10,000,000.00). In addition, such policy
shall comply with all other requirements set forth in Section 7.4.
(e) Inland Marine Policies for Additional Work. In the event any
machinery, tools or equipment are to be used in connection with any Additional
Work by the Material Additional Work Construction Contractor or Tenant's other
contractors and subcontractors, and such machinery, tools or equipment are not or
is not fully insured under the Builder's All Risk Policy for Additional Work or the
Installation Floater Policy for Additional Work, then prior to the commencement of
the use of any such machinery, tools or equipment in connection with any
Additional Work, and at all times during such use through completion of such use,
Tenant shall obtain, keep and maintain or cause to be obtained, kept and maintained
inland marine insurance policies in amounts sufficient to protect such machinery,
tools or equipment. In addition, such policy shall comply with all other
requirements set forth in Section 7.4.
(fl Commercial General Liability Policy for Additional Work. Prior to
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commencement of any Additional Work and at all times during the performance of
such Additional Work and for so long after the completion thereof that any Person
has any repair obligations with respect to such Additional Work, in addition to the
GL Policy required under Section 7.1.4(a), Tenant shall cause the Material
Additional Work Construction Contractor and the Tenant's other contractors and
subcontractors to obtain keep and maintain a commercial general liability insurance
policy ("GL Policy for Additional Work"), written on an occurrence basis and
limited to the Additional Work, the Premises and the Hotel Project Improvements,
naming such contractor or subcontractor as the insured and Tenant, Landlord
Insured, the Leasehold Mortgagee as additional insureds, affording protection
against liability arising out of personal injury, bodily injury and death or property
damage occurring, in, upon or about the Premises or the Hotel Project
Improvements or resulting from, or in connection with, the construction, use,
operation or occupancy of the Premises or the Hotel Project Improvements and
containing provisions for severability of interests. The GL Policy for Additional
Work shall be in such amount and such policy limits so that (i) the coverage and
limits are adequate to maintain the Excess/Umbrella Policy for Additional Work
without gaps in coverage between the GL Policy for Additional Work and the
Excess/Umbrella Policy for Additional Work and (ii) the minimum policy limits set
forth in the Insurance Plan Additional Requirements are satisfied. In addition, the
GL Policy for Additional Work shall comply with all other requirements applicable
to it set forth in the Insurance Plan Additional Requirements and the requirements
of Section 7.4.
(g) Excess/Umbrella Policy for Additional Work. Prior to the
commencement of any Additional Work and at all times during the performance of
such Additional Work and for so long after the completion thereof that any Person
has any repair obligations with respect to such Additional Work, in addition to the
Excess/Umbrella policy required under Section 7.1.4(e) below, Tenant shall cause
the Material Additional Work Construction Contractor and Tenant's other
contractors and subcontractors to obtain, keep and maintain an excess or umbrella
liability insurance policy ("Excess/Umbrella Policy for Additional Work"),
written on an occurrence basis, in an amount not less than TWO MILLION AND
N0/100 DOLLARS ($2,000,000.00) per occurrence and in the aggregate for
personal injury, bodily injury and death or property damage liability combined,
such policy to be written on an excess basis above the coverages required
hereinabove with respect to the Auto Policy for Additional Work, the worker's
compensation policy required pursuant to Section 7.1.2(c) and the GL Policy for
Additional Work (specifically listing such underlying policies) and following the
form of such underlying policies. The Excess/Umbrella Policy for Additional Work
shall name Landlord Insured and the Leasehold Mortgagee as additional insureds
and, in addition, shall comply with all other requirements applicable to it set forth
in the Insurance Plan Additional Requirements and the requirements of Section 7.4.
(h) Additional Insurance. Prior to the commencement of any
Additional Work, whether or not such work is Material Additional Work, and at all
times during the performance of such Additional Work and for so long after the
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completion thereof that any Person has any repair obligations with respect to such
Additional Work, Tenant shall cause the Material Additional Work Construction
Contractor and Tenant's other contractors and subcontractors to obtain, keep and
maintain such other and additional insurance (i) as is, from time to time, required
by all applicable Governmental Rules and (ii) that a reasonable and prudent hotel
manager (or owner of a Comparable Hotel Property, as applicable), would
reasonably be expected to obtain, keep and maintain or require to be obtained, kept
and maintained, in connection with similar activities in a Comparable Hotel
Property. Such other and additional insurance policies shall name the Landlord
Insured, the Leasehold Mortgagee as loss payees, mortgagee or additional insureds
in a manner consistent with their being named loss payees or additional insureds in
the policies required above in this Section 7.1 and shall comply with all other
requirements set forth in Section 7.4.
7.1.3. Property Insurance Policy. Commencing as and when Tenant acquires
such care, control, or custody over any portion of the Hotel Project Improvements such that the
insurance policies required under Section 7.1.2 are inadequate to protect the insurable interests
therein of Tenant, the Leasehold Mortgagee and the Landlord Insured (and, in all events by no later
than the date of Substantial Completion of the Hotel Project Improvements), and at all times
during the remainder of the Lease Term and continuing thereafter until Tenant has fulfilled all of
its obligations under ARTICLE 16, Tenant shall, at its sole cost and expense, obtain, keep and
maintain a Property Insurance Policy providing for coverage of the Premises and the Hotel Project
Improvements against loss or damage due to Insured Casualty Risks and such other perils,
including certified (TRIA) terrorism and non -certified terrorism, covered by the broadest form of
extended coverage insurance generally available on commercially reasonable terms from time to
time with respect to Improvements in Baytown, Harris County, Texas, similar to the Hotel Project
Improvements, and affording coverage for, among other things, demolition and debris removal
and losses from any malicious act of any employee or agent of an insured, naming Tenant as the
insured, and the Leasehold Mortgagee and the Landlord Insured as loss payees or mortgagee, as
their respective interests may appear, for a sum at least equal to one hundred percent (100%) of the
then full cost of replacing the Hotel Project Improvements and all Personalty (without reduction
for physical depreciation or obsolescence, and including the cost of excavation, foundations and
footings plus soft costs defined as attorney's fees, architectural, engineering and other consulting
costs and permit fees that may be incurred due to damage to the Hotel Project Improvements or
Personalty), to be determined no more frequently than every five (5) years during the Lease Term
upon Landlord's request, and with any deductible not exceeding ONE HUNDRED FIFTY
THOUSAND AND N0/100 DOLLARS ($150,000.00) per loss (provided, however, that, in the
case of demolition and debris removal coverage, Tenant shall carry coverage in not less than the
full amount necessary to demolish the Hotel Project Improvements and to remove all debris that
may exist after any Insured Casualty Risks that permits Tenant to terminate this Ground Lease).
The Property Insurance Policy shall also include an agreed amount clause or waiver of
coinsurance, shall not contain any exclusion for freezing, mechanical breakdown, loss or damage
covered under any guarantee or warranty or any exclusion for resultant damage caused by faulty
workmanship, design or materials, and shall comply with all other requirements applicable to it set
forth in the Insurance Plan Additional Requirements and the requirements of Section 7.4.
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7.1.4. Additional Policies Required. Commencing on the Lease
Commencement Date (unless otherwise provided below), and at all times during the Lease Term
(or the License Term, as applicable) and continuing thereafter until Tenant has fulfilled all of its
obligations under ARTICLE 16 (unless otherwise provided below), Tenant shall, at its sole cost
and expense, obtain, keep and maintain or cause to be obtained, kept and maintained, the following
insurance policies:
(a) Commercial General Liability Policy. A GL Policy, written on an
occurrence basis and limited to the Premises and the Hotel Project Improvements,
naming Tenant (including employees) as the insured and the Landlord Insured, the
Leasehold Mortgagee as additional insureds, affording protection against liability
arising out of bodily injury, death and property damage occurring, in, upon or about
the Premises or the Hotel Project Improvements or resulting from, or in connection
with, the construction, use, operation or occupancy of the Premises or the Hotel
Project Improvements and containing provisions for severability of interests and
coverage for certified (TRIA) terrorism and non -certified terrorism. The GL Policy
shall be in such amount and such policy limits so that (i) the coverage and limits
adequately protect the interest of the insured given the risk involved, when acting
as a reasonable and prudent hotel manager (or owner of a Comparable Hotel
Property, as applicable), (ii) the coverage and limits are adequate to maintain the
Excess/Umbrella Policy without gaps in coverage between the GL Policy and the
Excess/Umbrella Policy and (iii) and in all events, the minimum policy limits set
forth in the Insurance Plan Additional Requirements are satisfied. In addition, the
GL Policy shall comply with all other requirements applicable to it set forth in the
Insurance Plan Additional Requirements and the requirements of Section 7.4.
(b) Boiler and Machinery. If the Hotel Project Improvements contain
boilers, other pressurized equipment or HVAC Systems not insured under the any
other policies, a boiler and machinery insurance policy, or alternatively sublimit
coverage under the Property Insurance Policy, covering the foregoing in such
amounts as the Leasehold Mortgagee (or, in the absence of the Leasehold
Mortgagee, Landlord) may from time to time reasonably request, naming Tenant as
the insured, the Leasehold Mortgagee and the Landlord Insured as additional
insureds and mortgagee, as applicable. The Insurance Trustee shall be designated
as loss payee for all Insurance Proceeds which are to be delivered to the Insurance
Trustee in accordance with Section 7.5. In addition, such policy shall comply with
all other requirements applicable to it set forth in the Insurance Plan Additional
Requirements and the requirements of Section 7.4.
(c) Auto Policy. An Auto Policy covering all vehicles, whether owned,
non -owned and hired or borrowed vehicles, used in connection with the
construction, maintenance or operation of the Premises and the Hotel Project
Improvements, naming Tenant as the insured and the Leasehold Mortgagee and the
Landlord Insured as additional insureds, affording protection against liability for
bodily injury and death and/or for property damage in an amount not less than ONE
MILLION AND N0/100 DOLLARS ($1,000,000.00) combined single limit per
occurrence or its equivalent. In addition, the Auto Policy additionally shall comply
32
with all other requirements applicable to it set forth in the Insurance Plan
Additional Requirements and the requirements of Section 7.4.
(d) Workers' Compensation Policy. A Workers' Compensation Policy
affording protection of not less than ONE MILLION AND NO 100 DOLLARS
($1,000,000.00) for bodily injury by accident (each accident), not less than ONE
MILLION AND N0/100 DOLLARS ($1,000,000.00) for bodily injury by disease
(each employee) and not less than ONE MILLION AND N0/100 DOLLARS
($1,000,000.00) bodily injury by disease (policy limit). In addition, the Workers'
Compensation Policy shall comply with all other requirements applicable to it set
forth in the Insurance Plan Additional Requirements and the requirements of
Section 7.4.
(e) Excess/Umbrella Policy. An Excess/Umbrella Policy, written on an
occurrence basis, in an amount not less than TWO MILLION AND N0/100
DOLLARS ($2,000,000.00) per occurrence and in the aggregate for bodily injury
and death and/or property damage liability combined, such policy to be written on
an excess basis above the coverages required herein above with respect to the Auto
Policy, the Workers' Compensation Policy and the GL Policy (specifically listing
such underlying policies) and following the form of such underlying policies. The
Excess/Umbrella Policy shall name Tenant insured, the Landlord Insured and
Leasehold Mortgagee as additional insureds and, in addition, shall comply with all
other requirements applicable to it set forth in the Insurance Plan Additional
Requirements and the requirements of Section 7.4.
(f) Business Interruption Policy. Commencing on the first date that
Tenant is required to obtain a Property Insurance Policy, a business interruption
insurance policy or, alternatively, sub -limit coverage under the Property Insurance
Policy (in either form, "Business Interruption Policy") that is in an amount
sufficient to cover one hundred percent (100%) of continuing normal operating
expenses (including all Rentals payable under this Ground Lease, all Debt service
and payroll) for an extended reporting period of twenty-four (24) months arising
from any loss insured by the Property Insurance Policy, naming Tenant as the
insured and the Leasehold Mortgagee and the Landlord Insured as loss payees. The
maximum deductible shall be no more than thirty (30) calendar days. There shall
either be an agreed amount clause or a waiver of coinsurance. In addition, the
Business Interruption Policy shall comply with all other requirements set forth in
Section 7.4 and will provide coverage for service interruptions (loss of utilities), the
loss of which could lead to a temporary or partial shutdown, including fuel, potable
water, electricity, natural gas, telephone and chilled water, with a sub -limit cap of
no less than ONE HUNDRED THOUSAND AND NO/100 DOLLARS
($100,000.00).
(g) Commercial Crime Policy. A Crime Policy insuring against
employee dishonesty, forgery or alteration and robbery (inside and outside) naming
Tenant as the insured, complying with all other requirements applicable to it set
forth in the Insurance Plan Additional Requirements and the requirements of
33
Section 7.4.
(h) Special Policies for Contractor Engaged in Pollution or Hazardous
Materials Related Activities. At any time during the Lease Term, in the event any
Material Additional Work Construction Contractor or any other of Tenant's other
contractors and subcontractors is to remove or dispose of any Contaminated
Materials from in, upon or about the Premises or the Hotel Project Improvements,
then prior to the commencement of such removal and disposal, and at all times
during such removal and disposal through completion thereof, Tenant shall cause
to be obtained, kept and maintained, as a minimum, the insurance policies
(collectively, the "Special Policies") required in the Insurance Plan Additional
Requirements. In addition, the Special Policies shall comply with all other
requirements applicable to it set forth in the Insurance Plan Additional
Requirements and the requirements of Section 7.4.
(i) Employment Practices Liability Policy. On or before the earlier of
commencement of the Pre -opening Period and such date that any employee of
Developer or the Operator begins his or her employment for Developer or the
Operator , as applicable, in connection with the Hotel, an Employment Practices
Policy in an amount not less than TWO MILLION AND N0/100 DOLLARS
($2,000,000.00) per occurrence and in the aggregate, naming Tenant or the
Operator as the insured, affording protection against liability arising out of, and
indemnification for, claims or losses incurred from wrongful employment-related
acts or practices by the Operator (including, to the extent available, violation of any
Governmental Rule regarding employment practices), resulting from, or in
connection with, the employment of Persons by Developer for the construction,
use, operation or occupancy of the Premises or the Hotel Project Improvements and
containing provisions for severability of interests, excluding employees of third
Persons. In addition, the Employment Practices Policy shall comply with all other
requirements applicable to it set forth in the Insurance Plan Additional
Requirements and the requirements of Section 7.4.
(j) Additional Insurance. In addition to all insurance policies and
coverage required above in this ARTICLE 7, Tenant covenants, at its sole cost and
expense, commencing on the Lease Commencement Date and at all times
necessary during the Lease Term and through the date Tenant has fulfilled its
obligations under ARTICLE 16, to obtain, keep and maintain or cause to be
obtained, kept and maintained, all other additional insurance policies on the
Premises or the Hotel Project Improvements, as they exist at all times from time to
time (i) as required by all applicable Governmental Rules and (ii) that a reasonable
and prudent hotel manager (or, if applicable, an owner of a Comparable Hotel
Property), would reasonably be expected to obtain, keep and maintain, or require to
be obtained, kept and maintained, on a Comparable Hotel Property. Such other
additional insurance policies shall name the Tenant as insured, the Landlord
Insured and the Leasehold Mortgagee as loss payees, mortgagee, additional
insureds, as applicable, in a manner consistent with their being named loss payees
or additional insureds in the policies required above under this ARTICLE 7, and
34
shall comply with all other requirements applicable to them set forth in the
Insurance Plan Additional Requirements and the requirements of Section 7.4.
7.1.5. Adiustments in Policy Limits. Without limiting the other provisions of
this Ground Lease with respect to policy limits, Tenant covenants and agrees that at least every
five (5) years during the Lease Term, Tenant will cause an independent, nationally recognized
insurance advisor to conduct a comprehensive analysis and review of, and to provide a written
report on, the insurable risk involved in the use, occupancy and operation of the Premises and the
Hotel Project Improvements, specifically addressing the types of coverage and policy limits
reasonably necessary to insure against such risks. Such analysis and review shall be set forth in a
written report and a copy of the report shall be provided and addressed to Landlord. Tenant shall
adjust the policy limits, deductibles and coverages provided under the insurance policies required
under this Ground Lease (including the Insurance Plan Additional Requirements) or obtain such
additional policies in accordance with the recommendations of such insurance advisor; provided,
however, that Tenant shall only be able to reduce the amount of coverage, reduce the policy limits
or increase the deductible under any policy required under this Ground Lease (including the
Insurance Plan Additional Requirements) so long as the policy limits, deductibles and coverages
recommended by such insurance advisor are consistent with the policy limits, deductibles and
coverages which would be provided under the insurance policies that a reasonable and prudent
hotel manager and an owner of a Comparable Hotel Property, as applicable, would reasonably be
expected to obtain, keep and maintain, or require to be obtained, kept and maintained on a
Comparable Hotel Property. Further, Tenant shall have the right during the Lease Term to adjust
the policy limits, deductibles and coverages provided under the insurance policies required under
this Ground Lease (including the Insurance Plan Additional Requirements) to be in such amounts
and to contain such coverage that a reasonable and prudent hotel manager and an owner of a
Comparable Hotel Property would reasonably be expected to obtain, keep and maintain, or cause
to be obtained, kept and maintained, and, with respect to an owner of a Comparable Hotel
Property, require on a Comparable Hotel Property. Notwithstanding the foregoing or anything
herein to the contrary, Tenant shall provide Landlord with at least thirty (3 0) calendar days' Notice
prior to reducing the amount of coverage, reducing the policy limits or increasing the deductible
under any policy required under this Ground Lease (including the Insurance Plan Additional
Requirements).
Section 7.2. Surety Bonds. Unless Tenant is otherwise required to obtain payment and
performance bonds pursuant to applicable Governmental Rules, including Chapter 2253, Texas
Government Code, and obtains payment and performance bonds pursuant to such Governmental
Rules, prior to the commencement of any Additional Work (other than Additional Work related to
the purchase or installation of furniture, fixtures or equipment which is contained in a contract
solely covering the purchase or installation of such furniture, fixtures or equipment) the total cost
of which will exceed Fifteen Million and No/100 Dollars ($15,000,000.00) (the "Surety
Threshold"), whether or not such work is Material Additional Work, and at all times during the
performance of such Additional Work and for so long after the completion thereof that any of
Tenant's other contractors and subcontractors (other than the Material Additional Work
Construction Contractor) has not been paid in full in respect to the Additional Work, Tenant shall
cause Tenant's contractors and subcontractors (including, the Material Additional Work
Construction Contractor) to obtain, keep and maintain performance and payment bonds from a
Qualified Surety in a total amount equal to one hundred percent (100%) of the costs of the
35
Additional Work, such performance and payment bonds to be held and firmly bound unto
Landlord. Prior to commencing any such Additional Work, Tenant shall deliver to Landlord a
copy of such performance and payment bonds. At the commencement of each Lease Year, the
Surety Threshold shall be recalculated by multiplying the Surety Threshold by the Threshold
Escalator. In lieu of payment and performance bonds and to the extent allowed by applicable
Governmental Rules, Tenant may cause Tenant's contractors and subcontractors (including, the
Material Additional Work Construction Contractor) to obtain, keep and maintain protections,
reasonably acceptable to the Landlord, to assure total completion of the Project and payment of all
sub -contractor claims that are not substantially less than the protections provided in TEX. GOVT
CODE 2253, such as contractor default insurance, and in comparable amounts typically used for
similar projects in terms of size, scope and cost.
Section 7.3. Blanket or Master Policy. Any one or more of the types of insurance
coverages required in ARTICLE 7 may be obtained, kept and maintained through a blanket or
master policy insuring other entities (such as the sole member of Tenant, Affiliates of Tenant or
sole member or managers thereof) and which blanket or master policy, as to the GL Policy only,
may be written with per location/project aggregate or occurrence limits, provided, however, that
(a) such blanket or master policy and the coverage effected thereby comply with all applicable
requirements of this Ground Lease and (b) the protection afforded under such blanket or master
policy shall be no less than that which would have been afforded under a separate policy or
policies relating only to the Premises and the Hotel Project Improvements. If any excess or
umbrella liability insurance coverage required pursuant hereto is subject to an aggregate annual
limit and is maintained through such blanket or master policy, and if such aggregate annual limit is
impaired as a result of claims actually paid, as reported by the insurer on a quarterly basis, by more
than fifty percent (50%), Tenant shall immediately give notice thereof to Landlord and, within
sixty (60) calendar days after discovery of such impairment, to the fullest extent reasonably
possible, cause such limit to be restored by purchasing additional coverage.
Section 7.4. Failure of Tenant to Maintain.
7.4.1. Landlord May Procure Insurance. If at any time and for any reason
Tenant fails to provide, maintain, keep in force and effect, or deliver to Landlord proof of, any of
the insurance required under ARTICLE 7 and such failure continues for ten (10) calendar days
after Notice thereof from Landlord to Tenant, Landlord may, but shall have no obligation to,
procure single interest insurance for such risks covering the Landlord Insured, the Leasehold
Mortgagee (or, if no more expensive, the insurance required by this Ground Lease) and Tenant
shall, within ten (10) calendar days following Landlord's demand and Notice, pay and reimburse
Landlord therefor with interest at the Default Rate from the date of payment by Landlord until
repayment of Landlord in full by Tenant.
7.4.2. Work Stoppage. If any time prior to the commencement of, or during,
Additional Work for any reason Tenant fails to provide, maintain, keep in force and effect, any of
the insurance required hereunder, Landlord shall have the right to order Tenant, the Material
Additional Work Construction Contractor and Tenant's other contractors and subcontractors to
stop such Additional Work until such time that the insurance policies required hereunder shall
have been obtained, and proof furnished to Landlord that such policies are in full force and effect.
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Section 7.5. Additional Policy Requirements.
7.5.1. Approval of Insurers: Certificate and Other Requirements.
(a) Insurers. Each and every insurance policy required to be carried
hereunder shall be effected under valid policies issued by insurers which have been
approved by the Leasehold Mortgagee (and if none, by the Landlord
Representative, such Approval not to be unreasonably withheld), and which have
an Alfred M. Best Company, Inc. rating of "A" or better and a financial size
category of not less than "VIII" (or, if Alfred M. Best Company, Inc. no longer uses
such rating system, then the equivalent or most similar ratings under the rating
system then in effect, or if Alfred M. Best Company, Inc. is no longer the most
widely accepted rater of the financial stability of insurance companies providing
coverage such as that required by this Ground Lease, then the equivalent or most
similar rating under the rating system then in effect of the most widely accepted
rater of the financial stability of such insurance companies at the time).
(b) Waiver of Subrogation. Each and every policy required to be
carried hereunder shall provide for waivers of subrogation by endorsement or other
means which waivers of subrogation shall be effective as to any Person even
though such Person may otherwise have a duty of indemnification, contractual or
otherwise, may not have paid any insurance premiums directly or indirectly and
may or may not have an insurable interest in the insured Property damage.
(c) "City" Special Endorsement. (Intentionally Omitted).
(d) Loss Payee/Additional Insured. Each and every insurance policy
required to be carried hereunder (other than insurance policies to be carried by the
Material Additional Work Construction Contractor and Tenant's other contractors
and subcontractors) in which Landlord or the Leasehold Mortgagee is named as
loss payee, Landlord Insured or the Leasehold Mortgagee is named as additional
insureds or the Leasehold Mortgagee is named as mortgagee, each in accordance
with the terms of this Ground Lease, shall (i) contain an endorsement to the effect
that the 'other insurance" clause which may appear therein is not applicable to
Landlord Insured or the Leasehold Mortgagee, as applicable (ii) join Landlord and
the Leasehold Mortgagee as loss payee, Landlord Insured and the Leasehold
Mortgagee as additional insured and the Leasehold Mortgagee as mortgagee, as
applicable, at the time of issuance thereof and (iii) duly note and be endorsed upon
all slips, cover notes, policies or other instruments of insurance issued or to be
issued in connection therewith the interest of the Landlord, Landlord Insured and
the Leasehold Mortgagee, as applicable.
(e) Notice of Cancellation. Each and every insurance policy required to
be carried hereunder by or on behalf of Tenant shall provide (and any certificate
evidencing the existence of each such insurance policy shall certify) that such
insurance policy shall not be canceled unless Landlord and the Leasehold
Mortgagee shall have received written notice of cancellation, non -renewal or
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material reduction in coverage and that Landlord and the Leasehold Mortgagee
shall receive not less than thirty (30) calendar days written notice of such
cancellation, non -renewal or material reduction in coverage, in each such case
(except for notice of cancellation due to non-payment of premiums) such written
notice to be sent to Landlord and the Leasehold Mortgagee not less than thirty (30)
calendar days (or the maximum period of days permitted under applicable
Governmental Rule, if less than thirty (30) calendar days) prior to the effective date
of such cancellation, non -renewal or material reduction in coverage, as applicable.
In the event any insurance policy is to be cancelled due to non-payment of
premiums, the requirements of the preceding sentence shall apply except that the
written notice shall be sent to Landlord and the Leasehold Mortgagee on the earliest
possible date but in no event less than ten (10) calendar days prior to the effective
date of such cancellation.
(f) Primary Insurance; No Offset. Except as otherwise provided for
herein, each and every insurance policy required to be carried hereunder (other than
the workers' compensation policies required pursuant to Section 7.1.1(c), the
Workers' Compensation Policy and the insurance policies to be carried by the
Material Additional Work Construction Contractor and Tenant's other contractors
and subcontractors) shall provide that the policy is primary and that any other
insurance of any insured or additional insured thereunder with respect to matters
covered by such insurance policy shall be excess and non-contributing. Each of
said insurance policies shall also provide that (1) any loss shall be payable in
accordance with the terms of such policy notwithstanding any action, inaction or
negligence (other than a criminal offense) of the insured or of any other Person
(including Tenant, the Landlord Insured, the Leasehold Mortgagee or any
Insurance Trustee) which might otherwise result in a diminution or loss of
coverage, including "breach of warranty", and the respective interests of the
Landlord Insured and the Leasehold Mortgagee shall be insured regardless of any
breach or violation by Tenant, Landlord Insured, the Leasehold Mortgagee, any
Insurance Trustee or any other Person of any warranty, declaration or condition
contained in or with regard to such insurance policies and (2) any right of the
insurers to any offset or counterclaim or any other deduction, whether by
attachment or otherwise (except with respect to the application of policy
deductibles or unpaid premiums) shall be waived against the Landlord Insured and
the Leasehold Mortgagee.
(g) Board of Fire Underwriters. Tenant shall comply in all material
respects with all rules, orders, regulations and requirements of the Board of Fire
Underwriters or any other similar body having jurisdiction, in the case of fire
insurance policies.
7.5.2. Delivery of Evidence of Insurance. With respect to each and every one of
the insurance policies required to be obtained, kept or maintained under the terms of this Ground
Lease, on or before the date on which each such policy is required to be first obtained and at least
thirty (30) calendar days before the expiration of any policy required hereunder previously
obtained, Tenant shall deliver to Landlord and the Leasehold Mortgagee evidence reasonably
38
acceptable to Landlord and the Leasehold Mortgagee showing that such insurance is in full force
and effect. Such evidence shall include certificates of insurance (on the ACORD 28 form, or such
successor form thereto) issued by a Responsible Officer of the issuer of such policies, or in the
alternative, a Responsible Officer of an agent authorized to bind the named issuer, setting forth the
name of the issuing company, the coverage, limits, deductibles, endorsements, term and
termination provisions thereon and confirmation that the required premiums have been paid, along
with a similar certificate executed by Responsible Officer of Tenant. By no later than fifteen (15)
calendar days after the effective date of any insurance policy required under this Ground Lease,
Tenant shall provide Landlord and the Leasehold Mortgagee with a certified copy of such
insurance policy.
further agrees:
7.5.3. Special Tenant Covenants with Respect to Insurance. Tenant hereby
(a) Payment of Premiums. Tenant shall punctually to pay or cause to be
paid all premiums and other sums payable under each insurance policy required to
be obtained, kept and maintained pursuant to this Ground Lease.
(b) Proceeds. Tenant shall ensure that all Insurance Proceeds received
by Tenant (other than in respect of any insurance proceeds to be paid out in
settlement of claims and respect of third party liability) are delivered to the
Insurance Trustee to the extent required under the terms of this Ground Lease.
(c) Additional Information. Upon receipt of a Notice from Landlord to
such effect, Tenant shall deliver to Landlord such information concerning the
insurance policies obtained pursuant to the requirements of this Ground Lease (or
as to any matter which may be relevant to such insurance policies) as Landlord may
reasonably have requested in such request.
(d) No Adverse Action. Tenant shall not, at any time, take any action,
omit to take action or use or permit any use or condition of the Hotel Project
Improvements or the Premises which action, omission, use or condition would (1)
cause any insurance policies required to be obtained, kept and maintained under
this Ground Lease to become void, voidable, unenforceable, suspended or impaired
in whole or in part, (2) otherwise cause any sum paid out under any such insurance
policy to become repayable in whole or in part or (3) make it impossible to obtain
any required insurance at commercially feasible rates.
(e) Notice. Tenant shall promptly to notify Landlord of any facts or
circumstances of which it is aware which, if not disclosed to Tenant's insurers or
re -insurers, is likely to affect adversely the nature or extent of the coverage to be
provided under any insurance policy required hereunder.
(f) Maintain Policies. Tenant shall maintain in full force and effect the
policies required to be carried to the extent so required to be carried pursuant to the
terms hereof.
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7.5.4. Waiver of Right of Recovery. TO THE EXTENT PERMITTED BY
APPLICABLE GOVERNMENTAL RULE, AND WITHOUT AFFECTING THE INSURANCE
COVERAGES REQUIRED TO BE MAINTAINED HEREUNDER, LANDLORD AND
TENANT EACH WAIVE ANY RIGHT TO RECOVER AGAINST THE OTHER (A) DAMAGE
TO THE PREMISES, (B) DAMAGE TO THE HOTEL PROJECT IMPROVEMENTS, THE
PERSONALTY, ANY OTHER PROPERTY OR ANY PART THEREOF OR (C) CLAIMS
ARISING BY REASON OF ANY OF THE FOREGOING, TO THE EXTENT THAT SUCH
DAMAGES OR CLAIMS (I) ARE COVERED (AND ONLY TO THE EXTENT OF SUCH
COVERAGE) BY INSURANCE ACTUALLY CARRIED BY EITHER LANDLORD OR
TENANT OR (II) WOULD BE INSURED AGAINST UNDER THE TERMS OF ANY
INSURANCE REQUIRED TO BE CARRIED UNDER THIS GROUND LEASE BY THE
PARTY HOLDING OR ASSERTING SUCH CLAIM. THIS PROVISION IS INTENDED TO
RESTRICT EACH PARTY (IF AND TO THE EXTENT PERMITTED BY APPLICABLE
GOVERNMENTAL RULE) TO RECOVERY AGAINST INSURANCE CARRIERS TO THE
EXTENT OF SUCH COVERAGE AND TO WAIVE (TO THE EXTENT OF SUCH
COVERAGE), FOR THE BENEFIT OF EACH PARTY, RIGHTS OR CLAIMS WHICH
MIGHT GIVE RISE TO A RIGHT OF SUBROGATION IN ANY INSURANCE CARRIER.
THE PROVISIONS OF THIS SECTION 7.4.4 ARE NOT INTENDED TO LIMIT THE CLAIMS
OF THE LANDLORD OR TENANT TO THE FACE AMOUNT OR COVERAGE OF THE
INSURANCE POLICIES HEREIN PROVIDED FOR OR TO EVIDENCE THE WAIVER BY
EITHER PARTY HERETO OF ANY CLAIM FOR DAMAGES IN EXCESS OF THE FACE
AMOUNT OR COVERAGE OF ANY OF SUCH INSURANCE POLICIES OR THE
DEDUCTIBLES THEREFORE. NEITHER THE ISSUANCE OF ANY INSURANCE POLICY
REQUIRED HEREUNDER, OR THE MINIMUM LIMITS SPECIFIED HEREIN WITH
RESPECT TO TENANT'S INSURANCE COVERAGE SHALL BE DEEMED TO LIMIT OR
RESTRICT IN ANY WAY TENANT'S LIABILITY ARISING UNDER OR OUT OF THIS
GROUND LEASE. TENANT SHALL BE LIABLE FOR ANY LOSSES, DAMAGES OR
LIABILITIES SUFFERED OR INCURRED BY THE LANDLORD INSURED AS A RESULT
OF TENANT'S FAILURE TO OBTAIN, KEEP AND MAINTAIN OR CAUSE TO BE
OBTAINED, KEPT AND MAINTAINED, THE TYPES OR AMOUNTS OF INSURANCE
REQUIRED UNDER THE TERMS OF THIS GROUND LEASE. NOTWITHSTANDING
ANYTHING TO THE CONTRARY IN THIS GROUND LEASE, TENANT'S WAIVERS
OBLIGATIONS OF TENANT DO NOT APPLY TO ANY ACT OR OMISSION OF
LANDLORD ACTING IN ITS GOVERNMENTAL FUNCTION.
Section 7.6. Proceeds of Insurance, Insurance Trustee. The Insurance Proceeds shall
be payable to:
7.6.1. Provided that no Tenant Default then exists and this Ground Lease has not
been terminated in accordance with Section 10.4, Tenant, in the case of any particular Casualty
resulting in damage involving a reasonably estimated cost of repair of less than TWO MILLION
AND NO/100 DOLLARS ($2,000,000.00) (such amount to be adjusted at the commencement of
each Lease Year by multiplying such amount by the Threshold Escalator), which Insurance
Proceeds shall be received by Tenant in trust for the purpose of paying the cost of restoration as
required by Section 10.2;
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7.6.2. The Insurance Trustee, (i) in the case of any particular Casualty resulting in
damage involving a reasonably estimated cost of repair of more than TWO MILLION AND
NO.100 DOLLARS ($2,000,000.00) (such amount to be adjusted at the commencement of each
Lease Year by multiplying such amount by the Threshold Escalator) or (ii) in the event a Tenant
Default then exists, which Insurance Proceeds are to be held and disposed of pursuant to, and
under the conditions set forth, in Section 10.2; or
7.6.3. The Insurance Trustee with respect to Insurance Proceeds payable after any
termination of this Ground Lease in accordance with Section 10.4, provided that such Insurance
Proceeds shall be disbursed in accordance with the provisions of ARTICLE 10.
Landlord and Tenant agree that the initial Insurance Trustee and any subsequent Insurance
Trustees shall not be removed or replaced unless and until (y) Landlord receives Notice of such
removal and replacement and the identity of the successor Insurance Trustee at least thirty (30)
calendar days prior to the effective date of any such removal or replacement of the then existing
Insurance Trustee and (z) prior to the effective date of any such removal or replacement of the
Insurance Trustee, the successor Insurance Trustee shall deliver to Landlord the notice and
agreement required in the definition of Insurance Trustee. Tenant shall pay all of the fees, costs
and expenses of the Person (other than Landlord) from time to time serving as Insurance Trustee.
Section 7.7. Landlord Insured as Additional Insureds under Liability Insurance of
Space Tenants and Subtenants. Tenant shall require that any Subtenant and all Space Tenants
name the Landlord Insured and the Leasehold Mortgagee as additional insureds under their
respective policies of liability insurance.
Section 7.8. Release by Tenant.
7.8.1. Agreement to Release. SUBJECT TO SECTION 7.4.4, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE GOVERNMENTAL RULE,
TENANT HEREBY AGREES AND COVENANTS TO RELEASE LANDLORD, THE
LANDLORD INDEMNITEES, AND ANY LEASEHOLD MORTGAGEE FROM AND
AGAINST ANY AND ALL CLAIMS, DEMANDS, LOSSES, DAMAGES, CAUSES OF
ACTION, SUITS AND LIABILITIES OF EVERY HIND, INCLUDING ALL EXPENSES
OF LITIGATION, COURT COSTS AND REASONABLE ATTORNEYS' FEES, FOR
INJURY TO OR SICKNESS OR DEATH OF ANY PERSON, OR FOR LOSS OR
DAMAGE TO ANY PROPERTY (INCLUDING CLAIMS RELATING TO
CONTAMINATED MATERIALS AND ENVIRONMENTAL CLAIMS) OR FOR ANY
OTHER LOSS, LIABILITY OR DAMAGE, INCLUDING ANY CIVIL OR CRIMINAL
FINES OR PENALTIES, DIRECTLY OR INDIRECTLY ARISING OR ALLEGED TO
ARISE OUT OF OR ANY WAY INCIDENTAL TO (a) ANY USE, OCCUPANCY OR
OPERATION OF THE PREMISES OR THE HOTEL PROJECT IMPROVEMENTS BY
OR ON BEHALF OF TENANT, OPERATOR, ANY OF THEIR RELATED PARTIES OR
ANY INVITEE OR GUEST OF TENANT OR MANAGER DURING THE LEASE TERM,
OR DURING ANY PERIOD OF TIME, IF ANY, BEFORE OR AFTER THE LEASE
TERM THAT TENANT OR ITS RELATED PARTIES MAY HAVE POSSESSION OF
THE PREMISES OR THE HOTEL PROJECT IMPROVEMENTS, INCLUDING THE
CONSTRUCTION OF THE HOTEL PROJECT IMPROVEMENTS WORK PURSUANT
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TO THE DEVELOPMENT AGREEMENT, (b) ANY ENVIRONMENTAL EVENT
WHICH IS REQUIRED TO BE COVERED BY TENANT'S REMEDIAL WORK
(INCLUDING ANY STRICT LIABILITY OF LANDLORD OR ITS RELATED PARTIES)
EXCEPT AS PROVIDED IN SECTION 3.5, (c) ANY BREACH OF THE TERMS AND
CONDITIONS OF THIS GROUND LEASE OR ANY OTHER PROJECT DOCUMENT
BY TENANT OR ANY OF ITS RELATED PARTIES OR ANY FAILURE BY TENANT
TO PAY OR PERFORM ANY OF ITS OBLIGATIONS UNDER THIS GROUND LEASE
OR (d) ANY ACT OR OMISSION OF TENANT, MANAGER OR ANY PERSON
RELATED TO ANY OF THE FOREGOING (COLLECTIVELY, THE "LIABILITIES"),
EXCEPT IF CAUSED BY OR ARISING FROM THE ACTIVE NEGLIGENCE, BREACH
OF CONTRACT OR OTHER LEGAL DUTY OR FAULT OF LANDLORD OR ANY
LANDLORD INDEMNITEE. THIS RELEASE INCLUDES TENANT'S AGREEMENT
TO PAY ALL COSTS AND EXPENSES OF DEFENSE, INCLUDING WITHOUT
LIMITATION REASONABLE ATTORNEYS' FEES, INCURRED BY LANDLORD, ANY
LANDLORD INDEMNITEE, OR ANY LEASEHOLD MORTGAGEE. THIS RELEASE
SHALL APPLY WITHOUT LIMITATION TO ANY LIABILITIES IMPOSED ON ANY
PARTY INDEMNIFIED HEREUNDER AS A RESULT OF ANY STATUTE, RULE,
REGULATION OR THEORY OF STRICT LIABILITY. THIS INDEMNIFICATION
SHALL NOT BE LIMITED TO DAMAGES, COMPENSATION OR BENEFITS
PAYABLE UNDER INSURANCE POLICIES, WORKERS' COMPENSATION ACTS,
DISABILITY BENEFIT ACTS OR OTHER EMPLOYEE BENEFIT ACTS. ALTHOUGH
TENANT HAS CAUSED LANDLORD, LANDLORD INDEMNITEE, OR ANY
LEASEHOLD MORTGAGE TO BE NAMED AS LOSS PAYEES, ADDITIONAL
INSUREDS OR MORTGAGEE UNDER TENANT'S INSURANCE POLICIES,
TENANT'S LIABILITY UNDER THIS INDEMNIFICATION PROVISION SHALL NOT
BE LIMITED TO THE LIABILITY LIMITS SET FORTH IN SUCH POLICIES.
NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS GROUND LEASE,
THE WAIVER OBLIGATIONS OF TENANT DO NOT APPLY TO ANY ACT OR
OMISSION OF LANDLORD ACTING IN ITS GOVERNMENTAL FUNCTION.
7.8.2. Scone. TENANT FURTHER AGREES, EXCEPT AS MAY BE
OTHERWISE EXPRESSLY PROVIDED FOR IN THIS GROUND LEASE, THAT THE
RELEASE OBLIGATION HEREUNDER SHALL INCLUDE THE FOLLOWING:
7.8.2.1. LIENS BY THIRD PERSONS AGAINST LANDLORD OR
THE LANDLORD INDEMNITEES, OR ANY OF THEIR PROPERTY, BECAUSE
OF LABOR, SERVICES, MATERIALS FURNISHED TO TENANT, ITS
CONTRACTORS, SUBCONTRACTORS OR ASSIGNEES, IN CONNECTION
WITH ANY WORK IN, ON OR ABOUT THE PREMISES OR ANY PROJECT
IMPROVEMENTS, INCLUDING THE HOTEL PROJECT IMPROVEMENTS
WORK OR ANY ADDITIONAL WORK; AND
7.8.2.2. EXPENSES, CLAIMS, FINES AND PENALTIES OR OTHER
ENFORCEMENT CHARGES, RESULTING FROM THE FAILURE OF TENANT
TO ABIDE BY ANY AND ALL VALID AND APPLICABLE GOVERNMENTAL
RULES.
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7.8.3. No Waiver of Governmental Immunity. NOTHING CONTAINED IN
THIS SECTION 7.7 SHALL WAIVE ANY GOVERNMENTAL IMMUNITY
AVAILABLE TO THE LANDLORD OR TENANT UNDER APPLICABLE
GOVERNMENTAL RULE OR IN ANY WAY WAIVE OR LIMIT ANY DEFENSES OF
LANDLORD OR ANY LANDLORD INDEMNITEE OR TENANT UNDER
GOVERNMENTAL RULE.
7.8.4. Survival. The indemnities contained in this Section 7.7 shall survive the
expiration or earlier termination of this Ground Lease, but only insofar as such indemnities relate
to any liabilities, damages, suits, claims or judgments that arose prior to the expiration or earlier
termination of this Ground Lease.
7.8.5. No Third Party Beneficiary. The provisions of this Section 7.7 are solely
for the benefit of Landlord and the Landlord Indemnitees and are not intended to, and do not,
create or grant any rights, contractual or otherwise, to any other Person.
ARTICLE 8.
OWNERSHIP OF PROJECT IMPROVEMENTS AND PERSONALTY;
ADDITIONAL WORK; ACCESS
Section 8.1. Title to the Proiect Improvements.
8.1.1. During Lease Term; Upon Termination of Lease Term. Title to all of
the Hotel Project Improvements constructed on the Premises, all FF&E, and all equipment,
fixtures, machinery, furniture, furnishings and other personal property therein erected,
constructed, installed or placed in or affixed to the Hotel Project Improvements by or on behalf of
Tenant (collectively, "Personalty"), shall be and remain in the Tenant for and during the Lease
Term, as applicable. Upon the Lease Expiration Date, Tenant's title to all of the Hotel Project
Improvements, the Personalty, and the FF&E automatically shall vest in Landlord without further
conveyance, or the payment of any compensation therefor, and neither Tenant nor anyone
claiming by, through or under Tenant shall have any claim thereto or any right, title or interest
therein except as may have been otherwise agreed to in writing by Landlord in nondisturbance,
easement or comparable agreements or in this Ground Lease. Further, all of Tenant's right, title
and interest in and to the Reserve Accounts (defined below) shall automatically vest in Landlord.
Although the provisions hereof are intended to be self-executing, Tenant hereby agrees, upon the
Lease Expiration Date or upon earlier termination of this Ground Lease, to (i) execute any further
deed, bill of sale or other document reasonably requested by Landlord to confirm Landlord's
ownership of and fee simple title to the Hotel Project Improvements, the Personalty, the FF&E,
and the Reserve Accounts free and clear of all rights, titles and interests of any Persons claiming
by, through or under Tenant and Tenant's grant and conveyance thereof to Landlord hereby made
and (ii) cause the Leasehold Mortgagee to execute and deliver to Landlord recordable releases in
Rill of all liens and security interests in and to the Project Improvements, Personalty, or such
FF&E, and the Reserve Accounts as applicable.
8.1.2. Waste; Sale or Disposal of Equipment or Other Personal Property.
Tenant shall neither do nor permit nor suffer any waste to or upon the Hotel Project Improvements.
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Tenant shall have the right at any time and from time to time, to sell or dispose of any of the FF&E
and Personalty located in the Hotel Project Improvements; provided, however, that if such FF&E
and Personalty are necessary for operation of the Hotel Project Improvements at the Hotel
Operating Standard, Tenant shall then or prior thereto or as reasonably necessary thereafter
substitute for the same other FF&E or Personalty, not necessarily of the same character but capable
of performing the same function as that performed by the FF&E and Personalty so disposed of, and
of good quality and suitable for its intended purpose. Tenant shall repair any damage to the Hotel
Project Improvements caused by the removal of such Personalty and all such repair work shall be
performed in a good and workmanlike manner using qualified workers and subcontractors and
shall be free from all Liens and Encumbrances, subject to Tenant's right to dispute any Lien or
Claim of Lien pursuant to Section 8.6. Tenant shall notify Landlord of the schedule for completion
of any such repair work and Tenant shall use commercially reasonable efforts to cause completion
of such repair work to occur on or before the date for the same specified in such schedule.
Section 8.2. Additional Work by Tenant.
8.2.1. Intentionally Omitted.
8.2.2. Changes. Alterations, and Additional Improvements. After the Project
Completion Date and subject to the limitations and requirements contained elsewhere in this
Ground Lease, including contained in ARTICLE 5, Tenant shall have the right at any time and
from time to time to construct additional Improvements or replace the Hotel Project Improvements
or portions thereof ("Additional Improvements"), at its sole cost and expense, and to make, at its
sole cost and expense, changes and alterations in, to or of the Hotel Project Improvements, subject,
however, in all cases to the terms, conditions and requirements of this Section 8.2. For purposes of
this Ground Lease, "Additional Work" collectively shall refer to (i) construction or installation of
any such Additional Improvements and changes and alterations in, to or of the Project
Improvements under this Section 8.2.2, (ii) Maintenance and Repair Work, (iii) Tenant's
Remedial Work, (iv) Casualty Repair Work, and (v) Condemnation Work. The performance of
Additional Work shall, in all cases, comply to the following requirements and conditions:
8.2.2.1. Any Material Additional Work shall be subject to Landlord's
Approval and the following procedures and requirements:
(a) Tenant shall deliver all Material Additional Work Submission
Matters regarding the proposed Material Additional Work to Landlord at least
twenty (20) Business Days prior to the commencement of any Material Additional
Work for Landlord's Approval of such Material Additional Work Submission
Matters. Upon receipt from Tenant of any Material Additional Work Submission
Matters regarding proposed Material Additional Work, Landlord shall review the
same and shall promptly (but in any event within ten (10) Business Days after
receipt) give Notice to Tenant of the Approval or non -Approval of Landlord and, if
non -Approval, setting forth in reasonable detail the reasons for any such
non -Approval (Landlord's Approval shall not be unreasonably withheld,
conditioned or delayed);
(b) To the extent that, and from time to time as, Landlord gives Tenant
44
written notice of Approval of any of the Material Additional Work Submissions
Matters, Tenant shall have the right to proceed with the portion of Material
Additional Work Approved by Landlord. If Landlord gives Notice to Tenant of
non -Approval of any of the Material Additional Work Submission Matters, Tenant
shall have the right to resubmit any such Material Additional Work Submission
Matters to Landlord, altered as necessary in response to Landlord's reasons for
non -Approval, until the Material Additional Work Submission Matters shall be
Approved by Landlord. Any resubmission shall be subject to review by Landlord
in accordance with Section 8.2.2(a)(i) for the original Material Additional Work
Submission Matter (but limited to the matters not previously approved), except that
the time period for review and response by Landlord shall be five (5) Business
Days;
(c) Subject to Excusable Tenant Delay and Landlord Delay, Tenant
shall use commercially reasonable efforts to cause Final Completion of the
Material Additional Work to occur on or before the date for the same specified in
the Material Additional Work Construction Schedule that was Approved by
Landlord.
8.2.2.2. All Additional Work shall, once commenced, be made with due
diligence (subject to Excusable Tenant Delay and Landlord Delay) in accordance with the
Material Additional Work Submission Matters Approved by Landlord and shall be
completed in a good and workmanlike manner in accordance with standard construction
practices for construction, repair, renewal, renovation, demolition, rebuilding, addition or
alteration, as the case may be, of improvements similar to the Improvements using
qualified workers and subcontractors, and in compliance with the provisions of this
Ground Lease (including, without limitation, ARTICLE 7 and ARTICLE 8) and in
compliance with all applicable Governmental Rules;
8.2.2.3. Any Additional Work, other than Material Additional Work, does
not require Landlord's Approval, subject to Section 8.3 below;
8.2.2.4. Any Additional Work shall, when completed, be in accordance with
the Hotel Operating Standard;
8.2.2.5. All Additional Work shall be free from all Liens and Encumbrances,
subject to Tenant's right to dispute any Lien or Claim of Lien pursuant to Section 8.6,-
8.2.2.6.
.6;8.2.2.6. Prior to the commencement of any Additional Work, at all times
during the performance of such Additional Work and at all times thereafter that anyone
other than Landlord or Tenant has an insurable interest in the Additional Work, all
applicable insurance required under Article 7 shall be in full force and effect as required
thereunder; and
8.2.2.7. At all times when any Additional Work is in process, Tenant shall
continue to pay all Rentals as the same shall become due and payable in accordance
herewith.
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Section 8.3. No Substitute for Permitting Processes or other Governmental
Functions. The review for compliance by Landlord of any matter submitted to Landlord pursuant
to Section 8.2 shall not constitute a replacement or substitute for, or otherwise excuse Tenant from,
(a) all permitting processes of Governmental Authorities applicable to the Hotel Project
Improvements or the Additional Work or (b) any Governmental Functions of the Landlord. As
such, Tenant covenants and agrees that prior to commencing the construction of any Additional
Work, or any part thereof, Tenant shall have obtained all necessary Approvals or Authorizations
from the Landlord to construct all of the Additional Work to the extent required by applicable
Governmental Rule.
Section 8.4. Work Performed on Proiect.
8.4.1. General Requirements. Tenant shall not do or permit others to do any
Additional Work unless Tenant shall have first procured and paid for all permits and
authorizations then required by all applicable Governmental Authorities for the work being
performed. All such Additional Work (a) shall be prosecuted with due diligence in a good and
workmanlike manner in accordance with standard construction practices for construction, repair,
renewal, renovation, demolition, rebuilding, addition or alteration, as the case may be, of
improvements similar to the Improvements using qualified workers and subcontractors, and in
compliance with the provisions of this Ground Lease (including, without limitation, ARTICLE 7
and ARTICLE 8) and (b) shall be completed with all reasonable dispatch, free of any Liens and
Encumbrances other than any permitted Leasehold Mortgage. Tenant shall take all reasonably
necessary measures to minimize damage, disruption or inconvenience caused by such work in
accordance with the Hotel Operating Standard and not to unreasonably interfere with the
continuous use or occupancy of the Convention Center or the Adjacent Convention Center Site.
Tenant shall be responsible for all costs incurred in connection with the Additional Work.
8.4.2. Contract Requirements. If requested by Landlord in connection with any
Landlord Approval, Tenant shall (a) ensure that any contracts with any architect or other design
professionals or any general contractor for the construction of the initial Project Improvements and
all Material Additional Work shall provide for the assignment thereof (which provision for
assignment will be subordinate to the rights of Leasehold Mortgagee therein) to Landlord as
security to Landlord for Tenant's performance hereunder, and Landlord shall be furnished with a
copy of any such contracts, (b) obtain the further agreement of the parties thereto to perform for
Landlord thereunder, at the election of Landlord, if this Ground Lease is terminated for any reason
and (c) permit Landlord to use (but not own) any plans and specifications to which Tenant is then
entitled pursuant to any such contracts, in each instance provided that Landlord assumes the
obligations of Tenant under such contract including, without limitation, the obligation to pay any
sums due under such contract.
Section 8.5. Landlord's Joinder in Permit Applications. Landlord agrees, with
reasonable promptness after receipt of a Notice therefor from Tenant, to execute, acknowledge and
deliver (or to join with Tenant in the execution, acknowledgment and delivery of), at Tenant's sole
cost and expense, in its capacity as the owner of the fee interest in the Premises and on terms (and
with respect to any easement, along such route) as Approved by the Landlord Representative, such
Approval not to be unreasonably withheld, conditioned or delayed: (a) any and all applications for
rezoning, licenses, permits, vault space, alley closings or other authorizations of any kind or
46
character (including the resubdivision or platting of the Premises into a single lot or site or separate
lots or sites for purposes of assessment and taxation) required of Tenant by any Governmental
Authority in connection with the construction, operation, alteration, repair or demolition, in
accordance with this Ground Lease, of the Hotel Project Improvements on the Premises and (b)
easements or rights-of-way for public utilities or similar public facilities over and across portions
of the Premises for a term not exceeding the then remaining Lease Term which may be useful or
necessary in the proper economic and orderly development of the Project Improvements or of the
Premises, provided, however, that nothing in this Section 8.5 shall (y) obligate Landlord to execute
any agreement or to do any other act that requires, or that could require, Landlord to pay any sum,
or that would subject Landlord or any interest of Landlord in the Premises or in any other Property
of Landlord to any Lien arising out of or relating to the Project Improvements or any use thereof by
Tenant or by anyone holding by, through or under Tenant or by any invitee thereof, or (z)
constitute a waiver or delegation of any of the Governmental Functions of the Landlord or
constitute Approval by the Landlord in its capacity as a Governmental Authority to such
applications.
Section 8.6. Mechanics' Liens and Claims. If based, upon any amounts owed or
claimed to be owed by Tenant, any Mechanics' Lien shall be filed against the Premises, the Project
Improvements, Landlord's interest in the Premises or the Hotel Project Improvements, Landlord
or any Property of Landlord, Tenant shall, at its sole cost and expense, after notice of the filing
thereof but in no event less than thirty (30) calendar days prior to the foreclosure of any such
Mechanics' Lien, cause the same to be satisfied or discharged of record, or effectively prevent, to
the reasonable satisfaction of the Landlord Representative by injunction, payment, deposit, bond,
order of court or otherwise, the enforcement or foreclosure thereof against the Premises, the
Project Improvements, Landlord or any Property of Landlord. If Tenant fails to satisfy or
discharge of record any such Mechanics' Lien, or effectively prevent the enforcement thereof, by
the date which is thirty (30) calendar days prior to the foreclosure thereof, then Landlord shall have
the right, but not the obligation, to satisfy or discharge such Mechanics' Lien by payment to the
claimant on whose behalf it was filed, and Tenant shall reimburse Landlord within fifteen (15)
calendar days after demand therefor for all amounts paid by Landlord (together with reasonable
attorneys' fees, costs and expenses so incurred by Landlord) together with interest on such
amounts at the Default Rate from the date such amounts are paid until reimbursed by Tenant
without regard to any defense or offset that Tenant has or may have had against such Mechanics'
Lien claim. IT IS THE INTENT OF THE CITY, AS LANDLORD HEREUNDER, AND
TENANT THAT NOTHING CONTAINED IN THIS GROUND LEASE SHALL (a) BE
CONSTRUED AS A WAIVER OF THE CITY'S OR TENANT'S LEGAL IMMUNITY
AGAINST MECHANICS' LIENS ON ITS PROPERTY OR ITS CONSTITUTIONAL
AND STATUTORY RIGHTS AGAINST MECHANICS' LIENS ON ITS PROPERTY,
INCLUDING THE PREMISES OR (b) BE CONSTRUED AS CONSTITUTING THE
EXPRESS OR IMPLIED APPROVAL OR PERMISSION OF THE CITY FOR THE
PERFORMANCE OF ANY LABOR OR SERVICES FOR, OR THE FURNISHING OF
ANY MATERIALS TO, TENANT THAT WOULD GIVE RISE TO ANY SUCH
MECHANICS' LIEN AGAINST THE CITY'S INTEREST IN THE PREMISES, THE
HOTEL PROJECT IMPROVEMENTS, THE CITY OR ANY PROPERTY OF THE
CITY, OR IMPOSING ANY LIABILITY ON THE CITY FOR ANY LABOR OR
MATERIALS FURNISHED TO OR TO BE FURNISHED TO TENANT UPON CREDIT.
THE CITY SHALL HAVE THE RIGHT AT ALL REASONABLE TIMES DURING ANY
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CONSTRUCTION ACTIVITY AT THE PREMISES TO POST AND KEEP POSTED AT
THE PREMISES SUCH NOTICES OF NON -RESPONSIBILITY AS THE CITY MAY
DEEM NECESSARY FOR THE PROTECTION OF THE CITY, AND THE FEE OF THE
PREMISES FROM MECHANICS' LIENS.
Section 8.7. Access to the Proiect Improvements for Landlord.
8.7.1. Intentionally Omitted.
8.7.2. Prior to Completion of Construction. Without limiting Landlord's rights
with respect to the Premises Reservations, during the Construction Term or during the period of
the performance of any Additional Work, Landlord shall have the right of access, for itself and its
authorized representatives, to the Premises, the Project Improvements or any portion thereof (in
addition to City's access rights under its police powers), without charges or fees, at normal
construction hours, for the purposes of assuring compliance with this Ground Lease and for
undertaking any rights or obligations of Landlord pursuant to the terms of this Ground Lease,
provided that with respect to access other than in connection with a Tenant Default, Landlord shall
(i) provide Notice to Tenant at least forty-eight (48) hours in advance of such proposed entry and
such proposed entry shall be during construction hours, (ii) not unreasonably hinder or interfere
with the Hotel Project Improvements Work or any Additional Work or the activities of Tenant's
contractors, (iii) take such reasonable protective caution or measures as Tenant may reasonably
request, given the stage of the Hotel Project Improvements Work or Additional Work at the time of
such entry and (iv) endeavor to minimize interference with the business then being conducted in
the Project Improvements pursuant to the terms of this Ground Lease. Nothing in this Ground
Lease, however, shall be interpreted to impose an obligation upon Landlord to conduct any
inspections or impose on Landlord any liability in connection therewith.
8.7.3. No Construction Work Oneoing. Without limiting Landlord's rights with
respect to the Premises Reservations, upon Substantial Completion of the Project Improvements
and as to areas where no Additional Work is then ongoing, Landlord shall have the right of access,
for itself and its authorized representatives, to the Premises, the Project Improvements or any
portion thereof (in addition to the City's access rights under its police powers), without charge or
fees, at all reasonable times upon at least forty-eight (48) hours prior Notice for the purposes of (i)
inspection (during business hours only) or (ii) exhibition of the Project Improvements to others
during the last eighteen (18) months of the Lease Term; provided, however, that (x) such entry and
Landlord's activities pursuant thereto shall be conducted in such a manner as to minimize
interference with the business then being conducted in the Project Improvements pursuant to the
terms of this Ground Lease and be subject to the rights of transient guests of the Project and (y)
nothing herein shall be intended to require Landlord to deliver Notice to Tenant or to only enter
during any specific period of time with respect to entry in connection with a Tenant Default as
permitted hereunder.
Section 8.8. Record Drawings and Other Documents.
8.8.1. To be Furnished Upon Request. Upon completion of any Additional
Work (other than Maintenance and Repair Work), Tenant shall, if required by Landlord, furnish to
Landlord one (1) certified true copy of all Approvals, permits and certificates or any other
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Governmental Authorizations, including (if applicable) a certificate of occupancy or its
equivalent, which shall then be required by any Governmental Authority in connection with such
Additional Work.
8.8.2. Retention of DrawinEs and Other Documents. Tenant shall retain and at
all times maintain at a business office within the Project Improvements at least one (1) complete,
legible, full-size set of all "record drawings" in accordance with accepted industry standards
regarding all of Project Improvements as they then exist, to the extent appropriate considering all
work performed to date and the Project Improvements as they then exist, and true copies of all
approvals, permits and certificates or other Governmental Authorizations, including (if applicable)
all certificates of occupancy or their equivalent for the Project Improvements as they then exist, as
shall then be required by any Governmental Authority. Tenant shall permit Landlord and the
Leasehold Mortgagee to use (but not own) for purposes related to the Project Improvements (and
only for such purposes) all such drawings, approvals, permits, certificates and Governmental
Authorizations retained by Tenant under this Section 8.8.2, and the same shall be available to
Landlord and its agents and employees and the Leasehold Mortgagee who shall have the right, at
all reasonable times during regular business hours on a Business Day (and so as to minimize
interference with the business then conducted on the Premises in accordance with the terms of this
Ground Lease) and upon not less than two (2) calendar days' Notice to Tenant, to examine,
inspect, review, copy and otherwise use the same, such use being solely in connection with the
Project Improvements and subject to appropriate customary indemnification by any Leasehold
Mortgagee, as applicable, of Tenant and the Architect.
ARTICLE 9.
REPAIRS AND MAINTENANCE; UTILITIES: REMEDIAL WORK
Section 9.1. Repairs and Maintenance.
9.1.1. Tenant's Obligation. Tenant shall, throughout the Lease Term, at its own
expense and at no cost or expense to Landlord, do the following (collectively, the "Maintenance
and Repair Work" ):
9.1.1.1. Keep and maintain, or cause to be kept and maintained, the Premises
and Project Improvements in good working repair, order and condition in accordance with
the Hotel Operating Standard;
9.1.1.2. Promptly make, or cause to be made, all necessary repairs, interior
and exterior, structural and non-structural, foreseen as well as unforeseen, to the Premises
and the Project Improvements to keep them clean and in a condition such that the Hotel
Project Improvements may be operated in accordance with the Hotel Operating Standard
and in compliance with all applicable Governmental Rules; and
9.1.1.3. Perform all alterations, upgrades, improvements, renovations or
refurbishments to the Premises and the Hotel Project Improvements necessary to keep
them in a condition no less than that required by the Hotel Operating Standard, including
any capital expenditures necessary to accomplish same.
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This Section 9.1 shall not apply to any damage or destruction by fire or other Casualty
within the scope of Section 10.4 in the event Tenant is entitled to, and timely makes the
election permitted under Section 10.4 to, terminate this Ground Lease.
9.1.2. Standards Required for Maintenance and Repair Work. The necessity
for and adequacy of Maintenance and Repair Work pursuant to Section 9. 1.1 shall be measured by
the Hotel Operating Standard (except in the circumstances in which a non -hotel use is permitted
pursuant to Section 5.10 or 12.9 or as expressly stated in Section 9.1.1), provided that in all
circumstances Tenant shall perform, or cause to be performed, all Maintenance and Repair Work
in accordance with ARTICLE 7 and ARTICLE 8.
9.1.3. No Services Provided by Landlord; Tenant's Sole Responsibility.
Landlord shall not be required to furnish any services or facilities or to perform any maintenance,
repair or alterations in or to the Premises or the Hotel Project Improvements. Tenant hereby
assumes the full and sole responsibility for the condition, operation, security, repair, replacement,
maintenance and management of the Premises and the Hotel Project Improvements throughout the
Lease Term.
Section 9.2. Utilities.
9.2.1. Utility Costs. Landlord shall not be obligated to furnish or pay for any
utilities for the Hotel Project Improvements. Tenant shall cause the necessary mains, conduits and
other facilities to be provided and maintained (from and within the property lines of the Premises
and beyond to the connection with the supplying utility in the streets immediately adjacent to the
Premises) to supply water, gas, telephone, electricity, chilled water, steam and other utility
services in accordance with the Hotel Operating Standard, and Tenant shall, at Tenant's sole cost
and expense, subject to the obligations of the applicable utility provider, maintain and repair all
water pipes, conduits, electric lines, gas pipes, steam pipes and other transmission facilities in, on
or servicing the Project Improvements during the Lease Term, provided that to the extent the same
are not located in or on the Premises, the obligation of Tenant shall be only to maintain such pipes,
conduits, lines or other facilities to the connection points located in the streets immediately
adjacent to the Premises. Tenant shall pay, or cause to be paid, for all water used in the Hotel
Project Improvements and all rents or charges imposed for water used, and for any sewage charge
or assessment, whether imposed by meter or otherwise. Tenant shall comply with all water
conservation measures required by applicable Governmental Rule. Tenant shall also pay, or cause
to be paid, for all gas, electricity, fuel and other utilities used or consumed to heat, cool, light,
illuminate or otherwise power the Hotel Project Improvements and outside lighting and signs, if
any, for the Hotel Project Improvements on or surrounding the Hotel Project Improvements
(excluding costs of municipal street lighting) or otherwise delivered thereto. No interruption or
malfunction of any utility services shall constitute an eviction or disturbance of Tenant's
possession of the Premises or a breach of the covenant of quiet enjoyment, and no such
interruption or malfunction shall result in any abatement or reduction in the Rentals.
9.2.2. Utility Upgrade and Extension Costs. Tenant shall cause the necessary
mains, conduits and other facilities to be provided and maintained (from and within the property
lines of the Premises and beyond to the connection with the supplying utility in the streets
immediately adjacent to the Premises) to supply any additional volume or type of utility services
50
required in connection with Additional Work or otherwise, and Tenant shall, at its sole cost and
expense, subject to the obligations of the applicable utility provider, maintain and repair such
additional or other utility service facilities in, on or servicing only the Hotel Project Improvements
during the Lease Term, provided that to the extent the same are not located in or on the Premises,
the obligation of Tenant shall be only to maintain such pipes, conduits, lines or other facilities to
the connection points located in the streets immediately adjacent to the Hotel Project
Improvements. Tenant shall pay, or cause to be paid, rents, charges and fees imposed for use of
such additional volume or type of utility services. "Utility Upgrade and Extension Costs" shall
mean the total of all costs, expenses, rents, charges and fees arising under this Section 9.2.2. No
interruption or malfunction of any additional volume or type of utility services shall constitute an
eviction or disturbance of Tenant's possession of the Premises or a breach of the covenant of quiet
enjoyment, and no such interruption or malfunction shall result in any abatement or reduction in
the Rentals.
Section 9.3. Tenant's Remedial Work, Notice of Environmental Events: Waste
Disposal.
9.3.1. Tenant's Remedial Work. Tenant shall be responsible for performing or
causing to be performed, and for paying the cost of performing, any and all Tenant's Remedial
Work with respect to the Premises or the Hotel Project Improvements. Prior to undertaking any
Tenant's Remedial Work, Tenant shall, at its sole cost and expense, obtain the Approval of the
Landlord Representative (such Approval not to be unreasonably withheld) of the steps Tenant
proposes to take with respect to any Tenant's Remedial Work and Tenant shall select, subject to
the Approval of the Landlord Representative (such Approval not to be unreasonably withheld and
being limited to the experience, expertise and financial capacity to perform the work in question
and pursuant to such evidence requested by, and delivered to, the Landlord Representative as
reasonably necessary to allow the Landlord Representative to make such determination), an
independent environmental consultant to oversee Tenant's Remedial Work.
9.3.2. Notice. During the Lease Term, Tenant shall give the Landlord
Representative immediate oral and follow-up Notice within seventy-two (72) hours of Tenant's
discovery (or the discovery by any agent, contractor or subcontractor of Tenant who so informs
Tenant) of any actual or threatened Environmental Event relating to the Premises or the Hotel
Project Improvements or the existence at, in, on or under the Premises or the Hotel Project
Improvements of any Contaminated Material in violation of Environmental Laws, and promptly
shall furnish to the Landlord Representative or Landlord's third -party environmental consultant if
so designated by Landlord (and, if requested by the Landlord Representative, in lieu of providing
same to the Landlord Representative) any and all reports and other information available to Tenant
concerning the matter.
9.3.3. Waste Disposal. All wastes produced at or from the Premises or the Hotel
Project Improvements, including construction wastes or any waste resulting from any Additional
Work shall be disposed of appropriately by Tenant based on its waste classification. Regulated
wastes, such as asbestos and industrial wastes shall be properly characterized, manifested and
disposed of at an authorized facility. Except to the extent provided in Section 3.5 and Section
9.3.4, Tenant shall be the generator of any construction -related wastes resulting from any
Construction Work in accordance with Environmental Laws.
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9.3.4. No Cost to Landlord. For the avoidance of doubt it is understood and
agreed that Landlord shall not be responsible for the cost of any of Tenant's Remedial Work.
Landlord shall be the generator with respect to all Contaminated Material existing as of the
Effective Date, as disclosed by the Phase I or otherwise existing prior to the Effective Date, and
shall be responsible for at its expense all such Contaminated Material on the Premises and for all
Contaminated Material introduced by Landlord or its agents or contractors, or resulting for any
Environmental Event caused by Landlord or its agents or contractors. In the event Tenant
discovers any material amount of Contaminated Materials in the course of its construction of the
Project Improvements that are not disclosed by the Phase I, Tenant shall have the right, within four
(4) months of the Commencement Date, to terminate this Ground Lease upon Notice thereof to
Landlord. In the event of such termination, Tenant shall raze and remove any Project
Improvements and restore the Premises to a buildable condition.
ARTICLE 10.
CASUALTY DAMAGE
Section 10.1. Damage or Destruction. If at any time during the Lease Term, the Project
Improvements or any part thereof shall be damaged or destroyed by any Casualty, then Tenant
shall immediately secure or cause to be secured the area of damage or destruction to safeguard
against injury to Persons or Property and, promptly thereafter, remediate any hazard and restore
the Premises and the Project Improvements thereon to a presentable condition whether by repair or
by demolition, removal of debris and screening from public view. Tenant shall, to the extent
allowed by applicable Governmental Rules, promptly commence and thereafter proceed with
reasonable diligence (subject to a reasonable time allowance for the purpose of adjusting the
insurance loss and subject to Excusable Tenant Delay) to repair, restore, replace or rebuild the
Hotel Project Improvements as nearly as practicable to a condition substantially equivalent to that
existing immediately prior to such damage or destruction, in accordance with ARTICLE 8 and
other applicable provisions of this Ground Lease, subject, however, to the requirements of
ARTICLE 7 and Tenant's option to terminate this Ground Lease and to raze the Hotel Project
Improvements as set forth in Section 10.4. Such repair, restoration, replacement or rebuilding,
including temporary repairs for the protection of other Property pending the completion of any
such work, remediation of hazards and restoration of the Premises and the Hotel Project
Improvements to a presentable condition or any demolition and debris removal required are
sometimes referred to in this ARTICLE 10 as the "Casualty Repair Work".
Section 10.2. Insurance Proceeds.
10.2.1. Requirements for Disbursement. Insurance Proceeds shall be paid and
delivered to the Persons specified in Section 7.5. Except as provided in Section 10.2.3 and Section
10.4.3, Insurance Proceeds delivered to the Insurance Trustee shall be applied to the payment of
the costs of the Casualty Repair Work and shall be paid out to or for the account of Tenant from
time to time as such Casualty Repair Work progresses. The Insurance Trustee shall make such
payments or disbursements of such Insurance Proceeds upon the request from Tenant when
accompanied by a certificate dated not more than ten (10) Business Days prior to such request,
signed by a Responsible Officer of Tenant, and, to the extent an architect is reasonably required to
be retained with respect to the nature of the Casualty Repair Work being performed, by a Qualified
52
Design Professional in charge of the Casualty Repair Work selected by Tenant, setting forth the
following:
10.2.1.1. That the sum then requested either has been paid by Tenant or is due
to contractors, subcontractors, materialmen, architects, engineers or other Persons who
have rendered services or furnished materials in connection with the Casualty Repair
Work, giving a reasonably detailed description of the services and materials and the several
amounts so paid or due; and
10.2.1.2. That except for the amount stated in such certificate to be due (or
except for statutory or contractual retainage not yet due and payable), there is no
outstanding indebtedness for such Casualty Repair Work known to the Persons signing
such certificate which is then due to Persons being paid, after due inquiry.
Insurance Proceeds paid or disbursed to the Tenant, whether from the Insurance Trustee,
the issuers of any insurance policies or otherwise shall be held by the Tenant in trust for the
purposes of paying the cost of the Casualty Repair Work and shall be applied by Tenant to
such Casualty Repair Work or otherwise in accordance with the terms of this Section 10.2.
10.2.2. Disbursements for Work Performed. Upon compliance with Section
10.2.1, the Insurance Trustee shall, out of the Insurance Proceeds and the Casualty Shortfall
Funding, pay or cause to be paid to Tenant or to the Persons named in the certificate the respective
amounts stated therein to have been paid by Tenant or to be due to such Persons, as the case may
be. The distribution of funds out of the Insurance Proceeds for Casualty Repair Work shall not
constitute or be deemed to constitute (i) an approval or acceptance by the Landlord of the relevant
Casualty Repair Work or (ii) a representation by the Landlord to the Tenant or any other Person
against any deficiency or defects in such Casualty Repair Work or against any breach of contract.
10.2.3. Disbursements of Excess Proceeds. If the Insurance Proceeds (and other
funds, if any, including the Casualty Shortfall Funding) received by the Insurance Trustee shall
exceed the entire cost of the Casualty Repair Work, the Insurance Trustee shall pay the amount of
any such excess proceeds to Tenant, but only after Landlord has been furnished with reasonably
satisfactory evidence that all Casualty Repair Work has been completed and that no Mechanics'
Liens exist or may arise in connection with the Casualty Repair Work and after all Rentals then
due hereunder have been paid and after Tenant Defaults hereunder have been cured and provided
no uncured Potential Tenant Default under this Ground Lease of which Landlord has delivered
Notice to Tenant shall then exist and for which Tenant has not provided Landlord with assurances
reasonably acceptable to Landlord that such Potential Tenant Default will be cured within the
applicable cure period.
10.2.4. No Oblization of Landlord. Under no circumstances shall Landlord be
obligated to make any payment, disbursement or contribution toward the cost of the Casualty
Repair Work or the fees and costs of the Insurance Trustee (which fees and costs, if any, may be
deducted by the Insurance Trustee from the Insurance Proceeds).
10.2.5. Insufficient Funds; Payment by Tenant. In the event of a Casualty for
which the Insurance Proceeds are to be distributed to the Insurance Trustee pursuant to Section 7.5,
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within five (5) Business Days after the first distribution of any Insurance Proceeds to the Insurance
Trustee in accordance with the terms hereof and following the earlier to occur of (i) final
settlement of Tenant's insurance claim related to such Casualty or (ii) the entry of a final
non -appealable judgment disposing of Tenant's insurance claim related to such Casualty, Tenant
shall deposit with the Insurance Trustee an amount sufficient to cover any Casualty Shortfall
Funding. Without limiting the Insurance Trustee's obligations under Section 10.2.2, as Casualty
Repair Work progresses during the Lease Term, Tenant shall be obligated to pay for all costs and
expenses of any such Casualty Repair Work that are not covered by Insurance Proceeds or for
which Insurance Proceeds are inadequate.
Section 10.3. Non -Abatement of Rent. Except as specifically provided in Section 10.4,
Tenant shall not be entitled to any abatement, allowance, reduction or suspension of the Rentals as
a result of or in connection with the partial or total destruction of the Hotel Project Improvements
or any part thereof. Notwithstanding anything herein or in applicable Governmental Rule to the
contrary, no such damage or destruction shall affect in any way the obligation of Tenant to pay the
Rentals and other charges herein reserved, or release Tenant from any obligations imposed upon
Tenant hereunder except as specifically provided in Section 10.4 and further, except for Tenant's
obligations under Section 5.4.1 during the period of any Casualty Repair Work in accordance with
the terms hereof. Tenant hereby waives the provisions of any Governmental Rule now or hereafter
in effect to the contrary.
Section 10.4. Option to Terminate.
10.4.1. Damage or Destruction of Substantially All of the Hotel Proiect
Improvements. In the event that (a) Substantially All of the Hotel Project Improvements shall be
damaged or destroyed by Casualty at any time during the Lease Term, (b) any portion of the Hotel
Project Improvements shall be damaged or destroyed by Casualty at any time during the Lease
Term and the Governmental Rules then applicable to the Premises do not permit the restoration of
the Hotel Project Improvements so as to complete a tenantable building and an economically
viable convention center hotel, or (c) provided that Tenant has maintained all insurance required
by this Ground Lease and the damage or destruction was not caused by Tenant and occurs during
the final five (5) years of the Lease Term, there exists a Casualty Shortfall Funding which exceeds
$5,000,000.00, then Tenant may, at its option (exercised with reasonable promptness in the
circumstances, but in all events within one hundred twenty (120) calendar days after such
Casualty), terminate this Ground Lease and the other Project Documents by satisfying each of the
following which shall be conditions precedent to the effectiveness of any such termination (x)
serving Notice upon Landlord within such period setting forth Tenant's election to terminate this
Ground Lease and all other Project Documents as a result of such Casualty as of the end of the
calendar month in which such Notice is received by Landlord, and (y) paying to Landlord,
concurrently with the service of such Notice, all the Rentals (to the extent not being deferred) and
other payments, including Impositions, which would otherwise have been payable up to the
effective date of such termination. Upon the service of such Notice and the making of such
payments within the period aforesaid, this Ground Lease (except Section 10.4.3) and all other
Project Documents shall cease as of the end of the calendar month in which such Notice is received
by Landlord with the same force and effect as if such date were the date originally fixed as the
Lease Expiration Date. At Landlord's option, Landlord shall have the right to either (i) upon
delivering Notice to Tenant of its request to have Tenant perform same, require Tenant to raze and
54
remove the Hotel Project Improvements in a manner consistent with the provisions of Section 8.4
hereunder, in which case Tenant shall be obligated to perform same or (ii) Landlord shall be
entitled to raze and remove the Hotel Project Improvements. Failure to terminate this Ground
Lease within said one hundred twenty (120) calendar day period shall constitute an election by
Tenant to keep this Ground Lease in force. If Tenant elects to so keep this Ground Lease in full
force and effect, Tenant shall commence to construct, and prosecute the completion of, new
replacement Improvements in accordance with the provisions of ARTICLE 7 and Section 8. 1,
Section 8.2, Section 8.4 and Section 8.6.
