Ordinance No. 14,000ORDINANCE NO. 14,000
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 CITY FACILITIES LEASE
AGREEMENT WITH THE BAYTOWN MUNICIPAL DEVELOPMENT
DISTRICT; AND PROVIDING FOR THE EFFECTIVE DATE THEREOF.
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BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF BAYTOWN,
TEXAS:
Section 1: That the City Council of the City of Baytown, Texas, hereby authorizes
the City Manager to execute and the City Clerk to attest to the City Facilities Lease 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 2: 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 24h day of January, 2019.
ATTE
LLVFICIA BRYSCH, City Clerk
APPROVED AS TO FORM:
NACIO RAMIREZ, SR. C ty Attorney
BRANDON CAPETILLO, Mayor
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R:1Karen\Fi1eslCity Council'•.Ordinances\2019Uanuary 24`•CityFacilitiesLeasewithMDD.doc
Exhibit "A"
CITY FACILITIES LEASE AGREEMENT
Dated as of , 2019
by and between
THE CITY OF BAYTOWN, TEXAS,
as Landlord,
and
BAYTOWN MUNICIPAL DEVELOPMENT DISTRICT,
as Tenant
CITY FACILITIES
ARTICLE 1. GENERAL LEASE TERMS;
REPRESENTATIVES OF THE PARTIES.............................................................3
Section 1.1. Definitions and Usage.............................................................................3
Section 1.2. Governing Provisions..............................................................................3
Section1.3. Landlord Representative.........................................................................3
Section1.4. Tenant Representative.............................................................................4
ARTICLE 2. GRANT OF LEASEHOLD ESTATE AND LICENSES.........................................4
Section2.1. Lease.......................................................................................................4
Section2.2. Reservations............................................................................................5
Section 2.3. Landlord's Right to Compel Title............................................................6
ARTICLE 3. LEASE TERM; POSSESSION OF LEASED
CONVENTION CENTER PREMISES AND LICENSED AREAS.......................6
Section 3.1. City Facilities Lease Term......................................................................6
Section 3.2. Renewal Term Option.............................................................................7
Section 3.3. Delivery of Possession; Covenant of Quiet Enjoyment ..........................7
Section 3.4. Acceptance of Convention Center Premises on an "AS IS,
WHEREIS" Basis...................................................................................8
Section3.5. Tenant Release......................................................................................10
ARTICLE4. RENT......................................................................................................................10
Section 4.1. City Facilities Lease Rentals.................................................................10
Section 4.2. Intentionally Omitted............................................................................10
Section 4.3. Books and Records/Landlord Audit......................................................10
Section 4.4. Additional City Facilities Lease Rentals.............................................11
Section 4.5. Place and Method of Payment.............................................................11
ARTICLE 5. USE AND OCCUPANCY; PERMITTED USES..................................................11
Section 5.1. Permitted Uses During City Facilities Lease Construction Term ......... 1 l
Section 5.2. Permitted Uses During City Facilities Lease Operating Term..............1 l
Section5.3. Prohibited Uses.....................................................................................11
Section 5.4. Continuous Operation During the Convention Center Lease
Term......................................................................................................12
Section 5.5. Compliance with Governmental Rules and Permitted
Encumbrances.......................................................................................16
Section5.6. Excavations...........................................................................................17
Section5.7. Light and Air.........................................................................................17
Section 5.8. Estoppel Certificate for Operator..........................................................17
Section5.9. Deliverables...........................................................................................18
Section 5.10. Confidentiality ......................................................................................18
Section 5.12. CC Down Times....................................................................................18
Section 5.13. Compliance with the Operating Agreement..........................................18
Section 5.14. Minimum Convention Center Improvements Performance
Standards...............................................................................................19
Section 5.15. Completion of Convention Center Improvements Work . ...................19
ARTICLE 6. IMPOSITIONS; NET LEASE................................................................................19
Section6.1. Taxes and Assessments.........................................................................19
Section 6.2. Tenant's Right to Contest Impositions..................................................19
Section 6.3. Failure of Tenant to Pay Impositions....................................................21
Section6.4. Net Lease...............................................................................................21
ARTICLE 7. INSURANCE AND SURETY BONDS.................................................................22
Section 7.1. Policies Required..................................................................................22
Section7.2. Surety Bonds.........................................................................................30
Section 7.3. Blanket or Master Policy.......................................................................31
Section 7.4. Failure of Tenant to Maintain...............................................................31
Section 7.5. Additional Policy Requirements...........................................................32
Section 7.6. Proceeds of Insurance; Insurance Trustee. The Insurance
Proceeds shall be payable to:................................................................35
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 .............................36
Section 7.8. Indemnity by Tenant.............................................................................36
ARTICLE 8. OWNERSHIP OF CONVENTION CENTER IMPROVEMENTS AND
PERSONALTY;
ADDITIONAL WORK; ACCESS........................................................................38
Section 8.1. Title to the Convention Center Improvements......................................38
Section 8.2. Additional Work by Tenant..................................................................39
Section 8.3. No Substitute for Permitting Processes or other Governmental
Functions...............................................................................................41
Section 8.4. Work Performed on Project..................................................................41
Section 8.5. Landlord's Joinder in Permit Applications............................................42
Section8.6. Mechanics' Liens and Claims................................................................42
Section 8.7. Access to the Convention Center Improvements for Landlord.............43
Section 8.8. Record Drawings and Other Documents...............................................44
ARTICLE 9. REPAIRS AND MAINTENANCE; UTILITIES; REMEDIAL WORK ...............44
Section 9.1. Repairs and Maintenance......................................................................44
Section9.2. Utilities..................................................................................................45
Section 9.3. Tenant's Remedial Work; Notice of Environmental Events;
WasteDisposal......................................................................................46
ARTICLE 10. CASUALTY DAMAGE ..................
Section 10.1. Damage or Destruction....
Section 10.2. Insurance Proceeds...........
Section 10.3. Non -Abatement of Rent...
.....47
.....47
.....47
.....49
Section 10.4. Option to Terminate..............................................................................50
ARTICLE 11 CONDEMNATION.............................................................................................51
Section 12.1.
Section 11.1.
Condemnation of All or Substantially All ............................................51
Section 12.2.
Section 11.2.
Condemnation of Part...........................................................................53
Section 12.3.
Section 11.3.
Temporary Taking.................................................................................54
Section 12.4.
Section 11.4.
Condemnation Proceedings...................................................................54
Section 12.5.
Section 11.5.
Notice of Condemnation.......................................................................54
Section 12.6.
Section 11.6.
Condemnation by the City ....................................................................54
Section 12.7.
ARTICLE 12. ASSIGNMENT; SUBLETTING..........................................................................55
Section 12.1.
Assignments of Tenant's Interest; Subleasing.......................................55
Section 14.2.
Section 12.2.
Assignment; Subletting; Control of Interests in Tenant........................55
Default Notice.....................................................................................63
Section 12.3.
Information and Assurances Required; Review by Landlord ...............
56
Section 12.4.
No Waiver of Rights by Landlord.........................................................58
Section 14.6.
Section 12.5.
Conditions to Effectiveness of Any Transfer........................................58
Section14.7.
Section 12.6.
Space Leases.........................................................................................58
Section14.8.
Section 12.7.
Non -Disturbance of Space Leases........................................................58
Section 14.9.
Section12.8.
Acceptance of Rent...............................................................................59
Section 14.10.
Section12.9.
Transfers by Landlord...........................................................................59
Section 14.11.
Section 12.10.
Estoppel Certificate...............................................................................59
Section14.12.
ARTICLE 13. SPECIAL COVENANTS.....................................................................................60
Section 13.1. Registration in Texas.............................................................................60
Section 13.2. Maintenance of Rights of Way, Easements and Licenses . ..................60
Section 13.3. Compliance with Anti -Forfeiture Laws..............................................60
Section13.4. Legal Opinion......................................................................................61
Section13.5. Governmental Authorizations...............................................................61
Section 13.6. Payment of Property Taxes, Insurance, and City Facilities Lease
Rentals...................................................................................................61
ARTICLE 14. LEASEHOLD MORTGAGES.............................................................................62
Section 14.1.
Tenant's Limited Right to Grant Liens..................................................62
Section 14.2.
Consent of Leasehold Mortgagee Required..........................................63
Section14.3.
Default Notice.....................................................................................63
Section 14.4.
Notice to Leasehold Mortgagee............................................................63
Section14.5.
Procedure on Default.............................................................................64
Section 14.6.
Third Party Beneficiary .........................................................................65
Section14.7.
New Lease.............................................................................................65
Section14.8.
New Lease Priority ................................................................................66
Section 14.9.
Liability of New Tenant........................................................................67
Section 14.10.
Further Assurances; Estoppel Certificate..............................................67
Section 14.11.
Space Leases and Subrents...................................................................68
Section14.12.
Legal Proceedings.................................................................................68
Section14.13.
Notices...................................................................................................68
Rfl
Section 14.14. Non -separation of Leasehold Estate, Licenses, and Project
Documents..........................................................................................68
Section 14.15. Consent to Hotel Bond Trustee as Leasehold Mortgagee . ..................69
ARTICLE 15. DEFAULTS AND REMEDIES.............................................................................69
Section 15.1. Events of Default...................................................................................69
Section15.2. Remedies...............................................................................................72
Section 15.3.
No Indirect Damages.............................................................................74
Section 15.4.
Waiver of Consumer Rights..................................................................75
Section 15.5.
Limited Recourse Against Landlord
.....................................................75
Section 15.6.
Declaratory or Injunctive Relief............................................................75
Section 15.7.
Effect of Termination..........................................................................75
Section 15.8.
Notice of Default to the Operator..........................................................76
ARTICLE 16. SURRENDER OF POSSESSION; HOLDING OVER........................................76
Section16.1. Surrender of Possession........................................................................76
Section 16.2. Removal of Personalty..........................................................................76
Section16.3. Holding Over.......................................................................................77
ARTICLE 17. GENERAL PROVISIONS...................................................................................77
Section 17.1.
Representations of the Parties Regarding Brokerage Fees and
Commissions.........................................................................................77
Section17.2.
Representations and Warranties............................................................78
Section17.3.
Governing Body Approval..................................................................80
Section 17.4.
Non-Appropriation................................................................................80
Section 17.5.
Interest on Overdue Obligations...........................................................81
Section17.6.
Delays and Effect of Delays..................................................................81
Section17.7.
Recording of Memorandum of Lease.................................................83
Section 17.8.
(Intentionally Omitted)..........................................................................83
Section 17.9.
Employment of Consultants................................................................83
Section 17.10.
Alcoholic Beverage Permits..................................................................83
Section 17.11.
Acknowledgement of Confidential Nature...........................................83
Section17.12.
Open Records........................................................................................84
Section17.13.
Survival.................................................................................................84
l4
APPENDICES. SCHEDULES AND EXHIBITS
APPENDICES:
APPENDIX A Addresses for Payments and Notices/Description of Accounts
APPENDIX B
Governing Provisions
APPENDIX C
Insurance Plan Additional Requirements
EXHIBITS:
EXHIBIT A
Description of Convention Center Premises
EXHIBIT B
Form of Non -Disturbance and Attornment Agreement
EXHIBIT C
Form of Memorandum of City Facilities Lease
EXHIBIT D
Form of Assignment and Assumption Agreement
V
CITY FACILITIES LEASE AGREEMENT
THIS CITY FACILITIES LEASE AGREEMENT (the "City Facilities Lease") is made
and entered into effective as of the day of , 20 (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
the "Citv"), acting by and through its governing body, the City Council of the City of Baytown
("City Council'), and the Baytown Municipal Development District, a political subdivision of the
State of Texas and the City ("Tenant" or "MMD"), acting by and through its governing body, the
Board of Directors of the Baytown Municipal Development District ('Board of Directors").
