Loading...
Ordinance No. 8,4044) 480924 -1 ORDINANCE NO. 8404 AN ORDINANCE AUTHORIZING AND DIRECTING THE MAYOR TO EXECUTE AND THE CITY CLERK TO ATTEST TO A GROUND LEASE AGREEMENT WITH EDMUNDSON INTERESTS, L.L.C., FOR THE DEVELOPMENT AND OPERATION OF A HOTEL FACILITY AT BAYLAND PARK; AND PROVIDING FOR THE EFFECTIVE DATE THEREOF. BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF BAYTOWN, TEXAS: Section 1: That the City Council of the City of Baytown, Texas, hereby authorizes and directs the Mayor and City Clerk of the City of Baytown to execute and attest to a Ground Lease Agreement with Edmundson Interests, L.L.C., for the development and operation of a hotel facility at Bayland Park. A copy of said agreement is attached hereto, marked Exhibit "A," and made a part hereof 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 24`h day of September, 1998. ATTEST: EILEEN t'. HALL, City Clerk 4M460—z /-22.— — L —;44 I ACIO RAMIREZ, SR., 0ttorney c:k1h1091 Council\ Ordinancesl EdmundsonGround Lease IlotelBayland g rme (!� Cee PETE C. ALFARO, Mayor ® GROUND LEASE STATE OF TEXAS § COUNTY OF HARRIS § THIS GROUND LEASE ( "Lease ") is executed effective as of the 24th day of September, 1998 ( "Effective Date "), by and between the CITY OF BAYTOWN, TEXAS whose address is the City of Baytown, P. O. Box 424, Baytown, Texas 77522 ( "Lessor ") and EDMUNDSON INTERESTS, L.L.C., a Texas limited liability company whose address is 2445 Stanmore Drive, Houston, Texas 77019 -3423 ( "Lessee "). RECITALS Lessor is the owner of that certain thirty (30) acre tract of land, more or less, in the City of Baytown, Texas, which tract is more particularly described on Exhibit "A" attached hereto and made part hereof for all purposes ( "Bayland Park "). Lessor has developed (or caused to be developed) on the portion of the Bayland Park development known as "Phase 1," a restaurant, retail, and marina facility all as more particularly described in that certain Bayland Park Phase I Facilities Development Agreement dated September 14, 1995, executed by and between Lessor and Senterra Development, L.L.C. Lessor intends to cause to be developed on the portion of the Bayland Park development known as "Phase II," a hotel and convention center as more particularly described herein. Lessee's rights hereunder are contingent upon Lessee beginning, within one hundred twenty (120) days following the Effective Date, construction of a three (3) or four (4) story hotel facility, which complies with all specifications and requirements set forth herein and is acceptable to Lessor. The hotel facility shall include a swimming pool, restaurant, and health facility, and shall bear the name and enjoy all the reservation and other services provided by a nationally- recognized hotel corporation. Lessor shall have no fiduciary interest or responsibility in the Project Improvements. Lessee shall provide financing for all of the Project Improvements (hereinafter defined). As part of the development of Phase 11, Lessor shal I finance and construct a convention center, consisting of approximately fifteen thousand square feet (15,00oft2) adjacent to the Project Improvements, as well as parking and other improvements related to the convention center (the "Convention Center "). L WORDS OF LEASING For and in consideration of the covenants made by Lessee herein, and $10.00 and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Lessor has leased, demised and let and by these presents does lease, demise and let unto Lessee and Lessee by these to presents does hereby lease and take from Lessor the Premises (hereinafter defined). TO HAVE AND TO HOLD the Premises unto Lessee, Its successors and assigns, for and during the Term (hereinafter defined). Ground Lease, Page I EXHIBIT "A'- LESSOR EXPRESSLY DISCLAIMS ALL WARRANTIES OF ANY NATURE, KIND OR CHARACTER WHATSOEVER, EXPRESS OR IMPLIED, REGARDING THE PHYSICAL AND ENVIRONMENTAL CONDITION OF THE PROPERTY, INCLUDING, WITHOUT LIMITATION, ANY WARRANTIES OF HABITABILITY, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE AND LESSEE ACCEPTS SUCH PROPERTY IN AN "AS IS" CONDITION, WITH ALL FAULTS. LESSEE, BY ITS ACCEPTANCE OF THIS LEASE EXPRESSLY WAIVES ANY RIGHT OR CLAIM AGAINST GRANTOR FOR DAMAGES, RESCISSION OR OTHER REMEDY AT LAW OR IN EQUITY WITH RESPECT TO OR RESULTING FROM THE PHYSICAL CONDITION OF THE PROPERTY AND THE IMPROVEMENTS, IF ANY THEREON, INCLUDING, WITHOUT LIMITATION, THE ENVIRONMENTAL CONDITION OF THE PROPERTY AND THE FACT THAT PORTIONS OF THE PROPERTY MAY BE LOCATED WITHIN THE 100 YEAR FLOOD PLAIN. THE WAIVER AND EXCULPATION PROVIDED ABOVE SHALL BE BINDING ON ALL SUCCESSORS AND ASSIGNS OR LESSEE AND ALL OPERATORS OF THE PREMISES. II. PREMISES Premises. Except as expressly provided to the contrary in this Lease, reference to "Premises" is to the land within the area depicted in Exhibit "B" containing approximately three (3) acres of land area, more or less, in the City of Baytown, Harris County, Texas, together with all rights, easements, privileges, and appurtenances thereto or in anywise belonging. Lessee understands that the Lessor has not approved the overall site development plan for Phase 11. As such, Lessee hereby expressly agrees that the exact location of the Premises herein leased, demised and let shall be more particularly defined and described by metes and bounds by Lessor within thirty (30) days after the Lessor's approval of the site development plan for Phase II and that such property as hereinafter described by metes and bounds by Lessor shall constitute the Premises. III. TERM A. Term. Subject to the terms and conditions hereof, the term of this Lease is for a period of forty (40) years (the "Term ") beginning on the Commencement Date (hereinafter defined) and ending at midnight on the day immediately preceding the fortieth (40th) anniversary of the Commencement Date, unless sooner terminated as provided for in this Lease. B. Effective Date. The Lease is and shall be effective on the Effective Date and shall expire or be terminated in accordance with the terms contained herein. C. Contingency based on Management Agreement. Both Lessee and Lessor understand and agree that this Lease, with the exception of the indemnity provided in Article III.D, which indemnity obligations shall not cease, shall automatically expire and no longer be in force and effect should Lessee or Lessor fail to execute a Facility Management Agreement for the management and operation of the hotel facility on or before the 8th day of October, 1998. Neither Lessee nor Lessor shall incur any liability for failure to execute the Facility Management Agreement contemplated herein. Ground Lease, Page 2 D. Contingency based on Approvals and Start of Construction. Subject to the earlier expiration of this Lease in accordance with Article III.C, Lessee shall have the right, from and after the Effective Date until the expiration of one hundred twenty (120) days after the Effective Date to conduct, at Lessee's sole expense, such inspections, analyses, studies, and tests of the Premises; to make application for such licenses, permits, and approvals as Lessee may deem, in Lessee's reasonable opinion, necessary or desirable in connection with the development of the Project Improvements (hereinafter defined); and to begin construction of a hotel facility permitted hereby. The date upon which this contingency is satisfied is herein called the "Commencement Date." LESSEE HEREBY AGREES TO INDEMNIFY, DEFEND, AND HOLD HARMLESS LESSOR, ITS OFFICERS, AGENTS, AND EMPLOYEES FROM AND AGAINST ANY AND ALL LOSS, DAMAGES, CLAIMS, REMEDIES, DEFENSES, DEMANDS, SUITS, CAUSES OF ACTION, LIABILITIES, COSTS AND EXPENSES, OF WHATEVER KIND OR CHARACTER, FOR INJURIES, DEATH, OR DAMAGES ARISING OUT OF OR IN ANY WAY RELATED TO THE EXAMINATION OF THE PREMISES