10.4.2. Payment of Rent Upon Termination. With respect to any Rentals or
other sums payable hereunder or pursuant hereto which are to be paid to Landlord in the event of
any termination of this Ground Lease as provided in Section 10.4.1, but which are not then capable
of ascertainment, estimated amounts of such items shall be included in the aforesaid payment and
Landlord and Tenant shall make adjustments to correct any error in such estimate as and when the
same become determined.
10.4.3. Application of Insurance Proceeds, Excess Proceeds. In the event this
Ground Lease shall be terminated or the Hotel Project Improvements shall be razed pursuant to the
provisions of Section 10.4.1, Insurance Proceeds payable with respect to demolition or debris
removal shall be used for that purpose and, until so used for that purpose, shall be held in trust by
the Insurance Trustee and none of the excess Insurance Proceeds, if any, payable in respect of such
damage or destruction (the "Excess Proceeds") shall be payable to Landlord but shall be held by
the Insurance Trustee and paid to, and shall be the property of, Tenant, after (a) paying to Tenant or
Landlord, as applicable in accordance with Section 10.4.1 above, the costs of razing the Hotel
Project Improvements and clearing the Premises of debris in accordance with this Ground Lease
and all Governmental Rules, (b) paying any of the outstanding Rentals that are not then being
deferred (and establishing a reserve to pay any that cannot then be determined) and (c) causing all
Mechanics' Liens arising out of work performed with respect to the Premises or the Hotel Project
Improvements to be released from the Premises and from any interest of Landlord hereunder,
subject to Tenant's right to dispute such Liens pursuant to Section 8.6.
10.4.4. Definition of Substantially All of the Hotel Project Improvements. For
the purposes of this Section 10.4, "Substantially All of the Hotel Project Improvements" shall
be deemed to be damaged or destroyed by Casualty if the cost of repairing or restoring the
damaged or destroyed portion of the Hotel Project Improvements for the Permitted Uses for which
the Hotel Project Improvements are being used immediately prior to such Casualty will exceed (i)
if such damage or destruction occurs prior to the final five (5) Lease Years of the Lease Term,
twenty-five percent (25%) of the fair market value of all of the Hotel Project Improvements
immediately prior to such Casualty or (ii) if such damage or destruction occurs during the final five
(5) Lease Years of the Lease Term, the cost of razing the Hotel Project Improvements as required
upon a termination of this Ground Lease pursuant to this Section 10.4.
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ARTICLE 11.
CONDEMNATION
Section 11.1. Condemnation of All or Substantially All.
11.1.1. Condemnation of Substantially All of the Premises and the Proiect
Improvements. If at any time during the Lease Term, title to the whole of the Premises and the
Hotel Project Improvements or Substantially All of the Premises and Project Improvements shall
be taken in a Condemnation Action (or conveyed in lieu of any such Condemnation Action), other
than for a temporary use or occupancy that is for one (1) year or less in the aggregate, this Ground
Lease (except as to Section 11. 1.2) and all other Project Documents shall terminate and expire on
the date of such taking (or conveyance), and all the Rentals that are not then being deferred and
other payments, including Impositions, shall be paid to Landlord through the date of such taking
(or conveyance). With respect to any Rentals or other sums payable hereunder or pursuant hereto
which are to be paid to Landlord in the event of such termination, but which are not then capable of
ascertainment, reasonable estimates of such items shall be made and such estimates shall be
included in the aforesaid payment, and Landlord and Tenant shall make adjustments to correct any
error in such estimates as and when the same become determined. At Landlord's option, Landlord
shall have the right to either (i) upon delivering Notice to Tenant of its request to have Tenant
perform same, require Tenant to raze and remove the Hotel Project Improvements in a manner
consistent with the provisions of Section 8.4 hereunder, in which case Tenant shall be obligated to
perform same or (ii) Landlord shall be entitled to raze and remove the Hotel Project
Improvements.
11.1.2. Condemnation Award. In the event of a Condemnation Action relating to
the taking of the whole of the Premises and the Hotel Project Improvements or Substantially All of
the Premises and the Hotel Project Improvements, all of the Condemnation Award shall be paid to
the Condemnation Trustee and distributed as follows in the following order of priority: (a) paying
to Landlord or Tenant, as applicable and based on who performs same in accordance with the
terms of this Ground Lease, the costs of razing the Hotel Project Improvements and clearing the
Premises of debris in accordance with this Ground Lease in the event that this Ground Lease is
terminated pursuant to the terms hereof; (b) paying any outstanding Rentals that are not then being
deferred (and establishing a reserve to pay any that cannot then be determined), (c) causing all
Mechanics' Liens caused by Tenant or arising out of work performed with respect to the Premises
or the Hotel Project Improvements by, or in satisfaction of any obligation of, Tenant hereunder to
be released from the Premises and from any interest of Landlord hereunder, subject to Tenant's
right to dispute such Liens pursuant to Section 8.6, (d) paying to the Leasehold Mortgagee, if any,
the balance due under the Leasehold Mortgage, (e) paying Landlord for its fee simple interest in
the Premises and its residual interest in and to the Hotel Project Improvements and (f) paying any
remainder of the Condemnation Award to Tenant. Landlord and Tenant agree that the initial
Condemnation Trustee and any subsequent Condemnation Trustees shall not be removed or
replaced unless and until (i) Landlord receives Notice of such removal and replacement and the
identity of the successor Condemnation Trustee at least thirty (30) calendar days prior to the
effective date of any such removal or replacement of the then existing Condemnation Trustee and
(ii) prior to the effective date of any such removal or replacement of the Condemnation Trustee,
the successor Condemnation Trustee shall deliver to Landlord the Notice and agreement required
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in the definition of Condemnation Trustee. Tenant shall pay all of the fees, costs and expenses of
the Person (other than Landlord) from time to time serving as Condemnation Trustee.
11.1.3. Definitions of Substantially All of the Premises and the Hotel Proemt
Improvements and Condemnation Proceedings. For purposes of this ARTICLE 11,
"Substantially All of the Premises and the Hotel Project Improvements" shall be deemed to have
been taken if, by reason of the taking of title to the Premises and the Hotel Project Improvements
or any portion thereof by Condemnation Action (whether a permanent taking or a temporary
taking that is for one (1) year or more in the aggregate) in Landlord's and Tenant's reasonable
business judgment (i) the untaken portion cannot (taking into account the amount of the
Condemnation Award available for restoration) be practically and profitably used or converted,
due to economic conditions, physical constraints, Governmental Rules, provisions or requirements
of any insurance policy required to be maintained by Tenant, or the terms, conditions, covenants
and restrictions in any documents or instruments of record or this Ground Lease or any other
Project Documents, for use for the purposes for which the Premises and the Hotel Project
Improvements are being used immediately prior to such taking or (ii) the portion of the Hotel
Project Improvements taken by Condemnation Actions exceeds twenty-five percent (25%) of the
fair market value of the entire Project Improvements immediately prior to the Condemnation
Action.
Section 11.2. Condemnation of Part. In the event of condemnation of less than the
whole of the Premises and the Hotel Project Improvements or less than Substantially All of the
Premises and the Hotel Project Improvements, the Lease Term shall not be reduced or affected in
any way, and the following provisions shall apply:
11.2.1. Payment of Condemnation Award. The Condemnation Award
(including all compensation for the damages, if any, to the parts of the Premises and the Hotel
Project Improvements not so taken, that is, damages to the remainder) shall be paid to the
Condemnation Trustee as follows: (a) paying the costs of repairing, restoring or replacing the
remaining portion of the Premises and the Hotel Project Improvements to the condition required
by Section 11.2.2 below and causing all Mechanics' Liens arising out of work performed with
respect to the Premises or the Hotel Project Improvements by, or in satisfaction of any obligation
of, Tenant hereunder to be released from the Premises and from any interest of Landlord
hereunder, subject to Tenant's right to dispute such Liens pursuant to Section 8.6 above; (b) paying
any outstanding Rentals that are not then being deferred (and establishing a reserve to pay any that
cannot then be determined); (c) paying to the Leasehold Mortgagee the portion of the Debt owed to
it as proportionate to value of the Premises so taken; (d) paying Landlord for its fee simple residual
interest in the portion of the Premises so taken and its residual interest in and to the Hotel Project
Improvements so taken; and (e) paying any remainder of the Condemnation Award to Leasehold
Mortgagee or Tenant, as provided in the Leasehold Mortgage..
11.2.2. Restoration of the Premises and Project Improvements. Following
such Condemnation Action and the Condemnation Trustee's receipt of the portion of the
Condemnation Award required to be paid in order for the Governmental Authority undertaking
such Condemnation Action to obtain possession of the Premises in question, Tenant shall, subject
to the requirements of ARTICLE 7, with reasonable diligence (subject to Excusable Tenant
Delay), commence and thereafter proceed to repair, alter and restore the remaining part of the
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Premises and the Hotel Project Improvements to substantially their former condition to the extent
that the same may be feasible and so as to constitute a complete hotel complex usable for its
intended purposes to the extent practicable and permitted by applicable Governmental Rules.
Such repairs, alterations or restoration, including temporary repairs, for the protection of other
Property pending the completion of any part thereof, are sometimes referred to in this ARTICLE
11 as the "Condemnation Work".
11.2.3. Intentionally Omitted.
11.2.4. Rentals. Subject to Section 11.3 below, Tenant shall be entitled to a fair
and equitable abatement of Basic Rentals in the event of a Condemnation Action relating to less
than the whole of the Leased Premises and the Hotel Project Improvements or less than
Substantially All of the Premises and the Hotel Project Improvements, which abatement shall (i)
be calculated based solely on the square footage of the Leased Premises taken by such
Condemnation Action and (ii) be only to the extent that the annual fair market rental value of the
remaining portion of the Leased Premises as of the date of the Condemnation Action is less than
the annual Basic Rentals then payable hereunder.
Section 11.3. Temporary Taking. If the whole or any part of the Premises, the Hotel
Project Improvements or the Leasehold Estate shall be taken in Condemnation Action or by any
right of eminent domain for a temporary use or occupancy of one (1) year or less, the Lease Term
shall not be reduced or affected in any way, and Tenant shall continue to pay in full the Rentals,
without reduction or abatement, in the manner and at the times herein specified. Except to the
extent that Tenant is prevented from doing so pursuant to the terms of the order of the condemning
authority or because it is not possible as a result of such taking, Tenant shall continue to perform
and observe all of the other covenants, agreements, terms and provisions of this Ground Lease as
though such taking had not occurred. In the event of any such temporary taking, Tenant shall be
entitled to receive the entire amount of any Condemnation Award made for such taking whether
such award is paid by way of damages, rent or otherwise (and such Condemnation Award shall be
included in gross revenues to the extent the same constitutes compensation for loss of items
included in gross revenues), provided that if the period of temporary use or occupancy shall extend
beyond the Lease Expiration Date, the Leasehold Mortgagee, if any, or if none, Tenant, shall be
entitled to receive that portion of any Condemnation Award (whether paid by way of damages,
rent or otherwise), allocable to the period of time from the date of such condemnation to the Lease
Expiration Date, and Landlord shall be entitled to receive the balance of such Condemnation
Award.
Section 11.4. Condemnation Proceedings. Tenant, Landlord and to the extent permitted
by Governmental Rule, the Leasehold Mortgagee each shall have the right, at its own expense, to
appear in any Condemnation Action and to participate in any and all hearings, trials and appeals
therein. In addition, notwithstanding anything to the contrary contained in this Ground Lease,
Tenant shall have the right to claim, prove and receive in the Condemnation Action or Proceeding
any award allowed for the Tenant's separate Property or damage to or relocation costs of Tenant's
business.
Section 11.5. Notice of Condemnation. In the event Landlord or Tenant shall receive
notice of any proposed or pending Condemnation Action affecting the Premises or the Project
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Improvements or any portion thereof, the Party receiving such notice shall promptly notify the
other Party hereto.
Section 11.6. Condemnation by the City. The provisions of this ARTICLE 11 for the
allocation of any Condemnation Awards are not intended to be, and shall not be construed or
interpreted as, any limitation on or liquidation of any claims or damages (as to either amount or
type of damages) of Tenant against the City in the event of a condemnation by the City of any
portion or all of the Leasehold Estate.
ARTICLE 12.
ASSIGNMENT; SUBLETTING
Section 12.1. Assignments of Tenant's Interest; Subleasing.
12.1.1. Intentionally Omitted.
12.1.2. Transfers or Dispositions by Tenant. Except as otherwise permitted by
this ARTICLE 12 and in ARTICLE 14, Tenant may not (and Tenant agrees that it shall not),
voluntarily, involuntarily, by operation of law or otherwise, sell, assign, transfer, sublease, license
or otherwise dispose of this Ground Lease, or any interest herein or hereunder or therein or
thereunder, or mortgage, pledge, encumber or otherwise hypothecate this Ground Lease, or any
interest herein or hereunder or therein or thereunder or otherwise hypothecate, sell, license or in
any other manner transfer or convey any right, title, interest or estate in or under this Ground
Lease, or to any portion or all of the Premises or the Hotel Project Improvements, without first
obtaining the Approval of Landlord pursuant to this ARTICLE 12.
Section 12.2. Assignment; Subletting; Control of Interests in Tenant.
12.2.1. Assignment and Subletting. The occurrence of any Transfer with respect
to the Project Improvements, the Premises or this Ground Lease without the prior written Approval
of Landlord shall not be permitted hereunder and shall constitute a Tenant Default, unless such
event is a Permitted Transfer. Notwithstanding any provision in this Ground Lease to the contrary,
no Transfer to a Competitor or to a Blocked Person shall be proposed by Tenant.
12.2.2. Permitted Transfers. Notwithstanding anything to the contrary contained
herein, Landlord Approval to the following (each a "Permitted Transfer"), shall be deemed to
have been obtained:
12.2.2.1. Any room or banquet rental or any other booking for customary
hotel purposes;
12.2.2.2. Any Space Lease meeting the requirements of Section 12.6; and
12.2.2.3. The Leasehold Mortgagee or Leasehold Mortgagee Designee
pursuant to a Foreclosure Event, regardless of whether any uncured Tenant Default or
Potential Tenant Default shall then exist.
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12.2.3. Standards for Landlord Approval of Transfers. Provided the following
requirements are satisfied, Landlord will not unreasonably withhold, delay or condition its
Approval to an Asset Transfer or Change in Control:
12.2.3.1. Landlord must first receive a written request for its Approval to such
Transfer, together with reasonably detailed information concerning the type of Transfer,
the interests affected by the Transfer, the identity, reputation and financial condition of the
proposed transferee, to the extent generally available, the qualification or lack of
qualification of the proposed transferee as a "sophisticated investor", and such other
information related to the Transfer and the transferee as Landlord may reasonably request
to the extent such information is generally available. Any confidential financial
information will be delivered to Landlord's certified public accountant on terms mutually
agreed to prevent such confidential information from becoming publicly available;
12.2.3.2. No uncured Tenant Default shall exist;
12.2.3.3. No Potential Tenant Default under this Ground Lease of which
Landlord has given Tenant Notice shall exist and for which Tenant has not provided
Landlord with assurances reasonably acceptable to Landlord that such Potential Tenant
Default will be cured within the applicable cure period;
12.2.3.4. The Person who will become the Controlling Person of Tenant or
succeed to any of Tenant's rights or obligations under any of the Project Documents as a
result of the Transfer is a Qualified Investor and either such transferee Tenant or such
Controlling Person or a guarantor of this Lease on behalf of such Tenant meets the Net
Worth Test, and Tenant shall have provided reasonable written evidence to the Landlord at
least twenty (20) calendar days prior to such Transfer which evidence is sufficiently
detailed so that Landlord will be able to determine that all of the foregoing requirements
have been or will be satisfied by the date of the Transfer; and
12.2.3.5. All of the requirements of Section 12.3 and Section 12.5 are
satisfied.
Section 12.3. Information and Assurances Required; Review by Landlord.
12.3.1. Information. Landlord must first receive a written request for its Approval
to any proposed Transfer requiring Landlord's Approval at least twenty (20) Business Days prior
to any such proposed Transfer, together with the following information and assurances:
12.3.1.1. The name and address of the proposed transferee (and, if not an
individual, reasonable information concerning its legal structure, organization,
qualification and licensing);
12.3.1.2. Provision to Landlord's certified public accountant ("CPA"), on
terms mutually agreed to prevent such information, if confidential, from becoming
publicly available, of detailed financial information regarding the proposed transferee or
the Person controlling such transferee, including a copy of its most recent audited balance
sheet (or if no such audited balance sheet is available, then a balance sheet certified by the
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appropriate officer of such transferee) and income statement, and those for its prior two (2)
fiscal years, credit references and a report from a recognized credit reporting service,
sufficient to allow such CPA to issue an opinion to Landlord regarding the financial
condition of the proposed transferee, the qualification or lack of qualification of the
proposed transferee as a "sophisticated investor", and any other opinions reasonably
requested by Landlord;
12.3.1.3. To the extent reasonably available, the identity, background and
experience of all directors, all officers at the senior vice president level and above, any
controlling shareholder, and in the case of a partnership, all general partners and any
limited partner owning more than a twenty percent (20%) interest and not otherwise
confidential (and, if the owners of the entity that is to be Tenant are themselves entities,
that information concerning such owners and their partners, officers, etc.), and the senior
operational officer, agent or employee to be in charge of the Project Improvements;
provided, however, that such provisions shall not apply to any publicly traded company or
regulated pension fund; provided further that notwithstanding any provision hereof to the
contrary, under no circumstances shall any Controlling Person be considered
"confidential," and such Controlling Person must be disclosed to Landlord;
12.3.1.4. To the extent reasonably available, information concerning the
nature and locations of businesses conducted by the proposed transferee and its Affiliates;
12.3.1.5. To the extent actually known by Tenant, any information regarding
any criminal record of the proposed transferee; and
12.3.1.6. Except as otherwise provided herein, such other information as
Landlord may reasonably request, which request must be made within ten (10) calendar
days following the receipt of the applicable information pursuant to clauses (a) through (e)
above, to assist Landlord in evaluating the qualifications of the proposed transferee in
connection with the information received pursuant to clauses (a) through (e) above.
12.3.2. Independent Investization. Landlord may conduct its own independent
investigation of the proposed transferee and Tenant shall cooperate reasonably with Landlord in
the conduct of such investigation (any such independent investigation to be completed within the
herein below described twenty (20) Business Day period for Landlord's review of the proposed
assignment). In particular, Landlord shall have the opportunity to investigate and consider the
information acquired hereunder, whether or not it has been provided by Tenant.
12.3.3. Consent. Following submission by Tenant to Landlord of the information
required in Section 12.2.3(a), Landlord shall, within ten (10) Business Days following submission
of such information to Landlord either grant its Approval to such proposed Transfer or refuse its
Approval thereto by providing a written explanation setting forth in reasonable detail the basis for
such refusal, and in the event of any request by Landlord for additional information from Tenant,
the date for Landlord to grant or refuse its Approval shall be the date which is ten (10) Business
Days after the date of receipt by Landlord of any such additional information requested by
Landlord. If Landlord has not refused or granted its Approval within the time period prescribed in
the foregoing sentence, Landlord shall be deemed to have refused its Approval; provided that any
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such deemed disapproval shall in no event release Landlord from any applicable reasonable
Approval obligation. In connection with any request for Landlord's, as applicable, Approval
under this ARTICLE 12, and as a condition to Landlord's, as applicable, obligation to Approval,
Tenant shall pay to Landlord all reasonable costs and expenses incurred by Landlord in reviewing
Tenant's request for Approval, whether or not Landlord grants such Approval
12.3.4. Delivery of Assignment and Assumption Agreement. Prior to the
effective date of any permitted Asset Transfer and as a condition to Landlord's Approval,
Landlord shall have received (a) a duplicate original of the Transfer documents duly executed by
the transferee and (b) an instrument of assignment and assumption substantially in the form of the
Assignment and Assumption Agreement attached hereto as Exhibit E or if not substantially in such
form, then in a form approved by the Landlord (the "Assignment and Assumption Agreement").
Upon Landlord's receipt of a properly executed and completed Assignment and Assumption
Agreement and Tenant's satisfaction of all of the requirements of this Ground Lease with respect
to the Asset Transfer described in such Assignment and Assumption Agreement, the assignor
named in such Assignment and Assumption Agreement shall have no further liability for any of
the duties and obligations of Tenant under the Project Documents arising on and after such date,
but the foregoing shall not release such Person from liability for any acts or omissions of Tenant
that occurred prior to such date.
Section 12.4. No Waiver of Rights by Landlord. Landlord's Approval to any proposed
Transfer for which Landlord's Approval is required shall not be a waiver of any right to object to
further or future proposed Transfers, and Landlord's Approval to each such successive proposed
Transfer for which Landlord's Approval is required must be first obtained in writing from
Landlord (unless such Transfer is otherwise excepted from the requirement of Landlord's
Approval as provided in ARTICLE 14).
Section 12.5. Conditions to Effectiveness of Any Transfer. Any proposed Transfer to
which Landlord's Approval is required by this ARTICLE 12 shall be void and shall confer no right
upon the proposed transferee unless and until (a) such Approval of Landlord is obtained or deemed
to have been obtained, (b) with respect to any Asset Transfer, the transferee or sublessee shall have
assumed in writing each and every one of the terms, covenants and provisions of Tenant contained
in this Ground Lease, all other Transaction Documents (to the extent Tenant is a party thereto)
with respect to the period from and after the Transfer, by an Assignment and Assumption
Agreement delivered to Landlord, (c) any then -existing Tenant Default is fully cured, (d) any
Potential Tenant Default under this Ground Lease of which Landlord has given Notice to Tenant is
either fully cured or Landlord receives reasonably acceptable assurances that such Potential
Tenant Default will be cured within the applicable cure period, and (e) all Transfer requirements
set forth in the Operating Agreement have been met. Except as provided in Section 12.3.4, any
such Transfer consented to by Landlord shall not constitute a release of any existing liability under
this Ground Lease or any other Project Document, unless such Approval specifically includes an
express written release by Landlord, which release the Landlord has no obligation to provide.
Section 12.6. Space Leases. Nothing contained in this Ground Lease shall prevent or
restrict Tenant from subletting portions of the Premises or the Project Improvements, or both, to
Space Tenants under Space Leases, in accordance with the Hotel Operating Standard and without
Landlord's Approval, provided that each such Space Lease shall be subject and subordinate to this
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Ground Lease and the Leasehold Mortgage and to the rights of Landlord hereunder and the rights
of the Leasehold Mortgagee thereunder, and shall expressly so state. Notwithstanding any such
subletting, Tenant shall at all times remain liable for the performance of all of the covenants and
agreements under this Ground Lease on Tenant's part to be so performed.
Section 12.7. Non -Disturbance of Space Leases. Concurrently with or at any time after
the execution of a Space Lease permitted under Section 12.6 above or Approved by Landlord
under the terms hereof upon request by Tenant, Landlord agrees to enter into, and to cause any
Mortgagee of the Leased Premises to enter into, a nondisturbance and attornment agreement (in
the form attached hereto as Exhibit B) with respect to each Space Lease promptly after receipt by
each thereof of a copy of such Space Lease; provided, however that, notwithstanding anything to
the contrary in Section 12.6, Landlord shall not be obligated to execute a non -disturbance and
attomment agreement with respect to any restaurant Space Lease unless (i) such Space Lease
satisfies all of the requirements set forth in of Section 12.6 above or (ii) Landlord has otherwise
Approved such Space Lease.
Section 12.8. Acceptance of Rent. If Tenant makes a Transfer in violation of the
provisions of this Ground Lease, Landlord may collect rent from any such transferee, Subtenant or
Space Tenant. Landlord may apply the net rent collected to payment of the Rentals due hereunder,
but no such Transfer or collection shall be deemed a waiver of any of the provisions of this
ARTICLE 12, an acceptance of the transferee or Subtenant or a release of Tenant from its
obligations under this Ground Lease.
Section 12.9. Transfers by Landlord. Subject to Section 14.10.3, Landlord may effect a
Landlord Transfer of its interest in the Premises or any part thereof or interest therein, and this
Ground Lease or any of the Project Documents at any time or from time to time to any Person (a
"Landlord Transferee"); provided, however, that such Landlord Transferee assumes all of
Landlord's future obligations hereunder or thereunder, as applicable, and provide Tenant with a
tax opinion that such Landlord Transfer will not affect tax exempt status of the Hotel Bonds or the
tax-exempt status of Tenant or Tenant's applicable Affiliate. Landlord shall give Notice to Tenant
advising Tenant of the name of any Landlord Transferee and whether or not the Landlord
Transferee has assumed Landlord's future obligations hereunder. Notwithstanding anything to the
contrary in this Ground Lease, including without limitation this Section 12.9, if Landlord transfers
its interest to any Person that is not a governmental or quasi -governmental body or a non-profit
entity affiliated with the City or the Convention Center, then: (a) all use restrictions (other than
compliance with applicable laws) and any obligation on the part of Tenant to continuously operate
will permanently cease and expire, and (b) all Landlord's Approvals will be limited as provided in
the definition of "Approval".
Section 12.10.Estoppel Certificate. Within ten (10) Business Days after receipt of a
Notice of request from the other Party, Tenant and Landlord agree to execute and deliver to each
other an estoppel certificate intended to be relied upon by Tenant, Landlord and any transferee or
assignee pursuant to a Permitted Transfer, a Landlord Transfer or a Transfer which has been
Approved by Landlord pursuant to the terms hereof, as the case may be, or the Leasehold
Mortgagee stating:
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12.10.1. Whether this Ground Lease and the other Project Documents are
unmodified and in full force and effect (or, if there have been modifications, that this Ground
Lease and the other Project Documents are in full force and effect as modified and stating the
modifications) (and, if so requested, whether the annexed copies of the Ground Lease and other
Project Documents are true, correct and complete copies thereof);
12.10.2. To the knowledge of Landlord or Tenant, as the case may be,
whether there are any defaults or potential defaults under the other Project Documents (and
specifying each such default or potential default as to which Landlord or Tenant, as the case may
be, has knowledge) or any Tenant Defaults or any Potential Tenant Defaults under this Ground
Lease (and specifying each such default or potential default as to which Landlord or Tenant, as the
case may be, has knowledge);
12.10.3. Landlord's or Tenant's current address, as the case may be, for
purposes of giving notice;
12.10.4. The date to which Rentals payable by the Tenant have been paid;
12.10.5. The date of the Lease Expiration Date; and
12.10.6. The date upon which the Effective Date, the Project Completion
Date and the commencement of the Operating Term occurred, respectively, if such events have
occurred as of the date of such estoppel certificate.
ARTICLE 13.
SPECIAL COVENANTS
Tenant hereby covenants and agrees, in addition to all other covenants and agreements
contained in this Ground Lease, as follows:
Section 13.1. Maintenance of Rights of Way. Easements and Licenses. Tenant will
maintain, preserve and renew all rights of way, easements, grants, privileges, licenses and
franchises reasonably necessary for the use of the Project Improvements from time to time. Tenant
will not, without the prior Approval of Landlord (or in the case of zoning variances only, the
Approval of the Landlord Representative), initiate, join in or consent to any zoning change,
variance, private restrictive covenant or other public or private restriction as to the use of the
Project Improvements or any portion thereof, or any declaration, plat or other document having the
effect of subjecting the Project Improvements to the condominium or cooperative form of
ownership without the Approval of Landlord. Tenant shall, however, comply with all zoning
ordinances and other public or private restrictions which legally relate to the use of the Project
Improvements.
Section 13.2. Compliance with Anti -Forfeiture Laws. Tenant will not commit, permit
or suffer to exist any act or omission affording any Governmental Authority the right of forfeiture
against the Project Improvements or any part thereof. Without limiting the generality of the
foregoing, the filing of formal charges or the commencement of any Action or Proceedings against
Tenant or all or any part of the Premises or the Project Improvements, under any Governmental
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Rule for which forfeiture of the Premises or the Project Improvements or any part thereof is a
potential result, shall, at the election of Landlord, constitute an event that Landlord may remedy
pursuant to Section 6.3.
Section 13.3. Governmental Authorizations. At all times during the Term, Tenant shall
obtain and maintain all Governmental Authorizations then necessary for the development, use and
occupancy of the Premises in accordance with the terms of this Ground Lease.
Section 13.4. Payment of Property Taxes, Insurance, and City Facilities Lease
Rentals. Tenant shall cause the Hotel Bond Indenture to include mechanisms for the pre -funding
and ongoing funding by Tenant of (i) Insurance premiums, and (ii) City Facilities Lease Rentals, as
follows:
(a) Pre -Funded Deposit. At initial issuance of the Hotel Bonds
("Closing"), Tenant shall deposit to the [Operating Fund] held by the Hotel Bond Trustee
an amount equal to the Pre -Funded Deposit Expenses Amount. The term "Pre -Funded
Deposit Expenses Amount" means the sum of (i) Insurance premiums for the first 24
months after Closing, which shall both be deposited into the [Pre -Funded Insurance
Account] of Operating Fund; and (ii) City Facilities Lease Rentals for the first full year in
which City Facilities Lease Rentals are due under the City Facilities Lease, which shall be
deposited to the Pre -Funded City Facilities Lease Rentals Account of the Operating Fund.
(b) Amounts on deposit in the Pre -Funded Insurance Account and
Pre -Funded City Facilities Lease Rentals Account of the Operating Fund shall be
transferred as follows:
(i) Pre -Funded Insurance Account. Amounts, if any, on deposit
in the Pre -Funded Insurance Account shall be disbursed directly to the appropriate
insurance providers so as to pay in a timely manner when due all required Insurance
premiums contemplated with respect to the Project.
(ii) Pre -Funded City Facilities Lease Rentals Account.
Amounts on deposit in the Pre -Funded City Facilities Lease Rentals Account shall
be transferred to the City for payment of Pre -Funded City Facilities Lease Rentals
Account when due under the City Facilities Lease.
(c) Ongoing Funding Requirements. The Hotel Bond Indenture shall
further provide that the Trustee shall, commencing with the 25th day of the first full month
after Initial Occupancy (except as otherwise provided below), and on the 25th day of each
month thereafter, apply receipts from the Operator as follows:
(i) For deposit to the Insurance Account held by the Hotel
Bond Trustee, the amount necessary to accumulate during the month during which
such Property Taxes and Insurance premiums are due, the level monthly
installments necessary to pay the annual Insurance premiums that will next become
due and payable on insurance policies which the Tenant is required to maintain
hereunder.
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(ii) For deposit to the City Facilities Lease Rentals Account
held by the Hotel Bond Trustee, commencing on January 25 of the year
immediately preceding the first year in which City Facilities Lease Rentals, if any,
will be due under the City Facilities Lease, and on the 25th day of each month
thereafter, the amount necessary to accumulate during the month during which such
City Facilities Lease Rentals, if any, are due, the level monthly installments
necessary to pay the annual City Facilities Lease Rentals that will next become due
under the City Facilities Lease.
ARTICLE 14.
LEASEHOLD MORTGAGES
Section 14.1. Tenant's Limited Right to Grant Liens.
14.1.1. Tenant's Right to Mortgage or Pledge. Tenant shall grant a Leasehold
Mortgage as security to or for the benefit of the Qualified Lender, provided, and on the condition
that, such Leasehold Mortgage shall cover and encumber the entirety of Tenant's interest in the
Leasehold Estate and Tenant's interest in the other Project Documents and the Operating
Agreement (to the extent then effective). In no event shall Landlord's fee interest in the Premises,
or any other Property of Landlord be used as security or collateral for any obligation or Debt of
Tenant or for the benefit of the Leasehold Mortgagee, and Landlord shall have no obligation to
subordinate all or any of its interests or rights in this Ground Lease or in any other Project
Documents or in the Premises.
14.1.2. Special Provisions Applicable to the Leasehold Mortgagee. On the
Effective Date, Tenant shall have delivered a Notice (a "Tenant's Notice of Project Financing")
to Landlord of the existence of the Leasehold Mortgage and designating such Person as the
Leasehold Mortgagee. To be effective for purposes of this Ground Lease and any other Project
Document, such Tenant's Notice of Project Financing must include the following:
14.1.2.1. The name and address of the Leasehold Mortgagee;
14.1.2.2. A conformed original or certified or photostatic copy of the
Leasehold Mortgage;
14.1.2.3. The stated maturity date of the Project Financing; and
14.1.2.4. A certification by Tenant to Landlord that (i) the Person designated
by Tenant as the Leasehold Mortgagee is the Qualified Lender, and (ii) the Leasehold
Mortgage included in Tenant's Notice of Permitted Project Financing secures the Project
Financing and no other Debt.
Landlord shall be entitled to rely on all information contained in the Tenant's Notice of
Project Financing for all purposes under this Ground Lease and the other Project
Documents.
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Section 14.2. Consent of Leasehold Mortmee Required. No voluntary cancellation
or surrender of this Ground Lease by Tenant prior to the expiration of the Lease Term shall be
effective as to the Leasehold Mortgagee unless Approved by such Leasehold Mortgagee. No
Leasehold Mortgagee shall be bound by any material modification of this Ground Lease unless
such modification is Approved by the Leasehold Mortgagee, which Approval shall not be
unreasonably withheld unless the modification adversely affects the value of the Leasehold
Mortgagee's collateral or the Leasehold Mortgagee's rights hereunder.
Section 14.3. Default Notice. Landlord, upon delivering any Notice to Tenant of. (a) a
Potential Tenant Default under this Ground Lease or a Tenant Default or (b) a termination of this
Ground Lease, shall at the same time deliver a copy of such Notice to the Leasehold Mortgagee.
No such Notice by Landlord to Tenant shall be deemed to have been duly given unless and until a
copy thereof has been delivered to the Leasehold Mortgagee. From and after such Notice has been
delivered to the Leasehold Mortgagee, such Leasehold Mortgagee shall have the same period, after
the delivery of such Notice to it in which to remedy any default or acts or omissions which are the
subject matter of such Notice or cause the same to be remedied, as Tenant is entitled to after the
delivery of such notice to Tenant, plus in each instance, the additional periods of time specified in
Section 14.4 and Section 14.5, to remedy, commence remedying or cause to be remedied, as
applicable, the defaults or acts or omissions which are the subject matter of such Notice. Landlord
shall accept such performance by or at the instigation of the Leasehold Mortgagee as if the same
had been done by Tenant and Tenant hereby constitutes and appoints the Leasehold Mortgagee as
Tenant's attorney-in-fact with full power, in Tenant's name, place and stead, at Tenant's cost and
expense, to enter upon the Premises to perform any of Tenant's obligations under this Ground
Lease.
Section 14.4. Notice to Leasehold Mort2nee. Notwithstanding anything herein to the
contrary, if any Tenant Default shall occur, Landlord shall have no right to terminate this Ground
Lease or terminate Tenant's right to possession of the Premises without terminating this Ground
Lease unless Landlord shall deliver Notice to the Leasehold Mortgagee of Landlord's intent to so
terminate at least thirty (30) calendar days in advance of the proposed effective date of such
termination. Landlord may satisfy the foregoing Notice requirement by delivery to the Leasehold
Mortgagee a copy of any Final Notice delivered to Tenant pursuant to Section 15.2.2. The
provisions of Section 14.5 below shall apply if, within such thirty (30) calendar day termination
notice period, the Leasehold Mortgagee shall (a) pay or cause to be paid all amounts then due and
in arrears as specified in the termination Notice to the Leasehold Mortgagee, and (b) cure or, in
good faith and with reasonable diligence and continuity, (i) commence to cure all non -monetary
requirements of this Ground Lease then in default and reasonably susceptible of being cured by the
Leasehold Mortgagee or (ii) commence to exercise its rights to acquire or sell (or cause to be sold)
Tenant's interest in this Ground Lease by foreclosure or assignment in lieu thereof or otherwise
pursuant or with respect to the 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).
Section 14.5. Procedure on Default.
14.5.1. Leasehold Mortgagee's Rights Prior to Termination. If Landlord shall
elect to terminate this Ground Lease or terminate Tenant's right to possession of the Premises
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without terminating this Ground Lease by reason of any Tenant Default, and the Leasehold
Mortgagee shall have proceeded in the manner provided for in Section 14.4, the specified date for
the termination of this Ground Lease as fixed by Landlord in its termination notice shall be
extended for such period of time as may be reasonably required to effectuate (a) the cure of all
non -monetary obligations of Tenant then in default and reasonably susceptible of being cured by
the Leasehold Mortgagee or (b) if possession of the Premises is reasonably necessary to cure such
default, the acquisition or sale of the Leasehold Estate by foreclosure of the Leasehold Mortgage
or assignment in lieu thereof or the possession of the Premises by the Leasehold Mortgagee or a
receiver (it being understood that the Leasehold Mortgagee shall not be required to prejudice its
rights be electing to seek a receiver instead of proceeding with a foreclosure); provided, however
that the Leasehold Mortgagee shall pay all Rentals and all other amounts accrued and unpaid by
Tenant and shall continue to pay all Rentals and other amounts under this Ground Lease as the
same become due and continue its good faith diligent efforts to effect such acquisition, sale or
possession and to cure all non -monetary requirements of this Ground Lease then in default and
reasonably susceptible of being cured by the Leasehold Mortgagee.
14.5.2. Cure of Tenant Default. If the Tenant Default shall be cured pursuant to
this Article 14 within the time periods specified in Section 14.4 and Section 14.5, as applicable,
this Ground Lease shall continue in full force and effect as if Tenant had not defaulted under this
Ground Lease.
14.5.3. Cure of Default Upon Acquisition of Leasehold Estate. If the Leasehold
Mortgagee has complied with Section 14.4 and Section 14.5.1, then upon the acquisition of the
Leasehold Estate by the Leasehold Mortgagee, the Leasehold Mortgagee Designee or any other
permitted acquirer at a Foreclosure Event, this Ground Lease shall continue in full force and effect
as if Tenant had not defaulted under this Ground Lease, provided that all Tenant Defaults to be
cured pursuant to Section 14.5.1, which have not yet been cured and are reasonably susceptible of
cure by the Leasehold Mortgagee, Leasehold Mortgagee Designee or other permitted acquirer,
shall thereafter be cured within such period of time as may be reasonably required to effectuate
such cure, but in no event longer than the time period permitted under Section 14.5.1.
14.5.4. Leasehold Mortgage Not a Transfer. The making of the Leasehold
Mortgage to or for the benefit of the Qualified Lender shall not be deemed to constitute a Transfer
of this Ground Lease nor shall the Leasehold Mortgagee prior to a Foreclosure Event or the
acquisition of the Leasehold Estate or other security by foreclosure or assignment in lieu of
foreclosure, as such, be deemed to be a transferee of this Ground Lease so as to require the
Leasehold Mortgagee to assume the performance of any of the terms, covenants or conditions on
the part of Tenant to be performed hereunder prior to such acquisition of the Leasehold Estate.