Tenant and Landlord collectively are referred to herein as the "Parties" and individually as a
"Party".
RECITALS
A. The City has determined that it is in the best interests of the City and its residents to
construct a minimum 200 -room, full-service, upscale convention center headquarters hotel on the
Lease Premises (the "Hotel") and the related Convention Center Improvements (as defined herein)
on the Ground.
B. The construction of the Hotel and the related Convention Center Improvements
will address facilities needs identified by residents and businesses within the City and additionally
promote tourism and the convention industry in the City.
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
Tenant's territory and is authorized under Chapter 377 of the Texas Local Government Code and
Section 3888.102 of the Special District Local Laws Code to undertake the development,
construction, ownership, and operation of the Hotel and the related Convention Center
Improvements.
D. In response to a request for proposal 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 development services for the design, construction, and
operation of the Hotel and Convention Center 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.
E. Tenant has the authority to design, construct, furnish and open the Hotel and the
Convention Center Improvements and to own and/or lease and operate the Hotel and the
Convention Center Improvements following their completion.
F. 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, which include, without limitation, the Convention Center Improvements.
G. Landlord and Tenant are executing and entering into this City Facilities Lease
wherein Tenant shall lease the Convention Center Improvements and Convention Center Premises
from Landlord, and Landlord and Tenant are executing and entering into the Marina Site Parking
Agreement wherein up to 230 spaces on the Marina Parking Site will be made available for
Tenant's use in connection with the operation of the Hotel and the Convention Center
Improvements.
H. The City shall own the Convention Center Premises and Convention Center
Improvements.
I. Tenant intends to issue tax-exempt bonds, in one or more series, for the purpose of
acquiring, developing, constructing, furnishing and equipping the Hotel and to pay that portion of
the cost of developing the Project (hereinafter defined) that is not funded by the Landlord
(collectively, the "Hotel Bonds").
J. Tenant desires to enter into this City Facilities Lease in order to facilitate the
development and operation of the Project Improvements as part of a single unified project.
K. In conjunction with the design, development, construction, furnishing and opening
of the Convention Center Improvements pursuant to the Development Agreement and in light of
the anticipated ownership and operation thereof, Tenant desires to lease the Convention Center
Premises from the City for the purposes and uses related to the Convention Center Improvements
permitted hereunder, on, subject to and in accordance with the terms hereof.
L. Contemporaneously herewith, the Parties have entered into that certain Ground
Lease and License Agreement (the "Ground Lease") for the purposes more particularly described
therein, but which include the development and operation of the Hotel; and this City Facilities
Lease is entered into by the Parties to allow Tenant to [design, develop and] operate the
Convention Center Improvements, which shall be owned by the City, all in conjunction with the
operation of the Hotel.
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 City Facilities Lease
and not otherwise defined shall have the meanings assigned to them in the Glossary of Defined
Terms attached as Appendix A to the Ground Lease, which Appendix A also contains rules as to
usage that shall be applicable herein, all of which are incorporated herein by reference.
Section 1.2. Governing Provisions. The governing provisions set forth in Appendix B
attached to the Ground Lease shall apply to and govern (and are hereby incorporated into) this City
Facilities Lease for all purposes.
Section 1.3. Landlord Representative. For so long as the City is Landlord under this
City Facilities 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 City Facilities 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 City Facilities 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 City Facilities Lease of the Landlord Representative shall be as
expressly specified in this City Facilities Lease. With respect to any such action, decision or
determination which is to be taken or made by Landlord under this City Facilities 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 City Facilities 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
City Facilities Lease to the contrary, the Landlord Representative shall not have any right to
modify, amend or terminate this City Facilities Lease. Any written Approval, decision,
confirmation or determination hereunder by Landlord 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.
1.4.1. Appointment of Tenant Representative. Tenant hereby designates the
Deputy General Manager as a tenant representative (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 City Facilities Lease with respect to matters
pertaining to this City Facilities 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 City Facilities Lease of the Tenant
Representative shall be as expressly specified in this City Facilities Lease. With respect to any
such action, decision or determination which is to be taken or made by Tenant under this City
Facilities 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 City
Facilities Lease specifically provides for the Approval, decision, confirmation or determination of
the Tenant Representative and in no other instances; provided, however, that notwithstanding
anything in this City Facilities Lease to the contrary, the Tenant Representative shall not have any
right to modify, amend or terminate this City Facilities Lease. Any written Approval, decision,
confirmation or determination hereunder by Tenant Representative shall be binding on Tenant and
Landlord shall be entitled to rely on all approvals given and other actions taken by the then current
Tenant Representative without any obligation to confirm the Tenant Representative's authority to
grant such approval or take any such action. Tenant shall give Landlord at least ten (10) Business
Days' prior Notice of the replacement or appointment of a new Tenant Representative. Tenant
Representative shall not be a Person that is themselves or is an Affiliate of. (i) a Competitor; or (ii)
a Blocked Person.
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 City Facilities Lease,
that certain real property located in the City of Baytown, Harris County, Texas, as more
particularly described on Exhibit A attached hereto (the "Ground"), together with the right and
obligation to (i) cause the Developer to construct and install the Convention Center Improvements
thereon in conjunction with Developer's obligations under the Convention Center Improvements
Construction Documents and Tenant's and Developer's obligations under the Development
Agreement, and (ii) during the City Facilities Lease Term, lease the Convention Center
Improvements in accordance with the terms and conditions of this City Facilities Lease (the
Ground and the Convention Center Improvements upon the completion thereof are hereinafter
collectively referred to as the "Convention Center Premises") for the City Facilities Lease Term.
Section 2.2. Reservations. Notwithstanding anything in this City Facilities Lease to the
contrary, Landlord hereby reserves (and the Convention Center Premises shall not include) the
following Convention Center Premises Reservations with respect to the Convention Center
Premises (the "Convention Center Premises Reservations"):
2.2.1. Natural Resources. For the benefit of the City, the exclusive right to any
natural resources in, on or under the 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 City Facilities Lease, or the Marina Site Parking Agreement, as
applicable, (ii) be permitted on the surface of the Convention Center Premises, the surface parking
area or the Convention Center Premises, or (iii) adversely affect the surface of the Convention
Center Premises, the surface parking area or the Convention Center Premises or adversely
undermine the support for the Convention Center Premises, the surface parking area or the
Convention Center Premises or cause any adverse environmental impact on the Project or the
Convention Center Improvements;
2.2.2. 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 Improvements, (ii) the surface parking spaces, (iii) the elevator located within
the lobby of the Hotel at street level, (iv) any stairwells within the Convention Center Premises or
the surface parking area, and (v) the restaurant and retail stores located on the Convention Center
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;
2.2.3. 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 Convention Center
Premises an easement to, from and across the Convention Center Premises or the surface parking
area 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
Convention Center Premises, the Hotel, or the parking area pursuant to the terms of this City
Facilities Lease or the Marina Site Parking Agreement, as applicable; and
2.2.4. 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 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.
Section 2.3. 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) Tenants rights, interests
and obligations under the other Project Documents (as defined in this Ground Lease), including
without limitation, this City Facilities 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.
ARTICLE 3.
LEASE TERM; POSSESSION OF LEASED
CONVENTION CENTER PREMISES AND LICENSED AREAS
Section 3.1. City Facilities Lease Term. The term of this City Facilities Lease (the
"City Facilities Lease 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.
3.1.1. City Facilities Lease Construction Term. The construction term under this
City Facilities Lease (the "City Facilities Lease 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 City Facilities Lease Operating Term are fully satisfied.
3.1.2. City Facilities Lease Operating Term. The operating term under this City
Facilities Lease (the "City Facilities Lease Operating 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 City Facilities Lease Operating
Term") and end on the Lease Expiration Date, unless extended or earlier terminated as provided
herein:
3.1.2.1. Substantial Completion of the Convention Center Improvements has
occurred;
3.1.2.2. Substantial Completion of the surface parking for the Convention Center
Improvements has occurred; and
3.1.2.3. 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 each of the Convention Center Improvements, and
the surface parking improvements has occurred, along with an 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 City Facilities
Lease Operating Term to be satisfied on or before the Project Completion Deadline.
3.1.3. Early Termination. This City Facilities Lease shall automatically terminate
(subject to and in accordance with Section 15.7 hereof) at 11:59 pm on the day of the repayment in
6
full of the Hotel Bonds 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.
Section 3.2. Renewal Term Dation.
3.2.1. Provided that (a) the City Facilities Lease is in full force and effect and (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 City
Facilities Lease Base Term (as extended, if at all, the "City Facilities 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 or other obligations for the renovation of the City Facilities;
provided that the Ground 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 City Facilities Lease 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 City Facilities Lease 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 the Ground Lease. If
Tenant exercises the Renewal Term Option in accordance with the terms and conditions of this
Section 3.2, the City Facilities Lease Term shall be extended for the Renewal Term upon the same
terms, covenants and conditions as are contained herein for the City Facilities Lease 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 Ground subject only to (i) the Permitted Encumbrances,
(ii) the rights of Landlord hereunder, (iii) all applicable Governmental Rules and (iv) Convention
Center Premises Reservations.
3.3.2. Covenant of Ouiet Eniovment; No Warrantv of Title. Landlord
covenants for the City Facilities Lease Term that Tenant, upon paying the City Facilities Lease
Rentals and upon keeping, timely observing and performing the terms, covenants and conditions
of this City Facilities Lease to be kept, observed and performed by Tenant, shall and may quietly
and peaceably hold, occupy, use and enjoy the Convention Center 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 City Facilities 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 City Facilities Lease, Tenant agrees that Landlord is leasing to Tenant all of Landlord's right,
title and interest to the Convention Center Premises, all without warranty of title.
Section 3.4. Acceptance of Convention Center Premises on an "AS IS. WHERE
IS" Basis.
3.4.1. Condition of the Convention Center Premises; Disclaimer of
Representations and Warranties. TENANT ACKNOWLEDGES AND AGREES, EXCEPT
AS EXPRESSLY PROVIDED IN THIS CITY FACILITIES 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 CONVENTION CENTER 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 CONVENTION CENTER
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 CONVENTION CENTER PREMISES OR THE
COMPLIANCE THEREOF WITH ANY GOVERNMENTAL RULES, (iv) THE
FEASIBILITY OF THE PROJECT OR THE CONVENTION CENTER
IMPROVEMENTS WORK OR ANY ADDITIONAL WORK, (v) THE EXISTENCE OF
ANY CONTAMINATED MATERIALS OR ENVIRONMENTAL CLAIMS, (vi) THE
CONSTRUCTION OF ANY IMPROVEMENTS ON THE CONVENTION CENTER
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 CITY FACILITIES 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
CONVENTION CENTER 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 CONVENTION
CENTER 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 THE GROUND
LEASE, THE DEVELOPMENT AGREEMENT, THIS CITY FACILITIES LEASE OR
ANY OTHER TRANSACTION DOCUMENT:
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
CONVENTION CENTER PREMISES;
3.4.2.3. THE COMPLIANCE OF THE CONVENTION CENTER
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 CONVENTION
CENTER 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
CONVENTION CENTER PREMISES OR ENVIRONMENTAL CLAIMS WITH
RESPECT TO THE CONVENTION CENTER PREMISES OR THE CONVENTION
CENTER IMPROVEMENTS;
3.4.2.6. THE CONSTRUCTION OF ANY IMPROVEMENTS ON THE
CONVENTION CENTER PREMISES, INCLUDING THE CONVENTION CENTER
IMPROVEMENTS; AND
3.4.2.7. ANY OTHER MATTER RELATING TO ANY IMPROVEMENTS
AT ANY TIME CONSTRUCTED OR TO BE CONSTRUCTED ON THE
CONVENTION CENTER 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 ANY TRANSACTION DOCUMENT 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 ANY PERSON UNDER THE TRANSACTION
DOCUMENTS, THE CONVENTION CENTER PREMISES OR ANY OTHER
PROPERTY.