BY LESSEE, ITS OFFICERS, AGENTS AND /OR EMPLOYEES, OR SUCH INJURIES, DEATHS OR DAMAGES ARE CAUSED BY THE JOINT NEGLIGENCE OF LESSOR, ITS OFFICERS, AGENTS, AND /OR EMPLOYEES AND LESSEE, ITS SUBTENANTS, ASSIGNEES, OFFICERS, AGENTS, EMPLOYEES, CONTRACTORS, GUESTS, AND /OR INVITEES AND /OR BY THE JOINT OR SOLE NEGLIGENCE OF LESSEE, LESSEE, ITS SUBTENANTS, ASSIGNEES, OFFICERS, AGENTS, EMPLOYEES, CONTRACTORS, GUESTS, AND /OR INVITEES. IT IS THE EXPRESS INTENTION OF THE PARTIES HERETO, BOTH LESSOR AND LESSEE, THAT THE INDEMNITY PROVIDED FOR IN THIS PARAGRAPH IS AN INDEMNITY BY LESSEE TO INDEMNIFY, PROTECT AND DEFEND LESSOR, ITS OFFICERS, AGENTS, AND EMPLOYEES, FROM (I) THE CONSEQUENCES OF THE NEGLIGENCE OF LESSOR, ITS OFFICERS, AGENTS, AND EMPLOYEES, WHERE THAT NEGLIGENCE IS A CONCURRING CAUSE WITH THAT OF THE LESSEE, LESSEE, ITS SUBTENANTS, ASSIGNEES, OFFICERS, AGENTS, EMPLOYEES, CONTRACTORS, GUESTS, AND /OR INVITEES, OF THE INJURY, DEATH OR DAMAGE AND /OR (IT) THE CONSEQUENCES OF THE LESSEE'S, INCLUDING ITS SUBTENANTS', ASSIGNEES', OFFICERS', AGENTS', EMPLOYEES', CONTRACTORS', GUESTS', AND /OR INVITEES', JOINT AND SOLE NEGLIGENCE. FURTHERMORE, THE INDEMNITY PROVIDED FOR IN THIS PARAGRAPH SHALL HAVE NO APPLICATION TO ANY CLAIMS, DAMAGES, CAUSES OF ACTION, SUITS, OR LIABILITY WHERE THE INJURY, DEATH, OR DAMAGE RESULTS FROM THE SOLE NEGLIGENCE OF LESSOR. IN THE EVENT THAT ANY ACTION OR PROCEEDING IS BROUGHT AGAINST THE CITY BY REASON OF ANY OF THE ABOVE, LESSEE FURTHER AGREES AND COVENANTS TO DEFEND THE ACTION OR PROCEEDING BY LEGAL COUNSEL ACCEPTABLE TO THE CITY. Notwithstanding any provision of this Lease to the contrary, Lessee shall have the right and option to terminate this Lease with the exception of the indemnity provision enumerated hereinabove, which indemnity shall not expire, at anytime prior to the Commencement Date by providing written Ground Lease, rage 3 ® notice of such election to Lessor whereupon this Lease shall terminate and be of no further force or effect. In the event Lessee has not started construction within one hundred twenty (120) days following the Effective Date, this Lease with the exception of the indemnity provision enumerated hereinabove, which indemnity shall not expire, shall automatically terminate and be of no further force or effect. However, should Lessee desire an extension of time, Lessee must request such an extension in writing at least twenty -one (2 1 ) days prior to the expiration of the one hundred twenty (120) day period. The written request must state the reason the extension is needed as well as the amount of time Lessee reasonably believes is necessary in order to secure and provide to Lessor an agreement with a nationally recognized hotel operator ( "Hotel Operator ") satisfactory to Lessor in form and substance satisfactory to Lessee and in compliance herewith, and final approval of the project plans therefor as set forth below. Upon receipt of the extension request, Lessor in its sole discretion may grant an extension for any amount of time it believes is in the best interest of Lessor. A. Rent. IV. RENT; PERSONAL PROPERTY TAXES; UTILITIES Initial Rental Payment. If this Lease has not theretofore been canceled by Lessee or Lessor as provided herein, then within three (3) business days following the Commencement Date, Lessee shall pay to Lessor an initial rental in the amount of ONE AND NO/] 00 DOLLARS ($1.00) in cash. Such initial rental payment shall be due annually, until the issuance of the certificate of occupancies for both the hotel facility and convention center have been issued by the Lessor. 2. Rental Payment Subsequent to Issuance of Certificates of Occupancy. a. Rental Payment. After the Lessor has issued certificates of occupancy for both the hotel facility and the convention center, as rental payment for this Lease, Lessee shall manage and operate the convention center in accordance with the terms and conditions contained in the Facility Management Agreement, which agreement must be executed by both Lessor and Lessee on or before October 8, 1998, at no cost and expense to Lessor. Should the Facility Management Agreement not be executed by both parties hereto on or before the above - referenced date, then this ground lease shall automatically expire in accordance with Article III.0 and shall no longer be in full force and effect. Additionally, should such Facilities Management Agreement be terminated or expire during the Term hereof, Lessee hereby agrees to pay rent on a quarterly period in accordance with this article. For purposes hereof, a "quarterly period" shall mean a quarter of the calendar year. In a calendar year, the first quarter is composed of the months of January, February, and March; the second quarter is composed of the months of April, May, and June; the third quarter is composed of the months of July, August and September; and the fourth quarter 41 is composed of the months of October, November and December. On or before the last day of January, April, July and October, Lessee shall pay the Lessor the Ground Lease, Page 4 amount of ONE AND NO /100 DOLLARS ($1.00) per day for each and every room which was occupied during the preceding quarter, regardless of whether Lessee received compensation for such occupancy. The last payment shall be paid on or before the last day of the month following the expiration or termination of this Lease. As used in this paragraph, a room of the hotel facility will be deemed occupied if the use or possession or the right to the use or possession of such room has been granted to a person under any lease, concession, permit, right or access, license, contract or agreement. and if such room is one which is ordinarily used for sleeping. b. Report to Accompany Rental Payment. Lessee shall file a report with Lessor with each rental payment corresponding to such payment period. The report shall detail the number of rooms occupied each day during the preceding month and shall contain any other information that Lessor's city manager may reasonably require. The report shall be in a form prescribed by Lessor's city manager. Lessee hereby agrees that Lessor's city manager at any time may request in writing Lessee to provide additional documentation verifying the information contained in the report. Within ten (10) days after Lessee receives the written request for additional information, Lessee shall deliver or cause to be delivered such information or documentation in the requested format, if any, to Lessor. Lessor may, in its sole discretion, extend such period of time for the delivery of the information after receipt of a written request by Lessee if Lessee shows good cause as to why the same should be extended. All records, documents and other information which in any way may serve to verify the number of rooms occupied during the Term hereof shall be retained in a retrievable format and shall be maintained for a period of not less than four (4) years. 