14.5.5. Transfers After Acquisition Upon Default. Notwithstanding any other
provision of this Ground Lease to the contrary, the Leasehold Mortgagee, Leasehold Mortgagee
Designee or other permitted acquirer of the Leasehold Estate pursuant to a Foreclosure Event may,
upon acquiring the Leasehold Estate under the Ground Lease, subject to the Approval of Landlord
to the extent required in ARTICLE 12 with respect to any such proposed Transfer of the Leasehold
Estate, sell and assign the Leasehold Estate on such terms and to such Persons as are acceptable to
such acquirer (but without modifying this Ground Lease or any other Project Document) and
thereafter shall be relieved of all obligations of "Tenant" under this Ground Lease arising after the
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date of such Transfer, provided (i) such Transfer includes and is subject to all of the Project
Documents, (ii) such transferee assumes in writing for the benefit of Landlord all of the obligations
of "Tenant" under this Ground Lease and all other Project Documents and (iii) Landlord is notified
of such Transfer and provided a copy of such assumption contemporaneously with such Transfer
14.5.6. Foreclosure Event a Permitted Transfer. Notwithstanding any other
provisions of this Ground Lease to the contrary, any Foreclosure Event whereby a Leasehold
Mortgagee that is a Qualified Lender or its Leasehold Mortgagee Designee acquires the Leasehold
Estate shall be deemed to be a Permitted Transfer.
14.5.7. Post -Foreclosure Operation. Notwithstanding any other provisions of
this Ground Lease, in the event of the acquisition of the Leasehold Estate by the Leasehold
Mortgagee, Leasehold Mortgagee Designee or any other permitted acquirer at a Foreclosure
Event, the operation of the Hotel Project Improvements by or on behalf of any such acquirer of the
Leasehold Estate under this Ground Lease shall be subject to the provisions and requirements of
this Ground Lease and the other Project Documents, including those contained in ARTICLE 5 of
this Ground Lease, and such acquirer of the Hotel Project Improvements shall operate the Hotel
Project Improvements or shall cause the Hotel Project Improvements to be operated in accordance
with the requirements of this Ground Lease and the other Project Documents.
Section 14.6. Third Party Beneficiary. Notwithstanding anything herein to the
contrary, the Leasehold Mortgagee may each exercise and enforce its rights and any obligations as
the Leasehold Mortgagee expressly provided in this Ground Lease and shall also be an express
third -party beneficiary to exercise and enforce its respective rights and obligations expressly
provided for in this Ground Lease, including this ARTICLE 14.
Section 14.7. New Lease. In case of the termination of this Ground Lease for any reason
prior to the expiration of the Lease Term (other than (i) a termination consented to or acquiesced in
by the applicable Leasehold Mortgagee or (ii) a termination permitted under this Ground Lease as
a result of the failure or refusal of the Leasehold Mortgagee to comply with the provisions of
Section 14.4 and Section 14.5 hereof), including in the event of rejection or disaffirmance of this
Ground Lease pursuant to bankruptcy law or other Governmental Rule affecting creditors' rights,
Landlord shall give prompt Notice thereof to the Leasehold Mortgagee. Subject to the provisions
of ARTICLE 12, Landlord shall, on written request of the Leasehold Mortgagee, made at any time
within thirty (30) Business Days after Notice from Landlord to the Leasehold Mortgagee of the
termination of this Ground Lease, enter into a new Ground Lease with the Leasehold Mortgagee or
its Leasehold Mortgagee Designee (in either case, a "New Lessee") within thirty (30) Business
Days after receipt of such request, which new Ground Lease shall be effective as of the date of
such termination of this Ground Lease for the remainder of the Lease Term, on all terms and
conditions of this Ground Lease that would have been in effect on such date but for such
termination (the "New Lease"); provided, however, that such New Lessee shall: (a)
contemporaneously with entering into the New Lease, and as a condition to Landlord's obligation
to enter into a New Lease, such New Lease shall enter into a new Booking Agreement with
Landlord on such terms and conditions of the Booking Agreement as were in effect on the date that
the Ground Lease was terminated (the "New Booldng Agreement "); (b) contemporaneously with
the execution and delivery of such New Lease request, pay to Landlord all Rentals and other
amounts payable by Tenant hereunder or under the other Project Documents which are then due;
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(c) pay to Landlord at the time of the execution and delivery of the New Lease any and all
reasonable, out-of-pocket costs and expenses of any kind which Landlord incurs with respect to
the operation and maintenance of the Project Improvements after the rejection or disaffirmance of
this Ground Lease and any and all reasonable costs and expenses incurred by Landlord in
connection with the New Lease, including the reasonable fees and expenses of Landlord's outside
legal counsel; (d) comply with the provisions of Section 14 regarding Approval of the Person
proposed by the Leasehold Mortgagee to operate the Project Improvements and (e) on or prior to
the execution and delivery of the New Lease, agree in writing that promptly following the delivery
of the New Lease, the New Lessee will perform or cause to be performed all of the other
covenants, obligations and agreements contained in this Ground Lease and the other Project
Documents on Tenant's part to be performed to the extent that Tenant shall have failed to perform
the same to the date of delivery of the New Lease (except such covenants and agreements which
are not reasonably susceptible of performance by the New Lessee) and to the extent reasonably
necessary to accomplish same, enter into such new Project Documents with the City. Landlord's
execution of such a New Lease shall not in and of itself create any express or implied warranty by
Landlord as to the condition of the Premises or the Project Improvements. Landlord agrees not to
accept a voluntary surrender, termination or modification of this Ground Lease at any time while
the Leasehold Mortgage shall remain a Lien on Tenant's Leasehold Estate without the prior
written Approval of the Leasehold Mortgagee.
Section 14.8. New Lease Priority. Any New Lease made pursuant to Section 14.7 shall
have the same priority with respect to any Encumbrance on the fee of the Premises as did this
Ground Lease as of the time of its termination, and the New Lessee under such New Lease shall
have the same right, title and interest in and to the Premises as Tenant had under this Ground
Lease; provided, however that (i) Landlord shall have no duty to defend any claim adverse to such
right, title or interest and (ii) no Landlord default shall be based upon any intervening right, title or
interest in or to the Premises (other than as resulting from a voluntary and wrongful act of
Landlord). The provisions of Section 14.7, this Section 14.8, Section 14.9, and Section 14.11 shall
survive the termination, rejection or disaffirmance of this Ground Lease and shall continue in full
force and effect thereafter to the same extent as if Section 14.7, this Section 14.8, Section 14.9, and
Section 14.11 were a separate and independent contract made between Landlord and the
Leasehold Mortgagee (or New Lessee).
Section 14.9. Liability of New Tenant. The New Lessee under any New Lease entered
into pursuant to Section 14.7'shall be liable to perform the obligations imposed on such New
Lessee by such New Lease only during the period such Person has title to the Leasehold Estate
(subject to the obligation to cure prior defaults to the extent required under Section 14.7).
Section 14.10. Further Assurances, Estoppel Certificate.
14.10.1. Estoppel Certificate. At Tenant's cost and expense, Landlord
agrees to execute and deliver to the Leasehold Mortgagee any further documents reasonably
acceptable to Landlord and reasonably required by the Leasehold Mortgagee at any time and from
time to time to effectuate the intent and purposes of this ARTICLE 14 including, from time to time
upon receipt of Notice of a request therefor, within thirty (30) Business Days after receipt of such
Notice, an estoppel certificate intended to be relied upon by the Leasehold Mortgagee stating:
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14.10.1.1. Whether this Ground Lease is unmodified and is in full force and
effect (or, if there have been modifications, that this Ground Lease is in full force and effect
as modified and stating the modifications) (and, if so requested, whether the annexed copy
of this Ground Lease is a true, correct and complete copy of this Ground Lease);
14.10.1.2. To the actual knowledge of the individual executing such certificate
on behalf of Landlord, whether there are any Tenant Defaults or Potential Tenant Defaults
under this Ground Lease (and specifying each such default or potential default as to which
such individual is aware);
14.10.1.3. Landlord's current address for the purpose of giving Notice to
Landlord;
14.10.1.4. The date to which Rentals payable by the Tenant have been paid;
14.10.1.5. The date of the Lease Expiration Date; and
14.10.1.6. The date upon which the Effective Date, the Project Completion
Date and the commencement of the Operating Term occurred, respectively, if such events
have occurred prior to the date of such estoppel certificate.
14.10.2. Landlord's Costs. Tenant shall reimburse Landlord at the time of
execution and delivery of such estoppel certificate or other document all out-of-pocket costs and
expenses incurred by Landlord in connection with such estoppel certificate or other document,
including reasonable fees and expenses of Landlord's outside consultants and legal counsel.
14.10.3. No Subordination by Landlord; Fee Mortem . Neither this
ARTICLE 14 nor any other provision of this Ground Lease or any other Project Document
requires, or shall be construed to require, Landlord to subordinate Landlord's interest in the
Rentals, this Ground Lease, any other Project Document or the Premises to a Leasehold Mortgage.
Landlord shall not grant a Mortgage secured by Landlord's fee interest in the Premises unless the
Mortgagee of such Mortgage acknowledges that such Mortgage does not directly encumber (as
opposed to such Mortgagees' interest by, through or under Landlord's interest in this Ground
Lease) Tenant's interest in the Premises, the Leasehold Estate and the other Project Documents
and the Operating Agreement.
Section 14.11. Space Leases and Subrents. After termination of this Ground Lease and
during the period thereafter during which the Leasehold Mortgagee shall be entitled to enter into a
New Lease, Landlord will not terminate any Space Lease or the rights of any Space Tenant
thereunder unless such Space Tenant shall be in default under such Space Lease and has failed to
cure same within the time provided under such Space Lease, nor shall Landlord modify or amend
any of the terms of any Space Lease or the Operating Agreement (Operating Agreement) to which
Landlord has agreed in writing to recognize and not disturb. During such periods Landlord shall
receive all gross revenues, as agent of the Leasehold Mortgagee and shall deposit such gross
revenues in a separate and segregated account in trust for the Leasehold Mortgagee, but may
withdraw such sums as are required to be paid to Landlord under this Ground Lease at the time and
in the amounts due hereunder and as other sums are required to pay the cost of operations for the
Project Improvements, as reasonably necessary, and, upon the execution and delivery of the New
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Lease, Landlord shall account to the New Lessee thereunder for the balance, if any (after
application as aforesaid) of the gross revenues received by Landlord from the operation of the
Hotel Project Improvements, and Landlord shall thereupon assign the gross revenues to such New
Lessee and assign any Space Leases and the Operating Agreement (to which Landlord has agreed
in writing to recognize and not disturb) to the New Lessee. The collection of gross revenues by
Landlord acting as an agent pursuant to this Section shall not be deemed an acceptance by
Landlord for its own account of the attornment of any Space Tenant or hotel Operator unless
Landlord shall have agreed in writing with such Space Tenant or hotel Operator that its tenancy or
contract shall be continued following the expiration of any period during which a New Lessee may
be granted a New Lease, in which case such attornment shall take place upon the expiration of such
period but not before. After the termination of this Ground Lease and during the period thereafter
during which the Leasehold Mortgagee shall be entitled to enter into a New Lease, Landlord will
not enter into a new Operating Agreement that would survive the execution of such New Lease or
encumber the Leasehold Estate after the execution of such New Lease. Except as expressly set
forth in any nondisturbance and attornment agreements executed with respect to such Space
Leases or the Operating Agreement, under no circumstances shall Landlord be obligated to
perform any obligations of any Person under any Space Leases or Operating Agreement.
Section 14.12. LeEal Proceedings. Landlord shall give Notice to the Leasehold
Mortgagee of any Actions or Proceedings between Landlord and Tenant under this Ground Lease.
Section 14.13. Notices. Notices from Landlord to the Leasehold Mortgagee shall be
mailed to the address of the Leasehold Mortgagee set forth in a Tenant's Notice of Project
Financing or to such other address as may have been furnished to Landlord by the applicable
Leasehold Mortgagee in a Notice delivered to Landlord at the address for Landlord designated
pursuant to the provisions of Section 5 of Appendix B and all Notices to the Leasehold Mortgagee
shall in all respects be governed by the provisions of such Section 5 of Appendix B.
Section 14.14. Non -separation of Leasehold Estate. Licenses. and Proiect Documents.
Tenant's ownership of the elements of the Leasehold Estate and the Licenses created by this
Ground Lease, its interest in the Hotel Project Improvements and its rights, interests and
obligations under the other Project Documents shall be non -separable. Any attempt to transfer or
encumber less than the entirety of the foregoing shall be void and ineffective, except for Security
Interests in FF&E that Tenant may grant to third -parties from time to time in the ordinary course of
business but subject to the terms of this Ground Lease. Except upon expiration or earlier
termination of this Ground Lease, there shall be no merger of this Ground Lease nor the Leasehold
Estate or the Licenses created by this Ground Lease with the fee estate or any part thereof by
reason of the fact that the same Person may acquire or own or hold, directly or indirectly, this
Ground Lease or the Leasehold Estate or Licenses created by this Ground Lease or any interest in
this Ground Lease or any such Leasehold Estate or Licenses, and the fee estate in the Leased
Premises, the Licenses or part thereof or any interest in such estate, and, except upon expiration or
earlier termination of this Ground Lease, no merger shall occur unless and until (a) all Persons,
including the Leasehold Mortgagee, having any interest in (i) this Ground Lease or the Leasehold
Estate created by this Ground Lease, and (ii) the fee estate in the Leased Premises or any part
hereof or any interest in such fee estate, shall join in a written instrument effecting such merger and
shall duly record the same or (b) a final order, decree or judgment of a court of competent
jurisdiction shall have been entered adjudicating such merger.
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Section 14.15. Consent to Hotel Bond Trustee as Leasehold Mortmee. Landlord
hereby consents to Tenant's encumbrance of Tenant's interest in this Ground Lease and the
Premises to the Hotel Bond Trustee in order to secure repayment of the Hotel Bonds, and accepts
the Hotel Bond Trustee as the Leasehold Mortgagee.
Section 14.16. Additional Bonds. Tenant covenants and agrees not to authorize or issue
Additional Bonds (defined below) that are Refunding Bonds (defined below) without the City's
prior written consent unless such Additional Bonds are Refunding Bonds issued under the Hotel
Bond Indenture to achieve debt service savings and do not extend the final maturity of the Hotel
Bonds being refunded.
ARTICLE 15.
DEFAULTS AND REMEDIES
Section 15.1. Events of Default.
15.1.1. Tenant Default. The occurrence of any of the following shall be a "Tenant
Default":
15.1.1.1. The failure of Tenant to pay any of the Rentals when due and
payable under this Ground Lease if such failure continues for ten (10) Business Days after
Landlord gives Notice to Tenant that such amount was not paid when due;
15.1.1.2. The failure of Tenant to acquire and maintain in full force and effect
the insurance policies, amounts and coverages required under ARTICLE 7 of this Ground
Lease or the failure of Tenant to comply any other Insurance Covenant; provided however
that Tenant's failure to acquire and maintain the insurance amounts and coverages required
in Section 7.1 shall not lead to an immediate Event of Default if such failure(s) is cured
within three (3) days of notice regarding same; and provided further that , to the extent
permitted by Governmental Rules, Tenant hereby agrees to release Landlord from and
against any and all claims, costs (including reasonable attorney's fees), damages and
causes of action arising out of or related to Tenant's failure to acquire and maintain in full
force and effect the insurance policies, amounts and coverages required under ARTICLE
7.
15.1.1.3. The failure of Tenant to fund a Casualty Shortfall Funding if such
failure is not remedied by Tenant within thirty (30) calendar days after Landlord gives
Notice to Tenant of such failure; provided, if such failure reasonably is not susceptible of
being cured within such thirty (30) calendar day period, so long as Tenant continuously and
diligently prosecutes such cure after receipt of Notice from Landlord, Tenant shall have
such additional time as is necessary to complete such cure, but such additional cure period
shall not exceed ninety (90) calendar days;
15.1.1.4. Subject to the effects of Down Times permitted under this Ground
Lease, the failure of Tenant to cause the Leased Premises and the Hotel Project
Improvements to be operated continuously by a Qualified Operator within thirty (30)
calendar days after Notice from Landlord of such failure; provided, if such failure
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reasonably is not susceptible of being cured within such thirty (30) calendar day period, so
long as Tenant continuously and diligently prosecutes such cure after receipt of Notice
from Landlord, Tenant shall have such additional time as is necessary to complete such
cure, but such additional cure period shall not exceed ninety (90) calendar days;
15.1.1.5. Any breach by Tenant of the terms or provisions of ARTICLE 12 if
such breach continues for thirty (30) calendar days after Landlord gives Notice to Tenant
of such breach;
15.1.1.6. Any default by Tenant under one or more of the Project Documents,
subject to any notice and cure periods in such Project Documents;
15.1.1.7. Any default by Tenant under Section 5.13, or any fact of
circumstance that leads to a failure of the Hotel to meet the Operating Standards if such
default or failure is not cured within twelve (12) months after Landlord gives Notice to
Tenant of such breach; provided that if such default or failure is not cured within such
twelve (12) month period, such default or failure shall not be a Tenant Default, but the
Basic Rental shall immediately increase to $25,000 (the "Increased Basic Rental") per
annum during the period of such default or failure up to and including the date that is
twenty-four (24) months following such failure; but provided further that if such default or
failure is not cured prior to the expiration of said twenty-four (24) month period, such shall
be a Tenant Default which shall (notwithstanding any provision in this Ground Lease to the
contrary) entitle Landlord to immediately notify Tenant of its intent to terminate this
Ground Lease. Promptly upon receipt of such notice, Tenant shall submit to Landlord an
operating plan demonstrating its ability to achieve compliance with the Operating
Standards within six (6) months. If Tenant does not achieve compliance within such six (6)
month period, the Ground Lease shall automatically terminate without further action by
Landlord. Notwithstanding any provision herein to the contrary, the Increased Basic
Rental shall be automatically increased each year of the Lease Term by the percentage
increase in the Index (defined below) from the Effective Date to the first day of the relevant
Lease Year that such Increased Basic Rental shall become due and payable; provided that
the Increased Basic Rental shall never decrease.
15.1.1.8. Subject to the effects of Down Times permitted under this Ground
Lease, the failure of Tenant to cause the Leased Premises or the Hotel Project
Improvements to be operated continuously in accordance with the requirements of Section
5_2, Section 5.3 and Section 5.4 (other than the failure referred to in clause (d) above) if
such failure is not remedied by Tenant within thirty (30) calendar days after Landlord gives
Notice to Tenant of such failure; provided, if such failure reasonably is not susceptible of
being cured within such thirty (30) calendar day period, so long as Tenant continuously and
diligently prosecutes such cure after receipt of Notice from Landlord, Tenant shall have
such additional time as is necessary to complete such cure, but such additional cure period
shall not exceed ninety (90) calendar days;
15.1.1.9. The failure of Tenant to keep, observe or perform any of the terms,
covenants or agreements contained in this Ground Lease on the Tenant's part to be kept,
performed or observed (other than those referred to in clauses 15.1.1.1, 15.1.1.2, 15.1.1.3,
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15.1.1.4, 15.1.1.5, 15.1.1.6, 15.1.1.7 or 15.1.1.8 above and 15.1.1.10 below) if such failure
is not remedied by Tenant within thirty (30) calendar days after Notice from Landlord of
such default, provided, if such failure reasonably is not susceptible of being cured within
such thirty (30) calendar day period, so long as Tenant continuously and diligently
prosecutes such cure after receipt of Notice from Landlord, Tenant shall have such
additional time as is necessary to complete such cure, but such cure period shall not exceed
one hundred twenty (120) calendar days in the aggregate;
15.1.1.10. The failure of Tenant to satisfy all of the Conditions to
Commencement of the Operating Term on or before the Project Completion Deadline if
such failure continues for six (6) months after Landlord gives Notice to Tenant of such
failure;
15.1.1.11. The (1) filing by Tenant of a voluntary petition in bankruptcy; (2)
adjudication of Tenant as bankrupt; (3) approval as properly filed by a court of competent
jurisdiction of any petition or other pleading in any action seeking reorganization,
rearrangement, adjustment or composition of, or in respect of Tenant under the United
States Bankruptcy Code or any other similar state or federal law dealing with creditors'
rights generally; (4) all or substantially all of Tenant's assets are levied upon by virtue of a
writ of court of competent jurisdiction; (5) insolvency of Tenant; (6) assignment by Tenant
of all or substantially of its assets for the benefit of creditors; (7) initiation of procedures for
involuntary dissolution of Tenant, unless within ninety (90) calendar days after such filing,
Tenant causes such filing to be stayed or discharged; (8) Tenant ceases to do business as an
ongoing enterprise; and (9) appointment of a receiver, trustee or other similar official for
Tenant, or Tenant's Property, unless within ninety (90) calendar days after such
appointment, Tenant causes such appointment to be stayed or discharged;
15.1.2. Landlord Default. The occurrence of any of the following shall be a
"Landlord Default".
15.1.2.1. Landlord fails to provide any estoppel certificate after Tenant's
written request therefor pursuant to Section 14.10 and such failure shall continue for thirty
(30) days after Tenant's second written notice thereof to Landlord;
15.1.2.2. Landlord's failure to perform, comply with, or observe any other
material agreement or obligation of Landlord under this Ground Lease and the continuance
of such failure for a period of more than 30 days after Tenant has delivered to Landlord
written notice thereof or such longer period as may be reasonably necessary to cure such
default, provided Landlord commences to cure such failure and proceeds diligently to
completion;
15.1.2.3. The filing of a petition by or against Landlord (1) in any bankruptcy
or other insolvency proceeding; (2) seeking any relief under any state or federal debtor
relief law; (3) for the appointment of a liquidator or receiver for all or substantially all of
Landlord's property or for Landlord's interest in this Ground Lease; or (4) in any
assignment for the benefit of creditors proceeding; however, if such a petition is filed
against Landlord, then such filing shall not be a Landlord Default unless Landlord fails to
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have the proceedings initiated by such petition dismissed within 120 days after the filing
thereof; and
15.1.2.4. Landlord is in material default under one or more of the Project
Documents and such default shall continue beyond any applicable notice and cure or grace
periods.
Section 15.2. Remedies.
15.2.1. Landlord's Remedies. Subject to the provisions of ARTICLE 14 and this
ARTICLE 15, upon the occurrence of any Tenant Default, Landlord may, in its sole and absolute
discretion, pursue any one or more of the following remedies without any Notice or demand
whatsoever, other than any Notice expressly provided in this Ground Lease:
15.2.1.1. Landlord may (but under no circumstances shall be obligated to)
terminate this Ground Lease pursuant to Section 15.2.2, and upon such termination
Landlord may forthwith reenter and repossess the Premises by entry, forcible entry or
detainer suit or otherwise, without demand or Notice of any kind and be entitled to recover,
as damages under this Ground Lease, a sum of money equal to the total of (i) the reasonable
cost of recovering the Premises, (ii) the cost of removing and storing Tenant's or any other
occupant's Property, including all Personalty, (iii) the unpaid Rentals and any other sums
accrued hereunder at the date of termination, (iv) a sum equal to the amount, if any, by
which the present value of the total Rentals which would have accrued to Landlord under
this Ground Lease for the remainder of the Lease Term (excluding any Renewal Term for
which the Renewal Option has not been exercised by Tenant), if the terms of this Ground
Lease had been fully complied with by Tenant, exceeds the present value of the total fair
market rental value of the Premises for the balance of the Lease Term (excluding any
Renewal Term for which the Renewal Option has not been exercised by Tenant), (v) any
increase in insurance premiums caused by the vacancy of the Premises, and (vi) any other
sum of money or damages owed by Tenant to Landlord under applicable law. In the event
Landlord shall terminate this Ground Lease pursuant to Section 15.2.2, Landlord shall at
once have all the rights of reentry upon the Premises, without becoming liable for damages
or guilty of trespass.
15.2.1.2. Landlord may (but under no circumstances shall be obligated to)
terminate Tenant's right of occupancy of all or any part of the Premises pursuant to Section
15.2.2 and reenter and repossess the Premises by entry, forcible entry or detainer suit or
otherwise, without demand or Notice of any kind to Tenant and without terminating this
Ground Lease, without acceptance of surrender of possession of the Premises, and without
becoming liable for damages or guilty of trespass, in which event, Landlord may, but shall
be under no obligation to, relet the Premises or any part thereof for the account of Tenant
for a period equal to or lesser or greater than the remainder of the Term on whatever terms
and conditions Landlord, in Landlord's sole discretion, deems advisable. Tenant shall be
liable for and shall pay to Landlord, all Rentals payable by Tenant under this Ground Lease
plus an amount equal to (i) the reasonable cost of recovering possession of the Premises,
(ii) the reasonable cost of removing and storing any of Tenant's or any other occupant's
Property left on the Premises after reentry, (iii) the cost of any increase in insurance
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premiums caused by the termination of possession of the Premises and (iv) any other sum
of money or damages owed by Tenant to Landlord at law, in equity or hereunder, all
reduced by any sums received by Landlord through any reletting of the Leased Premises,
provided, however, that in no event shall Tenant be entitled to any excess of any sums
obtained by reletting over and above Rentals provided in this Ground Lease to be paid by
Tenant to Landlord. For the purpose of such reletting, Landlord is authorized to make any
repairs, changes, alterations or additions in or to the Premises that may be necessary.
Landlord may file suit to recover any sums falling due under the terms of this Section
15.2.1.2 from time to time. No reletting shall be construed as an election on the part of
Landlord to terminate this Ground Lease unless a written notice of such intention is given
to Tenant by Landlord. Notwithstanding any such reletting without termination, Landlord
may at any time thereafter elect to terminate this Ground Lease for such Tenant Default and
exercise its rights under Section 15.2.1.1 of this Ground Lease.
15.2.1.3. Landlord may (but under no circumstances shall be obligated to)
enter upon the Premises and do whatever Tenant is obligated to do under the terms on this
Ground Lease, including taking reasonable steps necessary to maintain and preserve the
Hotel Project Improvements and Tenant agrees to reimburse Landlord on demand, for any
reasonable expenses which Landlord may incur in effecting compliance with Tenant's
obligations under this Ground Lease (other than expenses of actually operating a business
as opposed to maintenance, repair and restoration) plus interest at the Default Rate, and
Tenant further agrees that Landlord shall not be liable for any damages resulting to Tenant
from such action. No action taken by Landlord under this Section 15.2.1.3 shall relieve
Tenant from any of its obligations under this Ground Lease or from any consequences or
liabilities arising from the failure to perform such obligations.
15.2.1.4. Landlord may exercise any and all other remedies available to
Landlord at law or in equity (to the extent not otherwise specified or listed in this Section
15.2.1), including enforcing specific performance of Tenant's obligations to continuously
operate the Premises and the Hotel Project Improvements in accordance with the Hotel
Operating Standard in accordance with the terms of this Ground Lease, including Section
5_2, Section 5.3 and Section 5.4.
15.2.1.5. In the event of a Tenant Default described in Section 15.1.1.9 and
notwithstanding any termination of any of the Project Documents, Landlord shall be
entitled to pursue a claim for (1) the reasonable cost of recovering possession of the
Premises and the Project Improvements, (2) the cost of removing and storing any
Personalty or any other occupant's property left on the Premises after reentry, (3) the
reasonable cost to cause Final Completion of the Hotel Project Improvements to occur or
for the reasonable cost to re -construct the Premises and the Hotel Project Improvements so
as to render it relettable to another tenant, (4) the amount by which the present value of the
projected Rentals to be received for the Operating Term (excluding any Renewal Term)
which did not occur as a result of Tenant's failure to meet the Conditions to
Commencement of the Operating Term as required by this Ground Lease and as if such
Operating Term had in fact commenced, using the income approach to valuation and a
discount rate equal to the Federal Reserve Discount Rate, exceeds the total fair market
rental value of the Premises for the balance of the Operating Term (excluding any Renewal
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Term) which did not occur and (5) any other sum of money or damages owed by Tenant to
Landlord at law, in equity or hereunder, or any other rights and remedies available to
Landlord at law or in equity, all foregoing being reduced by any sums received by
Landlord through any reletting of the Premises; provided, however, that in no event shall
Tenant be entitled to any excess of any sums obtained by reletting over and above Rentals
provided in this Ground Lease to be paid by Tenant to Landlord.
15.2.2. Termination. Subject to the provisions of ARTICLE 14, upon the
occurrence of a Tenant Default, Landlord, in addition to its other remedies at law or in equity, shall
have the right to give Tenant notice (a "Final Notice") of Landlord's intention to terminate this
Ground Lease pursuant to Section 15.2.1.1 or Tenant's right of occupancy of the Premises
pursuant to Section 15.2.1. after the expiration of a period of thirty (30) Business Days from the
date such Final Notice is delivered unless the Tenant Default is cured, and upon expiration of such
thirty (30) Business Day period, if the Tenant Default is not cured, this Ground Lease and the other
Project Documents, or Tenant's right of occupancy, as applicable, shall terminate without liability
to Landlord. If, however, within such thirty (30) Business Day period Tenant cures such Tenant
Default, then this Ground Lease and the other Project Documents shall not terminate by reason of
such Final Notice. Notwithstanding the foregoing, in the event there is an Action or Proceeding
pending or commenced between the Parties with respect to the particular Tenant Default covered
by such Final Notice, the foregoing thirty (30) Business Day period shall be tolled until a final
non -appealable judgment or award, as the case may be, is entered with respect to such Action or
Proceeding.
15.2.3. Cumulative Remedies. Subject to the provisions of ARTICLE 14 and this
ARTICLE 15, each right or remedy of Landlord and Tenant provided for in this Ground Lease or
any other Project Document shall be cumulative of and shall be in addition to every other right or
remedy of Landlord or Tenant provided for in this Ground Lease or any other Project Document,
and the exercise or the beginning of the exercise by Landlord or Tenant of any one or more of the
rights or remedies provided for in this Ground Lease shall not preclude the simultaneous or later
exercise by Landlord or Tenant of any or all other rights or remedies provided for in this Ground
Lease or any other Project Document or hereafter existing at law or in equity, by statute or
otherwise.
Section 15.3. No Indirect Damages. IN NO EVENT SHALL EITHER PARTY BE
LIABLE TO THE OTHER PARTY UNDER ANY PROVISION OF THIS GROUND LEASE
OR OTHERWISE FOR LOST PROFITS, INCLUDING LOST OR PROSPECTIVE PROFITS,
OR FOR ANY OTHER SPECIAL, INDIRECT, INCIDENTAL, CONSEQUENTIAL,
EXEMPLARY OR PUNITIVE DAMAGES, IN CONTRACT, TORT OR OTHERWISE,
WHETHER OR NOT CAUSED BY OR RESULTING FROM LANDLORD'S OR TENANT'S
OWN, SOLE OR CONCURRENT NEGLIGENCE OR THE NEGLIGENCE OF ANY OF ITS
AFFILIATES OR RELATED PARTIES.
Section 15.4. Waiver of Consumer Rights. LANDLORD AND TENANT HAVE
ASSESSED THEIR RESPECTIVE RIGHTS, LIABILITIES AND OBLIGATIONS UNDER
THE TEXAS DECEPTIVE TRADE PRACTICES - CONSUMER PROTECTION ACT,
SECTION 17.41 ET. SEQ., BUSINESS & COMMERCE CODE (THE "DTPA"). LANDLORD
AND TENANT AGREE THAT THE DTPA DOES NOT APPLY TO EITHER LANDLORD OR
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TENANT SINCE NEITHER QUALIFIES AS A "CONSUMER" UNDER SECTION 17.45(4)
OF THE DTPA. HOWEVER, IN THE EVENT THE DTPA IS DEEMED TO BE APPLICABLE
BY A COURT OF COMPETENT JURISDICTION, LANDLORD AND TENANT HEREBY
WAIVE THEIR RIGHTS UNDER THE DTPA, A LAW THAT GIVES CONSUMERS
SPECIAL RIGHTS AND PROTECTIONS. AFTER CONSULTATION WITH ATTORNEYS
OF THEIR OWN SELECTION, LANDLORD AND TENANT CONSENT TO THIS WAIVER.
THE PARTIES AGREE THAT THIS SECTION 15.4 CONSTITUTES A CONSPICUOUS
LEGEND.
Section 15.5. Limited Recourse Aninst Landlord. Tenant covenants and agrees that
any claim, judgment or decree of any court against Landlord and in favor of Tenant as a result of
any default or breach of any of the terms, covenants, conditions or limitations contained in this
Ground Lease on Landlord's part to be kept, observed and performed, shall be limited to the
interest of Landlord in and to the Leased Premises (including any proceeds of sale or assignment),
and the interest of Landlord in and to insurance proceeds, condemnation proceeds and title
insurance proceeds, in each case paid with respect to Landlord's interest in the Leased Premises.
Section 15.6. Declaratory or Iniunctive Relief. In addition to the remedies set forth in
this ARTICLE 15, Landlord shall be entitled, in any circumstances it may deem appropriate, to
seek injunctive relief prohibiting (rather than mandating) action by Tenant in connection with a
Tenant Default or Potential Tenant Default and to seek declaratory relief with respect to any matter
under this Ground Lease for which such remedy is available hereunder or available at law or in
equity. Without limiting the foregoing, in connection with a Tenant Default as a result of Tenant
engaging in, or permitting to occur, a Prohibited Use, Landlord shall have the right, but not the
obligation, to enjoin such use or occupancy.
Section 15.7. Effect of Termination. Upon termination of this Ground Lease as
provided herein (whether such termination occurs pursuant to this ARTICLE 15, Section 3.1.3, or
any other provision hereof), this Ground Lease shall, on the effective date of such termination,
terminate with respect to all future rights and obligations of performance hereunder by the Parties
hereto (except for the rights and obligations herein that expressly are to survive termination
hereof). Tenant agrees, at the termination of this Ground Lease, to surrender unto Landlord, all
and singular the Premises with then existing buildings, other structures, and improvements
constructed and located thereon and therein. Except as otherwise expressly provided herein,
termination of this Ground Lease shall not alter the then existing Claims, if any, of either Party for
breaches of this Ground Lease occurring prior to such termination and the obligations of the
Parties hereto with respect thereto shall survive termination.
Section 15.8. Notice of Default to the Operator. Landlord, upon delivering any Notice
to Tenant of (a) a Tenant Default or (b) a termination of this Ground Lease, shall at the same time
deliver a copy of such Notice to the Operator; provided, however, that the foregoing obligation to
deliver such Notice to the Operator (1) shall not be a requirement to the effectiveness of any such
Notice by Landlord to Tenant and (2) shall be conditioned upon Landlord having received Notice
from the Tenant, at least three (3) Business Days prior to Landlord's delivery to Tenant of the
Notice of (a) a Tenant Default or (b) a termination of this Ground Lease, as applicable, of the
existence of such Operator and which Notice contains, at a minimum, the name and address of the
Operator.
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Section 15.9. Effect of Offset. To the extent any unpaid amounts owed Landlord by
Tenant hereunder is offset by Landlord against payments otherwise due Tenant under the
Economic Development Agreement, if any, between Landlord and Tenant, such amounts shall be
considered paid in full.
ARTICLE 16.
SURRENDER OF POSSESSION: HOLDING OVER
Section 16.1. Surrender of Possession. Subject to and in accordance with Section 8.1.1,
on or before the Lease Expiration Date, the end of the License Term or the prior termination of this
Ground Lease, as applicable, the Hotel Project Improvements shall thence forward constitute and
belong to and be the absolute property of Landlord, without further act or conveyance, and without
liability to make compensation to Tenant or to anyone whomsoever, and Tenant shall peaceably
and quietly leave, surrender and yield up to Landlord the Premises and the Hotel Project
Improvements, free of subtenancies (other than any Space Leases which Landlord has agreed,
pursuant to ARTICLE 12 or any other express provision of this Ground Lease, to recognize and
not disturb upon such expiration or termination), and in clean condition and free of debris or in the
condition otherwise provided for in this Ground Lease upon such expiration or termination. Upon
such expiration or termination of this Ground Lease, Tenant shall execute and deliver to Landlord
a recordable termination of the Leasehold Estate and the Licenses, except as otherwise provided
for herein.
Section 16.2. Removal of Personalty.
16.2.1. Tenant's Obligation to Remove. Subject to the rights of the Leasehold
Mortgagee, any Space Tenants and with respect to FF&E, Landlord under Section 8.1.1, all
Personalty and FF&E installed in, affixed to or placed or used in the operation of the Project
Improvements throughout the Lease Term shall be the Property of Tenant during the Operating
Term, and, to the extent required by Landlord at Landlord's option, some or all such Personalty
and FF&E shall be removed by Tenant within thirty (30) Business Days after the Lease Expiration
Date, provided that Tenant shall promptly repair any material damage to the Project Improvements
caused by such removal. All such repair work shall be performed in a good and workmanlike
manner using qualified workers and subcontractors and shall be free from all Liens and
Encumbrances, subject to Tenant's right to dispute any Lien or Claim of Lien pursuant to Section
8_6. Notwithstanding the foregoing, all FF&E and Personalty which constitutes part of the building
systems of the Project Improvements shall remain in the Project Improvements and shall become
the property of Landlord.
16.2.2. Landlord's Richt to Remove. Any Personalty and FF&E of Tenant
required to be removed by Landlord, but which shall remain in the Project Improvements after the
Lease Expiration Date and said thirty (30) Business Day period may, at the option of Landlord, be
deemed to have been abandoned by Tenant and either may be retained by Landlord as its Property
or be disposed of, without accountability, in such manner as Landlord may determine necessary,
desirable or appropriate, and Tenant, upon demand, shall pay the cost of such disposal, together
with interest thereon at the Default Rate from the date such costs were incurred until reimbursed by
Tenant, together with reasonable attorneys' fees, charges and costs.
so
16.2.3. Assignment of Franchise and License Agreements; Name of Project;
Trademarks. Tenant hereby grants, conveys and assigns to Landlord, effective as of the Lease
Expiration Date, all franchise agreements, license agreements, trademarks, logos and other images
owned by Tenant or its Affiliates that are used to advertise or identify the Project Improvements
and all similar intangible rights relating to the Project Improvements, in each case only to the
extent owned by Tenant and only to the extent assignable by Tenant, and accordingly excluding
any rights in any intangible property owned by the Operator.
Section 16.3. Holding Over. In the case of any holding over or possession by Tenant
after the Lease Expiration Date or the expiration of the License Term, as applicable, without the
Approval of Landlord, Tenant shall pay Landlord rent at the then -current Market Rental Rate for
the Leased Premises, as determined by Landlord in its sole but reasonable discretion. Further, in
the event Tenant shall hold over beyond any date for surrender of the Premises and the Project
Improvements set forth in Landlord's Notice demanding possession thereof, Tenant shall
reimburse Landlord for all actual expenses and losses incurred by Landlord by reason of
Landlord's inability to deliver possession of the Premises, the Project Improvements or any part
thereof to a successor tenant, together with interest on such expenses at the Default Rate from the
date such expenses are incurred until reimbursed by Tenant, together with Landlord's reasonable
attorneys' fees, charges and costs. The acceptance of Rentals under this Section 16.3 by Landlord
shall not constitute an extension of the Lease Term or afford Tenant any right to possession of the
Premises or the Project Improvements beyond any date through which such Rentals have been
paid by Tenant and accepted by Landlord. Such Rentals shall be due to Landlord for the period of
such holding over, whether or not Landlord is seeking to evict Tenant; and, unless Landlord
otherwise then agrees in writing, such holding over shall be, and shall be deemed and construed to
be, without the Approval of Landlord, whether or not Landlord has accepted any sum due pursuant
to this Section 16.3.