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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
CONVENTION CENTER PREMISES OR THE CONVENTION CENTER
IMPROVEMENTS 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 CITY FACILITIES
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 CITY FACILITIES LEASE, WHETHER OR
NOT DISCLOSED BY THE PHASE I, THAT TENANT REMOVES DURING ITS
CONSTRUCTION OF THE CONVENTION CENTER IMPROVEMENTS.
ARTICLE 4.
RENT
Section 4.1. City Facilities Lease Rentals.
4.1.1. Amount. Tenant covenants and agrees to pay the following rentals as and
when specified below (collectively, the "City Facilities Lease Rentals"):
4.1.1.1. Basic City Facilities Lease Rentals. Basic City Facilities Lease Rentals,
together with interest thereon, to Landlord as provided in Section 4.1.2; plus
4.1.1.2. Additional City Facilities Lease Rentals. The Additional City Facilities
Lease Rentals, together with interest thereon, as provided in Section 4.4.
4.1.2. Payment of Basic City Facilities Lease Rentals. During the City Facilities
Lease Construction Term and the City Facilities Lease Operating Term (as some may be extended
as provided herein), Tenant shall pay to Landlord an annual rent equal to One and no/100 Dollar
($1.00) (the "Basic Rental").
Section 4.2. Intentionally Omitted.
Section 4.3. Books and Records/Landlord Audit. Throughout the City Facilities
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
10
Operator with regard to the Convention Center 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 City Facilities Lease Rentals. Tenant covenants and agrees to
pay, as additional rental, all of the following (collectively, the "Additional City Facilities Lease
Rentals"):
4.4.1.1. All Impositions if, as and when required to be paid under the terms of this
City Facilities Lease;
4.4.1.2. All costs, charges and expenses incurred in connection with the ownership,
management, operation, maintenance, repair and restoration of the Convention Center Premises
and the Convention Center Improvements, determined in accordance with GAAP (collectively,
the "City Facilities Oneratin2 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.
Section 4.5. Place and Method of Payment. City Facilities Lease Rentals shall be paid
to Landlord without notice or demand and all City Facilities Lease Rentals shall be paid in the
manner and at the place set forth in Section 11 of Appendix B to the 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 DurinE City Facilities Lease Construction Term.
During the City Facilities Lease Construction Term, Tenant covenants and agrees that it shall use
and occupy the Convention Center Premises in a manner which does not adversely impede, delay
or hinder the construction of the Convention Center Improvements.
Section 5.2. Permitted Uses During City Facilities Lease Operating Term. Tenant
covenants and agrees that it shall use and occupy the Convention Center Premises and the
Convention Center Improvements solely for Permitted Uses. "Permitted Uses" as used herein
means the use of the Convention Center Premises and the Convention Center Improvements in a
First Class Manner for the benefit of the City and its residents and visitors, consistent with the
Permitted Uses of the Hotel.
Section 5.3. Prohibited Uses. Tenant shall not use, nor permit the use of, the
Convention Center Premises or the Convention Center Improvements for any other or additional
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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 Convention Center Improvements
and the Convention Center Premises and that nothing in this ARTICLE 5 or elsewhere in this City
Facilities 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 Convention Center Premises or the Convention Center 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 Convention Center Improvements or the Leasehold Mortgagee,
shall have any right to enforce the prohibitions as to the Prohibited Uses.
Section 5.4. Continuous Operation During the Convention Center 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 City Facilities Lease Operating Term and continuing thereafter
during the remainder of the City Facilities Lease Term, Tenant covenants, at Tenant's sole cost and
expense to:
(a) operate the Convention Center Improvements, and cause the same
to be operated, diligently and continuously as amenities to 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 Convention
Center 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); and
(d) Tenant shall operate and maintain the Convention Center
Improvements in a First -Class Manner for the term of the City Facilities Lease.
5.4.2. Down Times. Tenant may temporarily cease to operate areas or all or
substantially all of the Convention Center Improvements during the City Facilities Lease Term for,
and only for, 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:
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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 Convention Center
Improvements and the Hotel Project Improvements in accordance with the terms of this City
Facilities Lease and the Ground Lease, as applicable;
5.4.2.2. During any period of any Additional Work permitted pursuant to the terms
of this City Facilities 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 Convention
Center 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 Convention Center 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 City Facilities 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 Convention Center
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 Convention Center
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 Convention Center 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 City Facilities
Lease 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 City Facilities Lease (including the
obligation to pay City Facilities Lease Rentals unless expressly provided otherwise pursuant to the
terms of this City Facilities Lease) other 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
13
and occupancy of the Convention Center Premises and the Convention Center Improvements and
its payment of City Facilities Lease Rentals provide a significant benefit to Landlord, (b) violation
of the covenants of continuous use, occupancy and operation in Section 5.4.1 shall each be a
material breach of this City Facilities 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 Convention Center Premises.
5.4.5. Operation by Space Tenants. Tenant shall use reasonable efforts to
provide retail stores, restaurants and service businesses in the Convention Center Improvements
consistent with the Hotel; 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 City Facilities Lease Construction Term reasonably
customary in the hotel industry (the "Pre -opening Period") and continuing thereafter during the
remainder of the City Facilities Lease Term, (i) Tenant will engage, and at all times retain, an
Operator to operate the Convention Center Premises and the Convention Center 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 City Facilities Lease relating to such Operator, including the
Operator Requirements. Each Operator engaged by Tenant to operate the Convention Center
Premises and the Convention Center 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 as the Initial
Operator and acknowledges that Interstate Interstate Management Company, LLC, d/b/a
Interstate MC, LLC, 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 Convention Center 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 City Facilities Lease 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
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
14
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 Convention Center Premises and the Convention Center
Improvements shall be operated as a franchise of Marriott Hotels ;
5.4.6.4. The Operator shall have the full authority and responsibility to operate the
Convention Center Premises and the Convention Center Improvements on a day-to-day basis,
subject only to the limitations thereon contained in the Operating Agreement; and
5.4.6.5. The Brand 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 City Facilities 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 Convention Center Premises
and the Convention Center 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 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 Convention Center
Premises and the Convention Center Improvements in accordance with the Hotel Operating
Standard; and
15
5.4.8.3. Notwithstanding the provisions of the Operating Agreement to the
contrary, if any, 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 Convention Center Premises from time to time to inspect the Convention Center
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 City Facilities Lease, Tenant shall throughout
the City Facilities Lease Term, within the time periods permitted by Governmental Rule, comply
or cause compliance with all Governmental Rules applicable to the Convention Center Premises or
the Convention Center Improvements. 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 Convention Center Premises or the Convention
Center 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 Convention Center 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
Convention Center Premises or the Convention Center Improvements to be condemned or vacated.
Even though a Lien against the Convention Center Improvements may be imposed by reason of
such noncompliance, Tenant may nevertheless delay compliance therewith during a contest
thereof if Tenant executes a bond for the sum of one hundred percent (100%) of the total Lien
amount, in standard forms for this purpose, guaranteeing that the Lien shall be released from the
Convention Center Premises and/or the Convention Center Improvements. Such bonds must be
submitted to and approved by the Landlord in order for the Tenant to be in compliance with this
provision. Tenant shall give 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 Convention
Center Improvements.
5.5.2. Permitted Encumbrances. Tenant shall throughout the City Facilities
Lease Term, comply or cause compliance with the Permitted Encumbrances.
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5.5.3. Governmental Authorizations. Before commencement of any aspect of
any Additional Work (as defined herein) or operation of the Convention Center 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 City Facilities 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
Convention Center Premises or on any other land in connection with this City Facilities Lease, in
connection with such excavation, Tenant shall notify the owners of all lands, buildings and
structures adjacent to the Convention Center 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. Licht 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
Convention Center Premises shall in any manner affect this City Facilities 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 City Facilities Lease is unmodified and is in full force and
effect (or, if there have been modifications, that this City Facilities Lease is in full force and effect
as modified and stating the modifications) (and, if so requested, whether the annexed copy of this
City Facilities Lease is a true, correct and complete copy of this City Facilities 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;
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 City Facilities Lease Operating Term occurred, respectively, if such events
have occurred as of the date of such estoppel certificate.
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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
Convention Center Premises, the Convention Center 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. the Compliance Certificate.
Section 5.10. Confidentiality. Materials delivered by Tenant to Landlord shall be subject
to disclosure unless otherwise exempt therefrom by law.
Section 5.11. Intentionally Omitted.
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 City Facilities 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 5.4.8.2; 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
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 Senior FF&E Reserve Fund, the Working Capital
Fund, Subordinated FF&E Reserve Fund, the Operating Fund, the Cash Management Agreement,
and the Lockbox Fund, all as defined in the Operating Agreement.
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Section 5.14. Minimum Convention Center Improvements Performance Standards.
Tenant covenants that notwithstanding any provision in the Operating Agreement to the contrary,
the Convention Center Improvements shall be operated at a performance standard of an upscale,
full service hotel, in compliance with the Hotel Operating Standard, and shall comply with the
Booking Agreement.
Section 5.15. Completion of Convention Center Improvements Work. Unless and
except where the Tenant is in default of its obligations, and such default excuses performance by
Developer and Design -Builder of their respective obligations to perform the Convention Center
Improvements Work, Landlord shall ensure that Developer diligently and timely performs or
causes Design -Builder to diligently and timely perform the Convention Center Improvements
Work in a good and workmanlike manner in accordance with the Hotel Operating Standards and
free from all Liens and Encumbrances. Landlord shall cause Developer to complete the
Convention Center 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 Convention Center 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 City Facilities Lease Term.
6.1.2. Payment of Impositions. Throughout the City Facilities Lease Term,
Tenant shall pay, or cause to be paid, all Impositions, if and only if such Impositions are levied on
the Convention Center Improvements or Convention Center 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
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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 Convention Center
Premises, the Convention Center Improvements, the Leasehold Estate or the Licenses created by
this City Facilities 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 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 final 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 Convention Center Premises, the Convention Center Improvements, the Leasehold
Estate or the Licenses created by this City Facilities 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 Convention
Center Premises, the Convention Center Improvements, the Leasehold Estate or the Licenses
created by this City Facilities 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 Convention Center Premises and the Convention Center Improvements from time to time
during the City Facilities Lease Term.
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. 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
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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
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 City Facilities 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 Oblizations. For so long as this City Facilities Lease remains
in effect and except for costs that Landlord has specifically agreed to pay pursuant to the express
terms of this City Facilities 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 City
Facilities Lease, the Convention Center Premises, the Convention Center 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 City Facilities Lease Rentals herein reserved
on an absolutely net basis.
6.4.2. Tenant's Oblizations for Payment of City Facilities Lease Rentals.
6.4.2.1. Tenant hereby acknowledges and agrees that (i) except for the express
provisions of this City Facilities Lease pursuant to which Tenant is entitled to abatement of City
Facilities Lease Rentals, Landlord and Tenant have expressly negotiated that Tenant's covenants
to pay City Facilities Lease Rentals under this City Facilities 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 City Facilities 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 City Facilities Lease Rentals hereunder, Landlord would
have required a greater amount of City Facilities Lease Rentals in order to enter into this City
Facilities Lease, if at all. AS SUCH, EXCEPT FOR THE EXPRESS PROVISIONS OF
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THIS CITY FACILITIES LEASE PURSUANT TO WHICH TENANT IS ENTITLED TO
AN ABATEMENT OF RENTALS AND SUBJECT TO THE PROVISIONS OF
APPLICABLE GOVERNMENTAL RULE, 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 OBLIGATED UNDER THIS CITY
FACILITIES 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 City
Facilities Lease in accordance with its terms, and that it shall not take any action to terminate,
rescind or avoid this City Facilities 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. Intentionally Omitted.