3. Prompt Payment of Rent. Lessee's right to possession and all of Lessor's obligations hereunder are expressly contingent on the prompt payment of rent, and the use of the Premises by Lessee is obtained only on the condition that rent is paid on time. Payment of rent shall be an independent covenant; and all monies received by Lessor shall be applied first to non -rent obligations of Lessee then on rent regardless of notations on checks. At Lessor's option, Lessor may at any time require that all rent and other sums be paid either in cash or by money order. Failure to pay any rent as and when required herein will not only be considered a material breach of this Lease but also interest being charged on the delinquent rental payment commencing on the date the payment First becomes overdue in accordance with Article XII.E. B. Taxes; Utilities. Taxes a. On Personal Property. Lessee shall pay without abatement, deduction or offset all personal property taxes, general and special assessments and other charges of every description levied on or assessed against all personal property (including the Project Improvements) located on the Premises (collectively referred to in this Article IV.B. as Ground Lease, Page 5 "taxes ") to the full extent of installments falling due during the Term. Except for those taxes being diligently contested in good faith which appropriate proceedings have been initiated, perfected, and diligently pursued by Lessee, Lessee shall make all such payments directly to the charging authority before delinquency and before any fine, interest or. penalty shall become due or be imposed by operation of law for their nonpayment. lf, however, the law expressly permits the payment of any or all of such taxes in installments (whether or not interest accrues on the unpaid balance), Lessee may, at Lessee's election, utilize the permitted installment method and shall, without exception, make payment when due of all such installments falling due during the Term. b. Hotel Occupancy and Other Taxes. Lessee shall collect the Hotel Occupancy Tax and all other taxes imposed or which may be hereinafter imposed by the Lessor and pay prior to the delinquency date the collections over to the Lessor. Along with such payment, Lessee shall file all appropriate reports as required by Lessor. Should Lessee fail to comply with this subsection, the same shall constitute an event of default hereunder. C. Accrual Date. Lessee will not be in possession of the Premises prior to the Commencement Date (although Lessee shall have the right of entry thereon for the purpose of conducting its tests, studies, and analyses and Lessor and Lessee do not anticipate that any real estate taxes, impact fees, special assessments, user fees, development fees or any other fees, levies, or charges will be levied, assessed, accrue or be payable with regard to the Premises between the Effective Date of this Lease and the Commencement Date. If any such amounts shall be levied, assessed, accrue or be payable prior to the Commencement Date due to the execution of this Lease or Lessee's activities on the Premises, Lessee shall pay the same. d. Lessee's Right to Contest. Lessee may contest the legal validity or amount of any tares, assessments or charges for which Lessee is responsible under this Lease, and may institute such proceedings as are necessary and appropriate to contest their validity. If Lessee contests any tax, assessment or charge, Lessee may, unless otherwise required by law, withhold or defer only that portion of the payment, which is the subject of. Lessee's contest, or pay under protest. Prior to the date any contested taxes, assessment, or charge shall become due, Lessee shall perfect its contest of any tax, assessment or charge and advise Lessor in writing that Lessee has contested the same and the grounds therefor. Failure to so notify Lessor shall result in Lessee being obligated to pay the full amount of any contested tax, assessment or charge, subject to any refund ordered on account of the perfected contest proceeding. 2. Utilities. Lessee shall pay when due all bills for water, heat, gas, telephone, cable television and electricity and other utilities used on the Premises from and after the Commitment Date and shall pay all connection charges, tap fees, sewer rents, sewer charges, and all other similar fees and charges associated with the operation and construction of the Project Improvements. Lessor agrees to matte available at the boundary of the Premises, at Lessor's sole cost and expense, facilities adequate in dotransmission size and capacity for the operation of the Project Improvements (as well as capacity therefor) with respect to water, sanitary sewer, storm water drainage, Ground Lease, Page 6 electricity, gas telephone, and cable television. All of such facilities shall be available for connection by Lessee at the boundary of the Premises at no cost or expense to Lessee. V. USES A. Use. Lessee shall use the Premises solely for the construction, operation, maintenance and repair of a hotel facility (such hotel and related amenities and facilities being herein called the "Project "). Any other proposed use of the Premises must be approved in writing by Lessee's city manager prior to the commencement of such use. 8. Land Use Restrictions. Lessee may, with the express prior written consent of Lessor (which consent shall not be unreasonably withheld), enter into agreements reasonably restricting use or granting easements over the Premises necessary and appropriate to the uses permitted hereunder; and Lessor shall, at Lessee's notice of request, join with Lessee in granting such easements as may be necessary for the efficient construction and operation of the Project, including, without limitation, easements for the provision of water, gas, electric, sewer, telephone, cable television and intruder alarm system services. Lessor agrees to cooperate with Lessee on the granting of such easements. C. Limitation on Detrimental Uses Lessee shall not use the Premises for any unlawful purpose or cause, permit or suffer any waste, damages, or injury to, or nuisance upon, any portion of the Premises. D. Signs. Lessee shall have the right to install as many signs in the format of its own designation as permitted and approved by Lessor, which approval shall not be unreasonably withheld, or any other governmental body having jurisdiction over the proposed signs. Lessor's approval of the signs shall be required, except when such signs relate to safety issues of Lessee, its employees, agents, patrons, or invitees or such signs are not visible from the exterior of any improvements constructed on the Premises. E. Covenant to Operate. Lessee shall continuously during the entire Term of the Lease conduct and carry on the operations of a hotel facility on the Premises which is designated for such purpose and shall keep the Premises open for business and cause Lessee's business to be conducted therein twenty -four (24) hours a day, seven (7) days a week. However, this provision shall not apply if the Premises should be closed and the business of Lessee temporarily discontinued therein (1) on account of strikes, lockouts or similar causes beyond the control of Lessor or (ii) in connection with any renovation or alteration of the Premises; provided that such closure shall be only for the period of time necessary to complete the renovation or alteration in accordance with the plans therefor approved by Lessor, if such approval is required pursuant to this Lease. Lessee shall to the satisfaction of Lessor employ sufficient personnel to care for the patronage and to conduct said business in accordance with sound business practice. Notwithstanding the foregoing, Lessee shall have the right to cease operation of the hotel facility for reasons other than as set forth herein above for the purpose of attempting, in good faith, to accomplish any of the following: (a) to locate and contract with a Hotel Operator, in the event any Hotel IS Operator actually operating the same discontinues such operation for any reason, or (b) to sublease or assign, subject to the other provisions of this Lease, the Lessee's rights hereunder; provided, that, in either of case (a) or (b), such period of non - operation shall not exceed ninety (90) days in any one Ground Lcase, Pale 7 instance. In the event such period of non - operation under this paragraph continues for a period in excess of said ninety (90) day period then, notwithstanding the notice and cure provisions of Article XII, Lessee shall be in default hereunder and Lessor shall have the right to immediately terminate this Lease and seek and obtain all