ARTICLE 17.
GENERAL PROVISIONS
Section 17.1. Representations of the Parties Regarding Brokerage Fees and
Commissions.
17.1.1. No Broker's Fees or Commissions. Each Party hereto hereby represents
to the other Party hereto that such Party has not created any liability for any broker's fee, broker's
or agent's commission, finder's fee or other fee or commission in connection with this Ground
Lease.
17.1.2. Intentionally Omitted.
Section 17.2. Representations and Warranties.
17.2.1. Power and Authority. Each individual executing and delivering this
Ground Lease on behalf of a Party hereto hereby represents to the other Party hereto that such
individual has all requisite power and authority to execute and deliver the same and to bind such
Party hereunder.
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17.2.2. Tenant's Representations. As an inducement to Landlord to enter into
this Ground Lease, Tenant hereby represents and warrants to Landlord that, notwithstanding
anything herein to the contrary, as of the Effective Date:
17.2.2.1. Organization. Tenant is a political subdivision duly formed and
validly existing under the laws of the State of Texas, with all necessary power and
authority to enter into this Ground Lease and to consummate the transactions herein
contemplated.
17.2.2.2. Power and Authority. Tenant has all necessary power and authority
to carry on its present business, to enter into this Ground Lease, to consummate the
transactions herein contemplated and to perform their obligations hereunder. The
execution, delivery and performance of this Ground Lease by Tenant are within Tenant's
powers, and have been duly authorized by all necessary action of Tenant.
17.2.2.3. No Conflict. None of (i) the execution and delivery of this Ground
Lease, (ii) the consummation of any of the transactions herein or therein contemplated, (iii)
compliance with the terms and provisions hereof or thereof or (iv) performance hereunder
will contravene the organizational documents of Tenant or any Governmental Rules to
which Tenant is subject or any judgment, decree, license, order or permit applicable to
Tenant, or will conflict or be inconsistent with, or will result in any breach of any of the
terms of the covenants, conditions or provisions of, or constitute a default under, or result
in the creation or imposition of a Lien upon any of the Property or assets of Tenant
pursuant to the terms of, any indenture, mortgage, deed of trust, agreement or other
instrument to which Tenant is a party or by which Tenant is bound, or to which Tenant is
subj ect.
17.2.2.4. No Consents. All proceedings required to be taken by or on behalf
of Tenant to authorize Tenant to make and deliver this Ground Lease and to perform the
covenants, obligations and agreements of Tenant hereunder have been duly taken. No
Approval, order, authorization, filing, notice or other action to the execution and delivery
of this Ground Lease by Tenant or the performance by Tenant of their covenants,
obligations and agreements hereunder is required from any partner, board of directors,
shareholder, creditor, investor, Governmental Authority or other Person, other than any
such Approval, order, authorization, filing, notice or other action which has already been
taken or unconditionally given.
17.2.2.5. Valid and Binding Obligation. This Ground Lease is the legal, valid
and binding obligation of Tenant, enforceable against Tenant in accordance with its terms,
except as limited by applicable relief, liquidation, conservatorship, bankruptcy,
moratorium, rearrangement, insolvency, reorganization or similar laws affecting the rights
or remedies of creditors generally, as in effect from time to time, including the application
of equitable principles, the exercise of judicial discretion in the appropriate cases.
17.2.2.6. No Pending Litigation, Investigation or Inquiry. There is no Action
or Proceeding, at law or in equity, before any court, arbitrator, governmental or other board
or official, pending or, to the knowledge of Tenant, threatened against or affecting Tenant,
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which the management of Tenant in good faith believes that the outcome of which would
(a) materially and adversely affect the validity or enforceability of, or the authority or
ability of Tenant to perform their obligations under this Ground Lease, or (b) have a
material and adverse effect on the consolidated financial condition or results of operations
of Tenant or on the ability of Tenant to conduct its business as presently conducted or as
proposed or contemplated to be conducted (including the operation of the Premises and the
Hotel Project Improvements).
17.2.2.7. Conflict of Interest. None of Tenant or any of its Principals,
partners, shareholders, officers, board members, employees or agents are 'officials" or
"employees" of the City.
17.2.3. Landlord's Representations. As an inducement to Tenant to enter into
this Ground Lease, Landlord represents and warrants to Tenant that, notwithstanding anything
herein to the contrary, as of the Effective Date:
17.2.3.1. Organization. Landlord is a municipal corporation duly formed and
validly existing under the laws of the State of Texas, with all necessary power and
authority to enter into this Ground Lease and to consummate the transactions herein
contemplated.
17.2.3.2. Authority; Consent. Upon execution of this Ground Lease by
Landlord, Landlord will have caused all governmental proceedings required to be taken by
or on behalf of Landlord to authorize Landlord to execute and deliver this Ground Lease
and to perform the covenants, obligations and agreements of Landlord hereunder. No
Approval to the execution or delivery of this Ground Lease by Landlord or the
performance by Landlord of its covenants, obligations and agreements hereunder is
required from any board of directors, shareholder, creditor, investor, judicial, legislative or
administrative body, Governmental Authority or other Person, other than any such
Approval which already has been unconditionally given.
17.2.3.3. No Conflict. The execution and delivery hereof and the
performance by Landlord of its obligations under this Ground Lease do not violate, conflict
with or result in a breach of or constitute an event of default under, and are not inconsistent
with any material terms or material provisions of, any contract, agreement, instrument or
Governmental Rule to which Landlord is a party or is subject or any judgment, order or
decree applicable to Landlord.
17.2.3.4. Litigation. There are no Actions or Proceedings, at law or in equity,
before any court, arbitrator, governmental or other board or official pending or, to the
knowledge of the Responsible Officer of Landlord, threatened against Landlord, which
directly relate to the Premises and which, if adversely determined, would materially and
adversely affect the validity or enforceability of, or the ability of Landlord to fulfill its
obligations under, this Ground Lease.
17.2.3.5. Valid and Binding Obligation. This Ground Lease is the legal, valid
and binding obligation of Landlord, enforceable against Landlord in accordance with its
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terms, except as limited by (i) applicable relief, liquidation, conservatorship, bankruptcy,
moratorium, rearrangement, insolvency, reorganization or similar laws affecting the rights
or remedies of creditors generally, as in effect from time to time or (ii) any Governmental
Rule applicable to Landlord solely as a result Landlord being a Governmental Authority.
All of Landlord's representations pursuant to this Section 17.2.3 shall be subject to, and
shall in all respects be qualified by, the provisions of Section 3.4.
Section 17.3. Governing Body Approval.
17.3.1. Notwithstanding anything to the contrary set forth in this Ground Lease,
Tenant recognizes and agrees that any contracts, agreements or amendments contemplated to be
entered into by Landlord under the terms of this Ground Lease which are entered into after the
Effective Date of this Ground Lease will be subject to the prior Approval of City Council other
than any Approvals and confirmations expressly required by the terms of this Ground Lease or
expressly permitted in this Ground Lease to be given by the Landlord Representative.
17.3.2. Notwithstanding anything to the contrary set forth in this Ground Lease,
Landlord recognizes and agrees that any contracts, agreements or amendments contemplated to be
entered into by Tenant under the terms of this Ground Lease which are entered into after the
Effective Date of this Ground Lease will be subject to the prior Approval of Board other than any
Approvals and confirmations expressly required by the terms of this Ground Lease or expressly
permitted in this Ground Lease to be given by the Tenant Representative.
Section 17.4. Non -Appropriation.
17.4.1. Current Expenses. The obligations of Landlord (so long as the City or a
political subdivision of the State of Texas is the Landlord) and the Tenant (so long as the MMD or
a political subdivision of the State of Texas is the Tenant) under this Ground Lease which require
an expenditure or the payment of money is subject to an Appropriation and accordingly (a) shall
constitute a current expense of Landlord or Tenant in the Fiscal Year in which an obligation
applies and (b) shall not constitute an indebtedness of Landlord or Tenant within the meaning of
any Governmental Rule. Nothing herein shall constitute a pledge by Landlord (so long as the City
or a political subdivision of the State of Texas is the Landlord) or the Tenant (so long as the MOD
or a political subdivision of the State of Texas is the Tenant) of any funds, other than funds
designated pursuant to lawful Appropriations from time to time, to pay any money or satisfy any
other obligation under any provision of this Ground Lease.
17.4.2. Appropriation. Landlord (so long as the City or a political subdivision of
the State is the Landlord) and the Tenant (so long as the MMD or a political subdivision of the State
of Texas is the Tenant) will (i) take such actions as may be reasonably necessary to include in their
annual budgets the sums necessary to satisfy its obligations hereunder and to make the necessary
Appropriation of such amounts for such purposes and (ii) cause the appropriate officers of the City
and MDD to include in their proposed annual budgets the sums necessary to satisfy such payment
obligations contemplated hereunder and request City Council and the Board of Directors to make
the necessary Appropriations of such sums for such purposes. Notwithstanding the foregoing or
anything herein to the contrary, no provision of this Ground Lease, including this Section 17.4.2,
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shall be construed to be an obligation of Landlord or Tenant to obtain an Appropriation, or to
obligate Landlord or Tenant in any way which would result in the obligations of this Ground Lease
constituting indebtedness on the part of the City or the MOD.
17.4.3. Effect of a Non -Appropriation. If a Non -Appropriation occurs in
response to a request for a proposed Appropriation, the non-apprpriating party shall provide
Notice to the other Party of such Non -Appropriation within thirty (30) Business Days of the
Non -Appropriation. Notwithstanding anything herein to the contrary, such Non -Appropriations
shall not constitute a default by the non -appropriating Party hereunder.
Section 17.5. Interest on Overdue Obligations. Except to the extent expressly stated
otherwise in this Ground Lease, all past due Rentals shall bear interest at the Default Rate from the
date(s) due (whether or not Landlord has given Notice to Tenant that such Rent is past due) until
paid. No breach of Tenant's obligation to pay Rentals shall have been cured unless and until the
interest accrued thereon under this Section 17.5 or as expressly provided elsewhere in this Ground
Lease shall have been paid to Landlord. In the event that Landlord fails to pay Tenant any amount
owed by Landlord pursuant to the terms of this Ground Lease on or before the date which is thirty
(30) Business Days after Tenant delivers Notice to Landlord of such failure, then such amount
shall bear interest at the Default Rate from the date due until paid. No breach of Landlord's
obligation to pay Tenant any amount owed by Landlord pursuant to the terms of this Ground Lease
shall have been cured unless and until the interest accrued thereon under this Section 17.5 shall
have been paid to Tenant. All payments shall first be applied to the payment of accrued but unpaid
interest.
Section 17.6. Delays and Effect of Delays.
17.6.1. Excusable Tenant Delay. Regardless of the existence or absence of
references to Excusable Tenant Delay elsewhere in this Ground Lease, the deadlines and time
periods within which Tenant must fulfill the obligations of Tenant in this Ground Lease shall each
be adjusted as appropriate to include Excusable Tenant Delay Periods; provided, however that
neither (i) the obligation of Tenant to pay Rentals as and when due pursuant to the terms of this
Ground Lease nor (ii) Tenant's obligations under ARTICLE 5 shall be subject to adjustment or
extension due to Excusable Tenant Delay.
With respect to each occurrence of Excusable Tenant Delay, Tenant shall, within thirty
(30) Business Days after the occurrence of such event of Excusable Tenant Delay, give Notice to
the Landlord Representative of the event constituting Excusable Tenant Delay, Tenant's good
faith estimate of the Excusable Tenant Delay Period resulting therefrom and the basis therefor,
Tenant's good faith estimate of any adjustment resulting therefrom that is to be made to the
schedule for Additional Project Improvements (including the Material Additional Work Schedule)
or time for performance of Tenant's obligations under this Ground Lease, together with
reasonable documentation supporting the adjustments proposed. If the Landlord Representative
believes that the documentation supplied is not sufficient to justify the delay claimed or
adjustments proposed, the Landlord Representative shall give Notice to Tenant of the claimed
deficiency and Tenant shall have a reasonable period of time to more fully document the delay and
adjustments claimed. Only one (1) Notice from Tenant shall be required with respect to a
continuing Excusable Tenant Delay, except that Tenant shall promptly (and in no event less often
85
than every thirty (30) Business Days) give Notice to the Landlord Representative of any further
changes in the schedule for Additional Improvements (including the Material Additional Work
Schedule) or the additional time for performance of Tenant's obligations under this Ground Lease
claimed by reason of the continuing delay. The Landlord Representative shall have the right to
challenge Tenant's assertion of the occurrence of an Excusable Tenant Delay, Tenant's good faith
estimate of the Excusable Tenant Delay Period, changes in the schedule for Additional
Improvements (including the Material Additional Work Schedule) or the additional time for
performance of Tenant's obligations under this Ground Lease claimed by reason of the Excusable
Tenant Delay if the Landlord Representative gives Notice to Tenant within thirty (30) Business
Days after receipt by the Landlord Representative of such claim of Excusable Tenant Delay or
Notice from Tenant of further changes to such dates as a result of such Excusable Tenant Delay, as
the case may be (which challenge shall be deemed to have been made if the Landlord
Representative gives Notice to Tenant of any claimed deficiency in documentation as provided for
above in this Section 17.6). If Landlord so elects to challenge any such assertion or determination
by Tenant hereunder, then Landlord and Tenant shall attempt in good faith for a period of thirty
(30) Business Days to resolve such dispute.
17.6.2. Excusable Landlord Delay. Regardless of the existence or absence of
references to Excusable Landlord Delay elsewhere in this Ground Lease, any deadline or time
period within which Landlord must fulfill the obligations of Landlord in this Ground Lease shall
each be adjusted as appropriate to include Excusable Landlord Delay Periods; provided that (i) the
obligation of Landlord to pay any sums to Tenant as and when due pursuant to the terms of this
Ground Lease, if any, is not subject to adjustment or extension due to Excusable Landlord Delay
and (ii) Landlord complies with the requirements of this Section 17.6.
With respect to each occurrence of Excusable Landlord Delay, the Landlord
Representative shall, within thirty (30) Business Days after the occurrence of such event of
Excusable Landlord Delay give Notice to Tenant of the event constituting Excusable Landlord
Delay, the Landlord Representative's good faith estimate of the Excusable Landlord Delay Period
resulting therefrom and the basis therefor and the Landlord Representative's good faith estimate of
any adjustment resulting therefrom that is to be made to the time for performance of Landlord's
obligations under this Ground Lease, together with reasonable documentation supporting the
adjustments proposed. If Tenant believes that the documentation supplied is not sufficient to
justify the delay claimed or adjustment proposed, Tenant shall give Notice to the Landlord
Representative of the claimed deficiency and the Landlord Representative shall have a reasonable
period of time to more fully document the delay and adjustments claimed. Only one (1) Notice
from the Landlord Representative shall be required with respect to a continuing Excusable
Landlord Delay, except that the Landlord Representative shall promptly (and in no event less often
than every thirty (30) Business Days) give Notice to Tenant of any further changes in the
additional time for performance of the Landlord Representative `s obligations under this Ground
Lease claimed by reason of the continuing delay. Tenant shall have the right to challenge the
Landlord Representative's assertion of the occurrence of an Excusable Landlord Delay, the
Landlord Representative's good faith estimate of the Excusable Landlord Delay Period or changes
in the additional time for performance of the Landlord's obligations under this Ground Lease
claimed by reason of Excusable Landlord Delay if Tenant gives Notice to the Landlord
Representative within thirty (30) Business Days after receipt by Tenant of such claim of Excusable
Landlord Delay or Notice from the Landlord Representative of further changes to such date as a
86
result of such Excusable Landlord Delay, as the case may be (which challenge shall be deemed to
have been made if Tenant gives Notice to the Landlord Representative of any claimed deficiency
in documentation as provided for above in this Section 17.6.2. If Tenant so elects to challenge any
such assertion or determination by the Landlord Representative hereunder, then Tenant and
Landlord shall attempt in good faith for a period of thirty (30) Business Days to resolve such
dispute.
17.6.3. Continued Performance; Exceptions. Upon the occurrence of any
Tenant Delay or Landlord Delay, the Parties shall endeavor to continue to perform their
obligations under this Ground Lease so far as reasonably practicable. Toward that end, Tenant and
Landlord each hereby agrees that it shall make all reasonable efforts to prevent and reduce to a
minimum and mitigate the effect of any Tenant Delay or Landlord Delay occasioned by an
Excusable Tenant Delay or Excusable Landlord Delay, respectively, and shall diligently and
continuously use its commercially reasonable efforts to ensure resumption of performance of its
obligations under this Ground Lease after the occurrence of any Excusable Tenant Delay or
Excusable Landlord Delay. The Parties shall use and continue to use all commercially reasonable
efforts to prevent, avoid, overcome and minimize any Tenant Delay or Landlord Delay.
Section 17.7. Recording of Memorandum of Lease. Tenant may file of record an
executed copy of the Memorandum of Lease in the form attached hereto as Exhibit D in the Real
Property Records of Harris County, Texas upon the Effective Date, but not before. Upon the
Lease Expiration Date, Tenant shall execute such instruments reasonably requested by Landlord in
recordable form which are sufficient to release of record any rights or interests of Tenant in and to
the Leasehold Estate and the Licensed Areas. In this connection, Tenant irrevocably and
unconditionally appoints Landlord as its attorney-in-fact, coupled with an interest, which
appointment shall survive the bankruptcy, insolvency or other legal disability of Tenant, to take all
actions necessary to perform Tenant's obligations under this Section 17.7.
Section 17.8. Intentionally Omitted
Section 17.9. Employment of Consultants. Landlord shall have the right, at its cost and
expense unless otherwise expressly provided herein, to employ such consultants as Landlord may
deem necessary to assist in the review of any and all plans, specifications, reports, agreements,
applications, bonds, statements and other documents and information to be supplied to Landlord
by Tenant under this Ground Lease and, subject to ARTICLE 16, to perform any inspection right
on behalf of Landlord. Tenant covenants and agrees to reasonably cooperate with such consultants
in the same manner as Tenant is required to cooperate with Landlord pursuant to the terms of this
Ground Lease.
Section 17.10. Alcoholic Beverage Permits. If at any time during the Lease Term, the
Operator is denied the issuance or renewal of any permit or license required by applicable
Governmental Rule in order for alcoholic beverages (including wine, beer and mixed beverages)
to be sold in or upon the Premises for consumption in or upon the Premises on the basis of the
proximity of the Premises to any churches, schools, day care centers or other facilities or uses,
Landlord, at Tenant's sole cost and expense, will reasonably cooperate with Operator in its efforts
to obtain a variance or exemption from any Governmental Authority necessary to obtain any such
permit or license for the sale of alcoholic beverages.
97
Section 17.11. Acknowledgement of Confidential Nature. The Parties acknowledge and
agree that the Private Contracts may contain confidential, proprietary and trade secret information.
The Parties acknowledge that, subject to Governmental Rule, including the Texas Public
Information Act, third Persons may restrict the distribution to or by the Parties of information,
documents and contracts in order to protect confidential, proprietary and trade secret information.
Notwithstanding the foregoing to the contrary, nothing herein shall prohibit a disclosure by either
Party as required pursuant to the terms of any Project Document or Financing Documents.
Section 17.12. Open Records. If any Person requests Landlord to disclose any
information that Tenant has previously and conspicuously marked as "confidential", "proprietary"
or of "trade secret" nature with respect to the operation of the Project, Tenant or the Private
Contracts under the Public Information Act and such information is subject to, or potentially
subject to, an exception under the Public Information Act, then prior to making any such disclosure
and to the extent permitted under applicable Governmental Rule and the Project Documents and
the Financing Documents, Landlord shall send Notice to Tenant of such request within five (5)
Business Days of Landlord's receipt of such request. Within three (3) Business Days of Tenant's
receipt of such Notice from Landlord, Tenant shall notify Landlord in writing whether Tenant
desires Landlord to make an Opinion Request; provided, however, that Landlord shall only be
required to comply with the foregoing to the extent that Landlord, in good faith, believes there is a
reasonable basis for claiming that the requested information is subject to an exception under the
Public Information Act and the Public Information Act permits Landlord to make an Opinion
Request in the circumstance in question. Upon receipt of a request from Tenant for Landlord to
make an Opinion Request and provided Landlord is required to act on same pursuant to the terms
hereof, Landlord, at Tenant's sole cost and expense, shall provide all reasonable assistance to
Tenant necessary to draft the Opinion Request so that it may be completed and filed within the
time period prescribed by the Public Information Act. After the Opinion Request is so filed, each
Party shall cooperate with each other Party in preparing appropriate responses or filings to the
Texas Attorney General and to any other Person with respect to the information request and the
Opinion Request, including any appeals involved with respect thereto, to prevent the disclosure of
such information. Each Party shall also cooperate with each other Party and use reasonable efforts
to promptly identify any possible third Person whose privacy or property interests may be
compromised by any such information request in order to enable Landlord to timely furnish to any
such third Person any statutory notice required by the Public Information Act and to seek any
applicable exceptions from disclosure under the Public Information Act. To the extent allowed by
applicable Governmental Rules, Landlord shall not disclose any information that is the subject of a
pending Opinion Request or a pending judicial appeal of a Texas Attorney General opinion unless
and until there is a final determination that the information is not excepted from disclosure under
the Public Information Act. Tenant shall provide Notice to Landlord of Tenant's intent to appeal
an opinion within ten (10) Business Days of such opinion being issued.
Section 17.13. Survival. The following terms and provisions of this Ground Lease shall
survive any expiration of termination of this Ground Lease: ARTICLE 1, Section 3.4, Section 3.5,
Section 4.1 through Section 4.5 (with respect to the periods specified therein), ARTICLE 6 (with
respect to the periods specified therein), ARTICLE 7 (with respect to the periods specified
therein), Section 8.1.1, Section 8.4, Section 8.6, Section 9.3 (with respect to the periods specified
therein), ARTICLE 10, Section 11.1.2, Section 11.2.1, Section 13.3, ARTICLE 14, ARTICLE 15,
88
ARTICLE 16, Section 17.5, Section 17.7, Appendix A, Appendix B, Appendix C, and Appendix
D.
[Signature Page Follows]
89
ATTEST:
By:
LETICIA BRYSCH, City Clerk
APPROVED AS TO FORM:
By:
IGNACIO RAMIREZ, SR., City Attorney
ATTEST:
By:
LETICIA BRYSCH, Assistant Secretary
GROUND LEASE AND LICENSE AGREEMENT
SIGNATURE PAGE
LANDLORD:
CITY OF BAYTOWN, TEXAS
By:
RICHARD L. DAVIS, City Manager
TENANT:
BAYTOWN MUNICIPAL
DEVELOPMENT DISTRICT
By:
BRANDON CAPETILLO, President
APPENDIX A
TO
GROUND LEASE
Rides of Usage and Glossary of Defined Terms
Rules of Usage
1. The terms defined below have the meanings set forth below for all purposes, and
such meanings are equally applicable to both the singular and plural forms of the terms defined.
2. "Include", "includes" and "including" shall be deemed to be followed by "without
limitation" whether or not they are in fact followed by such words or words of like import.
3. "Writing", "written" and comparable terms refer to printing, typing, lithography
and other means of reproducing in a visible form.
4. Any agreement, instrument or Governmental Rule defined or referred to below or
in any agreement or instrument that is governed by this Appendix means such agreement or
instrument or Governmental Rule as from time to time amended, modified or supplemented,
including (in the case of agreements or instruments) by waiver or consent and (in the case of
Governmental Rules) by succession of comparable successor Governmental Rules and includes
(in the case of agreements or instruments) references to all attachments thereto and instruments
incorporated therein.
5. References to a Person are also to its permitted successors and assigns.
6. "Hereof', "herein", "hereunder" and comparable terms refer, unless otherwise
expressly indicated, to the entire agreement or instrument in which such terms are used and not to
any particular article, section or other subdivision thereof or attachment thereto. References in an
instrument to "Article", "Section", "Subsection" or another subdivision or to an attachment are,
unless the context otherwise requires, to an article, section, subsection or subdivision of or an
attachment to such agreement or instrument. All references to schedules, exhibits or appendices in
any agreement or instrument that is governed by this Appendix are to schedules, exhibits or
appendices attached to such instrument or agreement.
7. Pronouns, whenever used in any agreement or instrument that is governed by this
Appendix and of whatever gender, shall include natural persons, corporations, limited liability
companies, partnerships and associations of every kind and character.
8. References to any gender include, unless the context otherwise requires, references
to all genders.
9. The word "or" will have the inclusive meaning represented by the phrase "and/or."
GROUND LEASE AND LICENSE AGREEMENT
APPENDIX A
10. The phrase "and/or" when used in a conjunctive phrase, shall mean any one or more
of the Persons specified in or the existence or occurrence of any one or more of the events,
conditions or circumstances set forth in that phrase; provided, however, that, when used to
describe the obligation of one or more Persons to do any act, it shall mean that the obligation is the
obligation of each of the Persons but that it may be satisfied by performance by any one or more of
them.
11. "Shall" and "will" have equal force and effect.
12. Unless otherwise specified, all references to a specific time of day in any agreement
or instrument that is governed by this Appendix shall be based upon Central Standard Time or
Central Daylight Savings Time, as applicable on the date in question in Baytown, Texas.
13. References to I" or to "dollars" shall mean the lawful currency of the United States
of America.
14. "Not to be unreasonably withheld "when used herein with respect to any Approval
shall be deemed to be followed by ", conditioned or delayed" whether or not it is in fact followed
by such words or words of like import.
15. References in this Ground Lease to another document, instrument or agreement, the
incorporation herein of another document, instrument or agreement or the incorporation herein of
a provision or defined term from another document, instrument or agreement shall not be affected
by the termination, expiration, amendment or modification of such document, instrument or
agreement, unless expressly stated herein otherwise or as a result of an amendment to or
modification of this Ground Lease pursuant to the terms hereof. Additionally, any term defined
below by reference to any Governmental Rule has such meaning whether or not such
Governmental Rule is in effect.
Glossary of Defined Terms
"Actions or Proceedings" means any legal action, lawsuit, proceeding, arbitration or other
alternative dispute resolution process, Governmental Authority investigation, hearing, audit,
appeal, administrative proceeding or judicial proceeding.
"Additional Addressees" shall have the meaning given to such term in Section 5 of
Appendix B hereof.
hereof.
"Additional Bonds" shall have the meaning ascribed to it in the Hotel Bond Indenture.
"Additional Improvements" shall have the meaning given to such term in Section 8.2.2
"Additional Work" shall have the meaning given to such term in Section 8.2.2 hereof.
GROUND LEASE AND LICENSE AGREEMENT
APPENDIX A
"Adiacent Convention Center Site," if applicable, means the real property adjacent to the
Premises on which the Convention Center is located as of the Effective Date and as more
particularly described on Exhibit A-3 attached hereto and incorporated herein.
"Affiliate" of any Person means any other Person directly or indirectly controlling, directly
or indirectly controlled by or under direct or indirect common control with such Person. As used
in this definition, the term "control", "controlling" or "controlled by" shall mean the possession,
directly or indirectly, of the power either to (a) vote fifty percent (50%) or more of the securities or
interests having ordinary voting power for the election of directors (or other comparable
controlling body) of such Person or (b) direct or cause the direction of management or policies of
such Person, whether through the ownership of voting securities or interests, by contract or
otherwise, excluding in each case, any lender of such Person or any Affiliate of such lender.
"Appropriation" means with respect to any payment obligation or other monetary
obligation of Landlord that may from time to time exist or arise under the Ground Lease, the City
Facilities Lease, or the Marina Site Parking Agreement, as applicable, during a Fiscal Year, the
adoption by City Council of a budget for such Fiscal Year that includes the amount of such
payment or other monetary obligation and certification by the Director of Finance of the City that
the funds are or will be available for the same, all pursuant to applicable Governmental Rule.
"Approval," "Approve" or "Approved" means (a) with respect to any item or matter for
which the approval of Landlord or the Landlord Representative is required under the terms of this
Ground Lease, the specific approval of such item or matter by Landlord or the Landlord
Representative, as applicable, pursuant to a written instrument executed by Landlord or the
Landlord Representative, as applicable, delivered to Tenant, which shall not include any implied
or imputed approval and no approval by Landlord or the Landlord Representative pursuant to this
Ground Lease shall be deemed to constitute or include any approval required under any City Code
or in connection with any Govemmental Functions of the City, unless such written approval shall
so specifically state; (b) with respect to any item or matter for which the approval of Tenant is
required under the terms of this Ground Lease, the specific approval of such item or matter by
Tenant pursuant to a written instrument executed by the Tenant Representative and delivered to
the Landlord, and shall not include any implied or imputed approval; (c) with respect to any item
or matter for which the approval of the Leasehold Mortgagee is required under the terms of the
Ground Lease, the specific approval of such item or matter by the Leasehold Mortgagee pursuant
to a written instrument executed by the Leasehold Mortgagee and delivered to Landlord or Tenant,
as applicable, and shall not include any implied or imputed approval; and (d) with respect to any
item or matter for which the approval of any other Person is required under the terms of this
Ground Lease, the specific approval of such item or matter by such Person pursuant to a written
instrument executed by a duly authorized representative of such Person and delivered to Landlord
or Tenant, as applicable, and shall not include any implied or imputed approval. Notwithstanding
Section 28 of Appendix B, if Landlord or Tenant does not respond in writing to a request for
Approval within a time period specified herein, then the Party seeking such Approval shall send a
second written request for such Approval (a "Second Notice") to the other, and if Landlord or
Tenant, as the case may be, does not respond in writing to such Second Notice within five (5)
Business Days, then Landlord or Tenant, as the case may be, shall be deemed to have Approved. If
an item for Landlord's Approval is required by the Operator, Landlord may withhold its approval
GROUND LEASE AND LICENSE AGREEMENT
APPENDIX A
�I
only for a reason that is demonstrably paramount to Hotel Operating Standards, and in such
manner that Landlord's failure to approve will not put Tenant in non-compliance with the
Operating Agreement.
"Architect" means the Qualified Design Professional that enters into the Project
Improvements Design Contract.
"Asset Transfer" means any direct or indirect sale, assignment, transfer, sublease, license
or other disposition of the Project, the Leasehold Estate, the Licenses, the Project Improvements or
any right, title, interest or obligation of Tenant in and to the Premises, or the Convention Center
Premises, under this Ground Lease, the City Facilities Lease, the Development Agreement or any
other Project Documents, whether voluntarily, involuntarily, by operation of law or otherwise
(including by way of merger or consolidation).
"Assignment and Assumption Agreement", as such term is used in the Ground Lease,
shall have the meaning given to such term in Section 12.3.4 hereof.
"Auto Policv " means a business automobile liability insurance policy.
"Auto Policy for Additional Work" shall have the meaning given to such term in Section
7.1.2 hereof.
"Auto Policy for Hotel Proiect Improvements Work" shall have the meaning given to
such term in Section 7.1.1(b) hereof.
"Base Term" shall have the meaning given to such term in Section 3.1 hereof.
"Basic Rental" and "Basic Rentals" shall have the meaning given to such terms in Section
4.1.2 hereof.
"Blocked Person" shall have the meaning given to such terms in Section 1.4.1 hereof.
"Board" shall mean the Board of Directors of the Tenant or any successor governing
board.
"Booking Agreement " means the Booking Agreement dated as of the Effective Date by
and between Landlord and Tenant and acknowledged by the Operator, as the same as amended,
supplemented, modified, renewed, or extended from time to time in accordance with the terms
thereof.
"Brand" means the hotel brand of the Hotel as approved by the City Council and Tenant.
"Builder's All Risk Policy for Additional Work" shall have the meaning given to such
term in Section 7.1.2(a) hereof
"Builder's All Risk Policy for Hotel Proiect Improvements Work" shall have the
meaning given to such term in Section 7.1.1(a) hereof.
GROUND LEASE AND LICENSE AGREEMENT
APPENDIX A
iv
EXHIBIT D
TO
GROUND LEASE
Form of Memorandum of Ground Lease
MEMORANDUM OF GROUND LEASE AND LICENSE AGREEMENT
THE STATE OF TEXAS
COUNTY OF HARRIS
THIS MEMORANDUM OF GROUND LEASE AND LICENSE AGREEMENT (this
"Memorandum") is made and entered into effective as of the , by and
between THE CITY OF BAYTOWN, TEXAS, a Texas municipal corporation and home -rule
city of the State of Texas principally situated in Harris County, Texas, acting by and through its
governing body, the City Council ("Landlord") and BAYTOWN MUNICIPAL
DEVELOPMENT DISTRICT, a political subdivision of the State of Texas and the City of
Baytown acting by and through its governing body, the Board of Directors ("Tenant").
A. Landlord and Tenant have entered into that certain Ground Lease and License
Agreement (the "Ground Lease") dated effective as of , pursuant to
which Landlord has leased to Tenant, and Tenant has leased from Landlord, that certain real
property described on Exhibit A attached hereto and incorporated herein, together with the
subterranean rights below the real property described on Exhibit A, all as more particularly
described by metes and bounds in Exhibit A (the "Leased Premises"):
B. Pursuant to the Ground Lease, Landlord has agreed to grant to Tenant certain
Licenses in and to the Licensed Areas pursuant to Section 2.2 of the Ground Lease.
C. Landlord and Tenant desire to execute this Memorandum to provide notice of
Tenant's rights, titles and interest under the Ground Lease and in and to the Leased Premises and
the Licensed Areas.
For good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the Parties agree as follows:
Section 1. Definitions and UsaLye. Unless the context shall otherwise require,
capitalized terms used in this Memorandum shall have the meanings assigned to them in the
Ground Lease, which also contains rules as to usage that shall be applicable herein.
GROUND LEASE AND LICENSE AGREEMENT
EXHIBIT D
Section 2. Lease. The Leased Premises have been leased to Tenant pursuant to the
terms and conditions of the Ground Lease, which is incorporated by reference in its entirety in this
Memorandum.
Section 3. License. The Licensed Premises have been licensed to Tenant pursuant to
the terms and conditions of the Ground Lease which is incorporated by reference in its entirety in
this Memorandum. The Licensed Premises are comprised of Tenant's Access and Maintenance
Area (being more particularly described on Exhibit D attached hereto), which Licenses are
irrevocable during the applicable License Term.
Section 4. Lease Term. The Landlord has leased the Leased Premises to Tenant for a
Base Term commencing at 12:00 a.m. on (the "Effective Date") and ending,
unless sooner terminated in accordance with the provisions of the Ground Lease, at 11:59 p.m. on
the date which is thirty (30) years after the Effective Date.
Section 5. License Term. Landlord has licensed to Tenant, commencing at 12:00
a.m. on and ending, unless sooner terminated in accordance with the provisions of
the Ground Lease, as to the Tenant Access and Maintenance Area, at the expiration of the Base
Term, as may be extended for two (2) additional periods of thirty (30) years each in accordance
with the terms and conditions of the Ground Lease.
Section 6. Successors and Assizns. This Memorandum and the Ground Lease shall
bind and inure to the benefit of the Parties and their respective successors and assigns, subject
however, to the provisions of the Ground Lease regarding assignment.
Section 7. Conflict. In the event of any conflict or inconsistency between this
Memorandum and the Ground Lease, the Ground Lease shall control.
[Signature Page Follows]
GROUND LEASE AND LICENSE AGREEMENT
EXHIBrr D
LANDLORD:
CITY OF BAYTOWN, TEXAS
By:_
Name:
Title:
TENANT:
By:
Name:
Title:
STATE OF TEXAS §
COUNTY OF HARRIS §
This instrument was acknowledged before me on , 2019 by ,
of the City of Baytown, Texas, a Texas municipal corporation and home -rule city
of the State of Texas principally situated in Harris County, Texas, acting by and through the
governing body, the City Council, on behalf of said municipal corporation.
{SEAL}
Printed Name:
Notary Public in and for the
State of Texas
My Commission Expires:
STATE OF §
COUNTY OF §
This instrument was acknowledged before me on , 2019 by
of , a
{SEAL}
GROUND LEASE AND LICENSE AGREEMENT
EXHIBrr D
IN
Printed Name:
Notary Public in and for the
State of
My Commission Expires:
EXHIBIT E
TO
GROUND LEASE
Form of Assignment and Assumption Agreement
ASSIGNMENT AND ASSUMPTION AGREEMENT
That [ , a ] ("Assignor"),
for and in consideration of the sum of TEN and NO/100 DOLLARS ($10.00) in hand paid to
Assignor by r ], a [ ] ("Assignee"), and other
good and valuable consideration, the receipt and sufficiency of all of which is hereby
acknowledged by Assignor, has TRANSFERRED and ASSIGNED, and by these presents does
TRANSFER and ASSIGN unto the said Assignee all of Assignor's right, title and interest in, to
and under the following:
The Ground Lease and License Agreement dated
(the "Ground Lease") by and between The City
of Baytown, Texas ("City") and The Baytown Municipal Development District
Tenant");
2. The Development Agreement dated _ by and among the City,
Garfield Public/Private LLC (the 'Developer") and Tenant (the 'Development
Agreement"); and
All other Project Documents and, to the extent the Debt thereunder is to remain
outstanding, the Financing Documents (as each are defined in the Ground Lease).
ACCEPTANCE AND ASSUMPTION
For good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged by Assignee, Assignee hereby (i) agrees to be bound by all of the terms, conditions
and provisions of the Ground Lease and Leasehold Mortgage and (ii) assumes full responsibility,
on and after the Effective Date (as defined below) hereof, for the performance of all the duties and
obligations of Assignor under the Ground Lease and Leasehold Mortgage arising on and after the
Effective Date hereof.
ASSIGNEE'S REPRESENTATIONS
For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged
by Assignee, Assignee hereby represents and warrants to Assignor and the City, as of the Effective
Date hereof, as follows:
(a) Assignee is a [ 1 duly formed, valid existing, and in good
standing under the laws of [ 1, with all necessary constituent
GROUND LEASE AND LICENSE AGREEMENT
EXHIBIT E
power and authority to carry on its present business and to enter into this
Assignment and Assumption Agreement and consummate the transactions herein
contemplated;
(b) Neither the execution and delivery of this Assignment and Assumption Agreement
by Assignee nor the performance by Assignee of its obligations hereunder or under
the Ground Lease, all other Project Documents and the Financing Documents will
(i) violate any statute, rule, regulation, judgment, order, decree, stipulation,
injunction, charge, or other restriction of any Governmental Authority (as defined
in the Ground Lease) or court to which Assignee is subject or any provision of any
charter or by-laws or constituent documents, as applicable, of Assignee or (ii)
conflict with, result in a breach of, constitute default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify or
cancel or require any notice under any contract, lease, sublease, license, sublicense,
franchise, permit, indenture, agreement or mortgage for borrowed money,
instrument of indebtedness, security interest or other agreement to which Assignee
is a party or by which Assignee or its assets are bound;
(c) All proceedings required to be taken by or in behalf of Assignee to authorize
Assignee to execute and deliver this Assignment and Assumption Agreement and
to perform the covenants, obligations and agreement of Assignee hereunder have
been duly taken. No consent to the execution or delivery of this Assignment and
Assumption Agreement or the performance by Assignee of its covenants,
obligations, and agreements hereunder is required from any partner, board of
directors, shareholder, creditor, investor, judicial, legislative or administrative
body, Governmental Authority or any other Person (as defined in the Ground
Lease), other than any such consent which has already been unconditionally given.