7.1.2. Policies Required For Additional Work. For clarification, any work at the
Convention Center Premises not covered under the Convention Center Improvements
Construction Documents shall be considered "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 Convention Center
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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 Convention Center 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 and the Insured Materials and Equipment, using a completed
value form (with permission to occupy upon completion of work or occupancy),
naming Landlord 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 Additional Work and to remove all debris that may exist after any
Insured Casualty Risks. 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 7.5.
(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 No/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 7.5; provided, however, that, in addition to Auto Policy for
Additional Work described above, in the event any Contaminated Materials will be
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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 for Additional 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
obligations with respect to such Additional Work, in addition to the Workers'
Compensation Policy required under this Section 7.1.2(c), 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 7.5.
(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 7.5.
(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
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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 7.5.
(f) Commercial General Liability Policy for Additional Work. Prior to
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 Convention Center Premises and the
Convention Center 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 Convention
Center Premises or the Convention Center Improvements or resulting from, or in
connection with, the construction, use, operation or occupancy of the Convention
Center Premises or the Convention Center 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 7.5.
(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 Fifty Million and No/ 100
Dollars ($50,000,000.00) per occurrence and in the aggregate for personal injury,
bodily injury and death or property damage liability combined, such policy to be
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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 7.5.
(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
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 and the Leasehold Mortgagee as loss payees, 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 7.5.
7.1.3. Property Insurance Policy. Commencing as and when Tenant acquires
such care, control, or custody over any portion of the Convention Center 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 Convention Center Improvements), and at all times
during the remainder of the City Facilities 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 Convention Center
Premises and the Convention Center 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 Convention Center 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 Landlord as the insured, for a sum at least equal to one
hundred percent (100%) of the then full cost of replacing the Convention Center 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 Convention Center Improvements or Personalty), to be determined no more
frequently than every five (5) years during the City Facilities Lease Term upon Landlord's request,
26
and with any deductible not exceeding One Hundred Fifty Thousand and No:'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
Convention Center Improvements and to remove all debris that may exist after any Insured
Casualty Risks that permits Tenant to terminate this City Facilities 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 7.5.
7.1.4. Additional Policies Required. Commencing on the Lease Commencement
Date (unless otherwise provided below), and at all times during the City Facilities 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 Convention Center Premises and the
Convention Center Improvements, naming Tenant (including employees) as the
insured and the Landlord Insured, as additional insureds, affording protection
against liability arising out of bodily injury, death and property damage occurring,
in, upon or about the Convention Center Premises or the Convention Center
Improvements or resulting from, or in connection with, the construction, use,
operation or occupancy of the Convention Center Premises or the Convention
Center 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 7.5.
(b) Boiler and Machinery. If the Convention Center 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
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Trustee in accordance with Section 7.6. 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 7.5.
(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 Convention Center Premises and the
Convention Center 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 No/100 Dollars ($1,000,000.00) combined
single limit per occurrence or its equivalent. In addition, the Auto Policy
additionally shall comply with all other requirements applicable to it set forth in the
Insurance Plan Additional Requirements and the requirements of Section 7.5.
(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 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, 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 7.5.
(e) Excess/Umbrella Policy. An Excess/Umbrella Policy, written on an
occurrence basis, in an amount not less than Fifty Million and No/100 Dollars
($50,000,000.00) 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 7.5.
(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 City Facilities Lease Rentals payable under this City
Facilities 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
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of coinsurance. In addition, the Business Interruption Policy shall comply with all
other requirements set forth in Section 7.5 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 $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
Section 7.5.
(h) Special Policies for Contractor Engaged in Pollution or Hazardous
Materials Related Activities. At any time during the City Facilities 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 Convention Center Premises or
the Convention Center 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 7.5.
(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 Five Million and No/100 Dollars ($5,000,000.00)
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 Convention Center Premises or the Convention Center
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 7.5.
0) 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 City Facilities Lease Term and through the date Tenant has
fulfilled its obligations under ARTICLE 16, to obtain, keep and maintain or cause
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to be obtained, kept and maintained, all other additional insurance policies on the
Convention Center Premises or the Convention Center 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 shall comply with all other requirements applicable to them
set forth in the Insurance Plan Additional Requirements and the requirements of
Section 7.5.
7.1.5. Adiustments in Policy Limits. Without limiting the other provisions of this
City Facilities Lease with respect to policy limits, Tenant covenants and agrees that at least every
five (5) years during the City Facilities 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
Convention Center Premises and the Convention Center 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 City Facilities 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 City Facilities 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 City Facilities Lease Term to adjust the policy limits, deductibles and
coverages provided under the insurance policies required under this City Facilities 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 (30) calendar days' Notice prior to reducing the
amount of coverage, reducing the policy limits or increasing the deductible under any policy
required under this City Facilities Lease (including the Insurance Plan Additional Requirements).
Section 7.2. Surety Bonds. 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,
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fixtures or equipment) the total cost of which will exceed the thresholds specified in TEX. GOVT
CODE §2253.021 (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 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.
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 City Facilities 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 Convention Center Premises and the Convention Center
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 City Facilities 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 City Facilities 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 City Facilities 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 7.1.2(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 City
Facilities 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
33
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 City Facilities
Lease, Tenant shall provide Landlord and the Leasehold Mortgagee with a certified copy of such
insurance policy.
agrees:
7.5.3. Special Tenant Covenants with Respect to Insurance. Tenant hereby further
(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 City Facilities 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 City Facilities
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 City Facilities
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 Convention Center
Improvements or the Convention Center Premises which action, omission, use or
condition would (1) cause any insurance policies required to be obtained, kept and
maintained under this City Facilities 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.
(fl 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
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terms hereof.
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 CONVENTION CENTER PREMISES, (B) DAMAGE TO THE CONVENTION
CENTER 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 CITY
FACILITIES 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 7.5.4 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 CITY FACILITIES 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 CITY
FACILITIES LEASE. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS
CITY FACILITIES LEASE, TENANT'S WAIVERS AND THE INDEMNITY 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 City Facilities 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
35
received by Tenant in trust for the purpose of paying the cost of restoration as required by Section
10.2;
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. Landlord with respect to Insurance Proceeds payable after any termination of
this City Facilities 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. Indemnity by Tenant.
7.8.1. Agreement to Indemnify. SUBJECT TO SECTION 7.5.4, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, 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 KIND, 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
CONVENTION CENTER PREMISES OR THE CONVENTION CENTER
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
36
OR AFTER THE LEASE TERM THAT TENANT OR ITS RELATED PARTIES MAY
HAVE POSSESSION OF THE CONVENTION CENTER PREMISES OR THE
CONVENTION CENTER IMPROVEMENTS, INCLUDING THE CONSTRUCTION OF
THE CONVENTION CENTER IMPROVEMENTS WORK PURSUANT 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 SECTIONS 3.4 AND 3.5, (c) ANY BREACH OF THE TERMS AND
CONDITIONS OF THIS CITY FACILITIES 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 CITY
FACILITIES 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 INDEMNITY 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 INDEMNITY 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 CITY FACILITIES LEASE, THE WAIVER AND
INDEMNITY OBLIGATIONS OF TENANT DO NOT APPLY TO ANY ACT OR
OMISSION OF LANDLORD ACTING IN ITS GOVERNMENTAL FUNCTION.
7.8.2. Scope. TENANT FURTHER AGREES, EXCEPT AS MAY BE
OTHERWISE EXPRESSLY PROVIDED FOR IN THIS CITY FACILITIES LEASE,
THAT THE OBLIGATION OF INDEMNIFICATION 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 CONVENTION CENTER PREMISES OR ANY CONVENTION
CENTER IMPROVEMENTS, INCLUDING THE CONVENTION CENTER
IMPROVEMENTS WORK OR ANY ADDITIONAL WORK; AND
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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.
7.8.3. No Waiver of Governmental Immunity. NOTHING CONTAINED IN
THIS SECTION 7.8 SHALL WAIVE ANY GOVERNMENTAL IMMUNITY
AVAILABLE TO THE CITY 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 7.8 shall survive the
expiration or earlier termination of this City Facilities 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 City Facilities Lease.
7.8.5. No Third Party Beneficiary. The provisions of this Section 7.8 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 CONVENTION CENTER IMPROVEMENTS AND PERSONALTY;
ADDITIONAL WORK; ACCESS
Section 8.1. Title to the Convention Center Improvements.
8.1.1. During City Facilities Lease Term; Upon Termination of City Facilities
Lease Term. Title to all of the Convention Center Improvements constructed on the Convention
Center Premises and all equipment, fixtures, machinery, and other real property therein erected,
constructed, installed or placed in or affixed to the Convention Center Improvements by or on
behalf of Tenant shall be and remain in Landlord. Title to all FF&E, and all equipment,
machinery, furniture, furnishings and other personal property therein not affixed to the Convention
Center Improvements by or on behalf of Tenant (collectively, "Personalty"), shall be and remain
in the Tenant for and during the City Facilities Lease Term, as applicable. Upon the Lease
Expiration Date, Tenant's title to all of 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 City Facilities 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 City Facilities 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 Convention Center 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
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recordable releases in full of all liens and security interests in and to the 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 Convention Center
Improvements. 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 Convention Center Improvements; provided,
however, that if such FF&E and Personalty are necessary for operation of the Convention Center
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 Convention Center 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 City
Facilities 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 Convention Center
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 Convention Center
Improvements, subject, however, in all cases to the terms, conditions and requirements of this
Section 8.2. For purposes of this City Facilities 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 Convention Center 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
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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
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 City Facilities 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. 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
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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 City Facilities Lease Rentals as the same shall become due and payable in accordance
herewith.
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 Convention Center
Improvements or the Additional Work or (b) any Governmental Functions of the City. 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
City 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 fust 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 City Facilities 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 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 City Facilities 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.
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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 Convention Center 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 character (including the resubdivision or platting of the Convention
Center 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 City Facilities Lease, of the
Convention Center Improvements on the Convention Center Premises and (b) easements or
rights-of-way for public utilities or similar public facilities over and across portions of the
Convention Center Premises for a term not exceeding the then remaining City Facilities Lease
Term which may be useful or necessary in the proper economic and orderly development of the
Convention Center Improvements or of the Convention Center 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 Convention Center Premises or in any other Property of Landlord to
any Lien arising out of or relating to the Convention Center 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 City or constitute
Approval by the City in its capacity as a Governmental Authority to such applications.
Section 8.6. Mechanics' Liens and Claims. During the City Facilities Lease Operating
Term, and during the City Facilities Lease Construction Term with respect to any Additional
Work, if, based upon any amounts owed or claimed to be owed by Tenant any Mechanics' Lien
shall be filed against the Convention Center Premises, the Convention Center Improvements,
Landlord's interest in the Convention Center Premises or the Convention Center 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 Convention Center
Premises, the Convention Center 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 CITY
FACILITIES LEASE SHALL (a) BE CONSTRUED AS A WAIVER OF THE CITY'S
LEGAL IMMUNITY AGAINST MECHANICS' LIENS ON ITS PROPERTY OR ITS
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CONSTITUTIONAL AND STATUTORY RIGHTS AGAINST MECHANICS' LIENS ON
ITS PROPERTY, INCLUDING THE CONVENTION CENTER 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 CONVENTION CENTER PREMISES, THE CONVENTION
CENTER 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
CONSTRUCTION ACTIVITY AT THE CONVENTION CENTER PREMISES TO POST
AND KEEP POSTED AT THE CONVENTION CENTER PREMISES SUCH NOTICES
OF NON -RESPONSIBILITY AS THE CITY MAY DEEM NECESSARY FOR THE
PROTECTION OF THE CITY, AND THE FEE OF THE CONVENTION CENTER
PREMISES FROM MECHANICS' LIENS.