other remedies available at law or in equity. Only one non - operation period of up to ninety (90) days shall be allowed in any twelve (12) month period. F. Limitation on Type of Food Service. Lessee hereby agrees that Lessee shall not operate nor allow any person or entity other than One Bayland Drive, L.C., to operate a restaurant facility on the Premises or any portion thereof which has a menu consisting of fifteen percent (15 %) or more of traditional Mexican dishes at any time within the first five (5) years of this Lease. VL IMPROVEMENTS A. Initial Construction of Project. Lessee's plans for improvement of the Premises consist of a hotel facility, all parking and other related improvements and the term "Project Improvements" shall mean and refer to the same. B. Site Development Plan. Prior to the commencement of construction of the Project Improvements, Lessee shall submit to Lessor for its approval, such approval not to be unreasonably withheld or delayed, a site development plan for the Project Improvements. Lessor hereby approves (without limiting Lessor's rights to approve the specific plans therefor) the construction of a three (3) or four (4) story hotel facility of approximately 120 rooms, which complies with the terms and conditions hereof. Lessor shall notify Lessee in writing of its approval or disapproval of the same after the city council of Lessor has rendered its decision. The consideration of the site development plan will be placed on the next city council's agenda for which proper public notice may be given. Within three (3) business days after the city council has rendered its decision, such decision shall be reduced to writing and sent to Lessee. Lessor shall review all submittals relative to the site development plan in a good faith effort to reach an acceptable site development plan. In the event Lessor objects to any portion of the site development plan, Lessee, at its own cost and expense, shall cause the same to be redesigned by the project architect or engineer, and resubmitted to Lessor for its consideration. This process of preparation, review, and resubmission of the site development plan shall continue until the site development plan has been approved by Lessor. C. Completion of Project Improvements. Once Lessee commences construction of the same, Lessee shall, at Lessee's cost, risk and expense, construct, erect, and diligently pursue completion of the Project Improvements upon the Premises, which completion shall be no later than twelve (12) months after the Commencement Date; provided, however, that such time for completion shall be extended one day for each day in which Lessee is prevented from completing construction by strikes, lockouts, labor disputes, failure of power, acts of God, acts of public enemies of this State or of the United States, riots, insurrections, civil commotion, casualties or other causes beyond the reasonable control of the Lessee. The Project Improvements shall be constructed in a good and workmanlike manner substantially in accordance with the site development plan approved by Lessor and all applicable laws, regulations, and ordinances applicable to such construction. D. Protection of Lessor against Cost or Claim. Lessee shall not, during the Term, permit to be foreclosed any mechanic's or materialman's lien or other statutory lien against the Premises or Ground Lease, Page 8 ® improvements thereon for any reason, including but not limited to, the work, labor, services, or materials supplied to or at the request of Lessee. Lessee shall pay and discharge, cause to be paid and discharged, or bond around any such mechanic's or materialman's lien filed against the Premises or Project Improvements (in accordance with applicable statutory requirements) within twenty (20) days after the filing thereof. Lessee may in good faith and at Lessee's own expense contest the validity of such asserted lien, claim or demand, in which event, Lessee shall bond around such lien or claim. Such bond shall be in the amount of one hundred percent (100 %) of the total lien and must be approved by Lessor. In no event shall Lessee have the right, authority or power to bind Lessor or any interest of Lessor in the Premises for any claim for labor or material or for any other charge or expense incurred in the construction, repair or alteration of the Project Improvements. E. Maintenance. Throughout the term hereof, Lessee, at Lessee's sole cost and expense, shall maintain the Premises and Project Improvements or any other improvements constructed on the Premises in good condition and repair (ordinary wear and tear, casualty and condemnation damage excepted) and operate and maintain the same in accordance with all applicable laws, rules, ordinances, orders and regulations of federal, state, county, municipal, and other governmental agencies and bodies having jurisdiction over the Premises or the Project Improvements. Lessor shall have no obligation to maintain or repair the Premises or Project Improvements. Lessee agrees to comply with all laws regarding handling and disposal of any pollutant, affluent, liquid or sold waste material, litter, trash or garbage from the Premises. Lessee shall be responsible for ensuring that all fire fighting systems and equipment are regularly inspected and remain in compliance with all applicable laws, codes and standards. Additionally, the construction and maintenance of the Project and all appurtenant facilities shall comply with all requirements of the Hotel and Motel Safety Act of 1990, and as may be hereinafter amended. F. Ownership of Improvements. Except as otherwise provided herein in respect to Lessee's right to remove certain personal property, all Project Improvements hereafter constructed on the Premises as permitted by this Lease, shall be owned by Lessee until the expiration or earlier termination of this Lease. All Project Improvements and other improvements on the Premises (excluding trade fixtures, furnishings, furniture, and other personal property) at the expiration or earlier termination of this Lease shall, without compensation to Lessee and without the necessity of executing additional documentation evidencing the conveyance, immediately become Lessor' s property free and clear of all claims to or against them by Lessee or anyone claiming by, through or under Lessee. Notwithstanding the foregoing or any contrary provision hereof to the contrary, Lessor shall not have the right to any trademark or logo of the Hotel Operator and in all events the Hotel Operator shall have the right to enter the Premises, within thirty (30) days following termination of this Lease, and remove therefrom all property therein (including signs) containing or depiciting such Hotel Operator's logo or trademark. All property remaining on the Premises after the expiration of such thirty (30) day period shall without the necessity of executing additional documentation evidencing the conveyance, immediately become Lessor's property free and clear of all claims to or against them by Lessee or anyone claiming by, through or under Lessee. G. Alterations. Lessee may, at any time and From time to time during the Term, make such changes and alterations, structural or otherwise, to any of the Project Improvements as Lessee shall deem 4D necessary or desirable, including, without limitation, the right to demolish any building, or any part thereof provided that such changes or alterations (1) are consistent with the site development plan Ground Lease, Page 9 ® approved by Lessor for the Project Improvements and (ii) do not result in a change in the character or the facade of the improvements existing as of the date of such alterations. VII. NET LEASE Lessor shall not be required to make any expenditure, incur any obligation (other than those expressly