(d) This Assignment and Assumption Agreement constitutes the valid and legally
binding obligation of Assignee, enforceable in accordance with its terms and
conditions, except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws presently or hereafter in effect,
affecting the enforcement of creditor's rights generally and by general principles of
equity whether applied in any proceeding at law or in equity.
(e) There is no action, suit, claim, proceeding or investigation pending or to the
Assignee's knowledge currently threatened against Assignee that questions the
validity of this Assignment and Assumption Agreement or the transactions
contemplated herein or that could either individually or in the aggregate have
material adverse effect on the assets, conditions, affairs or prospects of Assignee,
financially or otherwise, or any change in the current equity ownership of
Assignee, nor is Assignee aware that there is any basis for any of the foregoing.
Further, Assignee agrees that in the event any of the express representations or warranties made in
this Assignment and Assumption Agreement by Assignee shall be found to have been intentionally
incorrect in any material respect when made, such circumstances shall constitute a "Tenant
Default" under the Ground Lease, a "Developer Default" under the Development Agreement and a
GROUND LEASE AND LICENSE AGREEMENT
EXHIBIT E
ffl
default under all other Project Documents (for which any cure period provided for therein shall be
deemed to have lapsed without cure).
EXECUTED by Assignor as of ( , _� (the "Effective
Date").
GROUND LEASE AND LICENSE AGREEMENT
EXHIBIT E
um
ASSIGNOR:
By:
Name:
Title:
ASSIGNEE:
By:
Name:
Title:
EXHIBIT F
TO
GROUND LEASE
Permitted Encumbrances
GROUND LEASE AND LICENSE AGREEMENT
EXHIBIT F
EXHIBIT G
TO
GROUND LEASE
Parking Land
"Business Day" means any day other than a Legal Holiday.
"Business Hours" means 9:00 a.m. through 5.00 p.m. Baytown time on Business Days.
"Business Interruption Policy" means either a business interruption insurance policy or,
alternatively, sub -limit coverage under the Property Insurance Policy.
"Capital Leases" as applied to any Person, means any lease of any Property by such
Person as tenant which would, in accordance with GAAP, be required to be classified and
accounted for as a capital lease on the balance sheet of such Person.
"Cash Management Agreement" means the Cash Management and Lockbox Agreement,
dated as of , 20_, by and among the Depository Bank, the Trustee, the MDD and
the Operator.
"Casual " means damage, destruction or other property casualty resulting from any fire
or any Force Majeure or other sudden, unexpected or unusual cause.
"Casualty Repair Work" shall have the meaning given to such term in Section 10.1
hereof.
"Casualty Shortfall Fundin!" means the difference between the reasonably anticipated
cost of any Casualty Repair Work on the one hand, and the amount of the Insurance Proceeds
related thereto, plus any deductibles and self-insured retention, on the other hand.
"CC Down Times" shall have the meaning given to such term in Section 5.12 hereof.
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, 42 U.S.C. § 9601 et sec , as amended.
"Chance in Control" means any direct or indirect issuance or transfer of any securities or
interests having ordinary voting power for the election of directors (or other comparable
controlling body) of any Person or any transfer of an equity or beneficial interest in any Person that
directly or indirectly results in either (i) a change of the Controlling Person of Tenant, or (ii) the
creation of a Controlling Person of Tenant, where none existed before.
"City" shall have the meaning given to such term in Recital A hereof.
"City Asreements" means the Project Documents to which the City is a party, and all
other documents and agreements relating thereto.
"City Codes" means all ordinances and codes from time to time adopted by the City,
including any building codes, fire or life safety codes, development codes and zoning ordinances,
as same may be amended from time to time.
"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 and Parking
GROUND LEASE AND LICENSE AGREEMENT
APPENDIX A
Facilities as set forth in the Development Agreement.
"City Controlled Entity" means, collectively, (i) any Affiliate of the City, (ii) any local
government corporation created by or for the benefit of the City and (iii) any entity created by the
City or for the benefit of the City in which the City has the power to appoint the majority of the
board of directors or the legal authority to control the actions of such entity.
"City Council" shall have the meaning given to it in the opening paragraph hereof.
"City Facilities" means the public meeting rooms and areas along with related
infrastructure and such other public facilities or infrastructure as set forth in the Development
Agreement.
"City Facilities Lease" means that certain City Facilities Lease by and between Landlord
and Tenant dated as of the Effective Date pursuant to which Landlord has granted Tenant a lease to
use the Convention Center Improvements subject to certain conditions and reservations, all as
more particularly described therein, as well as the surface parking area described in the City
Facilities Lease.
"City Facilities Lease Rentals" means the amounts, if any, payable by the Tenant under
the City Facilities Lease.
"City Facilities Lease Rentals Account" means the account of that name established and
maintained under the Hotel Bond Indenture.
"City -Owned Improvements" shall mean, collectively, the Convention Center
Improvements and the surface parking area described in the City Facilities Lease.
"City Manager" means the person from time to time serving as the City Manager or
his/her designee of the City.
"Claims" shall mean and include any and all actions, causes of action, suits, disputes,
controversies, claims, debts, sums of money, offset rights, defenses to payment, agreements,
promises, notes, losses, damages and demands of whatsoever nature, known or unknown, whether
in contract or in tort, at law or in equity, for money damages or dues, recovery of property, or
specific performance, or any other redress or recompense which have accrued or may ever accrue,
may have been had, may be now possessed, or may or shall be possessed in the future by or in
behalf of any Person against any other Person for, upon, by reason of, on account of, or arising
from or out of, or by virtue of, any transaction, event or occurrence, duty or obligation,
indemnification, agreement, promise, warranty, covenant or representation, breach of fiduciary
duty, breach of any duty of fair dealing, breach of confidence, breach of funding commitment,
undue influence, duress, economic coercion, conflict of interest, negligence, bad faith,
malpractice, violations of any Governmental Rule, intentional or negligent infliction of mental
distress, tortuous interference with contractual relations, tortuous interference with corporate
governance or prospective business advantage, breach of contract, deceptive trade practices, libel,
slander, usury, conspiracy, wrongful acceleration of any indebtedness, wrongful foreclosure or
GROUND LEASE AND LICENSE AGREEMENT
APPENDIX A
V1
attempt to foreclose on any collateral relating to any indebtedness, action or inaction, relationship
or activity, service rendered, matter, cause or thing, whatsoever, express or implied.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commencement of Hotel Project Operations" means opening for business to the public
and the actual commencement of operation of all elements of the Project Improvements in
accordance with the Hotel Operating Standard and the terms of this Ground Lease and all other
Project Documents, except such minor elements which do not prevent Tenant from operating the
Premises and the Project Improvements as a whole in accordance with the Hotel Operating
Standard.
"Comparable Hotel Properties" means hotels that (i) are upscale, full-service,
"convention center headquarters hotel' (not including so-called "budget" or "limited service"
hotels or motels) and (ii) have at least 200 keys, (iii) contain features, fmishes 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 headquarters hotel " and (iv) are located
within the continental United States (other than Las Vegas or Orlando) or Canada.
"Competitive Set" means the hotels that (i) are upscale, full-service, convention center
headquarter hotels (not including so-called "budget" or "limited service" hotels or motels) and (ii)
have at least 200 keys, (iii) contain features, fmishes 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 headquarter hotels and (iv) are located within the continental
United States (other than Las Vegas or Orlando) or Canada); 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.
"Competitor" shall have the meaning given to such terms in Section 1.4.1 hereof.
"Compliance Certificate" shall mean a certificate by Tenant detailing compliance with
the Operating Standards as set out in Section 5.14.1 of the Ground Lease, which shall include the
annual RevPAR of the Hotel, the annual average RevPAR of the competitive Set and the annual
RevPAR for the Hotel compared as a percentage of the annual average RevPAR for the
Competitive Set. .
"Condemnation Action" means a taking by any Governmental Authority (or other Person
with power of eminent domain) by exercise of any right of eminent domain or by appropriation
and an acquisition by any Governmental Authority (or other Person with power of eminent
domain) through a private purchase in lieu thereof, provided that such term shall not include the
GROUND LEASE AND LICENSE AGREEMENT
APPENDIX A
Vii
dedication of any portion of the Project Improvements necessary to obtain building permits or to
comply with any other applicable Governmental Rule respecting the construction of the Project
Improvements.
"Condemnation Award" means all sums, amounts or other compensation for all or a
portion of the Project Improvements and the Premises, or the Convention Center Premises and the
Convention Center Improvements, as applicable.
"Condemnation Trustee" means the Leasehold Mortgagee (or the Leasehold Mortgagee
having senior priority), or if no Leasehold Mortgagee then exists or if the Leasehold Mortgagee so
designated does not satisfy the following requirements for being a Condemnation Trustee, then an
Institutional Lender having offices in the State of Texas, designated by Tenant and Approved by
Landlord, but only if, and for so long as, the Leasehold Mortgagee or Institutional Lender satisfies
all of the following requirements:
(a) such Person is not an Affiliate of Tenant, the Operator or any of their
Principals; and
(b) such Person delivers Notice to Landlord that such Person has agreed to act
as the Condemnation Trustee under the terms of this Ground Lease and agrees for the
benefit of Landlord, the Tenant, and if applicable, the Leasehold Mortgagee, that during all
times such Person acts as the Condemnation Trustee it will (x) receive and disburse
Condemnation Awards pursuant to the terms of this Ground Lease and (y) will notify
Landlord and Tenant of its removal or resignation as Condemnation Trustee at least thirty
(30) Business Days prior to the effective date of any such removal or resignation.
During such periods as (i) there is no Leasehold Mortgagee, (ii) there is no Institutional Lender
qualified to serve and then serving as Condemnation Trustee or (iii) the Leasehold Mortgagee so
designated does not satisfy the above requirements for being a Condemnation Trustee and Tenant
shall fail to designate a Condemnation Trustee in accordance with the above, then, in any such
event, Landlord shall act as Condemnation Trustee.
"Condemnation Work" shall have the meaning given to such term in Section 11.2.2
hereof.
"Conditions to Commencement of the Oneratins! Term" shall have the meaning given
to such term in Section 3.1.2 hereof.
"Construction Documents" shall mean, collectively, the Hotel Construction Documents
and the Convention Center Improvements Construction Documents.
"Construction Term" shall have the meaning given to such term in Section 3. 1.1 hereof.
"Contaminated Materials" means (a) any petroleum or petroleum products, metals,
gases, chemical compounds, radioactive materials, asbestos, urea formaldehyde foam insulation,
transformers or other equipment that contain dielectric fluid containing polychlorinated biphenyls,
lead paint, putrescible and infectious materials, and radon gas; (b) any chemicals or substances
GROUND LEASE AND LICENSE AGREEMENT
APPENDIX A
defined as or included in the definition of "hazardous substances", "hazardous wastes", "hazardous
materials", "extremely hazardous wastes", "restricted hazardous wastes", "toxic substances",
"toxic pollutants", 'contaminants" or "pollutants", or words of similar import, under any
applicable Environmental Law; and (c) any other chemical, material or substance, exposure to
which is prohibited, limited or regulated by any applicable Environmental Law or Governmental
Authority or which is regulated because of its adverse effect or potential adverse effect on health
and the environment, including soil and construction debris that may contain any of the materials
described in this definition.
"Contractors' Equipment" means all equipment used by any contractor in connection
with any Work, whether owned, hired or leased.
"Controlling Person of Tenant" means the Board of Tenant.
"Convention Center" means the Convention Center Improvements.
"Convention Center Improvements" means all Improvements covered by the City
Facilities Lease, including, without limitation, meeting space, ballroom facilities, kitchen, dining,
laundry, and all other Improvements of any kind whatsoever appurtenant thereto or comprising a
part of any of the same and defined as part of such Improvements in the City Facilities Lease and
all appurtenances and amenities relating to any of the same.
"Convention Center Improvements Construction Documents" shall mean the
"Construction Documents" as such term is defined in the Convention Center Improvements
Design Build Agreement
"Convention Center Improvements Design Build Agreement" shall mean that certain
Design -Build Agreement and General Conditions between City, Developer, and the
Design -Builder, dated as of September 27?, 2018], as the same may be amended, modified or
otherwise restated from time to time.
"Convention Center Premises" shall have the meaning given to such term in the City
Facilities Lease. Any reference to the "Convention Center Premises" shall include any part or
portion thereof unless the context otherwise requires.
"County " means Harris County.
"Crime Policy" means a commercial crime insurance policy.
"Debt" means for any Person without duplication:
(a) indebtedness of such Person for borrowed money;
(b) obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments;
GROUND LEASE AND LICENSE AGREEMENT
APPENDIX A
ix
(c) obligations of such Person to pay the deferred purchase price of Property or
services;
(d) obligations of such Person as tenant under Capital Leases;
(e) obligations of such Person under direct or indirect guaranties in respect of,
and obligations (contingent or otherwise) of such Person to purchase or otherwise
acquire, or otherwise to assure a creditor against loss in respect of, indebtedness or
obligation of another Person of the kinds referred to in clauses (a) through (d)
above; and
(f) indebtedness or obligations of others of the kinds referred to in clauses (a)
through (e) secured by any Lien on or in respect of any Property of such Person.
"Default Rate" means the Municipal Index Rate plus three percent (3%) per annum;
provided that it shall not exceed the Maximum Lawful Rate.
"Delay Liquidated Damages" shall have the meaning given to such term in Section
3.1.4(a) hereof.
Delay Liquidated Damages Reserve Account" shall have the meaning given to such term
in Section 3.1.4(a) hereof.
"Depository Bank" means , a national banking association,
in its capacity as the depository of Gross Operating Revenues from the Hotel Project in accordance
with the Cash Management Agreement.
"DesiEn-Builder" means DPR Construction, a General Partnership, and its permitted
successors and assigns.
"Developer" means Garfield Public/Private LLC, a Texas limited liability company, and
any permitted successors and assigns.
"Developer Default" means a default or event of default (howsoever defined) on the part
of Developer under the Development Agreement.
"Development Agreement" means that certain Master Development Agreement dated
September 13, 2018 by and among Landlord, Developer and Tenant, as the same may be amended,
supplemented, modified, renewed or extended in accordance with the terms thereof.
"Down Times" shall have the meaning given to such term in Section 5.4.2 hereof.
"DTPA" shall have the meaning given to such term in Section 15.4 hereof.
"Economic Development Support Agreement," or "EDSA, " means the agreement
between the City and Tenant, pursuant to which the City has agreed to provide certain economic
development payments as set forth in the EDSA.
GROUND LEASE AND LICENSE AGREEMENT
APPENDIX A
"Effective Date" shall have the meaning given to such term in the opening paragraph
hereof.
"Emereency" means any circumstance in which (i) Tenant, Landlord or the Person in
question, as applicable, in good faith believes that immediate action is required in order to
safeguard lives, Property or the environment against the likelihood of injury, damage or
destruction due to an identified threat or (ii) Governmental Rule require that immediate action is
taken in order to safeguard lives, Property or the environment.
"Employment Practices Policy " means an employment practices liability insurance
policy.
"Encumbrances" means any defects in, easements, covenants, conditions or restrictions
affecting, or liens or any other encumbrances of any kind on, the title to the Premises or all or any
part of the Project Improvements, whether evidenced by written instrument or otherwise
evidenced.
"Environmental Claims" means any and all Claims that any Person may now or hereafter
have in connection with or as a result of the condition of any Property, any existing or past
Environmental Release of any Contaminated Materials from any Property or into the ground,
ground water or surface water of any Property, the existence of any Environmental Proceedings
with respect to any Property or its operation or the violation of any Environmental Laws with
respect to any Property or its operation.
"Environmental Event" means the occurrence of any of the following: (i) any
noncompliance with an Environmental Law; (ii) an environmental condition requiring responsive
action, including an environmental condition caused by a third Person; (iii) any event on, at or
from the Property in question or related to the operation thereof of such a nature as to require
reporting to applicable Governmental Authorities under any Environmental Law, (iv) an
emergency environmental condition, (v) the existence or discovery of any spill, discharge,
leakage, pumpage, drainage, pourage, interment, emission, emptying, injecting, escaping,
dumping, disposing, migration or other release or any kind of Contaminated Materials on, at or
from the Property in question which may cause a threat or actual injury to human health, the
environment, plant or animal life or (vi) any threatened or actual Environmental Claim.
"Environmental Law(s)" means any applicable Federal, State or local statute, law
(including common law tort law, common law nuisance law and common law in general), rule,
regulation, ordinance, code, permit, concession, grant, franchise, license, policy or rule of
common law now in effect or adopted in the future, and in each case as may be amended or
replaced, and any judicial or administrative interpretation thereof (including any judicial or
administrative order, consent decree or judgment) relating to (i) the environment, health, safety or
Contaminated Materials, (ii) the storage, handling, emission, discharge, release and use of
chemicals and other Contaminated Materials, (iii) the generation, processing, treatment, storage,
transport, disposal, investigation, remediation or other management of waste materials of any
kind, and (iv) the protection of environmentally sensitive areas, including CERCLA; the
Hazardous Materials Transportation Act, as amended, 49 U.S.C. § 5101 et seq.; the Resource
GROUND LEASE AND LICENSE AGREEMENT
APPENDIX A
Xi
Conservation and Recovery Act, as amended, 42 U.S.C. § 6901 et seg.; the Federal Water
Pollution Control Act, as amended, 33 U.S.C. § 1251 et sec .; the Toxic Substances Control Act, 15
U.S.0 § 2601 et seq.; the Clean Air Act, 42 U.S.C. § 7401 et seMc .; the Safe Drinking Water Act, 42
U.S.C. § 300f et seq.; the Endangered Species Act, as amended, 16. U.S.C. § 1531 et M.; the
Texas Solid Waste Disposal Act, Tex. Health & Safety Code Ann. Ch. 361 (Vernon 1990); the
Texas Clean Air Act, Tex. Health & Safety Code Ann. Ch. 382 (Vernon 1990); the Texas Water
Code, Tex. Water Code Ann. (Vernon 1988 and Supp. 1990); the Texas Hazardous Substances
Spill Prevention and Control Act, Tex. Water Code Ann. (Vernon 1988 and Supp. 1990); the
Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. § 136 et. seq.; and the Emergency
Preparedness and Response Community Right -to -Know Act, 42 U.S.C. § 11001.
"Environmental Proceeding" means:
(a) Any notice of any investigation, response action, spill, proceeding, whether
executive, administrative or judicial, or litigation or litigation threatened in writing relating
to Environmental Laws or other environmental matters concerning a Property insofar as
such investigation, response action, spill, litigation, litigation threatened in writing or
proceeding relates to such Property; or
(b) Receipt of any notice from any Person of. (i) any violation or alleged
violation of any Environmental Law relating to a Property or any part thereof or any
activity at the time conducted on any Property, (ii) the commencement of any clean-up,
abatement or control pursuant to or in accordance with any Environmental Law of any
Contaminated Materials on or about any such property or any part thereof or (iii) any
violation of any Governmental Rules or harm to Person or Property in each case with
respect to worker safety at or in connection with such Property or any part thereof.
"Environmental Release" means a "release" as said term is defined under CERCLA.
"Excess Proceeds" shall have the meaning given to such term in Section 10.4.3 hereof.
"Excess/Umbrella Policy" means an excess or umbrella liability insurance policy.
"Excess/Umbrella Policv for Additional Work" shall have the meaning given to such
term in Section 7.1.2(8) hereof.
"Excess/Umbrella Policy for Proiect Improvements Work" shall have the meaning
given to such term in Section 7.1.1(g) hereof.
"Excusable Landlord Delay" means any Landlord Delay which is caused by or
attributable to, but only to the extent of, Force Majeure.
"Excusable Landlord Delay Period" means with respect to any particular occurrence of
Excusable Landlord Delay, that number of days of delay in the performance by Landlord of its
obligations under the Ground Lease, the City Facilities Lease, or the Parking Lease, as applicable,
actually resulting from such occurrence of Excusable Landlord Delay.
GROUND LEASE AND LICENSE AGREEMENT
APPENDIX A
xii
"Excusable Tenant Delay" means any Tenant Delay which is caused by or attributable to
the, but only to the extent of, Force Majeure.
"Excusable Tenant Delay Period" means with respect to any particular occurrence of
Excusable Tenant Delay, that number of days of delay in the performance by Tenant of its
obligations under the Ground Lease, the City Facilities Lease, or the Parking Lease, as applicable,
actually resulting from such occurrence of Excusable Tenant Delay.
"Failure Notice" shall have the meaning given to it in Section 3.2.2 hereof.
"Federal Reserve Discount Rate" means the interest rate charged to individual banks for
loans they obtain from central banks of the Federal Reserve System, as such rate is published from
time to time by the Wall Street Journal or similar financial publication.
"FF&E", as such term is used in the Ground Lease, means, subject to Section 8.1.2 of the
Ground Lease, all furniture, fixtures, equipment, furnishings, machinery and other personal
property located on or in the Project Improvements and all such other items of Personalty as are
necessary for operation of the Project Improvements at the Hotel Operating Standard, including
the items of Personalty described on Exhibit C attached hereto and incorporated herein.
"FF&E Reserve Account" shall have the meaning ascribed to it in the Operating
Agreement.
"Final Completion" shall have the meaning given in the Development Agreement.
"Final Notice" shall have the meaning given to such term in Section 15.2.2 hereof.
"Financing Documents" means the Leasehold Mortgage and any other documents,
instruments and agreements executed or delivered by Tenant or any of its Affiliates or Related
Parties in favor of or for the benefit of the Leasehold Mortgagee, as the same may be amended,
supplemented, modified, renewed or extended from time to time in accordance with the terms
thereof and with the Approval of Landlord, not to be unreasonably withheld, conditioned, or
delayed.
"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 as of the date when the Project Operating Agreement is initially
executed by Tenant and the Operator. Such standards shall never be below that of the Operating
Standards of the Competitive Set.
"Force Maieure" means any act that (a) materially and adversely affects the affected
Party's ability to perform the relevant obligations under this Ground Lease, the City Facilities
Lease, or the Parking Lease, or delays such affected Party's ability to do so, (b) is beyond the
reasonable control of the affected Party, (c) is not due to the affected Party's fault or negligence
and (d) could not be avoided, by the Party who suffers it, by the exercise of commercially
reasonable efforts, including the expenditure of any reasonable sum of money and, subject to the
satisfaction of the conditions set forth in (a) through (d) above, "Force Majeure" shall include: (i)
GROUND LEASE AND LICENSE AGREEMENT
APPENDIX A
natural phenomena, such as storms, floods, lightning and earthquakes; (ii) wars, civil disturbances,
revolts, insurrections, terrorism, sabotage and threats of sabotage or terrorism; (iii) transportation
disasters, whether by ocean, rail, land or air, (iv) strikes or other labor disputes that are not due to
the breach of any labor agreement by the affected Party; (v) fires, (vi) actions or omissions of a
Governmental Authority (including the actions of the City in its capacity as a Governmental
Authority or in the exercise of its Governmental Functions) that were not voluntarily induced or
promoted by the affected Party, or brought about by the breach of its obligations under this Ground
Lease or any Governmental Rule and (vii) failure of the other Party to perform any of its
obligations under this Ground Lease within the time or by the date required pursuant to the terms
of this Ground Lease, the City Facilities Lease, or the Parking Lease, for the performance thereof;
provided, however, that under no circumstances shall Force Majeure include any of the following
events: (A) economic hardship; (B) changes in market condition, (C) any strike or labor dispute
involving the employees of Tenant or any Affiliate of Tenant, other than industry or nationwide
strikes or labor disputes; (D) weather conditions which could reasonably be anticipated by
experienced contractors operating the relevant location; (E) the occurrence of any manpower,
material or equipment shortages; or (F) any delay, default or failure (financial or otherwise) of the
Design -Builder, the Material Additional Work Construction Contractor or any subcontractor,
vendor or supplier of Tenant, the Design -Builder or the Material Additional Work Construction
Contractor.
"Foreclosure Event" shall mean and refer to any foreclosure of any Lien or security
interest or conveyance in lieu of foreclosure under the Leasehold Mortgage or any entry of a court
order ordering the assignment or transfer of the Ground Lease pursuant to which the Qualified
Lender or its Leasehold Mortgagee Designee, acquires all, and not less than all, of the Tenant's
rights, titles, interests and obligations in and to this Ground Lease, the Leasehold Estate, the Hotel
Project Improvements, and the Project Documents. A Foreclosure Event shall not relieve Tenant
of any of its obligations under this Ground Lease and any other Project Documents.
"Franchise Agreement' means that certain Francise Agreement by and between
and , dated as of , 2019, as may be amended or supplemented from time to time.
"GAAP" means generally accepted accounting principles, applied on a consistent basis, as
set forth in Opinions of the Accounting Principles Board of the American Institute of Certified
Public Accountants or in statements of the Financial Accounting Standards Board or their
respective successors and which are applicable in the circumstances as of the date in question.
Accounting principles are applied on a "consistent basis" when the accounting principles observed
in a current period are comparable in all material respects to those accounting principles applied in
a preceding period.
"GL Policv" means a commercial general liability insurance policy.
"GL Policy for Additional Work" shall have the meaning given to such term in Section
7.1.2(fl hereof.
"GL Policy for Hotel Proiect Improvements Work" shall have the meaning given to
such term in Section 7.1.1(fl hereof.
GROUND LEASE AND LICENSE AGREEMENT
APPENDIX A
XIV
"Governmental Authority" means any applicable Federal, state or local governmental
entity, authority (including any 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 the
terms of this Ground Lease, the City Facilities Lease, or the Parking Lease, as applicable, or by
agreement of the Parties.
"Governmental Authorizations" means all approvals, consents, decisions,
authorizations, certificates, confirmations, exemptions, applications, notifications, concessions,
acknowledgments, agreements, licenses, permits, import permits, employee visas, environmental
permits, decisions, right-of-ways, and similar items from any Governmental Authority, including a
liquor license from the state Alcohol and Beverage Commission.
"Governmental Function" means any regulatory, legislative, permitting, zoning,
enforcement (including police power), licensing or other functions which the City is authorized or
required to perform in its capacity as a Governmental Authority in accordance with Governmental
Rules. The entering into this Ground Lease, the City Facilities Lease, and the Parking Lease, and
the performance by Landlord of its obligations under this Ground Lease, under the City Facilities
Lease, or under the Parking Lease, shall not be considered a "Governmental Function."
"Governmental Rule(s)" 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" shall have meaning given to such term in the opening paragraph hereof.
"Hotel" means the convention center headquarters hotel to be constructed on the Leased
Premises by Developer in accordance with the terms of the Development Agreement, including all
FF&E and all Personalty owned or leased or to be owned or leased by Tenant and contained
therein which at a minimum shall be such FF&E and Personalty necessary to furnish and operate
the Hotel Project Improvements in accordance with the Hotel Operating Standard.
"Hotel Assessed Valuation" valuation of the Hotel Project Improvements under the
Leased Premises and as shown on the tax rolls of the Harris County Appraisal District or other then
applicable governmental appraising authority.
"Hotel Bond Documents" means the Hotel Bond Indenture and such other trust indentures
for the Hotel Bonds, any related bond purchase agreement and any other document or instrument
pursuant to which the Tenant obtains the funds to develop and construct the Hotel.
"Hotel Bond Indenture" means that certain Indenture of Trust dated contemporaneously
herewith between Hotel Bond Trustee and Tenant to secure the Hotel Bonds.
GROUND LEASE AND LICENSE AGREEMENT
APPENDIX A
XV
"Hotel Bond Trustee" means , in its capacity as trustee under the Hotel Bond
Indenture between Tenant and the Hotel Bond Trustee to secure the Hotel Bonds, and its permitted
successors and assigns.
"Hotel Bonds" has the meaning given in the recitals hereof.
"Hotel Construction Documents" shall mean the "Construction Documents" as such term
is defined in the Hotel Design Build Agreement.
"Hotel Design Build Agreement" shall mean that certain Amended and Restated
Design -Build Agreement and General Conditions between Tenant, Developer, and the
Design -Builder, dated as of October 2, 2018, as the same may be amended, modified or otherwise
restated from time to time.
"Hotel Operating Standard" means the operation of the Premises and the Project
Improvements on a full-service basis as an upscale, full service convention center headquarters
hotel and in a manner at least consistent with the standards of operations of the Competitive Set;
provided, however, Tenant shall not 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
Improvements, (b) undertake any actions prohibited by this Ground Lease or the Operating
Agreement, or (c) perform any structural alterations to the Project Improvements, except to the
extent otherwise required by this Ground Lease, including Maintenance and Repair Work.
"Hotel Proiect Improvements" means the Hotel, and all other Improvements of any kind
whatsoever appurtenant thereto or comprising a part of any of the same and all appurtenances and
amenities relating to any of the same excluding, however, any related or appurtenant
Improvements which are defined in the City Facilities Lease as being included in the Convention
Center Improvements.
"Hotel Proiect Improvements Work" means the design, development, construction,
furnishing and opening of the Hotel Project Improvements in accordance with the Hotel
Construction Documents.
"HVAC Systems" means heating, vacuum, air conditioning, refrigeration and chilling
systems, machinery and equipment.
"Impositions" means all real estate taxes, all personal property taxes and all possessory
interest taxes imposed or assessed upon the Leased Premises, the Hotel Project Improvements, or
on any items of Property (including the Personalty) located in the Hotel Project Improvements, all
use and occupancy taxes, all excises, levies, license and permit fees, general and special, ordinary
and extraordinary, foreseen and unforeseen (including, without limitation, assessments for public
improvements and betterment, and any mass transit, park, child care and art contributions,
assessments or fees), that are, with respect to this Ground Lease or the City Facilities Lease,
assessed, levied, charged, confirmed or imposed upon or with respect to or become payable out of
or become a Lien on the Leasehold Estate, the Hotel Project Improvements, on any items of
Property (including the Personalty) located in the Hotel Project Improvements the appurtenances
GROUND LEASE AND LICENSE AGREEMENT
APPENDIX A
xvt
thereto, or for any use or occupation the Hotel Project Improvements, or such franchises, licenses
and permits as may be appurtenant or related to the use of the Leased Premises, or the Hotel
Project Improvements, this transaction or any documents to which Tenant is a party, creating or
transferring an interest or estate in the Leasehold Estate, or any real estate taxes, assessments,
excises, levies or fees, general or special, ordinary or extraordinary, foreseen or unforeseen, that
are levied, imposed or assessed upon the fee simple estate in and to the Leased Premises (except
any tax, assessment, excise, levy or fee payable with respect to the receipt of Rentals or other sums
under the Ground Lease, or the receipt of any surface parking rentals). The term "Impositions"
shall not mean or include, and Landlord and not Tenant shall pay, prior to delinquency, any
municipal, state, county or Federal income, excess profits or sales taxes assessed against Landlord
or any municipal, state, county or Federal capital, levy, estate, succession, inheritance or transfer
taxes of Landlord (on a sale or other transfer of the fee estate in the Premises or the Convention
Center Premises by Landlord other than a transfer to Tenant) or any franchise taxes imposed upon
any corporate owner of the fee estate in the Premises or the Convention Center Premises or any
part thereof, provided, however, that if, at any time during the Lease Term or the City Facilities
Lease Term, as applicable, the methods or scope of taxation or assessment of real estate prevailing
on the Effective Date shall be so changed that there shall be substituted for the whole or any part of
the real estate taxes, assessments, levies, impositions or charges now or hereafter levied, assessed
or imposed on real estate and the improvements thereon or upon the possessory interest of Tenant
in the Leasehold Estate or upon the Leased Premises the Hotel Project Improvements or any of the
Personalty described above in this defmition, a capital levy or other tax levied, assessed or
imposed on any of the Rentals payable by Tenant to Landlord under this Ground Lease, then all
such capital levies or other taxes shall, to the extent that they are so substituted, be deemed to be
included within the term "Impositions".
"Improvements" means all structures or other improvements of any kind whatsoever,
whether above or below grade, whether now existing or hereafter constructed, and including
buildings, the foundations and footings thereof, utility installations, storage, loading and parking
facilities, walkways, driveways, landscaping, signs, site lighting, site grading and earth movement
and all fixtures, plants, apparatus, appliances, furnaces, boilers, machinery, engines, motors,
compressors, dynamos, elevators, fittings, piping, connections, conduits, ducts and equipment of
every kind and description now or hereafter affixed or attached to any of such buildings, structures
or improvements and used or procured for use in connection with the heating, cooling, lighting,
plumbing, ventilating or general operation of any of such buildings, structures or improvements,
and any exterior additions, changes or alterations thereto or replacements or substitutions therefor.
"Index" means the Consumer Price Index for All Urban Consumers, All Items, for the
market area that includes the Hotel, as published by the Bureau of Labor Statistics of the United
States Department of Labor, using the years 1982-84 as a base of 100, or if such index is
discontinued, the most comparable index published by any federal Governmental Authority on
which the duties in connection with such index shall devolve or such other official index as agreed
by the Parties.
"Initial Competitive Set" means, with respect to the Competitive Set, 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.
GROUND LEASE AND LICENSE AGREEMENT
APPENDIX A
xvii
"Initial Occupancy" means the first night a Person pays for the use or possession of or the
right to the use or possession of a room or space at the Hotel.
"Initial Operator" shall have the meaning given to such term in Section 5.4.6 hereof.
"Insolvency Event" means, with respect to any Person, (a) such Person's or any of its
Major Subsidiaries' (i) failure to not generally pay its debts as such debts become due, (ii)
admitting in writing its inability to pay its debts generally or (iii) making a general assignment for
the benefit of creditors; (b) any proceeding being instituted by or against such Person or any of its
Major Subsidiaries (i) seeking to adjudicate it a bankrupt or insolvent, (ii) seeking liquidation,
winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its
debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors or (iii)
seeking the entry of an order for relief or the appointment of a receiver, trustee or other similar
official for it or for any substantial part of its Property and, in the case of any such proceeding
instituted against such Person or any such Major Subsidiary, either such proceeding shall remain
undismissed for a period of ninety (90) Business Days or any of the actions sought in such
proceeding shall occur; or (c) such Person's or any of its Major Subsidiaries' taking any corporate
action to authorize any of the actions set forth above in this definition.
"Installation Floater Policy for Additional Work" shall have the meaning given to such
term in Section 7.1.2(a) hereof.
"Installation Floater Policy for Hotel Proiect Improvements Work" shall have the
meaning given to such term in Section 7.1.1(a) hereof.
"Insurance Account" means the account of that name established and maintained under the
Hotel Bond Indenture.
"Insurance Covenant", as such term is used in the Ground Lease, means all of the
covenants and agreements of Tenant with respect to insurance policies and coverages to be
maintained by Tenant pursuant to and in accordance with ARTICLE 7 hereof.
"Insurance Plan Additional Requirements" means those Insurance Plan Additional
Requirements listed under Appendix D of this Ground Lease.
"Insurance Proceeds" means all insurance proceeds paid pursuant to the policies of
insurance required under ARTICLE 7 hereof, ARTICLE 7 of the City Facilities Lease, or
ARTICLE III of the Parking Lease, as applicable, for loss of or damage to the Project
Improvements.
"Insurance Trustee" means the Leasehold Mortgagee (or the Leasehold Mortgagee
having senior priority) or, if no Leasehold Mortgagee then exists or if the Leasehold Mortgagee so
designated does not satisfy the following requirements for being an Insurance Trustee, then an
Institutional Lender having offices in the State, designated by Tenant and Approved by Landlord,
but only if, and for so long as, the Leasehold Mortgagee or Institutional Lender satisfies all of the
following requirements:
GROUND LEASE AND LICENSE AGREEMENT
APPENDIX A
Xviii
(a) such Person is not an Affiliate of Tenant, the Operator or any of their
Principals; and
(b) such Person delivers a written notice to Landlord that such Person has
agreed to act as the Insurance Trustee under the terms of the Ground Lease and agrees for
the benefit of Landlord, the Tenant, and if applicable, the Leasehold Mortgagee, that
during all times such Person acts as the Insurance Trustee it will (x) receive and disburse
Insurance Proceeds pursuant to the terms of the Ground Lease and (x) will notify Landlord
and Tenant of its removal or resignation as Insurance Trustee at least thirty (30) Business
Days prior to the effective date of any such removal or resignation.
During such periods as (i) there is no Leasehold Mortgagee, (ii) there is no Institutional Lender
qualified to serve and then serving as Insurance Trustee or (iii) the Leasehold Mortgagee so
designated does not satisfy the above requirements for being an Insurance Trustee and Tenant shall
fail to designate an Insurance Trustee in accordance with the above, then, in any such event,
Landlord shall act as Insurance Trustee.
"Interim Operator" shall have the meaning given to such term in Section 5.4.6 hereof.
"Landlord", as such term is used in the Ground Lease, means (i) as of the Effective Date,
the meaning given to such term in the opening paragraph hereof and (ii) thereafter, any Landlord
Transferee, after Notice to Tenant in accordance with Section 12.9 of the Ground Lease, provided
that such Landlord Transferee assumes all of the obligations of Landlord under the Ground Lease
in accordance with Section 12.9. References to "Landlord" in the Ground Lease shall mean the
City solely in its capacity as Landlord of the Premises, and only for so long as it is the owner of
record of fee simple title to the Premises.
"Landlord Delav" means any delay by Landlord in achieving any deadlines for
performance of its obligations under the Ground Lease or the City Facilities Lease, as applicable.
"Landlord Indemnitees" means any Person who is a Related Party to Landlord.
"Landlord Insured" means Landlord and its elected and appointed officials (during such
period of time as the City or a City Controlled Entity is Landlord), employees, volunteers, agents,
auditors, advisors, consultants, servants, counsel, contractors, subcontractors (of any tier), lessees,
sublessees (of any tier), licensees, sublicensees (of any tier), lenders, successors, assigns and legal
representatives.
"Landlord Representative", as such term is used in the Ground Lease, shall have the
meaning given to such term in Section 1.3 hereof.
"Landlord Transfer" means any sale, conveyance, assignment or other transfer by
Landlord of the Premises, the Ground Lease, and/or the Convention Center Premises, the City
Facilities Lease, the other Project Documents or any part thereof or interest therein by Landlord,
including the grant by Landlord of any easements, licenses, rights of way or similar Encumbrances
on the Premises, and/or the Convention Center Premises, which are not prohibited under the
Ground Lease or the City Facilities Lease, as applicable.
GROUND LEASE AND LICENSE AGREEMENT
APPENDIX A
xix
"Landlord Transferee", as such term is used in the Ground Lease, shall have the meaning
given to such term in Section 12.9 hereof.
"Landlord's Access and Maintenance Area" means the real property, if any, described
on Exhibit A-6 attached hereto and incorporated herein.
"Landlord's Account" shall have the meaning given to such term in Appendix C of the
Ground Lease.