Section 8.7. Access to the Convention Center 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 Convention Center Premises Reservations, 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 Convention Center Premises, the Convention Center
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 City Facilities Lease and for undertaking any rights or obligations of Landlord pursuant
to the terms of this City Facilities 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 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 the Convention Center 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 Convention Center Improvements pursuant to the terms of this City
Facilities Lease. Nothing in this City Facilities 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 Ongoing. Without limiting Landlord's rights with
respect to the Convention Center Premises Reservations, upon Substantial Completion of the
Convention Center 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
Convention Center Premises, the Convention Center 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
43
(during business hours only) or (ii) exhibition of the Convention Center Improvements to others
during the last eighteen (18) months of the City Facilities 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 Convention Center
Improvements pursuant to the terms of this City Facilities 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
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 Drawings and Other Documents. Tenant shall retain and at
all times maintain at a business office within the Convention Center Improvements at least one (1)
complete, legible, full-size set of all "record drawings" in accordance with accepted industry
standards regarding all of Convention Center Improvements as they then exist, to the extent
appropriate considering all work performed to date and the Convention Center 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
Convention Center 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 Convention Center 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 Convention Center Premises in accordance with the terms of this
City Facilities 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
Convention Center 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 City Facilities Lease
Term, at its own expense and at no cost or expense to Landlord, do the following (collectively, the
"Maintenance and Repair Work"):
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9.1.1.1. Keep and maintain, or cause to be kept and maintained, the Convention
Center Premises and Convention Center 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 Convention Center
Premises and the Convention Center Improvements to keep them clean and in a condition such
that the Convention Center 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 Convention Center Premises and the Convention Center 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.
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 City Facilities 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 Convention Center Premises or the Convention Center
Improvements. Tenant hereby assumes the full and sole responsibility for the condition,
operation, security, repair, replacement, maintenance and management of the Convention Center
Premises and the Convention Center Improvements throughout the City Facilities 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 Convention Center Improvements. After initial construction, Tenant shall cause
the necessary mains, conduits and other facilities to be provided and maintained (from and within
the property lines of the Convention Center Premises and beyond to the connection with the
supplying utility in the streets immediately adjacent to the Convention Center 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 Convention
Center Improvements during the City Facilities Lease Term, provided that to the extent the same
are not located in or on the Convention Center 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
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immediately adjacent to the Convention Center Premises. Tenant shall pay, or cause to be paid,
for all water used in the Convention Center 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 Convention Center
Improvements and outside lighting and signs, if any, for the Convention Center Improvements on
or surrounding the Convention Center 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 Convention Center 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 City Facilities Lease 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 Convention Center Premises and beyond to the connection with the supplying utility in
the streets immediately adjacent to the Convention Center Premises) to supply any additional
volume or type of utility services 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 Convention Center Improvements during the City Facilities Lease Term, provided that to
the extent the same are not located in or on the Convention Center 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 Convention Center 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 Convention Center 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 City Facilities Lease 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 Convention Center Premises or the Convention Center 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.
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9.3.2. Notice. During the City Facilities 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 Convention
Center Premises or the Convention Center Improvements or the existence at, in, on or under the
Convention Center Premises or the Convention Center 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 Convention Center
Premises or the Convention Center 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.
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 Convention Center
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 Convention Center 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 City
Facilities Lease upon Notice thereof to Landlord. In the event of such termination, Tenant shall
raze and remove any Convention Center Improvements and restore the Convention Center
Premises to a buildable condition.
ARTICLE 10.
CASUALTY DAMAGE
Section 10.1. DamaLre or Destruction. If at any time during the City Facilities Lease
Term, the Convention Center 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 Convention Center Premises and the Convention Center 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 Governmental Rule, 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)
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to repair, restore, replace or rebuild the Convention Center 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 City Facilities
Lease, subject, however, to the requirements of ARTICLE 7 and Tenant's option to terminate this
City Facilities Lease and to raze the Convention Center 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 Convention Center Premises and the Convention Center 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 7.6. 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
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
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Casualty Repair Work or (ii) a representation or indemnity 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 City Facilities
Lease Rentals then due hereunder have been paid and after Tenant Defaults hereunder have been
cured and provided no uncured Potential Tenant Default under this City Facilities 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
7.6.2, 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 City Facilities 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 City
Facilities Lease Rentals as a result of or in connection with the partial or total destruction of the
Convention Center 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 City Facilities Lease 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.
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Section 10.4. Option to Terminate.
10.4.1. Damage or Destruction of Substantially All of the Convention Center
Improvements. In the event that (a) Substantially All of the Convention Center Improvements
shall be damaged or destroyed by Casualty at any time during the City Facilities Lease Term, (b)
any portion of the Convention Center Improvements shall be damaged or destroyed by Casualty at
any time during the City Facilities Lease Term and the Governmental Rules then applicable to the
Convention Center Premises do not permit the restoration of the Convention Center 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 City Facilities Lease and the
damage or destruction was not caused by Tenant and occurs during the final five (5) years of the
City Facilities 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 City Facilities 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 City Facilities 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 City Facilities Lease 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 City Facilities 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 remove the Convention Center 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 Convention Center Improvements. Failure to
terminate this City Facilities Lease within said one hundred twenty (120) calendar day period shall
constitute an election by Tenant to keep this City Facilities Lease in force. If Tenant elects to so
keep this City Facilities 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 City Facilities
Lease Rentals or other sums payable hereunder or pursuant hereto which are to be paid to Landlord
in the event of any termination of this City Facilities 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
City Facilities Lease shall be terminated or the Convention Center 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,
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shall be held in trust by the Insurance Trustee and the excess Insurance Proceeds, if any, payable in
respect of such damage or destruction (the "Excess Proceeds") shall be payable to Landlord, and
shall be the property of, Landlord, after (a) paying to Tenant or Landlord, as applicable in
accordance with Section 10.4.1 above, the costs of razing the Convention Center Improvements
and clearing the Convention Center Premises of debris in accordance with this City Facilities
Lease and all Governmental Rules, (b) paying any of the outstanding City Facilities Lease 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
Convention Center Premises or the Convention Center Improvements to be released from the
Convention Center 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 Convention Center
Improvements. For the purposes of this Section 10.4, "Substantially All of the Convention
Center 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 Convention Center Improvements
for the Permitted Uses for which the Convention Center 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 City Facilities Lease Term, twenty-five percent (25%) of the fair
market value of all of the Convention Center Improvements immediately prior to such Casualty or
(ii) if such damage or destruction occurs during the final five (5) Lease Years of the City Facilities
Lease Term, the cost of razing the Convention Center Improvements as required upon a
termination of this City Facilities Lease pursuant to this Section 10.4.
ARTICLE 11.
CONDEMNATION
Section 11.1. Condemnation of All or Substantially All.
11.1.1. Condemnation of Substantiallv All of the Convention Center Premises
and the Convention Center Improvements. If at any time during the City Facilities Lease Term,
title to the whole of the Convention Center Premises and the Convention Center Improvements or
Substantially All of the Convention Center Premises and Convention Center 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 City
Facilities 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 City Facilities Lease 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 City Facilities Lease 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 Convention Center Improvements in a manner consistent with the provisions of
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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 Convention Center Improvements.
11.1.2. Condemnation Award. In the event of a Condemnation Action relating to
the taking of the whole of the Convention Center Premises and the Convention Center
Improvements or Substantially All of the Convention Center Premises and the Convention Center
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 City Facilities
Lease, the costs of razing the Convention Center Improvements and clearing the Convention
Center Premises of debris in accordance with this City Facilities Lease in the event that this City
Facilities Lease is terminated pursuant to the terms hereof, (b) paying any outstanding City
Facilities Lease 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 Convention Center Premises or the Convention Center
Improvements by, or in satisfaction of any obligation of, Tenant hereunder to be released from the
Convention Center 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 Landlord the amount necessary to retire
any applicable City bonds, and (e) paying Landlord for its fee simple interest in the Convention
Center Premises and its residual interest in and to the Convention Center Improvements. 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 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 Convention Center Premises and
the Convention Center Improvements and Condemnation Proceedings. For purposes of this
ARTICLE 11, "Substantially All of the Convention Center Premises and the Convention Center
Improvements" shall be deemed to have been taken if, by reason of the taking of title to the
Convention Center Premises and the Convention Center 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 City Facilities Lease or any other Project Documents, for use for the
purposes for which the Convention Center Premises and the Convention Center Improvements are
being used immediately prior to such taking or (ii) the portion of the Convention Center
Improvements taken by Condemnation Actions exceeds twenty-five percent (25%) of the fair
market value of the entire Convention Center Improvements immediately prior to the
Condemnation Action.
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Section 11.2. Condemnation of Part. In the event of condemnation of less than the
whole of the Convention Center Premises and the Convention Center Improvements or less than
Substantially All of the Convention Center Premises and the Convention Center Improvements,
the City Facilities 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 Convention Center
Premises and the Convention Center 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 Convention Center Premises and the
Convention Center 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 Convention Center
Premises or the Convention Center Improvements by, or in satisfaction of any obligation of,
Tenant hereunder to be released from the Convention Center 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 City Facilities Lease Rentals that are not then being deferred (and
establishing a reserve to pay any that cannot then be determined); (c) paying to Landlord the
amount necessary to retire any applicable City bonds; (d) paying Landlord for its fee simple
residual interest in the portion of the Convention Center Premises so taken and its residual interest
in and to the Convention Center Improvements so taken; and (e) paying any remainder of the
Condemnation Award to Tenant.
11.2.2. Restoration of the Convention Center Premises and Convention
Center 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
Convention Center 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 Convention Center Premises and the
Convention Center 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. City Facilities Lease Rentals. Subject to Section 11.3 below, Tenant shall
be entitled to a fair and equitable abatement of Basic City Facilities Lease Rentals in the event of a
Condemnation Action relating to less than the whole of the Convention Center Premises and the
Convention Center Improvements or less than Substantially All of the Convention Center
Premises and the Convention Center Improvements, which abatement shall (i) be calculated based
solely on the square footage of the Convention Center Premises taken by such Condemnation
Action and (ii) be only to the extent that the annual fair market rental value of the remaining
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portion of the Convention Center Premises as of the date of the Condemnation Action is less than
the annual Basic City Facilities Lease Rentals then payable hereunder.
Section 11.3. Temporary Taking. If the whole or any part of the Convention Center
Premises, the Convention Center 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 City Facilities Lease Term shall not be reduced or affected in any way, and
Tenant shall continue to pay in full the City Facilities Lease 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 City Facilities 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 City Facilities
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 Convention Center
Premises or the Convention Center 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.
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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 City Facilities Lease, or any interest herein or hereunder or therein or
thereunder, or mortgage, pledge, encumber or otherwise hypothecate this City Facilities 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 City
Facilities Lease, or to any portion or all of the Convention Center Premises or the Convention
Center 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 Convention Center Improvements, the Convention Center Premises or this City Facilities
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 City Facilities 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:
purposes;
12.2.2.1. Any room or banquet rental or any other booking for customary hotel
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.