set forth in this Lease), or incur any liability of any kind whatsoever in connection with this Lease or Lessee's financing, ownership, construction, maintenance, operation, or repair of the Premises. It is expressly understood and agreed that this is a completely net lease intended to assure Lessor the rent herein reserved on an absolute net basis. VIII. ENCUMBRANCE; ASSIGNMENT; SUBLETTING A. Encumbrance. Lessee shall have the right to mortgage, pledge, hypothecate or otherwise transfer or assign the leasehold estate granted hereby as security for a debt or other obligation, whether by direct or indirect method (collectively, a "Mortgage "); provided, however, in no event shall any such Mortgage attach to or become a lien on the Premises or any interest other than the leasehold interest and other rights, title, and interests granted to Lessee hereunder. Any lien pertaining to the leasehold estate shall expire prior to the expiration of the Term. Lessor agrees that upon the occurrence of any event of default under the documents, instruments or agreements executed by Lessee in connection with the Mortgage, the party to whom such Mortgage has been granted (herein called a "Lender "), may (but shall not be obligated to) assume, or cause a new lessee or purchaser of the leasehold estate created hereby to assume, all the interests, rights, and obligations of Lessee thereafter arising under this Lease; provided, however, that any prior defaults by Lessee must be cured pursuant to this Lease within sixty (60) days, as such period may be extended as hereinafter provided, after the date of notice to Lender as hereinafter provided. It is expressly understood and agreed that any obligation of Lessor to give notice to Lender shall be contingent upon Lessee filing in writing with Lessor the name and current address of Lender. Lessee's failure to provide such information relieves Lessor from tendering any notice to Lender and Lessor shall be able to terminate the Lease without providing Lender an opportunity to cure. In respect to non - monetary defaults, if at the end of such sixty (60) day period Lender shall be actively engaged in acquiring or selling Lessee's interest in this Lease, such sixty (60) day period shall be extended for such further period as shall be reasonably necessary to enable Lender to acquire or sell Lessee's interests in this Lease and remedy such default so long as Lender is diligently pursuing the acquisition or sale of Lessee's interest in this Lease, curing or causing to be cured such default and to the extent possession of the Premises is not required therefor, complying with all of the provisions of this Lease. No Lender shall be or become liable or responsible for the performance of Lessee's obligations hereunder until such time as such Lender acquires title to the interests of Lessee hereunder and, upon such Lender's assignment of such rights and interests to another, Lender shall be automatically relieved from all further obligations hereunder. For so long as there exists a Mortgage of which Lessor has been notified of in writing by Lessee, Lessor agrees that it will not accept a voluntary surrender from, or a voluntary termination by, Lessee of the leasehold estate created hereby or any of the rights, titles and interests of Lessee in the Premises without the express prior written consent of the Lender holding the same. Lessee shall give written Ground Lease, Page 10 ® notice to Lessor of the release of any Mortgage within ten (10) calendar days of the effective date of such release. Notwithstanding any contrary provision hereof, upon termination of this Lease for any reason (including, without limitation, bankruptcy of Lessee) other than expiration by passage of the forty (40) year Term, Lender shall have the exclusive right and option, exercisable by delivery of written notice to Lessor within thirty (30) days following receipt by Lender of written notice from Lessor of the termination hereof, to elect to receive, in its own name or its designated affiliate, from Lessor a new lease for the Premises for the unexpired balance of the Term, such new lease to be on substantially the same terms and conditions as herein provided; provided, however, that in such event Lender shall be entitled to receive such a new lease only if Lender shall cure any defaults by Lessee hereunder within thirty (30) days after entering into such new lease. Failure of Lender to so cure any defaults by Lessee shall result in the automatic termination of the new lease and release of any lien which Lender may have against the Project Improvements. Lessor agrees to reasonably cooperate with Lessee's Lender in making reasonable modifications to the provisions of this Article VIII A. as may be reasonably required by any such Lender so long as the same do not materially and adversely affect the rights and obligations of Lessor hereunder. B. Assignment and Sublease. Provided Lessee is not in default hereunder, Lessee may assign or sublet or otherwise transfer Lessee's interest in this Lease or in the estate created by this Lease or any rights granted by this Lease to any person or entity with the prior written consent of Lessor, which consent shall not be unreasonably withheld or delayed. In electing whether to grant or deny such consent, Lessor may consider the proposed assignee's character, business reputation, experience in operating similar real estate projects as well as any other information Lessor believes should be considered. Furthermore, Lessee may assign this Lease to a partnership or other entity in which Lessee or Lessee's principals, listed in Exhibit "D," own not less than ten percent (10 %) of the beneficial ownership interests. Any sublease, assignment or other transfer of Lessee's interest in this Lease shall be made in writing and in a form acceptable to Lessor and such assignee or sublessee shall assume in writing of all Lessee's obligations and covenants hereunder. Notwithstanding any such assignment, Lessee shall not be relieved from its obligation hereunder. IX. CONDEMNATION; INSURANCE; INDEMNITY A. Condemnation I. Definition. The following definitions apply in construing provisions of this Lease relating to a taking of all or any part of the Premises, Project Improvements or improvements constructed in connection with a redevelopment of the Premises or any interest in them by eminent domain or inverse condemnation: a. Taking means any taking by eminent domain or by inverse condemnation or for any public or quasi - public use under any statute. The transfer of title may be either a transfer resulting from the recording of a final order in condemnation or a voluntary transfer or conveyance to the condemning authority or entity under threat of condemnation, in avoidance of an exercise of eminent domain. The taking shall be Ground Lease, Page I I ® considered to take place as of the later of (1) the date actual physical possession is taken by the condemnor or (ii) the date on which the right to compensation and damages accrues under the law applicable to the Premises. b. Total taking means the taking of the fee title to all the Premises and the Project Improvements on the Premises. C. Substantial taking means the taking of so much of the Premises or Project Improvements or both that the remaining Premises would not be economically and feasibly usable by Lessee, or the Project Improvements would be other than reasonably efficient or economic for Lessee's use. 2. Notice to Other Party. The party receiving any notice of the kinds specified below shall within fifteen (15) days of the date on which the party receiving such notice is aware of the intended taking, give the other party notice of the receipt, contents and date of the notice received: a. Notice of intended taking. b. Service of any legal process relating to condemnation of the Premises or Project Improvements. C. Notice in connection with any proceedings or negotiations with respect to such condemnation. d. Notice of intent or willingness to make or negotiate a private purchase, sale or transfer in lieu of condemnation. Failure of Lessee to so notify Lessor forfeits any right which Lessee may have to declare the intended taking a total taking. 