"Lease Expiration Date" means the last calendar day of the calendar year which is thirty
(30) years following the Effective Date, unless (i) Tenant timely exercises the Renewal Term
Option in accordance with the terms of this Ground Lease, in which event the term "Lease
Expiration Date" shall mean the last day of the exercised Renewal Term, or (ii) sooner terminated
pursuant to any applicable provisions of the Ground Lease, in which event such date of termination
shall be the Lease Expiration Date.
"Lease Term" shall mean the Base Term, or if any Renewal Term Option is exercised, the
Base Term, as extended by any Renewal Term.
"Lease Year" means each twelve (12) full calendar months which comprise a calendar
year during the Lease Term; provided, however, that (a) if the Effective Date occurs on a day other
than the first (1") day of a calendar year, the first Lease Year shall commence on the Effective Date
and conclude on the last day of such calendar year and (b) if the Lease Expiration Date shall occur
on a day other than the last day of such calendar year, the last Lease Year shall commence on the
first (1") day of such calendar year and conclude on the Effective Date.
"Leased Premises" shall have the meaning given to such term in Section 2.1 hereof. Any
reference to the "Leased Premises" shall include any part or portion thereof unless the context
otherwise requires.
"Leasehold Estate" means the leasehold estate in the Leased Premises granted under this
Ground Lease and all other rights, titles and interest granted under this Ground Lease except for
the Licenses in the Licensed Areas.
"Leasehold Mortgage" means the Mortgage given by Tenant covering and encumbering
substantially all of Tenant's right, title and interest in and to the Leasehold Estate, the Hotel Project
Improvements, Tenant's interest in the Licenses (but not Landlord's fee estate in the Premises),
and Tenant's rights under this Ground Lease and the other Project Documents
"Leasehold Mortgagee" means, for only so long as the applicable Debt is outstanding the
Hotel Bond Trustee.
"Leasehold Mortgagee Designee" means any Person controlled by the Leasehold
Mortgagee that is designated by such Leasehold Mortgagee to (a) acquire the interests of Tenant
under this Ground Lease in connection with a Foreclosure Event or (b) be a New Lessee under a
New Lease.
GROUND LEASE AND LICENSE AGREEMENT
APPENDIX A
xx
"Legal Holiday" means any day, other than a Saturday or Sunday, on which the City's
administrative offices are closed for business.
"Liabilities" shall have the meaning given to such term in Section 7.8.1 hereof.
"License Term" shall have the meaning given to such term in Section 2.2 hereof.
"Licensed Areas" shall have the meaning given to such term in Section 2.2 hereof. Any
reference to the "Licensed Areas" shall include any part or portion thereof unless the context
otherwise requires.
"Licenses" shall have the meaning given to such term in Section 2.2 hereof.
"Lien" means, with respect to any Property, any mortgage, lien, pledge, charge or security
interest, and with respect to the Premises, the term Lien shall also include any liens for taxes or
assessments, builder, mechanic, warehouseman, materialman, contractor, workman, repairman or
carrier lien or other similar liens, including Mechanics' Liens and Claims.
"Lockbox Fund" means the Fund of such name established at the Depository Bank and
created pursuant to Section 2 of the Cash Management Agreement.
"Maintenance and Repair Work" shall have the meaning given to such term in Section
9.1.1 hereof.
"Maior Decisions" means the Approval of (i) any Transfer or Permitted Transfer, (ii) any
Operating Agreement, (iii) any amendment to the Project Documents or Financing Documents,
and (iv) the budgets for construction of the Convention Center Improvements.
"Maior Subsidiary" means a Subsidiary whose Insolvency Event would have a material
adverse effect on the financial condition or operations of the Person in question or the operation of
the Project.
"Marina Parking Site " shall have the meaning given to such term in the Marina Site
Parking Agreement.
"Marina Site Parking Agreement" shall mean that certain Marina Site Parking
Agreement by and between Landlord and Tenant dated as of the Effective Date pursuant to which
Landlord has granted Tenant the right to use up to 230 public parking spaces on the Marina
Parking Site adjacent to the City Facilities subject to certain conditions and reservations, all as
more particularly described therein.
"Material Additional Work" means any Additional Work which (i) does not conform in
any respect to the Project Improvements specifications, plans, or schematics which have been
approved by Landlord pursuant to the Development Agreement and is estimated to cost more than
$5,000,000.00 in the aggregate (such amount to be adjusted at the commencement of each Lease
Year by multiplying such amount by the Threshold Escalator); or (ii) materially alters the nature,
GROUND LEASE AND LICENSE AGREEMENT
APPENDIX A
xxi
character, exterior appearance or primary use of the Project Improvements; or (iii) materially
affects or impacts the City-Owned Improvements.
"Material Additional Work Architect" means the design professional responsible for
designing the Material Additional Work pursuant to the Material Additional Work Design
Contract, provided that such design professional must be a Qualified Design Professional.
"Material Additional Work Construction Bonds" means payment and performance
bonds issued by one or more Qualified Sureties, naming Landlord as an obligee thereof and
covering the obligations of the Material Additional Work Construction Contractor for the
completion of the Material Additional Work and payment of all costs incurred pursuant to the
Material Additional Work Construction Contract, provided, however, such payment and
performance bonds shall be optional, in the sole discretion of Tenant, as to Material Additional
Work with regard to the Hotel Improvements.
"Material Additional Work Construction Contract" means the construction contract to
be entered into by Tenant for the construction of the Material Additional Work.
"Material Additional Work Construction Contractor" means the contractor
responsible for performing the Material Additional Work pursuant to the Material Additional
Work Construction Contract, provided that such contractor must be a Qualified Contractor.
"Material Additional Work Construction Schedule" means a schedule of critical dates
relating to the construction of the Material Additional Work (which dates may be described or set
forth as intervals of time from or after the completion or occurrence of the proceeding task or
event), which construction schedule, shall contain, but shall not be limited to, the dates for (a)
ordering and delivery of critical delivery items, such as construction components or items
requiring long lead time for purchase or manufacture, or items which by their nature affect the
basic structure or system of the Hotel Project Improvements, (b) completion of the Material
Additional Work Plans in detail sufficient for satisfaction of all Governmental Rules (including
issuance of necessary building permits), (c) issuance of all Governmental Authorizations and
satisfaction of all Governmental Rules prerequisite to commencement of the Material Additional
Work, (d) commencement of the Material Additional Work and (e) Final Completion of the
Material Additional Work. The Material Additional Work Construction Schedules shall be
adjusted as appropriate to reflect the delay in the Material Additional Work by Tenant resulting
from each occurrence of Excusable Tenant Delay in accordance with the provisions of this Ground
Lease.
"Material Additional Work Design Contract" means the services contract to be entered
into by the Tenant for the design of the Material Additional Work and preparation of the Material
Additional Work Plans.
"Material Additional Work Plans" means the detailed working drawings for the Material
Additional Work prepared by the Material Additional Work Architect.
GROUND LEASE AND LICENSE AGREEMENT
APPENDIX A
"Material Additional Work Schematics" means schematic design plans for the Material
Additional Work showing all elements of the Material Additional Work and their effect on the
Hotel Project Improvements (including specifications, conceptual plans, schematic plans and
design development plans), conforming in all respects to the usual and customary standards of the
American Institute of Architects for schematic design plans.
"Material Additional Work Submission Matters" means all of the following:
(a) The proposed Material Additional Work Construction Schedule, together
with a statement of whether such Material Additional Work will require any Down Time as
to all or any portion of the Project Improvements and, if so, the duration and dates of such
Down Time;
(b) The name and qualifications of the proposed Material Additional Work
Contractor and Material Additional Work Architect;
(c) The Material Additional Work Schematics;
(d) The proposed form of the Material Additional Work Construction Bonds
and the identity of the Qualified Sureties issuing the same to the extent such a bond is
required, or if Tenant elects to require such Bonds for Material Additional Work relating to
the Hotel Project Improvements; and
(e) The Material Additional Work Plans, to confirm compliance with the
Material Additional Work Schematics and for Approval thereof by the City Representative
as to any City Improvements, with such Approval not to be unreasonably withheld,
conditioned or delayed.
"Maximum Lawful Rate" means the maximum non -usurious interest rate, if any, that at
any time, or from time to time, may be contracted for, taken, reserved, charged or received on any
indebtedness or other sum becoming due and owing under this Ground Lease, under
Governmental Rule with respect to the Person entitled to collect such interest and such
indebtedness or, to the extent permitted by Governmental Rule, under such Governmental Rules
which may hereafter be in effect and which allow a higher maximum nonusurious interest rate than
Governmental Rules now allow.
"Mechanics' Lien" means any Lien or Claim of Lien, whether choate or inchoate, filed
against the Premises, the Convention Center Premises, the Project Improvements, Landlord's
interest in the Premises, the Convention Center Premises, or the Project Improvements, Landlord
or any Property of Landlord, by reason of any work, labor, services or materials supplied or
claimed to have been supplied on or to the Premises, the Convention Center Premises, or the
Project Improvements or any portion thereof.
"Memorandum of Lease" means the Memorandum of Ground Lease and License
Agreement in the form attached hereto as Exhibit D and incorporated herein.
GROUND LEASE AND LICENSE AGREEMENT
APPENDIX A
"Minimum Hotel Performance Standards" means Exhibit C to the Master Development
Agreement.
"Mort2a2e" means a mortgage, a deed of trust, a security agreement or any other type of
security instrument pursuant to which a Lien is granted to secure Debt.
"Mortnue" means the trustee and beneficiary under, and the party secured by, any
Mortgage.
"Municipal Index Rate" means the weekly average municipal bond yield for the 11 -Bond
GO Index for the week preceding the week in question, as published for each week in The Bond
Buyer under the table entitled Bond Buyer Indexes (but if, at any time, such weekly municipal
bond yield for the 11 -Bond GO Index is no longer published in such manner or is otherwise
unavailable, the Parties shall agree on a substitute publication or methodology that is comparable
or substantially similar to the manner in which such interest rate was determined).
"Net Worth Test" means with respect to any Person, a Tangible Net Worth equal to or
greater than Ten Million and No/ 100 Dollars ($10,000,000.00),
"New Lease" shall have the meaning given to it in Section 14.7 hereof.
"New Lessee" shall have the meaning given to it in Section 14.7 hereof.
"New Bookine Atireement " shall have the meaning_given to such term in Section 14.7
hereof.
"Non -Appropriation" means the failure of an Appropriation to be made for any payment
or other monetary obligation of the City under the Ground Lease or the City Facilities Lease, as
applicable.
"Notice" shall have the meaning given to such term in Section 5 of Appendix B.
"Notice of Failure to Respond" means a Notice to the Landlord Representative and the
City Manager that:
(a) has been delivered by pre -paid, certified U.S. Mail with return receipt
requested, nationally recognized overnight courier with electronic tracking or personal
delivery with receipt of delivery, but not any other method, even though such method
might otherwise be permitted pursuant to Section 5 of Appendix B;
(b) states that the Landlord Representative has failed to respond to a Review
and Approval Right which requires the action of the Landlord Representative (as opposed
to Landlord);
(c) includes a full copy of the original submission made in connection with
such Review and Approval Right to which the Landlord Representative failed to respond;
GROUND LEASE AND LICENSE AGREEMENT
APPENDIX A
XXl V
(d) requests that the Landlord Representative provide its Approval,
confirmation, disapproval or failure to Approve to or confirm with respect to such original
submission within seven (7) Business Days of the date of receipt of such Notice by the
Landlord Representative and the City Manager (as determined in accordance with Section
5 of Appendix B); and
(e) states that if the Landlord Representative fails to respond to such Notice
within seven (7) Business Days of the date of receipt of such Notice by the Landlord
Representative and the City Manager, that the Landlord Representative shall be deemed to
have given its Approval or confirmation to the submission which is the subject of such
Notice.
"Operating Account" shall have the meaning ascribed to it in the Operating Agreement.
"Operating Agreement" as described in Section 5.4.8 means a binding operating
agreement between Tenant and a Qualified Operator governing the management and operation of
the Premises and the Project Improvements by such Qualified Operator on a full-service basis as a
"convention center headquarters hotel' (and not as a so-called "budget" or "limited service" hotel
or motel) in accordance with the Hotel Operating Standard.
"Operating Expenses" means all costs, charges and expenses incurred in connection with
the ownership, management, operation, maintenance, repair and restoration of the Premises and
the Project Improvements, determined in accordance with GAAP.
"Operating Fund" means the fund of that name established and maintained under the Hotel
Bond Indenture.
"Operating Reserve Fund" means the fund of that name described in the Operating
Agreement and established and maintained under the Hotel Bond Indenture.
"Operating Standards" shall have the meaning given to such term in Section 5.14 hereof.
"Operating Term" shall have the meaning given to such term in Section 3.1.2 hereof.
"Operator" means the Person with whom Tenant from time to time enters into the
Operating Agreement or any other agreement for the management or operation of the Project.
"Operator Requirements" shall have the meaning given to such term in Section 5.4.6
hereof.
"Opinion Request" means a request for a determination from the Texas Attorney General
as to whether particular information must be disclosed pursuant to the Public Information Act.
hereof.
"Option Exercise Period" shall have the meaning given to such term in Section 3.2
"Parties" shall have the meaning given to such term in the opening paragraph hereof.
GROUND LEASE AND LICENSE AGREEMENT
APPENDIX A
xxv
"Permitted Construction Uses" shall have the meaning given to it in Section 5.1 hereof.
"Permitted Encumbrances" with respect to the Ground Lease means, collectively, (i) the
matters listed in Exhibit F attached hereto and (ii) the Premises Reservations and all rights to use
the Premises or the Project Improvements pursuant thereto.
"Permitted Transfer", as such term is used in the Ground Lease, shall have the meaning
given to such term in Section 12.2.2 hereof.
"Permitted Uses" shall have the meaning given to it in Section 5.2 hereof.
"Person" means any individual, public or private corporation, limited or general
partnership, joint venture, association, joint stock company, trust, limited liability company,
unincorporated organization, Governmental Authority or any other form of entity.
"Person Related to" means with respect to any other Person, the owner of an economic
interest in such other Person or a Person in whom such other Person owns an economic interest
(whether directly or indirectly) or to whom such other Person is related by blood or marriage.
"Personalty" shall have the meaning as given to such term in Section 8.1.1 hereof.
"Phase I" means that certain Phase I Environmental Site Assessment and Limited
Environmental Compliance Assessment relating to the Leased Premises dated , prepared
by
"Potential Tenant Default" means either (a) any then -existing uncured breach by Tenant
which, but for the passage of time (with or without Notice thereof from Landlord, if applicable),
would constitute a Tenant Default or (b) the then existence of any of the following: (1) the making
by Tenant of any general assignment for the benefit of creditors until such assignment is rescinded;
(2) the filing by Tenant or against Tenant of a petition or proceeding to have Tenant adjudged
bankrupt or of a petition or proceeding for reorganization or arrangement under any Governmental
Rule relating to bankruptcy until the same is dismissed; (3) the appointment of a trustee or receiver
to take possession of substantially all of the Leasehold Estate, until possession is restored to
Tenant; or (4) the attachment, execution or other judicial seizure of substantially all of the
Leasehold Estate, until such seizure is discharged.
"Pre -Funded City Facilities Lease Rentals Account" means the fund of that name
established and maintained under the Hotel Bond Indenture.
"Pre -Funded Insurance Account" means the fund of that name established and maintained
under the Hotel Bond Indenture.
"Pre-onenine Period" shall have the meaning as given to such term in Section 5.4.6
hereof.
GROUND LEASE AND LICENSE AGREEMENT
APPENDIX A
XXVI
"Premises" means, collectively, the Leased Premises and the Licensed Areas. Any
reference to the "Premises" shall include any part or portion thereof unless the context otherwise
requires.
"Premises Reservations" mean, collectively, the following:
(i) Natural Resources. For the benefit of the City, the exclusive right to any natural
resources in, on or under the Premises and the Convention Center Premises,
including all oil, coal, natural gas and other hydrocarbons, minerals, aggregates and
geothermal resources as well as a right to grant leases or to conduct and undertake
surface or subsurface extraction of same; provided, however, that no extraction of
such natural resources shall (i) be inconsistent or incompatible with the rights or
privileges of Tenant under this Ground Lease, the City Facilities Lease, or the
Marina Site Parking Agreement, as applicable, (ii) be permitted on the surface of
the Premises or the Convention Center Premises, or (iii) adversely affect the
surface of the Premises or the Convention Center Premises or adversely undermine
the support for the Premises or the Convention Center Premises or cause any
adverse environmental impact on the Project or the Project Improvements;
(ii) Public Access. For the benefit of the City and the public, the non-exclusive right of
ingress and egress to, from and across the Public Areas for purposes of accessing (i)
the Convention Center, (ii) the elevator located within the lobby of the Hotel at
street level, (iii) any stairwells within the Premises, or the Convention Center
Premises, and (iv) the restaurant and retail stores located on the Premises or within
the lobby of the Hotel; provided, however that (x) access to the interior of the Hotel
shall only be during times when the Hotel is open to the general public and shall
exclude guests rooms, (y) access to any such restaurants or retail shops shall only
be during times when such restaurants or retail shops are open to the general public
and (z) all such access by the public shall be subject to such reasonable rules and
regulations as Tenant (or such Person acting by or on behalf of Tenant) may adopt
in writing which comport with the Hotel Operating Standard;
(iii) Utilities. For the benefit of Landlord (so long as the City or a City Controlled
Entity is Landlord) and the City, the right to grant the owner or manager of any
utility lines, pipes, conduits, mains, transmission facilities or appurtenances located
on the Premises or the Convention Center Premises an easement to, from and
across the Premises or the Convention Center Premises in order to operate,
maintain, repair, replace, remove or modify such utility facilities or appurtenances;
provided, however the location, route, construction, use and maintenance thereof
must not materially or unreasonably interfere with the operation or planned
operation of the Premises, the Hotel or the Convention Center Premises pursuant to
the terms of this Ground Lease, the City Facilities Lease, or the Marina Site Parking
Agreement, as applicable; and
(iv) Landlord's Access and Maintenance Area. For the benefit of Landlord (so long as
the City or a City Controlled Entity is Landlord) and the City, non-exclusive access
GROUND LEASE AND LICENSE AGREEMENT
APPENDIX A
xxvii
over and across Landlord's Access and Maintenance Area for the purpose of
maintaining and repairing City property and constructing any modifications or
improvements thereto.
"Principals" means with respect to any Person, all other Persons that either (a) control.
directly or indirectly, such Person or (b) are Affiliates of such Person.
"Private Contracts" means agreements entered into by Tenant with private entities
pursuant to the rights of Tenant under the Ground Lease, the City Facilities Lease, or the Parking
Lease, together with any and all information and documents related thereto.
"Prohibited Uses" means:
(a) any use that creates, causes, maintains or permits any public or private nuisance in,
on or about the Project Improvements, the Premises or the Convention Center Premises or that
violates any applicable Govemmental Rules;
(b) the sale or display of any pornographic material or material which is obscene under
standards set forth in any Governmental Rules or operate, or allowing any Person to operate, in, on
or about the Project Improvements, the Premises or the Convention Center Premises, any store or
other facility a principal or significant portion of the business of which is a "sexually oriented
business" as such term is defined in the City Codes or similar business;
(c) the display of lewd, offensive or immoral sign or advertisement, including any sign
or advertisement that promotes lewd, offensive or immoral activities, including sexually immoral
activities;
(d) a place of permanent residence by any Person or for any time share purposes,
except for minimal and incidental staff residences in the ordinary course of business;
(e) the sale of paraphernalia or other equipment or apparatus which is used primarily in
connection with the taking or use of illegal drugs (or their equivalent);
(f) a gentlemen's club (or other establishment which allows full or partial nudity), a
massage parlor (provided that massage services offered by a licensed massage therapist as part of a
health, beauty or fitness operation in the Hotel which is otherwise a Permitted Use shall be
permitted) or a tanning parlor (provided that tanning services provided as part of a health, beauty
or fitness operation in the Hotel which is otherwise a Permitted Use shall be permitted);
(g) except during the course of Additional Work, and then only if kept in a neat and
orderly condition, the use of any portion of the Premises or the Convention Center Premises (other
than portions inside the Project Improvements and in a manner in accordance with Hotel Operating
Standard) for storage; and
(h) the use, generation, manufacture, production, storage, treatment or disposal of
Contaminated Materials (other than the use, storage and disposal of Contaminated Materials
customarily used, stored or disposed of in the operation or cleaning of convention hotels, so long
GROUND LEASE AND LICENSE AGREEMENT
APPENDIX A
xxviii
as such Contaminated Materials are used, stored and disposed of in compliance with all applicable
Governmental Rules).
"Proiect" means the undertaking of Tenant to design, develop, finance, construct, furnish
and open the Project Improvements and the Commencement of Hotel Project Operations, all as
required pursuant to the terms of the Development Agreement and the other Project Documents.
"Proiect Completion Date" means the date of Final Completion.
"Proiect Completion Deadline" means twenty two (22) months from the Effective Date,
or such later date as Landlord and Tenant may approve.
"Proiect Documents" means this Ground Lease, the Operating Agreement, City Facilities
Lease, the Marina Site Parking Agreement, the Development Agreement, Booking Agreement,
Franchise Agreement, and all other documents, instruments and agreements entered into between
the City and Tenant or Developer during the term of the Development Agreement pursuant to the
express terms of the Development Agreement, if any, as the same may be amended, supplemented,
modified, renewed or extended from time to time in accordance with the terms hereof or thereof.
"Proiect Improvements" means, collectively, the Hotel Project Improvements, the
Convention Center Improvements, related surface area parking, and any Additional
Improvements.
"Proiect Improvements Design Contract" means the Agreement by and
between and
"Property" means any interest in any kind of property or asset, whether real, personal or
mixed, or tangible or intangible.
"Property Insurance Policy" means a hazard and casualty insurance policy.
"Property Taxes" means all real estate ad valorem taxes and assessments, or any other
similar form of tax or assessment now or hereinafter levied and assessed against the Leased
Premises or the Hotel Project Improvements for the fiscal tax years that are included in the Lease
Term.
"Public Areas" means the public areas on the street level of the Premises
"Public Information Act" means the Texas Public Information Act (Tex. Gov't. Code
Ann. Sec. 552.001 et seg.) or any equivalent or successor statute.
"Qualified Contractor" means a general contractor that, on the date its name and
qualifications are submitted to Landlord and if such general contractor thereafter becomes (or
replaces the prior) the Material Additional Work Construction Contractor, at all times from the
GROUND LEASE AND LICENSE AGREEMENT
APPENDIX A
date of such Approval until Final Completion of the Additional Work, satisfies all of the following
criteria:
(a) licensed or otherwise in compliance with all applicable Governmental
Rules to do business and act as a general contractor in the State of Texas and the City of
Baytown, Texas for the type of work proposed to be performed by such contractor;
(b) possessed of the capacity to obtain payment and performance bonds in the
full amount of the pertinent construction contract from a Qualified Surety;
(c) well experienced as a general contractor in comparable work; and
(d) neither such general contractor nor any of its Affiliates is in default under
any material obligation to the City under any other contract between such general
contractor or any of its Affiliates and the City.
"Oualified Design Professional" means an architect that, on the date its name and
qualifications are submitted to Landlord and if such architect thereafter becomes (or replaces the
prior) the Material Additional Work Architect, at all times from the date of such Approval until
Final Completion of the Additional Work, satisfies all of the following criteria:
(a) licensed and otherwise in compliance with all applicable Governmental
Rules to do business and act as an architect in the State of Texas and in the City of
Baytown, Texas for the type of work proposed to be performed by such architect;
(b) well experienced as an architect in comparable work; and
(c) neither such architect nor any of its Affiliates is in default under any
material obligation to the City under any other contract between such architect or any of its
Affiliates and the City.
"Oualified Investor" means a Person (of good character and repute) who is a qualified
institutional buyer within the meaning of Rule 144A under the Securities Act of 1933, as amended,
or institutional accredited investor within the meaning of Regulation D under the Securities Act of
1933, as amended; provided, however, that no such Person may be a Qualified Investor for
purposes of this Ground Lease or any other Project Document if (i) such Person is the Operator or
an Affiliate of the Operator or (ii) during the seven (7) years preceding the date in question, any of
the following events have occurred with respect to such Person or any Affiliate of such Person
unless the same shall have been subsequently reversed, suspended, vacated, annulled or otherwise
rendered of no effect under applicable Governmental Rule:
(a) The initiation of any federal or state bankruptcy or insolvency preceding by or
against, or the appointment of a receiver, conservator, physical agent or similar officer for the
business or assets of any such Person; or
(b) The conviction of such Person or its Affiliate in a federal or state felony criminal
proceeding (including a conviction entered on a plea of nolo contender but excluding traffic
GROUND LEASE AND LICENSE AGREEMENT
APPENDIX A
xxx
violations and other minor offenses) or such Person or its Affiliate is a defendant in a felony
criminal proceeding (excluding traffic violations and other minor offenses) that is pending.
"Oualified Lender" means the Hotel Bond Trustee.
"Oualified Operator" means a nationally recognized hotel operator (or, if its parent
company has and continues to unconditionally guarantee the full payment and performance of all
of such hotel operator's obligations under or in connection with the Operating Agreement, such
parent company meets) that (a) as of the effective date of the Operating Agreement then in effect,
operates, on a full-service basis, either directly or through Subsidiaries at least three (3)
Comparable Hotel Properties; (b) meets, as of the effective date of the Operating Agreement then
in effect, the Qualified Operator Financial Test as of the end of the fiscal quarter ending
immediately preceding such date; and (c) an Insolvency Event with respect to such hotel Operator
or, in the case of the foregoing guaranty, its parent company does not then exist. Additionally, an
Affiliate of any entity meeting the foregoing criteria shall be a Qualified Operator, provided that
the applicable entity meeting the foregoing criteria becomes or remains liable for the obligations of
the "Operator" under the Operating Agreement.
"Oualified Operator Financial Test" means for any Person as of the end of any fiscal
quarter for such Person a Tangible Net Worth of at least Five Million and No/100 Dollars
($5,000,000.00) as of the end of the most recently ending fiscal year. All calculations for
determining the Qualified Operator Financial Test shall be based upon the consolidated accounts
of such Person and its Subsidiaries in accordance with GAAP.
"Reference Bank" means (or its successor, by merger or acquisition);
or, if none, a banking institution designated by Tenant, subject to the Approval of the Landlord
Representative.
"RefundinE Bonds" shall have the meaning ascribed to it in the Hotel Bond Indenture.
"Related Party" means with respect to any Person, such Person's partners, directors,
officers, shareholders, members, agents, employees, auditors, advisors, consultants, servants,
counsel, contractors, subcontractors (of any tier), lenders, successors, assigns, legal
representatives, elected and appointed officials, volunteers and Affiliates, and for each of the
foregoing their respective partners, directors, officers, shareholders, members, agents, employees,
auditors, advisors, counsel, consultants, contractors, subcontractors, licensees, sublicensees,
lessees, and sublessees.
"Renewal Notice" shall have the meaning given to such term in Section 3.2 hereof.
"Renewal Term" shall have the meaning given to such term in Section 3.2 hereof.
"Renewal Term Option" shall have the meaning given to such term in Section 3.2 hereof.
"Rentals" shall have the meaning given to such term in Section 4.1.1 hereof.
GROUND LEASE AND LICENSE AGREEMENT
APPENDIX A
"Reserve Accounts" means each of the Subordinated Repair and Replacement Reserve
Account, the Operating Account, the Operating Reserve Account, and the FF&E Reserve
Account.
"Responsible Officer" means with respect to the subject matter of any certificate,
representation or warranty of any Person contained in this Ground Lease or in any other Project
Documents, a vice president or higher corporate officer of such Person (or in the case of a
partnership, an individual who is a general partner of such Person or such an officer of a general
partner of such Person) who, in the normal performance of his operational responsibility, would
have knowledge of such matter and the requirements with respect thereto.
"Review and Approval Rights" shall have the meaning given to such term in Section 28
of Appendix B to this Ground Lease.
"Reviewing Party" shall have the meaning given to such term in Section 28 of Appendix B
to this Ground Lease.
"RevPAR" means room revenue per available room (as defined in the Uniform System of
Accounts) for the applicable period of time as determined (i) for the Hotel, by Operator and shall
be identical to that reported to Smith Travel Research, and (ii) for the Competitive Set, by Smith
Travel Research as set out in a Smith Travel Trend Report (or a similar third party and report
prepared by a successor organization agreed to by the Parties).
"RFP" means that certain Request for Proposals Number 03-14-17 issued by the City.
"Space Lease" means a lease, sublease, license, concession or other occupancy agreement
for the use or occupancy of space or the location of any business or commercial operations in or on
the Premises or the Project Improvements, or any part thereof, but not (a) any room or banquet
rental or other customary hotel booking, or (b) any Operating Agreement.
"Space Tenant" means a tenant, occupant, licensee or concessionaire under or pursuant to
a Space Lease.
"Special Policies" shall have the meaning given to such term in 7.1.3(h) hereof.
"State " means the State of Texas.
"Submitting Party" shall have the meaning given to such term in Section 28 of Appendix
B to this Ground Lease.
"Subordinated FF&E Reserve Fund" shall mean the fund of such name established and
maintained under the Hotel Bond Indenture and described in the Operating Agreement.
"Subordinated Management Fee Fund" shall mean the fund of such name established
and maintained under the Hotel Bond Indenture and described in the Operating Agreement.
GROUND LEASE AND LICENSE AGREEMENT
APPENDIX A
"Subrent" means any rent, charge or other compensation payable pursuant to a Space
Lease.
"Subsidiary" means, for any Person, any corporation, partnership or other entity of which
at least a majority of the securities or other ownership interests having by the terms thereof
ordinary voting power to elect a majority of the board of directors or other Persons performing
similar functions of such corporation, partnership or other entity (irrespective of whether or not at
the time securities or other ownership interests of any other class or classes of such corporation,
partnership or other entity shall have or might have voting power by reason of the happening of
any contingency) is at the time directly or indirectly owned or controlled by such Person.
"Substantial Completion" means and shall occur when:
(a) The Architect (as defined in the Development Agreement) shall
have issued the Certificate of Substantial Completion (as defined in the
Development Agreement);
(b) The Architect shall have approved the Priced Punchlist (as defined
in the Development Agreement);
(c) Tenant and Developer shall not have a material uncured breach of
their respective obligations under the Development Agreement following delivery
of written notice by Landlord and the expiration of applicable cure periods;
(d) A Certificate of Occupancy (as defined in the Development
Agreement) shall have been issued for the Project Improvements, together with any
and all liquor licenses required in connection therewith; and
(e) There is no ongoing construction on any portion of the Project
Improvements that would materially adversely affect access to the Project
Improvements or that would otherwise materially adversely limit, restrict, disturb
or interfere with management and operation of the Project Improvements as a hotel,
and any work which remains to be completed or corrected is in the nature of "punch
list" items in the common areas, lobby, administrative offices or any space to be
opened on the date of Substantial Completion, none of which preclude operation of
the Project Improvements as a hotel.
"Surety Threshold" shall have the meaning given to such term in Section 7.2 hereof.
"Surplus Fund " shall have the meaning given to such term in Section 4.4.1.4 hereof.
"Tanzible Net Worth" means, for any Person as of any date on which the amount thereof
is being determined, the stockholders' equity of such Person determined in accordance with
GAAP, minus the sum of (a) the amount of any write-up in the book value of any assets resulting
from the revaluation thereof, or any write-up in the excess of the cost of the assets acquired, and (b)
the aggregate of all residual values and intangible assets appearing on the asset side of that
Person's statement of financial position (balance sheet) including all amounts for goodwill,
GROUND LEASE AND LICENSE AGREEMENT
APPENDIX A
patents, patent rights, trademarks, trade names, copyrights, design rights, franchises, bond
discounts, underwriting expenses, treasury stock, organization expense and other similar items, if
any.
"Tax Proceeding" means appropriate proceedings instituted in accordance with any
protest procedures permitted by the applicable Governmental Authority.
"TCEO" means the State Commission on Environmental Quality, or any successor
thereto.
"Tenant", as such term is used in the Ground Lease, shall have the meaning given to it in
the opening paragraph of hereof, or any successor owner of the Leasehold Estate pursuant to the
requirements of ARTICLE 12 hereof or under a New Lease pursuant to ARTICLE 14 hereof.
"Tenant Default" shall have the meaning given to such term in Section 15. 1.1 hereof.
"Tenant Delav" means any delay by Tenant in achieving any deadline for performance of
its obligations under the Ground Lease, the City Facilities Lease, or the Parking Lease, as
applicable.
"Tenant Representative" shall have the meaning given to such term in Section 1.4 hereof.
"Tenant Representative Agreement" shall have the meaning given to such term in the
recitals hereof.
"Tenant's Access and Maintenance Area" means the real property described on Exhibit
AA=5 attached hereto and incorporated herein.
"Tenant's Account" shall have the meaning given to such term in Appendix C hereof.
"Tenant's Notice of Proiect FinancinW' shall have the meaning given to such term in
Section 14.1.2 hereof.
"Tenant's Recourse Liabilities" shall have the meaning given to such term in Section
17.8.1 hereof.
"Tenant's Remedial Work" means any and all removal, corrective or remedial actions
(including all investigation, monitoring, etc.) required by applicable Governmental Rules to be
performed at any time during the applicable Lease Term with respect to any Environmental Event
or any Contaminated Materials or state historical or archeological landmarks (including any state
archeological landmarks), other than such Environmental Event, Contaminated Materials or
landmarks existing on the Premises as of the Commencement Date, as disclosed by the Phase I, or
introduced by Landlord or any Persons claiming by, under or through Landlord.
"Tenant's Risks", as such term is used in the Ground Lease, shall have the meaning given
to such term in Section 3.4.2 hereof.
GROUND LEASE AND LICENSE AGREEMENT
APPENDIX A
XXXIV
"Threshold Escalator" means the sum of (i) forty-four percent (44%) of the quotient of (a)
the most current Employment Costs Index Total Compensation Private Industry determined and
reported by the Bureau of Labor Statistics of the U.S. Department of Labor for such immediately
preceding Lease Year divided by (b) the Employment Costs Index Total Compensation Private
Industry determined and reported by the Bureau of Labor Statistics of the U.S. Department of
Labor for 2012 and (ii) fifty-six percent (56%) of the quotient of (x) the Producer Price Index All
Commodities Not Seasonally Adjusted determined and reported by the Bureau of Labor Statistics
of the U.S. Department of Labor for such immediately preceding Lease Year, divided by (y) the
Producer Price Index All Commodities Not Seasonally Adjusted determined and reported by the
Bureau of Labor Statistics of the U.S. Department of Labor for 2012. If at any time during the
Lease Term any of the foregoing indices are no longer published or are otherwise unavailable, the
Parties shall mutually agree on a substitute index or indices that are comparable or substantially
similar to the index or indices that are no longer available.
"Transaction Documents" means the Project Documents and the Construction
Documents.
"Transfer" means:
(a) Any Asset Transfer; and
(b) Except with respect to Leasehold Mortgage and other Financing Documents
executed in favor of or for the benefit of the Qualified Lender, any Mortgage, pledge,
encumbrance or other hypothecation by Tenant of the Project, the Leasehold Estate, the Licenses,
the Project Improvements, or any right, title or interest of the Tenant in and to the Premises or this
Ground Lease;
(c) Any Change in Control.
"Utility Upmrade and Extension Costs" shall have the meaning given to such term in
Section 9.2.2 hereof.
"Workine Capital Fund" means
GROUND LEASE AND LICENSE AGREEMENT
APPENDIX A
XXXV
APPENDIX B
TO
GROUND LEASE
Governing Provisions
The following Governing Provisions shall apply to and govern the Ground Lease, the City
Facilities Lease, and the Parking Lease for all purposes and shall apply to and govern each of the
other Project Documents that expressly states that it is governed by these Governing Provisions
(each, a "Subject Document" and collectively, the "Subject Documents").
Section 1. Accounting Terms and Determinations. Unless otherwise specified in an
y Subject Document, all accounting terms used in such Subject Document shall be interpreted, all
determinations with respect to accounting matters thereunder shall be made, and all financial
statements and certificates and reports as to financial matters required to be furnished thereunder
shall be prepared in accordance with GAAP as applicable to governmental entities.
Section 2. Definitions. Except as otherwise expressly provided in any Subject
Document, capitalized terms used therein and all appendices, schedules and exhibits thereto shall
have the respective meanings given in Appendix A to the Ground Lease.
Section 3. Intentionally Omitted.
Section 4. Liabilities. No Party to any Subject Document shall have any obligation or
duty to the other Party thereto or any other Person with respect to the transactions contemplated
hereby except the obligations or duties expressly of such Party set forth in such Subject Document
or in any other Project Document to which the Party in question is a signatory.
Section 5. Notices. Each provision of each Subject Document with reference to the
sending, mailing or delivery of any notice, consent, direction, Approval, instructions, request,
request, reply, advice, confirmation and other communications (hereinafter severally and
collectively called "Notice"), or with reference to the making of any payment by Tenant to
Landlord, shall have been complied with when and if the procedures described in this Section 5
have been complied with by the Party giving such Notice. Subject to Section 14 below, all Notices
must be in writing and given to (A) with respect to a Party to any Subject Document, to such Party
at the address set forth in Appendix C to the Ground Lease or at such other address as such Party
shall designate by Notice to the other Party, and (B) with respect to the Leasehold Mortgagee, at
the address set forth in Appendix C to the Ground Lease or at such other address as contained in a
Notice of Project Financing delivered pursuant to the terms of the Ground Lease, and in all cases
shall be (i) sent by pre -paid, registered or certified U.S. Mail with return receipt requested, (ii)
delivered personally with receipt of delivery, (iii) sent by nationally recognized overnight courier
(e.g. Federal Express) with electronic tracking or (iv) sent by email (with confirmation of receipt
by the sending machine and a copy to follow by U.S. Mail postage prepaid) to the Party entitled
thereto. Such Notices shall be deemed to be duly given or made (i) in the case of U.S. mail in the
GROUND LEASE AND LICENSE AGREEMENT
APPENDIX B
manner provided above, three (3) Business Days after posting, (ii) if delivered personally with
receipt of delivery, when actually delivered by hand and receipted unless such day is not a
Business Day, in which case such delivery shall be deemed to be made as of the next succeeding
Business Day, (iii) if sent by nationally recognized overnight courier with electronic tracking
service, the next Business Day after depositing same with such overnight courier before the
overnight deadline, and if deposited with such overnight courier after such deadline, then the next
succeeding Business Day or (iv) in the case of email (with a copy to follow by U.S. Mail, postage
prepaid), when sent so long as it was received during normal Business Hours of the receiving Party
on a Business Day and otherwise such delivery shall be deemed to be made as of the next
succeeding Business Day. Each Party hereto shall have the right at any time and from time to time
to specify additional parties ("Additional Addressees") to whom Notice thereunder must be
given, by delivering to the other Party five (5) calendar days' Notice thereof setting forth a single
address for each such Additional Addressee; provided, however, that no Party shall have the right
to designate more than two (2) such Additional Addressees (except that such limitation on the
number of Additional Addressees shall not apply to or limit the number of Leasehold Mortgagees
entitled to receive Notices under Section 14.1 of the Ground Lease).