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
55
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 City Facilities 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 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
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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 Convention Center 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 Investigation. 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
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
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transferee and (b) an instrument of assignment and assumption substantially in the form of the
Assignment and Assumption Agreement attached hereto as Exhibit D 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 City Facilities
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
fin-ther 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 fixture 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 City Facilities 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 City Facilities 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
123.4, any such Transfer consented to by Landlord shall not constitute a release of any existing
liability under this City Facilities 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 City Facilities Lease shall prevent
or restrict Tenant from subletting portions of the Convention Center Premises or the Convention
Center 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 City Facilities 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 City Facilities 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
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under the terms hereof upon request by Tenant, Landlord agrees to enter into, and to cause any
Mortgagee of the Convention Center 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 attornment 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 City Facilities Lease, Landlord may collect rent from any such transferee,
Subtenant or Space Tenant. Landlord may apply the net rent collected to payment of the City
Facilities Lease 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 City Facilities Lease.
Section 12.9. Transfers by Landlord. Subject to Section 14.10.3, Landlord may effect a
Landlord Transfer of its interest in the Convention Center Premises or any part thereof or interest
therein, and this City Facilities 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 City Facilities 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:
12.10.1. Whether this City Facilities Lease and the other Project Documents are
unmodified and in full force and effect (or, if there have been modifications, that this City
Facilities 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 City Facilities
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
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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 City Facilities
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 City Facilities Lease 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 City Facilities Lease 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 City Facilities Lease, as follows:
Section 13.1. Intentionally omitted.
Section 13.2. 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 Convention Center 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 Convention Center Improvements or any portion thereof, or any declaration, plat or other
document having the effect of subjecting the Convention Center 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 Convention Center Improvements.
Section 13.3. 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 Convention Center 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 Convention Center Premises or the Convention Center
Improvements, under any Governmental Rule for which forfeiture of the Convention Center
Premises or the Convention Center 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.
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Section 13.4. Legal Opinion. On the Effective Date, Tenant has delivered a legal
opinion to Landlord from Tenant's counsel in form acceptable to Landlord in its sole discretion on
certain matters set forth in Section 17.2.
Section 13.5. 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 Convention Center Premises in accordance with the terms of this City
Facilities Lease.
Section 13.6. 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) Property Taxes, if any, and 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 "Pre -Funded Expenses 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) Tenant's tax consultant's
good faith estimate of Property Taxes for the first 36 months after Closing (subject to
review and approval by Landlord Representative not to be unreasonably withheld) and
Insurance premiums for the first 24 months after Closing, which shall both be deposited
into the Taxes and Insurance Subaccount of the Pre -Funded Expenses 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 City Facilities Lease
Rentals Subaccount of the Pre -Funded Expenses Fund.
(b) Amounts on deposit in the Pre -Funded Expenses Fund shall be
transferred as follows:
(i) Taxes and Insurance Subaccount. Amounts on deposit in the
Taxes and Insurance Subaccount shall be disbursed directly to the appropriate
governmental authorities and insurance providers so as to pay in a timely manner
when due all required Property Taxes and Insurance premiums contemplated with
respect to the Project.
(ii) City Facilities Lease Rentals Subaccount. Amounts on
deposit in the City Facilities Lease Rentals Subaccount shall be transferred to the
City for payment of City Facilities Lease Rentals 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 Taxes and Insurance Fund 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
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installments necessary to pay (i) the annual Property Taxes that will next become
due and payable with respect to the Project and (ii) the annual Insurance premiums
that will next become due and payable on insurance policies which the Tenant is
required to maintain hereunder.
(ii) For deposit to the City Facilities Lease Rentals Fund held by
the Hotel Bond Trustee, commencing in the year immediately preceding the first
year in which City Facilities Lease Rentals 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 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
Convention Center 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 City Facilities Lease or
in any other Project Documents or in the Convention Center 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 City Facilities Lease and any other
Project Document, such Tenant's Notice of Project Financing must include the following:
Mortgage;
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
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
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Project Financing for all purposes under this City Facilities Lease and the other Project
Documents.
Section 14.2. Consent of Leasehold Mortgagee Required. No voluntary cancellation
or surrender of this City Facilities Lease by Tenant prior to the expiration of the City Facilities
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 City
Facilities 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 City Facilities Lease or a Tenant Default or (b) a termination of
this City Facilities 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 Convention Center Premises to perform any
of Tenant's obligations under this City Facilities Lease.
Section 14.4. Notice to Leasehold Mortgagee. Notwithstanding anything herein to the
contrary, if any Tenant Default shall occur, Landlord shall have no right to terminate this City
Facilities Lease or terminate Tenant's right to possession of the Convention Center Premises
without terminating this City Facilities 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 City Facilities 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 City Facilities
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).
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Section 14.5. Procedure on Default.
14.5.1. Leasehold Mortgagee's Rights Prior to Termination. If Landlord shall
elect to terminate this City Facilities Lease or terminate Tenant's right to possession of the
Convention Center Premises without terminating this City Facilities 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 City Facilities 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
Convention Center 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 Convention Center 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 City Facilities Lease Rentals and all other amounts accrued and unpaid by
Tenant and shall continue to pay all City Facilities Lease Rentals and other amounts under this
City Facilities 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 City
Facilities 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 City Facilities Lease shall continue in full force and effect as if Tenant had not defaulted under
this City Facilities 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 City Facilities Lease shall continue in full force and
effect as if Tenant had not defaulted under this City Facilities 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 MorteaLye 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 City Facilities 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 City Facilities 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.
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14.5.5. Transfers After Acquisition Upon Default. Notwithstanding any other
provision of this City Facilities 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 City Facilities 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 City Facilities Lease or any
other Project Document) and thereafter shall be relieved of all obligations of "Tenant" under this
City Facilities Lease arising after the 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 City Facilities 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 City Facilities 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 City Facilities 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 Convention Center Improvements by or on behalf of any such acquirer
of the Leasehold Estate under this City Facilities Lease shall be subject to the provisions and
requirements of this City Facilities Lease and the other Project Documents, including those
contained in ARTICLE 5 of this City Facilities Lease, and such acquirer of the Convention Center
Improvements shall operate the Convention Center Improvements or shall cause the Convention
Center Improvements to be operated in accordance with the requirements of this City Facilities
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 City Facilities Lease and shall also be an
express third -party beneficiary to exercise and enforce its respective rights and obligations
expressly provided for in this City Facilities Lease, including this ARTICLE 14.
Section 14.7. New Lease. In case of the termination of this City Facilities Lease for any
reason prior to the expiration of the City Facilities Lease Term (other than (i) a termination
consented to or acquiesced in by the applicable Leasehold Mortgagee or (ii) a termination
permitted under this City Facilities 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 City Facilities 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 City Facilities Lease,
enter into a new City Facilities Lease with the Leasehold Mortgagee or its Leasehold Mortgagee
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Designee (in either case, a "New Lessee") within thirty (30) Business Days after receipt of such
request, which new City Facilities Lease shall be effective as of the date of such termination of this
City Facilities Lease for the remainder of the City Facilities Lease Term, on all terms and
conditions of this City Facilities 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 condition to Landlord's obligation to
enter into a New Lease, such New Lessee 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 City
Facilities Lease was terminated (the "New Booking Agreement"); (b) contemporaneously with the
execution and delivery of such New Lease request pay to Landlord all City Facilities Lease Rentals
and other amounts payable by Tenant hereunder or under the other Project Documents which are
then due; (c) contemporaneously with the execution and delivery of such New Lease request 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 Convention Center Improvements after the rejection or disaffirmance of
this City Facilities 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; (c) comply with the provisions of Section 14 regarding Approval of the Person
proposed by the Leasehold Mortgagee to operate the Convention Center Improvements and (d) 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 City Facilities 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 Convention Center Premises or the Convention
Center Improvements. Landlord agrees not to accept a voluntary surrender, termination or
modification of this City Facilities 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 Convention Center
Premises as did this City Facilities 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 Convention Center
Premises as Tenant had under this City Facilities 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 Convention Center 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 City Facilities 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).
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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:
14.10.1.1. Whether this City Facilities Lease is unmodified and is in full force and
effect (or, if there have been modifications, that this City Facilities Lease is in full force and
effect as modified and stating the modifications) (and, if so requested, whether the annexed copy
of this City Facilities Lease is a true, correct and complete copy of this City Facilities 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
City Facilities 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 City Facilities Lease 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 City Facilities Lease 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 Mortm . Neither this ARTICLE
14 nor any other provision of this City Facilities Lease or any other Project Document requires, or
shall be construed to require, Landlord to subordinate Landlord's interest in the City Facilities
Lease Rentals, this City Facilities Lease, any other Project Document or the Convention Center
Premises to a Leasehold Mortgage. Landlord shall not grant a Mortgage secured by Landlord's fee
interest in the Convention Center 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 City Facilities Lease) Tenant's interest in the
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Convention Center Premises, the Leasehold Estate and the other Project Documents and the
Operating Agreement.
Section 14.11. Space Leases and Subrents. After termination of this City Facilities 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 City Facilities Lease at the
time and in the amounts due hereunder and as other sums are required to pay the cost of operations
for the Convention Center Improvements, as reasonably necessary, and, upon the execution and
delivery of the New 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 Convention Center 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 City Facilities 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. Legal Proceedings. Landlord shall give Notice to the Leasehold
Mortgagee of any Actions or Proceedings between Landlord and Tenant under this City Facilities
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 City
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Facilities Lease, its interest in the Convention Center 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 City Facilities Lease. Except upon expiration or earlier
termination of this City Facilities Lease, there shall be no merger of this City Facilities Lease nor
the Leasehold Estate or the Licenses created by this City Facilities 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 City Facilities Lease or the Leasehold Estate or Licenses created by this City
Facilities Lease or any interest in this City Facilities Lease or any such Leasehold Estate or
Licenses, and the fee estate in the Convention Center Premises, the Licenses or part thereof or any
interest in such estate, and, except upon expiration or earlier termination of this City Facilities
Lease, no merger shall occur unless and until (a) all Persons, including the Leasehold Mortgagee,
having any interest in (i) this City Facilities Lease or the Leasehold Estate created by this City
Facilities Lease, and (ii) the fee estate in the Convention Center 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.
Section 14.15. Consent to Hotel Bond Trustee as Leasehold Mortgagee. Landlord
hereby consents to Tenant's encumbrance of Tenant's interest in this City Facilities Lease and the
Convention Center 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.
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 City Facilities Lease Rentals when
due and payable under this City Facilities 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 City Facilities
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
Sections 7.1.2(a), 7.1.2(b), 7.1.2(d), 7.1.2(e)7.1.2(fl 7.1.2(8) 7.1.4(b), 7.1.4(c), 7.1.4(g),
7.1.4(h), 7.1.4(j), 7.1.5, and 7.2 shall not lead to an immediate Event of Default if such
failure(s) is cured within three (3) days of notice regarding same.
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
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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 City Facilities
Lease, the failure of Tenant to cause the Convention Center Premises and the Convention Center
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 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 or the Operating Agreement;
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 City Facilities Lease Rental shall immediately
increase to $100,000 (the "Increased Basic City Facilities Lease 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 City Facilities Lease to the contrary) entitle Landlord to
immediately notify Tenant of its intent to terminate this City Facilities 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 City Facilities Lease shall
automatically terminate without further action by Landlord. Notwithstanding any provision
herein to the contrary, the Increased Basic City Facilities Lease Rental shall be automatically
increased each year of the City Facilities 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 City Facilities Lease Rental shall become due and payable; provided that the
Increased Basic City Facilities Lease Rental shall never decrease.