3. Representative of Each Party; Effectuation. Lessor and Lessee shall each have the right to represent his or its respective interests in each proceeding or negotiation with respect to a taking or intended taking and to make full proof of his or its claims. Lessor and Lessee each agrees to execute and deliver to the other any instruments that may be required to effectuate or facilitate the provisions of this Lease relating to condemnation. 4. Total or Substantial Taking. On a total taking, Lessee's obligation to pay rent shall terminate on the day of taking. If Lessee reasonably believes that the taking is substantial under the definition appearing in Article IX.A.I.C. above, Lessee shall, by notice to Lessor given within ninety (90) days after Lessee first receives notice by any means of the intended taking, seek concurrence from Lessor in order to treat the taking as a substantial taking. If Lessee does not so notify Lessor, the taking shall be deemed a partial taking. A substantial taking shall be treated as a total taking if (I) Lessee delivers notice to Lessor within one hundred sixty (160) days after Lessee receives notice of intended taking, as provided above, (2) Lessee is not III n default under this Lease and has complied with all Lease provisions concerning apportionment Ground Lease, Page 12 ® of the award, and (3) the substantial taking is in fact a total taking. If these conditions are not met, the taking shall be treated as a partial taking. 5. Delivery of Possession. Lessee shall continue to occupy the Premises and Project Improvements until the day of taking. 6. Award for Total Taking. On a total taking, the award therefor shall be distributed and paid to Lessee and Lessor as their respective interests under this Lease (as if the same had not been terminated) may appear. In determining their respective interests: W The interest of Lessor shall be based on the value of Lessor's reversionary interest in the Premises and improvements taking into account the leasehold estate created by this Lease, the amount of rental paid by Lessee hereunder and all of the other terms and provisions of this Lease; and (ii) The interest of Lessee shall be based on the value of Lessee's interest in the Premises and improvements, including the value of the improvements for the Term and the value of Lessee's leasehold estate and interests under this Lease. T Partial Taking. in the event of a partial taking, Lessor shall be entitled to a portion of the award equal to the value of the fee simple title to the portion of the Premises taken plus its reversionary interest in the Project Improvements, and Lessee shall be entitled to its interest in the Project Improvements. In such event, this Lease shall remain in full force and effect covering the remaining portion of the Premises. Upon the partial taking, such amount shall be refunded by Lessor to Lessee in cash, less any amounts then due and owing to Lessor by Lessee hereunder. Such payment shall be made to Lessee within thirty (30) days after Lessor receives the award. After the partial taking, Lessee shall, subject to the rights of each Lender promptly commence reconstruction of the improvements damaged by such partial taking to as near as condition as existed prior to such taking as is reasonably practicable and diligently prosecute the same to completion. Should any reconstruction be necessary, Lessee must obtain Lessor's prior written approval of the plans for reconstruction. 8. Taking of Less than Fee Title. On any taking of the temporary use of all or any part or parts of the Premises or Project Improvements or both for a period, or of any estate less than the fee, ending on or before the expiration date of the Term, neither the Term nor the rent shall be reduced or affected in any way, and Lessee shall be entitled to any award for the use or the leasehold estate taken. If any such taking is for a period extending beyond the expiration date of the Tenn, the taking shall be treated under the foregoing provisions for total, substantial and partial takings. B. Insurance. I . Lessee's Insurance. From and after the Effective Date and throughout the Term of this Lease, Lessee will keep and maintain (or cause to be kept and maintained) in force and effect insurance against claims for injuries to or death or persons or damages to property which may Ground Lease, Page 13 ® arise out of or result from the construction, operation, repair, or maintenance of the Project and all activities associated therewith, whether such construction, operation, repair or maintenance be performed by Lessee, his agents, representatives, employees, subcontractors, assigns, or anyone directly or indirectly employed by any of them or by anyone for whose acts any of them may be liable. 4) Lessee's insurance coverage shall be primary insurance with respect to Lessor, its officials, employees and agents. Any insurance or self-insurance maintained by Lessor, its officials, employees or agents shall be considered in excess of Lessee's insurance and shall not contribute to it. Further Lessee shall cause all subcontractors to furnish separate certificates and endorsements for each such person or entity. All coverages for subcontractors and assigns shall be subject to all of the requirements stated herein. 2. Policies and Minimum Limits: The following is a list of standard insurance policies along with their respective minimum coverage amounts required in this Lease: a. Commercial General Liability • General Aggregate: $5,000,000 • Per Occurrence: $1,000,000 • Owners' and Contractors' Protective Liability: $1,000,000, during construction and all renovations thereafter of the Facility. • Products & Completed Operations Aggregate: $2,000,000 • Personal & Advertising Injury: $1,000,000 • Liquor Liability Endorsement • Coverage shall be at least as broad as ISO CG 00 01 10 93 • No coverage shall be deleted from standard policy without notification of individual exclusions being attached for review and acceptance. b. Business Automobile Policy • Combined Single Limits: $1,000,000 • Coverage for "Any Auto" C. Real and Personal Property • Limit: Not less than 80% of insurable value, replacement cost basis (exclusive of cost of excavation, foundations, footings below the surface of the ground and costs of underground flues, pipes and drains). This coverage shall include structure and contents. • Special form basis to include perils of flood and wind. • "Actual replacement cost" shall be confirmed from time to time (but not more frequently than once in any twelve (12) calendar months) at the request of Lessor, by one of the insurers or, at the option of Lessee, by an appraiser, engineer, architect or contractor approved by the issuer of such insurance policy and paid by Lessee. Ground Lease, Page 14 ® d. Builder's Risk • This coverage shall be required during construction and all renovations thereafter of the Facility. • Limit: Not less than 80% of insurable value, replacement cost basis (exclusive of cost of excavation, foundations, footings below the surface of the ground and costs of underground flues, pipes and drains). • "Actual replacement cost" shall be confirmed from time to time (but not more frequently than once in any twelve (12) calendar months) at the request of Lessor, by one of the insurers or, at the option of Lessee, by an appraiser, engineer, architect or contractor approved by the issuer of such insurance policy and paid by Lessee. • Coverage for the perils of flood and wind shall be included. • Lessor shall be named Loss /Payee. e. Workers' Compensation • Statutory Limits • Employer's Liability $500,000 • Waiver of Subrogation required. f. Errors and Omissions • This coverage shall be required during any design, construction, and renovations of the Facility. • Limit: $1,000,000 per claim and in the aggregate. • For all architects, engineers, and/or design companies. • Claims -made form is acceptable. • Coverage will be in force for three (3) years after construction of the Project is completed. The amounts of such insurance shall be reviewed on the fifth (5th) anniversary date of this Lease and each fifth (5th) year thereafter and shall be increased, if necessary, so that the amount of such coverage is at all times generally equal to the limits described herein measured in 1998 dollars. 