Section 6. Severability. If any term or provision of any Subject Document, or the
application thereof to any Person or circumstances, shall to any extent be invalid or unenforceable
in any jurisdiction, as to such jurisdiction, the remainder of such Subject Document, or the
application of such term or provision to the Persons or circumstances other than those as to which
such term or provision is held invalid or unenforceable in such jurisdiction, shall not be affected
thereby, and each term and provision of each Subject Document shall be valid and enforceable to
the fullest extent permitted by any Governmental Rule and any such invalidity or unenforceability
in any jurisdiction shall not invalidate or render unenforceable such provision in any other
jurisdiction. To the extent permitted by any Governmental Rule, the Parties to each Subject
Document hereby waive any provision of any Governmental Rule that renders any provision
thereof prohibited or unenforceable in any respect.
Section 7. Entire Aereement; Amendment. The Ground Lease, together with the
other applicable Project Documents, constitutes the entire agreement of the Parties with respect to
the subject matter hereof and supersedes all prior written and oral agreements and understandings
with respect to such subject matter, including the RFP. No Subject Document nor any of the terms
thereof may be terminated, amended, supplemented, waived or modified orally, but only by an
instrument in writing signed by the Party against which the enforcement of the termination,
amendment, supplement, waiver or modification shall be sought, and in the case of Landlord,
Approved by action of City Council and in the case of the City, Approved by action of City
Council.
Section 8. No Waivers.
(a) General. Unless expressly agreed to by such Party in writing, the failure of
any Party hereto to insist, in any one or more instances, upon the strict performance by the
other Party of any of such other Party's covenants, obligations or agreements under any
Subject Document, or to exercise any right or remedy given the first Party upon a default
by the other Party, shall not be construed as a discharge or invalidation of such covenant,
GROUND LEASE AND LICENSE AGREEMENT
APPENDIX B
obligation or agreement or as a waiver or relinquishment thereof for the future, nor shall
any single or partial exercise of any such right, power or remedy or insistence on strict
performance, or any abandonment or discontinuance of steps to enforce such a right, power
or remedy or to enforce strict performance, preclude any other or future exercise thereof or
insistence thereupon or the exercise of any other right, power or remedy. As such, the
covenants, obligations and agreements of the other Party and the rights and remedies of the
first Party upon a default shall continue and remain in full force and effect with respect to
any subsequent breach, act or omission.
(b) No Accord and Satisfaction. Without limiting the generality of clause a
above, the receipt by Landlord of any rentals with knowledge of a breach by Tenant of any
covenant, obligation or agreement under the Ground Lease, the City Facilities Lease, or the
Parking Lease, shall not be deemed or construed to be a waiver of such breach (other than
as to the rentals received). The payment by Tenant of any rentals with knowledge of a
breach by Landlord of any covenant, obligation or agreement under the Ground Lease, the
City Facilities Lease, or the Parking Lease, shall not be deemed or construed to be a waiver
of such breach. No acceptance by Landlord or Tenant of a lesser sum than then due shall
be deemed to be other than on account of the earliest installment of the amounts due under
the Ground Lease, the City Facilities Lease, or the Parking Lease, as applicable, nor shall
any endorsement or statement on any check, or any letter accompanying any check, wire
transfer or other payment, be deemed an accord and satisfaction. Landlord and Tenant may
accept a check, wire transfer or other payment without prejudice to its right to recover the
balance of such installment or pursue any other remedy provided in the Ground Lease, the
City Facilities Lease or the Parking Lease.
(c) No Waiver of Termination Notice. Without limiting the generality of
clause a above, the receipt by Landlord of any rentals paid by Tenant after the termination
in any manner of the Lease Term and City Facilities Lease Term, or after the giving by
Landlord of any Notice thereunder to effect such termination, shall not, except as otherwise
expressly set forth in the Ground Lease or the City Facilities Lease, as applicable, reinstate,
continue or extend the Lease Term or the City Facilities Lease Term, as applicable, or
destroy, or in any manner impair the efficacy of, any such Notice of termination as may
have been given thereunder by Landlord to Tenant prior to the receipt of any such rentals or
other consideration, unless so agreed to in writing and executed by Landlord. Neither
acceptance of the keys nor any other act or thing done by Landlord or by its agents or
employees during the Lease Term or the City Facilities Lease Term, as applicable, shall be
deemed to be an acceptance of a surrender of the applicable premises, excepting only an
agreement in writing executed by Landlord accepting or agreeing to accept such a
surrender.
Section 9. Table of Contents: Beadings: Exhibits. The table of contents, if any, and
headings, if any, of the various articles, sections and other subdivisions of each Subject Document
are for convenience of reference only and shall not modify, define or limit any of the terms or
provisions thereof. All Appendices and Exhibits attached to each Subject Document, including,
without limitation, this Appendix B, are incorporated therein by reference in their entirety and
made a part thereof for all purposes; provided, however, that in the event of a conflict between the
GROUND LEASE AND LICENSE AGREEMENT
APPENDIX B
HM
terms of the text of any Subject Document and any Appendices or Exhibits attached thereto, the
text of such Subject Document shall control.
Section 10. Parties in Interest, Limitation on RiLyhts of Others. The terms of each
Subject Document shall be binding upon, and inure to the benefit of, the Parties and their permitted
successors and assigns. Subject to Section 14.6 of the Ground Lease, nothing in any Subject
Document, whether express or implied, shall be construed to give any Person (other than the
Parties and their permitted successors and assigns and as expressly provided herein) any legal or
equitable right, remedy or claim under or in respect of any Subject Document or any covenants,
conditions or provisions contained therein or any standing or authority to enforce the terms and
provisions of any Subject Document.
Section 11. Method of Payment. All amounts required to be paid by any Party to the
other Party under any Subject Document shall be paid in such freely transferable coin or currency
of the United States as at the time of payment shall be legal tender for the payment of public and
private debts, by wire transfer, or other acceptable method of payment, of immediately available
federal funds to the account set forth in Appendix C to the Ground Lease or to such other account
located in the United States as such Party may specify by Notice to the other Parties.
Notwithstanding the foregoing, all payments shall be deemed paid and received only when
actually received by the other Party and, in the event of payment by check, other than a cashier's
check or certified check, shall not be considered to have been actually received in the event of the
failure of such check to clear the receiving Party's account.
Section 12. Counterparts. Each Subject Document may be executed by the Parties in
separate counterparts, each of which when so executed and delivered shall be an original, but all
such counterparts shall together constitute but one and the same document. All signatures need not
be on the same counterpart.
Section 13. GoverninE Law. EACH SUBJECT DOCUMENT, AND THE
ACTIONS OF THE PARTIES THEREUNDER SHALL IN ALL RESPECTS BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE (EXCLUDING PRINCIPLES OF CONFLICT OF LAWS);.
Section 14. Court Proceedings. Any Action or Proceeding against any Party arising
out of or relating to any Subject Document, any transaction contemplated thereby or any judgment
entered by any court in respect of any thereof may be brought in any Federal or state court located
in the City or County, as appropriate, and each Party hereby submits to the nonexclusive
jurisdiction of such courts for the purpose of any such Action or Proceeding. To the extent that
service of process by mail is permitted by Governmental Rule, each Party irrevocably consents to
the service of process in any such Action or Proceeding in such courts by the mailing of such
process by registered or certified mail, postage prepaid, at its address for Notice provided for
above. Each Party irrevocably agrees not to assert any objection that it may ever have to the laying
of venue of any such Action or Proceeding in any Federal or state court located in the City or
County, as appropriate, and any claim that any such Action or Proceeding brought in any such
court has been brought in an inconvenient forum. Each Party agrees not to bring any Action or
Proceeding against the other Party arising out of or relating to any Subject Document or any
GROUND LEASE AND LICENSE AGREEMENT
APPENDIX B
iv
transaction contemplated thereby except in a Federal or state court located in the City or County, as
appropriate.
Section 15. Limitation to Capacity as Landlord. The Parties acknowledge that all
references to "Landlord" herein (which, for the purposes of this provision, shall be deemed to
include any references in the Ground Lease to Landlord as the owner of the fee interest in the
Premises) shall refer only to Landlord in its capacity as Landlord under the Ground Lease. The
term "Landlord" and the duties and rights assigned to it under the Ground Lease, thus exclude any
action, omission or duty of the City when performing its Governmental Functions. Any action,
omission or circumstance arising out of the performance of the City of its Governmental Functions
may prevent Landlord from performing its obligations under the Ground Lease and shall not cause
or constitute a default by Landlord under the Ground Lease or give rise to any rights or Claims
against the City in its capacity as Landlord, it being acknowledged that Tenant'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 shall be governed by the laws and regulations
concerning Claims against the City as a charter city and a Governmental Authority. In addition, no
setoff, reduction, withholding, deduction or recoupment shall be made in or against any payment
due by Tenant to Landlord under the Ground Lease as a result of any action or omission of the City
when performing its Governmental Function.
Section 16. Capacity of Persons Actine on Behalf of Landlord. Notwithstanding
anything to the contrary in the Ground Lease, all references in the Ground Lease to employees,
agents, representatives, contractors and the like of Landlord shall refer only to Persons acting in
the City's capacity as the "Landlord" thereunder, and thus all such references specifically exclude
any employees, agents, representatives, contractors and the like acting in connection with the
performance of the Governmental Functions of the City. Without limiting the foregoing, all
police, fire, permitting, regulatory, water and power, health and safety and sanitation employees of
the City shall be deemed to be acting in connection with the performance of the Governmental
Functions of the City.
Section 17. No Limitation on City's Governmental Functions. The Parties
acknowledge that Landlord is a municipal corporation operating pursuant to its Charter in addition
to being the owner of the Premises, and that no representation, warranty, consent, Approval or
agreement in any Subject Document by Landlord shall be binding upon, constitute a waiver by or
estop the City from exercising any of its rights, powers or duties in connection with its
Governmental Functions nor will any portion of any Subject Document be deemed to waive any
immunities granted to the City when performing its Governmental Functions, which are provided
under Governmental Rule. For example, Approval by "Landlord" or the "City" of plans for the
Project Improvements or any Additional Improvements to be constructed shall not constitute
satisfaction of any requirements of, or the need to obtain any approval by, the City's Fire
Department, Building Inspections Department, Public Works Department, Planning Department
and Economic Development Department acting in connection with the performance of the
Governmental Functions of the City. Further, any consent to jurisdiction by Landlord is only with
respect to matters arising in its capacity as a Party to a Subject Document and expressly does not
constitute a waiver of the City's legal immunity or a consent to jurisdiction for any actions,
GROUND LEASE AND LICENSE AGREEMENT
APPENDIX B
omissions or circumstances, in each case solely arising out of the performance of the
Governmental Functions of the City.
Section 18. Nonliability of City Officials and Tenant's Employees.
No member of any legislative, executive, or administrative body of, or affiliated with, the
City or its Related Parties, and no official, agent, employee or representative of the City or such
body or any of their Related Parties (whether acting in the performance of the City's Governmental
Functions or otherwise) shall be personally liable to Tenant or any Person holding by, through or
under Tenant, for any actions taken in his or her capacity as an official, agent, employee or
representative of such Person in the event of any default or breach by Landlord, or for any amount
which may become due to Tenant or any Person holding by, through or under Tenant, or for any
other obligation, under or by reason of any Subject Document. No officer, director, shareholder,
member, limited partner, agent, employee or representative of Tenant shall be personally liable to
Landlord or any Person holding by, through or under Landlord, for any actions taken in his or her
capacity as an officer, director, shareholder, agent, employee or representative of Tenant in the
event of any default or breach by Tenant, or for any amount which may become due to Landlord or
any Person holding by, through or under Landlord, or for any other obligation, under or by reason
of any Subject Document.
Section 19. Payment on Business Days. If any payment under any Subject Document
is required to be made on a day other than a Business Day, the date of payment shall be extended to
the next Business Day.
Section 20. Time. Times set forth in any Subject Document for the performance of
obligations shall be strictly construed, time being of the essence of such Subject Document. All
provisions in such instrument which specify or provide a method to compute a number of days for
the performance, delivery, completion or observance by a Party hereto of any action, covenant,
agreement, obligation, consent or Notice thereunder shall mean and refer to calendar days, unless
otherwise expressly provided. However, in the event the date specified or computed under such
instrument for the performance, delivery, completion or observance of a covenant, agreement,
obligation, consent or Notice by either Party, or for the occurrence of any event provided for
herein, shall be a day other than a Business Day, then the date for such performance, delivery,
completion, observance or occurrence shall automatically be extended to the next calendar day
that is a Business Day. All references in the Subject Documents to times or hours of the day shall
refer to Central Standard Time or Central Daylight Savings Time, as applicable.
Section 21. Interpretation and Reliance. No presumption will apply in favor of any
Party in the interpretation of any Subject Document or in the resolution of any ambiguity of any
provision thereof.
""Section 22.Joint and Several Liability. If there is more than one Tenant at any time,
all such Persons shall be jointly and severally liable for payment of all rentals and for the
performance of every obligation of Tenant under the Ground Lease, the City Facilities Lease, and
the Parking Lease, as applicable.
GROUND LEASE AND LICENSE AGREEMENT
APPENDIX B
VI
Section 23. Relationship of the Parties; No Partnership. The relationship of Tenant
and Landlord under each of the Subject Documents is that of independent parties, each acting in its
own best interests, and notwithstanding anything in any Subject Document to the contrary shall
create or evidence, nor is it intended to create or evidence, a partnership, joint venture or other
business relationship or enterprise between Tenant and Landlord. As such, Landlord shall have no
direct supervision of or obligation to the employees of Tenant and any communication of
employee matters shall be through the Tenant Representative.
Section 24. Non -Merger of Estates.
(a) The interests of Landlord and Tenant in the Premises shall at all times be separate and
apart, and shall in no event be merged, notwithstanding the fact that the Ground Lease or
the Leasehold Estate created hereby, or any interest therein, may be held directly or
indirectly by or for the account of the Person who shall own the fee title to the Premises or
any portion thereof; and no such merger of estates shall occur by operation of law, or
otherwise, unless and until all Persons at the time having any interest in the Premises shall
join in the execution of a written instrument effecting such merger of estates.
(b) The interests of Landlord and Tenant in the Convention Center Premises shall at all times
be separate and apart, and shall in no event be merged, notwithstanding the fact that the
City Facilities Lease or any interest therein, may be held directly or indirectly by or for the
account of the Person who shall own the fee title to the Convention Center Premises or any
portion thereof; and no such merger of estates shall occur by operation of law, or otherwise,
unless and until all Persons at the time having any interest in the Convention Center
Premises shall join in the execution of a written instrument effecting such merger of
estates.
Section 26. Covenants Running with the Estates in Land.
(a) Landlord and Tenant covenant and agree that all of the conditions, covenants, agreements,
rights, privileges, obligations, duties, specifications and recitals contained in the Ground
Lease, except as otherwise expressly stated therein, shall be construed as covenants
running with title to the Premises, the Leasehold Estate thereunder and the Licenses
granted thereunder, respectively, which shall extend to, inure to the benefit of and bind,
Landlord and Tenant, and their permitted successors and assigns, to the same extent as if
such permitted successors and assigns were named as original parties to the Ground Lease,
such that (i) the Ground Lease shall always bind the owner and holder of any fee or
leasehold interest in or to the Premises, the Project Improvements or any portion thereof,
and shall bind predecessors thereof except as otherwise expressly provided herein, and (ii)
any Operating Agreement and the operations of the Project Improvements shall always be
subject to the provisions of the Ground Lease.
(b) Landlord and Tenant covenant and agree that all of the conditions, covenants, agreements,
rights, privileges, obligations, duties, specifications and recitals contained in the City
Facilities Lease, except as otherwise expressly stated therein, shall be construed as
covenants running with title to the Convention Center Premises, which shall extend to,
GROUND LEASE AND LICENSE AGREEMENT
APPENDIX B
Vii
inure to the benefit of and bind, Landlord and Tenant, and their permitted successors and
assigns, to the same extent as if such permitted successors and assigns were named as
original parties to the City Facilities Lease, such that (i) the City Facilities Lease shall
always bind the owner and holder of any fee or leasehold interest in or to the Convention
Center Premises and the Convention Center Improvements or any portion thereof, and
shall bind predecessors thereof except as otherwise expressly provided herein, and (b) the
operations of the Convention Center Improvements shall always be subject to the
provisions of the City Facilities Lease.
Section 27. Waiver of Liens. Notwithstanding anything contained in the Ground Lease,
the City Facilities Lease, or the Parking Lease to the contrary, Landlord hereby expressly waives
any statutory, constitutional or common law landlord's liens (as the same may be enacted or exist
from time to time) and any and all rights granted under any present or future applicable
Governmental Rules to levy or distrain for any rentals (whether in arrears or in advance) against
the Property of Tenant on the Premises or in the Convention Center Premises and further agrees to
execute any reasonable instruments evidencing such waiver, at any time or times hereafter upon
Tenant's reasonable request at Tenant's sole cost and expense and provided that the Landlord
Representative has Approved such instrument in advance, such Approval not to be unreasonably
withheld.
Section 28. Approvals, Standards for Review.
(a) Review and Approvals Rights. The provisions of this Section 28
shall be applicable with respect to all instances in which it is provided under
any Subject Document that Landlord, the Landlord Representative, Tenant,
the Tenant Representative, the Leasehold Mortgagee exercises Review and
Approval Rights; provided, however, that if the provisions of this Section
28 specifying time periods for exercise of Review and Approval Rights
shall conflict with other express provisions of a particular Subject
Document providing for time periods for exercise of designated Review and
Approval Rights, then the provisions of such other provisions of such
Subject Document shall control. As used herein, the term "Review and
Approval Rishts" shall include, without limiting the generality of that
term, all instances in which one party or its representative (the "Submitting
Party") is permitted or required to submit to the other party or to the
representative of that other party any document, Notice or determination of
the Submitting Party and with respect to which the other party or its
representative (the "Reviewing Party") has a right or duty under a Subject
Document to review, comment, Approve, disapprove, dispute, confirm, or
challenge the submission or determination of the Submitting Party.
Without limiting the foregoing, in the instances where the Reviewing Party
pursuant to the terms of the Ground Lease, the City Facilities Lease, or the
Parking Lease is the Landlord (as opposed to the Landlord Representative),
such Reviewing Party shall be City Council
GROUND LEASE AND LICENSE AGREEMENT
APPENDIX B
(b) Standard for Review. Unless any Subject Document specifically
provides that a party's Review and Approval Rights shall be exercised in its
reasonable discretion, all of such Review and Approval Rights under the
Subject Documents shall be exercised in such party's reasonable discretion.
The Submitting Party shall use reasonable efforts to cause any matter
submitted to the Reviewing Party by the Submitting Party and with respect
to which the Reviewing Party has Review and Approval Rights under any
Subject Document to be submitted under cover of a request which (i)
contains the heading or caption "TIME SENSITIVE - REQUEST FOR
REVIEW/APPROVAL" (or similar phrase), (ii) states the date of
submission to the Reviewing Party by the Submitting Party (but which date
shall ultimately be determined in accordance with Section 5 of this
Appendix B), (iii) states the date by which a response is required under the
terms of the Subject Document (to the extent a specific response time is
required pursuant to the terms hereof, as opposed to the general
requirements of this Section 28), (iv) identifies the provision of any Subject
Document pursuant to which such Review and Approval is sought and (v)
identifies (by document or drawing title, identifying number and revision
date, or other clear descriptor) all enclosures to such request with respect to
which Review and Approval is then being sought. The Reviewing Party
shall review the same and shall promptly (but in any event within fifteen
(15) calendar days after such receipt) give Notice to the Submitting Party of
the Reviewing Party's comments resulting from such review and, if the
matter is one that requires Approval or confirmation pursuant to the terms
of the Ground Lease, such Approval, confirmation, disapproval or failure to
confirm, setting forth in detail the Reviewing Party's reasons for any
disapproval or failure to confirm. Any failure to respond within the
foregoing fifteen (15) calendar day period shall be deemed to be a
disapproval or failure to confirm the matter submitted; provided, however,
that to the extent that the action with respect to any Review and Approval
Rights is to come from the Landlord Representative (as opposed to
Landlord) and only in the event of a failure to respond by the Landlord
Representative within the within the above fifteen (15) calendar day period,
(i) Tenant shall have the right to deliver a Notice of Failure to Respond to
the Landlord Representative and the City Manager or his/her designee and
(ii) if the Landlord Representative shall fail to respond to such Notice of
Failure to Respond by the date which is seven (7) Business Days after the
Landlord Representative and the City Manager or his/her designee shall
have received the Notice of Failure to Respond, then in such event, and in
such event only, the Landlord Representative shall be deemed to have given
its Approval or confirmation as to the original submission upon which the
Notice of Failure to Respond was based, and no other submission or Review
and Approval Right. Unless otherwise provided in the applicable Subject
Document, the Reviewing Party's right to disapprove or not confirm any
matter submitted to it for Approval and to which this Section 28(c) applies
GROUND LEASE AND LICENSE AGREEMENT
APPENDIX B
1X
shall be limited to the elements thereof. (i) which do not conform
substantially to Approvals or confirmations previously given with respect
to the same matter, (ii) which are new elements not previously presented or
(iii) which propose or depict matters that are or the result of which would be
a violation of or inconsistent with the provisions of such Subject Document
or applicable Governmental Rules.
(c) Resubmissions. If the Reviewing Party disapproves or fails to
Approve to approve or confirm a submission or any other matter to which
this Section 28 applies within the applicable time period, the Submitting
Party shall have the right, within thirty (30) calendar days after the
Submitting Party receives Notice of such disapproval or failure to Approve
or confirm, to resubmit such matter to the Reviewing Party, altered to
satisfy the Reviewing Party's basis for disapproval or failure to Approve or
confirm (all subsequent resubmissions with respect to such matter must be
made within thirty (30) calendar days of the date the Submitting Party
receives Notice of disapproval of or failure to Approve or confirm the prior
resubmission). The applicable Submitting Party shall use reasonable efforts
to cause any such resubmission to expressly state that it is a resubmission,
to identify the original submission and any prior resubmissions, and to not
be included with an original submission unless the matter previously
disapproved is expressly identified thereon. Any resubmission made
pursuant to this Section 28(c) shall be subject to Review and Approval by
the Reviewing Party in accordance with the procedures described in this
Section 28 for an original submission, until such matter shall be Approved
or Consented to by the Reviewing Party.
(d) Duties, Obligations and Responsibilities Not Affected. Approval
or confirmations by the Reviewing Party of or to a matter submitted to such
party by the Submitting Party shall neither, unless specifically otherwise
provided, (a) relieve the Submitting Party of its duties, obligations or
responsibilities under the applicable Subject Document with respect to the
matter so submitted, nor (b) shift the duties, obligations or responsibilities
of the Submitting Party with respect to the submitted matter to the
Reviewing Party.
GROUND LEASE AND LICENSE AGREEMENT
APPENDIX B
APPENDIX C
TO
GROUND LEASE
Addresses for Payments and Notices/Description ofAccozmts
A. LANDLORD: THE CITY OF BAYTOWN, TEXAS
(1) Landlord's Account: All payments to Landlord shall be made by wire transfer of
immediately available federal funds to the following account (the "Landlord's
Account"):
with sufficient information to identify the source and application of such funds.
(2) Confirmations: All written confirmations of such wire transfer shall be sent to:
(3) Notices: All Notices to Landlord shall be sent to:
If by hand or courier service, then to:
If by mail or email, then to:
GROUND LEASE AND LICENSE AGREEMENT
APPENDIX C
and in all cases to:
B. TENANT:
(1) Tenant's Account: All payments to Tenant shall be made by wire transfer of
immediately available federal funds to an account (the "Tenant's Account") to be
designated by Tenant in a Notice to Landlord with sufficient information to identify
the source and application of such funds.
(2) Confirmations: All written confirmations of such wire transfer shall be sent to an
address to be designated by Tenant in a written notice to Landlord.
(3) Notices: All Notices to Tenant shall be sent to:
C/O Baytown Municipal Development District
2401 Market Street
Baytown, TX 77520
Attn: Ron Bottoms
C. LEASEHOLD MORTGAGEE:
All Notices to the Leasehold Mortgagee pursuant to the Tenant's Notice of Financing
delivered as of the Effective Date shall be sent to:
GROUND LEASE AND LICENSE AGREEMENT
APPENDIX C
APPENDIX D
TO
GROUND LEASE
Insurance Plan Additional Requirements
1. Builder's All Risk Policy
a. Coverage shall also include, but not be limited to:
i. Demolition and removal of debris (including from demolition occasioned
by enforcement of Governmental Rules)
ii. Inland transit (including off-site storage)
iii. No aggregate loss limit of sum insured except for perils customarily subject
to annual aggregates, such as flood and earthquake
iv. Soft costs
V. Increased cost of construction
vi. False work
vii. Ordinance or law
viii. EDP and valuable paper
ix. Expediting expense
X. Collapse
xi. Water damage
xii. No exclusion for physical damage arising from faulty workmanship, design
defect or faulty materials
b. The Builder's All Risk Policy shall include coverage for a twenty-four (24) month
extended period of indemnity after completion of any Additional Work.
2. Maritime Policies
a. If policy is required, coverage shall also include:
i. Activities for which watercraft is used in connection with Additional Work
GROUND LEASE AND LICENSE AGREEMENT
APPENDIX D
0
ii. Master and crew, including general maritime liability, Jones Act, wages,
transportation, maintenance and care
3. GL Policies
a. As obtainable on commercially reasonable terms, the following endorsements:
i. Premises and operations coverage with no exclusion for explosion, collapse
and underground
ii. Blanket contractual coverage, including written contracts
iii. Personal injury and advertising injury
iv. Host/legal liquor liability, and to the extent applicable, dramshop liability
V. Broad form property damage coverage
vi. Incidental medical malpractice liability
vii. Completed operations and products liability coverage for a period of three
(3) years after Commencement of Hotel Project Operations
viii. Non -owned watercraft liability for boats under twenty-six feet (26') in
length, if exposure exists
ix. Severability of interests and cross liability endorsement
X. Hoists and elevators or escalators, if exposure exists
b. Initial limits: $1,000,000 Each Occurrence
1,000,000
Personal and Advertising Injury
1,000,000
Completed Operations Aggregate
2,000,000
General Aggregate/all insureds
5,000
Medical Payments
100,000
Fire Legal Liability
C. Deductible or self-insured retention not to exceed:
$10,000 any one accident for bodily injury, death and property damage
relating to operations; $250,000 during construction phase
GROUND LEASE AND LICENSE AGREEMENT
APPENDIX D
W
4. Auto Policies
a Coverage shall also include:
Owned/Leased Vehicles
Non -owned Vehicles
Hired Vehicles
b. Deductible or self-insured retention not to exceed: $5,000
5. Workers' Compensation Policies (statutory workers' compensation coverage and
employers liability)
a. Extensions of coverage:
i. Other States endorsement
ii. Voluntary compensation, if exposure exists
iii. United States Longshoreman's and Harbor Worker's Act, if exposure exists
iv. Jones Act, if exposure exists
V. Alternate employer endorsement
vi. Amendment of notice of occurrence
b. Specific waiver of subrogation in favor of the Landlord Insured.
G. Crime Policy
a. Sub -limit coverage amounts:
Employee Dishonesty $ 2,000,000.00
Forgery or Alteration 2,000,000.00
Robbery - Inside 2,000,000.00
Robbery - Outside 2,000,000.00
Total: $8,000,000.00
b. Deductible amounts not to exceed:
Employee Dishonesty $ 25,000.00
GROUND LEASE AND LICENSE AGREEMENT
APPENDIX D
n
Forgery or Alteration 25,000.00
Robbery - Inside 25,000.00
Robbery - Outside 25,000.00
Total: $ 100,000.00
7. Special Policies
a. The GL Policies in accordance with Sections 7.1.1(h), 7.1.2(h) and 7.1.4(a) of the
Ground Lease.
b. Auto Policies in accordance with Sections 7.1.1(121, 7.1.2(b) and 7.1.4c of the
Ground Lease, with the addition of a motor trucker or carrier pollution endorsement
related to claims arising out of the transporting and loading or unloading of
Contaminated Materials.
Workers' Compensation Policies in accordance with Sections 7.1.1(c), 7.1.2 c and
7.1.4(d) of the Ground Lease.
d. Excess/Umbrella Policies in accordance with Sections 7.1.1(g), 7.1.2(g) and
7.1.4(e) of the Ground Lease.
e. A pollution or environmental impairment liability insurance policy written on a
claims made basis, that names Tenant as the insured and the Landlord Insured as an
additional insureds (with an endorsement that the "other insurance" clause shall not
apply to the Landlord Insured), insuring against liability for bodily injury and death
and/or for property damage occurring, in, upon or about the Premises or the Project
Improvements as a result of removal and disposal of any Contaminated Materials in
an amount not less than Five Million and No/100 Dollars ($5,000,000.00)
combined single limit per occurrence.
GROUND LEASE AND LICENSE AGREEMENT
APPENDIX D
iv
EXHIBIT A-1
TO
GROUND LEASE
Description of Leased Premises
GROUND LEASE AND LICENSE AGREEMENT
EXHII3rF A -I
EXHIBIT A-2
TO
GROUND LEASE
Description of the Licensed Areas
1. None.
GROUND LEASE AND LICENSE AGREEMENT
EXHIBIT A-2
EXHIBIT A-3
TO
GROUND LEASE
Description ofAdjacent Convention Center Site
GROUND LEASE AND LICENSE AGREEMENT
EXHIBIT A-3
EXHIBIT A-4
TO
GROUND LEASE
GROUND LEASE AND LICENSE AGREEMENT
EXHIBff A-4
EXHIBIT A-5
TO
GROUND LEASE
Description of Tenant's Access and Maintenance Area
GROUND LEASE AND LICENSE AGREEMENT
EXHIBIT A-5
EXHIBIT A-6
TO
GROUND LEASE
Description of Landlord's Access and Maintenance Area
GROUND LEASE AND LICENSE AGREEMENT
EXHIBIT A-6
EXHIBIT B
TO
GROUND LEASE
Form of Recognition, Non -Disturbance and Attornment Agreement
RECOGNITION, NON -DISTURBANCE AND ATTORNMENT AGREEMENT
THE STATE OF TEXAS
COUNTY OF HARRIS
THIS RECOGNITION, NON -DISTURBANCE AND ATTORNMENT AGREEMENT
(this "Agreement") is made and entered into effective as of the day of ,
20_, by and between THE CITY OF BAYTOWN, a Texas municipal corporation and
home -rule city of the State of Texas principally situated in Dallas County, Texas ("Landlord"),
acting by and through its governing body, the City Council, and the Baytown Municipal
Development District, a political subdivision of the State of Texas, and the City of Baytown
("Tenant") acting by and through its governing body, the Board of Directors; and
I 1 ("Space Tenant").
RECITALS
A. Landlord and Tenant have
Agreement dated effective as of
following have occurred:
entered into that certain Ground Lease and License
(the "Ground Lease"), pursuant to which the
a. Landlord has leased to Tenant and Tenant has leased from Landlord the real
property located in Harris County, Texas described on Exhibit A attached hereto (the
"Leased Premises"):
b. Landlord has granted to Tenant the following licenses (collectively, the
"Licensees") in and to the following Licensed Areas described on Exhibit A-2 attached
hereto (collectively, the "Licensed Areas"):
B. Pursuant to the terms of the provisions of the Ground Lease, Tenant has entered
into a Space Lease with Space Tenant dated [ ] and, in accordance with the
provisions of the Ground Lease, has requested Landlord to enter into this Agreement with respect
to the Space Lease.
C. Landlord, Tenant and Space Tenant desire to execute this Agreement as a
non -disturbance and attornment agreement pursuant to Section 12.7 of the Ground Lease.
GROUND LEASE AND LICENSE AGREEMENT
EXHIBIT B
For good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the Landlord, Tenant and Space Tenant agree as follows:
Section 1. Definitions and Usage. Unless the context shall otherwise require,
capitalized terms used in this Agreement shall have the meanings assigned to them in the Ground
Lease, which also contains rules as to usage that shall be applicable herein.
Section 2. Attornment. In the event Landlord (a) succeeds to the interest of Tenant as
sublandlord under the Space Lease by reason of any termination of the Ground Lease by Landlord
due to a Tenant Default thereunder (following any notice and cure provisions provided therein,
including Mortgage protection provisions), or by any other manner or for any other reasons and (b)
elects to continue to operate the Hotel on the Leased Premises after the termination of the Ground
Lease, it is agreed that Space Tenant shall be bound to Landlord and Landlord shall be bound to
Space Tenant, under all of the terms, covenants and conditions of the Space Lease for the
remaining balance of the term thereof with the same force and effect as if Landlord were the
original sublandlord under the Space Lease and Space Tenant shall attorn to Landlord, such
attornment to be effective and self -operative without execution of any further instruments on the
part of any of the parties of this Agreement, immediately upon Landlord succeeding to the interest
of Tenant as sublandlord under the Space Lease. Notwithstanding the foregoing, Landlord shall
have no obligations to Space Tenant under the Space Lease, this Agreement or otherwise during
any period of time that Landlord does not operate the Hotel on the Leased Premises. Space Tenant
agrees that Landlord is not obligated to operate the Hotel.
Section 3. Non -Disturbance. So long as (a) Space Tenant is not in default under the
Space Lease, which default shall not have been cured or is not in process of being cured within the
applicable grace period provided for in the Space Lease, and (b) Landlord has elected to continue
to operate the Hotel on the Leased Premises after the termination of the Ground Lease, Landlord
shall:
(a) recognize the Space Lease to be in full force and effect;
(b) not disturb or terminate Space Tenant's subleased estate under the Space
Lease by reason of any default by Tenant under the Ground Lease; and
(c) permit Space Tenant to remain in quiet and peaceful possession of the
Leased Premises throughout the balance of the term of the Space Lease (including any
renewal terms thereunder) in accordance with the provisions of the Space Lease; provided,
however:
(i) Landlord shall not be liable for or obligated to cure any monetary
default under the Space Lease occurring prior to the time that Landlord succeeds to
Tenant's interest as sublandlord under the Space Lease, nor be subject to any
offsets, defenses or claims that Space Tenant may be able to assert against Tenant
as its sublandlord;
(ii) subject to Section 4 below, Landlord shall not be liable for or
obligated to cure any non -monetary default under the Space Lease occurring prior
GROUND LEASE AND LICENSE AGREEMENT
EXHIBIT B
to
to the time Landlord succeeds to Tenant's interest as sublandlord under the Space
Lease; and
(iii) Landlord shall not be bound by any modification or amendment of
the Space Lease made without Landlord's written Approval, except as otherwise
permitted in the Ground Lease.
Section 4. Cure of Certain Defaults. Space Tenant's attornment obligations set forth
herein shall be subject to Landlord's cure of any material non -monetary default under the Space
Lease to the extent such material non -monetary default must be cured in order to provide a facility
that complies with the standards, provisions and requirements of the Space Lease.
Section 5. Notice and Opportunity to Cure Under Space Lease. Landlord shall be
entitled to notice and opportunity to cure any default by Tenant as sublandlord under the Space
Lease as follows:
(a) Notices of Default. Space Tenant shall give Landlord a copy of any
and all notices of default or of the occurrence of an event of default from time to
time given to Tenant, as sublandlord under the Space Lease, by Space Tenant at the
same time as and whenever any such notice shall thereafter be given by Space
Tenant to Tenant. Such notice shall be addressed to Landlord in the manner for
delivery of notices provided in the Ground Lease.
(b) Landlord's Cure Rights. In the case of any notice of default given
by Space Tenant to Tenant as sublandlord under the Space Lease and the Landlord
in accordance with subsection (a) above, Landlord shall have the same rights to
cure Tenant's default under the Space Lease as are given to Tenant under the Space
Lease; and Space Tenant shall accept such performance by or at the instance of
Landlord as if the same had been made by Tenant.
Section 6. General.
(a) Successors and Assigns. This Agreement shall be binding upon,
and inure to the benefit of, the parties hereto and their respective successors, heirs,
administrators and assigns.
(b) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas, without regard to
conflict of law principles.
(c) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument.
(d) Special Provisions. From and after the attornment of Space Tenant
to Landlord pursuant to Section 2 above, notwithstanding anything to the contrary
set forth in the Space Lease, the provisions of Section 2.1, Section 2.2, Section 3.1,
Section 3.2, Section 3.3, Section 4.17 Section 6.2, Section 12.2, ARTICLE 9,
GROUND LEASE AND LICENSE AGREEMENT
EXHIBIT B
Im
ARTICLE 10, ARTICLE 11 and ARTICLE 14 of the Ground Lease shall not be
incorporated by reference and made a part of the Space Lease and Space Tenant
shall not be entitled to the rights granted thereunder.
IN WITNESS WHEREOF, this Agreement has been executed by Landlord, Tenant and
Space Tenant as of the date first above written.
I W.110 ; 1
CITY OF BAYTOWN, TEXAS
By:_
Name:
Title:
TENANT:
BAYTOWN MUNICIPAL
DEVELOPMENT DISTRICT
By:
Name:
Title:
GROUND LEASE AND LICENSE AGREEMENT
EXHIBIT B
SPACE TENANT:
By:_
Name:
Title:
STATE OF TEXAS §
COUNTY OF HARRIS §
This instrument was acknowledged before me on 20_ by
of the City of Baytown, Texas, a
Texas municipal corporation and home -rule city of the State of Texas principally situated in
County, Texas, acting by and through the governing body, the City Council, on behalf of said
municipal corporation.
{SEAL}
Printed Name:
Notary Public in and for
the State of Texas
My Commission Expires:
STATE OF §
COUNTY OF §
This instrument was acknowledged before me on
, of
of said limited partnership.
{SEAL}
STATE OF §
COUNTY OF §
GROUND LEASE AND LICENSE AGREEMENT
EXHBIT B
V
Printed Name:
Notary Public in and for
the State of
My Commission Expires:
20_ by
on behalf
This instrument was acknowledged before me on , 20_ by
, of , on behalf
of said limited partnership.
{SEAL}
GROUND LEASE AND LICENSE AGREEMENT
EXHIBIT B
Vi
Printed Name:
Notary Public in and for
the State of
My Commission Expires:
EXMIT C
TO
GROUND LEASE
Additional Items ofFF&E
❑ Kitchen and restaurant improvements, appliances, fixtures and equipment
❑ Bar equipment
❑ Refrigeration improvements, appliances, fixtures and equipment
❑ Laundry fixtures, furniture and equipment
❑ Millwork
❑ Landscaping
❑ Point of sale equipment
❑ Management information system
❑ Phone system
❑ Computer system
❑ Sound system
❑ Exterior/interior signs and graphics (except logos and trademarks that are not
covered by Tenant's obligations under Section 16.2.3)
❑ Televisions and television system
❑ Employee time system (unless owned by the Operator)
❑ Security system and equipment
❑ In -room refrigerators and safes
❑ Other furniture, fixtures and equipment for the interior of the Hotel
❑ Engineering Supplies and Equipment
❑ Vans/Vehicles
❑ Emergency Generators
GROUND LEASE AND LICENSE AGREEMENT
EXHIBIT C
i