15.1.1.8. Subject to the effects of Down Times permitted under this City Facilities
Lease, the failure of Tenant to cause the Convention Center Premises or the Convention Center
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
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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 City Facilities Lease on the Tenant's part to be kept,
performed or observed (other than those referred to in clauses (a), (b), (c), (d), (e), (f) or (g) above
and (i) 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 City Facilities Lease Operating Tema on or before the Project Completion Deadline if such
failure continues for six (6) months after Landlord gives Notice to Tenant of such failure, or
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 City Facilities 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;
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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 City Facilities 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 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 City Facilities Lease:
15.2.1.1. Landlord may (but under no circumstances shall be obligated to)
terminate this City Facilities Lease pursuant to Section 15.2.2, and upon such termination
Landlord may forthwith reenter and repossess the Convention Center 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 City Facilities Lease, a sum of money equal to the total of (i) the
reasonable cost of recovering the Convention Center Premises, (ii) the cost of removing and
storing Tenant's or any other occupant's Property, including all Personalty, (iii) the unpaid City
Facilities Lease 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 City Facilities Lease
Rentals which would have accrued to Landlord under this City Facilities Lease for the remainder
of the City Facilities Lease Term (excluding any Renewal Term for which the Renewal Option
has not been exercised by Tenant), if the terms of this City Facilities Lease had been fully
complied with by Tenant, exceeds the present value of the total fair market rental value of the
Convention Center Premises for the balance of the City Facilities 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 Convention Center 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 City Facilities Lease pursuant to Section 15.2.2, Landlord shall at
once have all the rights of reentry upon the Convention Center 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 Convention Center Premises
pursuant to Section 15.2.2 and reenter and repossess the Convention Center Premises by entry,
forcible entry or detainer suit or otherwise, without demand or Notice of any kind to Tenant and
without terminating this City Facilities Lease, without acceptance of surrender of possession of
the Convention Center 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 Convention Center
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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 City
Facilities Lease Rentals payable by Tenant under this City Facilities Lease plus an amount equal
to (i) the reasonable cost of recovering possession of the Convention Center Premises, (ii) the
reasonable cost of removing and storing any of Tenant's or any other occupant's Property left on
the Convention Center Premises after reentry, (iii) the cost of any increase in insurance premiums
caused by the termination of possession of the Convention Center 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 Convention Center Premises;
provided, however, that in no event shall Tenant be entitled to any excess of any sums obtained
by reletting over and above City Facilities Lease Rentals provided in this City Facilities 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 Convention Center 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 City Facilities 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 City Facilities Lease for such Tenant Default and exercise its
rights under Section 15.2.1.1 of this City Facilities Lease.
15.2.1.3. Landlord may (but under no circumstances shall be obligated to) enter
upon the Convention Center Premises and do whatever Tenant is obligated to do under the terms
on this City Facilities Lease, including taking reasonable steps necessary to maintain and
preserve the Convention Center 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 City Facilities 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 City Facilities 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 Convention
Center Premises and the Convention Center Improvements in accordance with the Hotel
Operating Standard in accordance with the terms of this City Facilities 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 Convention Center
Premises and the Convention Center Improvements, (2) the cost of removing and storing any
Personalty or any other occupant's property left on the Convention Center Premises after reentry,
(3) the reasonable cost to cause Final Completion of the Convention Center Improvements to
occur or for the reasonable cost to re -construct the Convention Center Premises and the
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Convention Center Improvements so as to render it relettable to another tenant, (4) the amount by
which the present value of the projected City Facilities Lease Rentals to be received for the City
Facilities Lease 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 City Facilities Lease
Operating Term as required by this City Facilities Lease and as if such City Facilities Lease
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
Convention Center Premises for the balance of the City Facilities Lease Operating Term
(excluding any Renewal 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 Convention Center Premises; provided, however, that in no
event shall Tenant be entitled to any excess of any sums obtained by reletting over and above
City Facilities Lease Rentals provided in this City Facilities 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
City Facilities Lease pursuant to Section 15.2.1.1 or Tenant's right of occupancy of the Convention
Center Premises pursuant to Section 15.2.1.2 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 City
Facilities 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 City Facilities 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 City Facilities
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 City Facilities 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 City Facilities 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 City Facilities 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 CITY FACILITIES
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,
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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
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, TO THE EXTENT PERMITTED BY
APPLICABLE GOVERNMENTAL RULE, 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 Against 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
City Facilities Lease on Landlord's part to be kept, observed and performed, shall be limited to the
interest of Landlord in and to the Convention Center 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 Convention
Center 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 City Facilities 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 City Facilities Lease as
provided herein (whether such termination occurs pursuant to this ARTICLE 15, Section 3.1.3, or
any other provision hereof), this City Facilities 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 City Facilities Lease, to surrender
unto Landlord, all and singular the Convention Center Premises with then existing buildings, other
structures, and improvements constructed and located thereon and therein. Except as otherwise
expressly provided herein, termination of this City Facilities Lease shall not alter the then existing
Claims, if any, of either Party for breaches of this City Facilities Lease occurring prior to such
termination and the obligations of the Parties hereto with respect thereto shall survive termination.
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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 City Facilities 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 City Facilities Lease, as
applicable, of the existence of such Operator and which Notice contains, at a minimum, the name
and address of the Operator.
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
City Facilities Lease, as applicable, the Convention Center 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 Convention
Center Premises and the Convention Center Improvements, free of subtenancies (other than any
Space Leases which Landlord has agreed, pursuant to ARTICLE 12 or any other express
provision of this City Facilities 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 City Facilities Lease upon such expiration or termination. Upon such expiration or
termination of this City Facilities 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 Convention
Center Improvements throughout the City Facilities Lease Term shall be the Property of Tenant
during the City Facilities Lease 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 Convention Center 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 Convention Center
Improvements shall remain in the Convention Center Improvements and shall become the
property of Landlord.
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16.2.2. Landlord's Rieht to Remove. Any Personalty and FF&E of Tenant
required to be removed by Landlord, but which shall remain in the Convention Center
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.
16.2.3. Assignment of Franchise and License Agreements; Name of Proiect;
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 Convention Center
Improvements and all similar intangible rights relating to the Convention Center 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 or Franchisor.
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 City Facilities
Lease Rental Rate for the Convention Center 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 Convention Center Premises and the Convention Center 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 Convention Center Premises, the Convention Center 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 City Facilities Lease Rentals under this Section 16.3 by
Landlord shall not constitute an extension of the City Facilities Lease Term or afford Tenant any
right to possession of the Convention Center Premises or the Convention Center Improvements
beyond any date through which such City Facilities Lease Rentals have been paid by Tenant and
accepted by Landlord. Such City Facilities Lease 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 Retarding 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
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or agent's commission, finder's fee or other fee or commission in connection with this City
Facilities Lease.
Section 17.2. Representations and Warranties.
17.2.1. Power and Authority. Each individual executing and delivering this City
Facilities 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.
17.2.2. Tenant's Representations. As an inducement to Landlord to enter into
this City Facilities 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 of the State and the City
duly formed and validly existing under the laws of the State of Texas.
17.2.2.2. Power and Authority. Tenant has all necessary power and authority to
carry on its present business, to enter into this City Facilities Lease, to consummate the
transactions herein contemplated and to perform their obligations hereunder. The execution,
delivery and performance of this City Facilities 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 City Facilities
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 subject.
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 City Facilities 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 City
Facilities Lease by Tenant or the performance by Tenant of their covenants, obligations and
agreements hereunder is required from any 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 City Facilities Lease is the legal,
valid and binding obligation of Tenant, enforceable against Tenant in accordance with its 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, including the application of equitable
78
principles, the exercise of judicial discretion in the appropriate cases or (ii) any Governmental
Rule applicable to Tenant solely as a result of Tenant being a Governmental Authority.
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, 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 City Facilities 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 Convention Center Premises and the Convention
Center Improvements).
17.2.3. Landlord's Representations. As an inducement to Tenant to enter into
this City Facilities 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 City Facilities Lease and to consummate the transactions herein contemplated.
17.2.3.2. A:ithority; Consent. Upon execution of this City Facilities 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 City Facilities Lease and to
perform the covenants, obligations and agreements of Landlord hereunder. No Approval to the
execution or delivery of this City Facilities Lease by Landlord or the performance by Landlord of
its covenants, obligations and agreements hereunder is required from any 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 City Facilities 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
Convention Center 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 City Facilities Lease.
17.2.3.5. Valid and Binding Obligation. This City Facilities Lease is the legal,
valid and binding obligation of Landlord, enforceable against Landlord in accordance with its
terms, except as limited by (i) applicable relief, liquidation, conservatorship, bankruptcy,
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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. Notwithstanding anything to the contrary set
forth in this City Facilities Lease, Tenant recognizes and agrees that any contracts, agreements or
amendments contemplated to be entered into by Landlord under the terms of this City Facilities
Lease which are entered into after the Effective Date of this City Facilities Lease will be subject to
the prior Approval of City Council other than any Approvals and confirmations expressly required
by the terms of this City Facilities Lease or expressly permitted in this City Facilities Lease to be
given by the Landlord 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 City Facilities 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 Tenant (so long as the MMD 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 City Facilities Lease.
17.4.2. Appropriation. Landlord (so long as the City or a political subdivision of
the State of Texas is the Landlord) and Tenant (so long as the MDD 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 City Facilities Lease,
including this Section 17.4.2, 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 City Facilities Lease constituting indebtedness on the part of the City or the
MDD.
17.4.3. Effect of a Non -Appropriation. If a Non -Appropriation occurs in
response to a request for a proposed Appropriation, the non -appropriating Party shall provide
Notice to the other Party of such Non -Appropriation within thirty (30) Business Days of the
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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 City Facilities Lease, all past due City Facilities Lease 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 City Facilities Lease
Rentals shall have been cured unless and until the interest accrued thereon under this Section 17.5
or as expressly provided elsewhere in this City Facilities 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 City Facilities 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 City Facilities 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 fust 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 City Facilities Lease, the deadlines and
time periods within which Tenant must fulfill the obligations of Tenant in this City Facilities Lease
shall each be adjusted as appropriate to include Excusable Tenant Delay Periods; provided,
however that neither (i) the obligation of Tenant to pay City Facilities Lease Rentals as and when
due pursuant to the terms of this City Facilities 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 Convention Center Improvements (including the Material Additional Work Schedule)
or time for performance of Tenant's obligations under this City Facilities 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
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 City Facilities
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
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performance of Tenant's obligations under this City Facilities 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 Delav. Regardless of the existence or absence of
references to Excusable Landlord Delay elsewhere in this City Facilities Lease, any deadline or
time period within which Landlord must fulfill the obligations of Landlord in this City Facilities
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 City Facilities 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 City Facilities 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 City
Facilities 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 City Facilities 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
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.
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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 City Facilities 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 City Facilities 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. Recordine of Memorandum of Lease. Tenant may file of record an
executed copy of the Memorandum of Lease in the form attached hereto as Exhibit C 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 City Facilities 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 City Facilities Lease.
Section 17.10. Alcoholic Beverage Permits. If at any time during the City Facilities
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 Convention Center Premises for consumption in or upon the
Convention Center Premises on the basis of the proximity of the Convention Center 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.
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 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.
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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 either Party to disclose any
information that other Party has previously and conspicuously marked as "confidential",
"proprietary" or of "trade secret" nature with respect to the operation of the Project 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, the Party that received the public information request (the "First Party")
shall send Notice to other Party (the "Second Party") of such request within five (5) Business Days
of First Party's receipt of such request. Within three (3) Business Days of the Second Party's
receipt of such Notice from the First Party, the Second Party shall notify the First Party in writing
whether the Second Party desires to make an Opinion Request; Thereafter, the First Party must
notify the Attorney General that the Second Party is going to be making a request but shall have no
further obligation with regard to the same. The Second Party shall be required to make its
arguments to the Texas Attorney General as to why the requested information is subject to an
exception under the Public Information Act and the Public Information Act permits the Second
Party to make an Opinion Request in the circumstance in question. Each Party shall 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 the First Party to timely furnish to any such third Person any statutory notice required by
the Public Information Act a. To the extent allowed by Governmental Rules, First Party 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. The Second Party
shall provide Notice to the First Party of the Second Party'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 City Facilities Lease
shall survive any expiration of termination of this City Facilities 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, ARTICLE 16, Section 17.5, Section 17.7, Appendix A. Appendix B, and
Appendix C.