3. Requirements Applicable to All Policies. The following shall be applicable to all policies of insurance required herein: a. Insurance carrier must have an A.M. Best Rating of A:V111 or better. b. Only insurance carries licensed and admitted to do business in the State of Texas will be accepted. C. Liability policies must be on occurrence form. Errors and omissions may be on a claims -made form. is d. Each insurance policy shall be endorsed to state that coverage shall not be suspended, voided, canceled or reduced in coverage or in limits except after Ground Lease, Page 15 0 ninety (90) days' prior written notice by certified mail, return receipt requested, has been given to Lessor. Lessor, its officers, a .ents and employees are to be added as Additional Insureds to liability policies. Upon request and without cost to Lessor, certified copies of all insurance polices and /or certificates of insurance shall be furnished to Lessor. g. Upon request and without cost to Lessor, Loss runs (claims listing) of any and /or all insurance coverages shall be furnished to Lessor. All insurance required herein insurance shall be secured and maintained in a company or companies satisfactory to Lender and Lessor, and shall be carried in the name of Lessee. Lessee shall provide copies of insurance policies required hereunder to Lessor on or before the Effective Date. 4. Waiver of Subrogation. Lessee shall secure an appropriate clause in, or an endorsement upon, each policy of insurance required to be provided by it hereunder pursuant to which the respective insurance companies waive subrogation and rights of recovery or permit the insured to agree with the other party hereto to waive any claim it might have against such party. The waiver of subrogation or permission for waiver of any claim herein before referred to shall extend to the agent of each party hereto and their respective contractors and employees and, in the case of Lessee, shall also extend to all the persons occupying or using all or any part of the Project Improvements from time to time. C. INDEMNITY. LESSEE HEREBY AGREES TO INDEMNIFY, HOLD HARMLESS, PROTECT AND DEFEND LESSOR, ITS OFFICERS, AGENTS, AND EMPLOYEES FROM AND AGAINST ANY AND ALL CLAIMS, LOSSES, DAMAGES, CAUSES OF ACTION, SUITS AND LIABILITY OF EVERY KIND, INCLUDING ALL EXPENSES OF LITIGATION, COURT COSTS AND ATTORNEYS' FEES, FOR ANY INJURY TO OR DEATH OF ANY PERSON OR FOR DAMAGE TO ANY PROPERTY INCURRED IN CONNECTION WITH ALL CLAIMS, INCLUDING ANY ACTION OR PROCEEDINGS THROUGHOUT, THEREON, ARISING FROM, AS A RESULT OF, OR IN ANY WAY RELATED TO LESSEE'S AND ITS SUBTENANTS', ASSIGNEES', OFFICERS', AGENTS', EMPLOYEES', CONTRACTORS', GUESTS', AND /OR INVITEES' USE OR OCCUPANCY OF THE PREMISES AND /OR PROJECT IMPROVEMENTS OR ANY OF THE ACTIVITIES OF ANY SUCH PARTIES IN OR ON THE PREMISES, OR THE DESIGN OR CONSTRUCTION OF THE PROJECT IMPROVEMENTS, WHERE SUCH INJURIES, DEATH, OR DAMAGES ARE CAUSED BY THE JOINT NEGLIGENCE OF LESSOR, ITS OFFICERS, AGENTS AND /OR EMPLOYEES AND LESSEE, ITS SUBTENANTS, ASSIGNEES, OFFICERS, AGENTS, EMPLOYEES, CONTRACTORS, GUESTS, AND /OR INVITEES, AND /OR BY THE JOINT OR SOLE NEGLIGENCE OF LESSEE, ITS SUBTENANTS, ASSIGNEES, OFFICERS, AGENTS, EMPLOYEES, CONTRACTORS, GUESTS, AND /OR INVITEES. IT IS THE Ground Lease, Page 16 0 EXPRESS INTENTION OF BOTH LESSOR AND LESSEE THAT THE INDEMNITY PROVIDED FOR IN THIS PARAGRAPH IS AN INDEMNITY BY LESSEE TO INDEMNIFY, HOLD HARMLESS, PROTECT, AND DEFEND LESSOR, ITS OFFICERS, AGENTS AND EMPLOYEES FROM (1) THE CONSEQUENCES OF THE NEGLIGENCE OF LESSOR, ITS OFFICERS, AGENTS AND /OR EMPLOYEES, WHERE THAT NEGLIGENCE IS A CONCURRING CAUSE WITH THAT OF LESSEE, ITS SUBTENANTS, ASSIGNEES, OFFICERS, AGENTS, EMPLOYEES, CONTRACTORS, GUESTS, AND /OR INVITEES OF THE INJURY, DEATH OR DAMAGE AND /OR (II) LESSEE'S AND LESSEE'S SUBTENANTS', ASSIGNEES', OFFICERS', AGENTS', EMPLOYEES', CONTRACTORS', AND /OR GUESTS' JOINT AND /OR SOLE NEGLIGENCE. FURTHERMORE, THE INDEMNITY PROVIDED FROM THIS PARAGRAPH SHALL HAVE NO APPLICATION TO ANY CLAIM, LOSS, DAMAGE, CAUSE OF ACTION, SUIT OR LIABILITY WHERE THE INJURY, DEATH OR DAMAGE RESULTS FROM THE SOLE NEGLIGENCE OF LESSOR. IN THE EVENT THAT ANY ACTION OR PROCEEDING IS BROUGHT AGAINST THE CITY BY REASON OF ANY OF THE ABOVE, LESSEE FURTHER AGREES AND COVENANTS TO DEFEND THE ACTION OR PROCEEDING BY LEGAL COUNSEL ACCEPTABLE TO THE CITY. The indemnity provided hereinabove shall not terminate, but shall continue in full force and effect during and after the expiration or earlier termination of this Lease. X. REPRESENTATION AND WARRANTIES A. Lessee represents and warrants that: I . As of the execution date of this Lease, Lessee is a limited liability company organized and validly existing under the laws of the State of Texas and has the power and authority to carry on its business as presently conducted and as contemplated to be conducted on the Premises by this Lease and to enter into and perform its obligations under this Lease; and the execution, delivery and performance by Lessee of this Lease has been duly authorized by all necessary action. 2. As of the execution date of this Lease, the execution, delivery and performance of this Lease by Lessee will not violate any law or Lessee's organizational documents. B. Lessor represents and warrants that: I . Except as disclosed to Lessee, as of the execution date of this Lease, Lessor is the record owner of the Premises and Lessor has all power and authority necessary to enter into this Lease. Ground Lease, Page 17 2. As of the execution date of this Lease, to the best of Lessor's knowledge, the Premises has free access to and from public streets and roads; there is no pending or threatened condemnation action pertaining to the Premises; and no pending or threatened action which would result in the termination of such access to and from public streets and roads. 