[Signature Page Follows]
S4
ATTEST
LANDLORD:
CITY OF BAYTOWN, TEXAS
By: By:
City Secretary , Mayor
APPROVED AS TO FORM:
City Attorney
CITY FACILITIES LEASE
SIGNATURE PAGE
TENANT:
mm
By:_
Name:
Title:
APPENDIX A
TO
CITY FACILITIES LEASE
Addresses for Payments and Notices/Description of Accounts
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:
CITY FACILUIES LEASE
APPENDIX A
with copies of all notices to Landlord relating to defaults or remedies being sent to:
Attn:
Email:
and in all cases to:
Attn:
Email:
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:
with copies to:
Attn:
Email:
CITY FACILITIES LEASE
APPENDIX A
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:
CrrY FACILMES LEASE
APPENDIX A
Om
APPENDIX B
TO
CITY FACILITIES 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 "Subiect Document" and collectively, the "Subiect Documents").
Section 1. Accounting Terms and Determinations. Unless otherwise specified in
any 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 Agreement; Amendment. The City Facilities 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. 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,
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APPENDIX B
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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; Headings; 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
IN
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 Rizhts 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.
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
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APPENDIX B
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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 Actins 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. Attorneys' Fees. If a Party defaults in the performance of any covenants,
obligations or agreements of such Party contained herein and the other Party places the
enforcement of such instrument, or any part thereof, or the exercise of any other remedy therein
provided for such default, in the hands of an attorney who files suit upon the same (either by direct
action or counterclaim), the non -prevailing Party (as determined by a final, non -appealable
GROUND LEASE AND LICENSE AGREEMENT
APPENDIX B
Vi
judgment) shall pay to the prevailing Party its reasonable attorneys' fees and costs of court. In
addition to the foregoing award of attorneys' fees to the prevailing Party, the prevailing Party shall
be entitled to its attorneys' fees incurred in any post judgment proceedings to collect or enforce the
judgment. This provision is separate and several and shall survive the merger of any Subject
Document into any judgment on such instrument.
Section 23. 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.
Section 24. 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 25. 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
GROUND LEASE AND LICENSE AGREEMENT
APPENDIX B
Vii
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,
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 Marina Site Parking Agreement 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 Rizhts" 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
GROUND LEASE AND LICENSE AGREEMENT
APPENDIX B
Viii
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, (i) in the instances where the Reviewing
Party pursuant to the terms of the Ground Lease, the City Facilities Lease,
or the Marina Site Parking Agreement is the Landlord (as opposed to the
Landlord Representative), such Reviewing Party shall be the City Council
and (ii) in the instances where the Reviewing Party pursuant to the terms of
the Ground Lease, the City Facilities Lease, or the Marina Site Parking
Agreement is the Tenant (as opposed to Tenant Representative), such
Reviewing Party shall be the MDD Board of Directors.
(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 sole and absolute
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. 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 shall be limited to the elements thereof. (i)
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APPENDIX B
ix
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.
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APPENDIX B
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APPENDIX C
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CITY FACILITIES LEASE
Insurance Plan Additional Requirements
1. Builder's All Risk Policv
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
CITY FACILITIES LEASE
APPENDIX
H
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. Convention Center 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
CITY FACILMES LEASE
APPENDIX C
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.
6. Crime Policy
a. Sub -limit coverage amounts:
Employee Dishonesty $ 5,000,000.00
Forgery or Alteration 5,000,000.00
Robbery - Inside 5,000,000.00
Robbery - Outside _5,000,000.00
Total: $20,000,000.00
b. Deductible amounts not to exceed:
Employee Dishonesty $ 25,000.00
CITY FACILITIES LEASE
APPENDIX'
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
City Facilities Lease.
b. Auto Policies in accordance with Sections 7.1.1(b), 7.1.2 and_2.1.4Ll of the City
Facilities 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.
C. Workers' Compensation Policies in accordance with Sections 7.1.1(c), -Z. 1.2c) and
7.1.4(d) of the City Facilities Lease.
d. Excess/Umbrella Policies in accordance with Sections 7.1.1(i), 7.1.2(i) and 7.1.4(e)
of the City Facilities 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 Convention Center
Premises or the Convention Center 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.
CITY FACILITIES LEASE
APPENDIX C
i",
EXHIBIT A
TO
CITY FACILITIES LEASE
Description of Convention Center Premises
CITY FACILITIES
McKinney & Williams Surrey, Abstract No. 1056
City of Baytown, Dallas County, Texas
MY FACILMES LEASE
EXHBIT -RA
#5792960.5
EXHIBIT B
TO
CITY FACILITIES 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 "Aereement") 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,
("Tenant"); and [ 1 ("Space
Tenant").
RECITALS
A. Landlord and Tenant have entered into that certain CITY FACILITIES LEASE
dated effective as of (the "City Facilities Lease"), pursuant to which the
following have occurred:
a. Landlord has leased to Tenant and Tenant has leased from Landlord the real
property located in Harris County, Texas described on Exhibit A-1 attached hereto (the
"Convention Center 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 City Facilities Lease, Tenant has
entered into a Space Lease with Space Tenant dated [ 1 and, in accordance
with the provisions of the City Facilities 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 City Facilities Lease.
CITY FACILITIES LEASE
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 Usaze. Unless the context shall otherwise require,
capitalized terms used in this Agreement shall have the meanings assigned to them in the City
Facilities 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 City Facilities 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 Convention Center Premises after the
termination of the City Facilities 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 attom 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
Convention Center 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 Convention Center Premises after the termination of the City Facilities
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 City Facilities Lease; and
(c) permit Space Tenant to remain in quiet and peaceful possession of the
Convention Center 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;
CITY FACILITIES LEASE
EXHIBIT B
(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
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 City Facilities 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 City Facilities 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.
CITY FACILITIES LEASE
EXHIBIT B
(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 4.1, Section 6.2, Section 12.2, ARTICLE 9,
ARTICLE 10, ARTICLE 11 and ARTICLE 14 of the City Facilities 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.
LANDLORD:
CITY OF BAYTOWN, TEXAS
By:
Name:
Title:
TENANT:
By:
Nax
Title:
CITY FACILITIES LEASE
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 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 20_ by
of , on behalf
of said limited partnership.
{SEAL}
STATE OF §
COUNTY OF §
CITY FACILITIES LEASE
EXHIBIT B
Printed Name:
Notary Public in and for
the State of
My Commission Expires:
This instrument was acknowledged before me on , 20_ by
, of , on behalf
of said limited partnership.
{SEAL}
CITY FACILITIES LEASE
EXHIBIT B
Printed Name:
Notary Public in and for
the State of
My Commission Expires:
EXHIBIT C
TO
CITY FACILITIES LEASE
Form of Memorandum of City Facilities Lease
MEMORANDUM OF CITY FACILITIES LEASE
THE STATE OF TEXAS
COUNTY OF HARRIS
THIS MEMORANDUM OF CITY FACILITIES LEASE (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 , a Texas limited
liability company ("Tenant").
A. Landlord and Tenant have entered into that certain CITY FACILITIES LEASE
(the "City Facilities 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 "Convention Center Premises"):
B. Pursuant to the City Facilities Lease, Landlord has agreed to grant to Tenant certain
Licenses in and to the Licensed Areas pursuant to Section 2.2 of the City Facilities Lease.
C. Landlord and Tenant desire to execute this Memorandum to provide notice of
Tenant's rights, titles and interest under the City Facilities Lease and in and to the Convention
Center 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 Usage. Unless the context shall otherwise require,
capitalized terms used in this Memorandum shall have the meanings assigned to them in the City
Facilities Lease, which also contains rules as to usage that shall be applicable herein.
CITY FACILITIES LEASE
EXHIBIT C
Section 2. Lease. The Convention Center Premises have been leased to Tenant
pursuant to the terms and conditions of the City Facilities Lease, which is incorporated by
reference in its entirety in this Memorandum.
Section 3. License. The Licensed Convention Center Premises have been licensed to
Tenant pursuant to the terms and conditions of the City Facilities Lease which is incorporated by
reference in its entirety in this Memorandum. The Licensed Convention Center Premises are
comprised of Staging Site (being more particularly described on Exhibit B attached hereto),
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. City Facilities Lease Term. The Landlord has leased the Convention
Center Premises to Tenant for a City Facilities Lease Base Term commencing at 12:00 a.m. on
and ending, unless sooner terminated in accordance with the provisions of the
City Facilities Lease, at 11:59 p.m. on the date which is thirty (30) years after the last day of the
City Facilities Lease Construction Term. In addition, Tenant, at its option, may extend the City
Facilities Lease Base Term of the City Facilities Lease for two (2) additional periods of thirty (30)
years each in accordance with the terms and conditions of the City Facilities Lease.
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 City Facilities Lease, (i) as to Staging Site, on the date which is ninety (90) calendar days after
the conclusion of the City Facilities Lease Construction Term and (ii) as to the Tenant Access and
Maintenance Area, at the expiration of the City Facilities Lease 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 City Facilities Lease.
Section 6. Successors and Assigns. This Memorandum and the City Facilities Lease
shall bind and inure to the benefit of the Parties and their respective successors and assigns, subject
however, to the provisions of the City Facilities Lease regarding assignment.
Section 7. Conflict. In the event of any conflict or inconsistency between this
Memorandum and the City Facilities Lease, the City Facilities Lease shall control.
[Signature Page Follows]
MY FACILITIES LEASE
EXHD31T C
LANDLORD:
CITY OF BAYTOWN, TEXAS
By:
Name:
Title:
TENANT:
By:
By:
Name:
Title:
STATE OF TEXAS §
COUNTY OF HARRIS §
This instrument was acknowledged before me on , 2017 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.
Printed Name:
{SEAL} Notary Public in and for the
State of Texas
My Commission Expires:
STATE OF §
COUNTY OF §
This instrument was acknowledged before me on 2017 by
of , a
{SEAL)
CITY FACILITIES LEASE
EXHBIT C
Printed Name:
Notary Public in and for the
State of
My Commission Expires:
EXHIBIT D
TO
CITY FACILITIES LEASE
Form of Assignment and Assumption Agreement
ASSIGNMENT AND ASSUMPTION AGREEMENT
That [ 'a ] ("Assignor"),
for and in consideration of the sum of TEN and N01100 DOLLARS ($10.00) in hand paid to
Assignor by [ 1, 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:
1. The CITY FACILITIES LEASE dated (the
"City Facilities Lease") by and between The City of Baytown, Texas ("City") and
("Tenant");
2. The Development Agreement dated by and among the City,
Garfield Public/Private LLC (the "Developer") and Tenant (the "Development
Asreement"); and
3. All other Project Documents and, to the extent the Debt thereunder is to remain
outstanding, the Financing Documents (as each are defined in the City Facilities
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 City Facilities Lease, all other Project Documents and the Financing
Documents 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 City Facilities
Lease, all other Project Documents and the Financing Documents arising on and after the Effective
Date hereof.]
CI'T'Y FACILMES LEASE
EXHIBTI' D
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 j 1 duly formed, valid existing, and in good
standing under the laws of ( 1, with all necessary constituent
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 City Facilities 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 City Facilities 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 City Facilities
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
CITY FACILITIES LEASE
EXHIBIT D
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 City Facilities Lease, a "Developer Default" under the Development
Agreement and the Booking Agreement and a 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 j % _� (the "Effective
Date").
ASSIGNOR:
By:
Name:
Title:
ASSIGNEE:
By:
Nat
Title:
MY FACILITIES LEASE
EXHIBff D