3. Lessor has not executed any lease covering the Premises which has not been terminated or the term of which has not expired. XI. CASUALTY A. Should the Project Improvements or any other improvements or fixtures on the Premises be wholly or partially destroyed or damaged by fire, or any other casualty whatsoever during the Term, Lessee shall, subject to the rights of any Lender under a Mortgage, promptly repair, replace, restore, or reconstruct the same to substantially the same (or better) form which the same existed immediately prior to such casualty. Notwithstanding the foregoing, should the cost of said repairs, restoration or rebuilding be estimated by an architect of both the Lessee's and Lessor's choosing be in excess of said insurance proceeds made available or to be available to Lessee under the insurance maintained by Lessee or should the casualty event occur during the last three (3) years of the Term, Lessee shall have the option to terminate this Lease by written notice to Lessor in which event this Lease shall terminate and be of no further force and effect from and after Lessor's receipt of such notice. B. In no event shall Lessee be entitled to any abatement, allowance, reduction or suspension of rental or other changes herein reserved. All proceeds of any business interruption or rent insurance shall be solely the property of Lessee and Lessor shall have no rights or interest therein. In the event Lessee and Lessor agree in writing that the Project Improvements or other improvements shall not be reconstructed, then all insurance proceeds payable as a consequence of the casualty shall be applied first to discharge each Mortgage, second, to pay the costs to demolish and clear the Premises of damaged or destroyed Project Improvements or other improvements, third, to pay Lessor the value of Lessor's reversionary interest in the Project Improvements or other improvements had the same been reconstructed and fourth, to Lessee. XII. DEFAULT; REMEDIES A. Lessee's Default. Each of the following events shall be a default by Lessee and a breach of this Lease: 1. Failure or refusal to pay when due the rent as provided in Article IV. A. of this Lease and such failure continues for a period of ten (10) business days after notice thereof from Lessor to Lessee. 2. Failure or refusal to pay when due any other sum required by this Lease to be paid by Lessee if such failure to pay is not cured within ten (10) business days after written notice thereof is provided to Lessee. Ground Lease, Page 18 ® 3. Failure by Lessee to perform as required any other covenant, agreement or obligation (other than the payment of a liquidated sum of money) of Lessee provided to be performed by Lessee under this Lease and the same is not cured within thirty (30) days after notice of such failure from Lessor to Lessee; provided, that, if such default is of a nature that cannot reasonably be expected to be cured within said thirty (30) days, then for such longer time as may be reasonably necessary so long as Lessee commences the cure within said thirty (30) days and thereafter diligently prosecutes the sarne to completion. 4. Failure to comply with any of the terms and conditions of the Facility Management Agreement of even date, which failure results in the termination of such agreement; B. Lessor's Remedies. Upon default hereunder by Lessee, Lessor has the following remedies in addition to all other rights and remedies provided by law or equity, to which Lessor may resort cumulatively or in the alternative: I. Lessor may at Lessor's election terminate this Lease by giving Lessee notice of termination. On the giving of the notice, all Lessee's rights in the Premises and in all improvements shall terminate. Promptly after notice of termination, Lessee shall surrender and vacate the Premises and all improvements and Lessor may reenter and take possession of the Premises and all remaining improvements and eject all parties in possession or eject some and not others or eject none. Termination under this Article XII.B. I shall not relieve Lessee from the payment of any sum then due to Lessor or from any claim for damages previously accrued or then accruing against Lessee. 2. Lessor may at Lessor's election reenter the Premises, and, without terminating this Lease, at any time and from time to time relet the Premises and improvements or any part or parts of them for the account and in the name of Lessee or otherwise. Lessor may at Lessor's election eject all persons or eject some and not others or eject none. Lessor shall apply all rents from reletting, if any, first to the reasonable costs and expenses incurred by Lessor in reletting the Premises then to the reasonable costs and expenses incurred by Lessor in operating and maintaining the Project Improvements, and then to rents and other surns payable by Lessee to Lessor, with the balance being paid to Lessee. Any reletting may be for the remainder of the term or for a longer or shorter period. Lessor may execute any leases made under this provision either in Lessor's name or in Lessee's name and shall be entitled to all rents from the use, operation or occupancy of the Premises or improvements or both. No act by or on behalf of Lessor under this provision shall constitute a termination of this Lease unless Lessor gives notice of termination. Nothing contained herein shall be deemed to place any obligation on Lessor to relet the Premises. C. Notice of Lessor's Default. Lessor shall not be considered to be in default under this Lease unless (1) Lessee has given written notice specifying the default and (2) Lessor has failed for thirty (30) days after receipt of such notice to cure the default or to commence cure within such time and then pursue the same diligently. The foregoing shall not apply, however, to Lessor's obligations in this Lease to respond to submittals of the site development plan or any plans for alteration which must be submitted is to Lessor in accordance with this Lease; however, Lessor shall not be in default of that obligation until Ground Lease, Page l9 the expiration of three (3) business days after the city council has rendered its decision regarding its approval or disapproval of the site devebpment plan or any plans for alteration. D. Unavoidable Default or Delay; Waiver. Any prevention, delay, nonperformance, or stoppage due to any of the following causes shall excuse nonperformance for the period of any such prevention, delay, nonperformance, or stoppage, except the obligations imposed by this Lease for the payment of rent, taxes or insurance or obligations to pay money that are treated as rent. The causes referred to above are strikes, lockouts, labor disputes, failure of power, acts of God, acts of public enemies of this State or of the United States, riots, insurrections, civil commotion, inability to obtain labor or materials or reasonable substitutes for either, governmental restrictions or regulations or controls, casualties or other causes beyond the reasonable control of the party obligated to perform. No waiver of any default shall constitute a waiver of any other breach or default, whether of the same or any other covenant or condition. No waiver, benefit, privilege, or service voluntarily given or performed by either party shall give the other any contractual right by custom, estoppel or otherwise. If either party brings any action or proceeding to enforce, protect or establish any right or remedy, the prevailing party shall be entitled to recover reasonable attorneys' fees. E. Payment on Default: Deduction; Lien. If Lessor is compelled or elects to pay any sum of money or do any acts that require the payment of money by reason of the defaulting party's failure or inability to perform any of the provisions of this Lease after passage of any notice and cure period provided under any other provisions of this Lease, Lessee shall, within ten (10) days of the demand therefor, reimburse Lessor for such sums, and all such sums shall bear interest at the Default Rate from the date of expenditure until the date of such reimbursement. Other sums payable hereunder that are not paid by Lessee when due shall bear interest at the same rate from and after the payment due date until the date Lessor receives payment thereof. The Default Rate as used herein shall be defined as the prime rate as determined by Citizens Bank and Trust Company of Baytown, Texas, or twelve percent (12 %) per annum, whichever is greater. F. Effect of Termination of this Facility Management Agreement of Even Date. Manager understands and agrees that should this Lease be terminated due to a material breach as described hereinbelow by either party, such termination may result in the automatic termination of the Facility Management Agreement of even date herewith, at the sole option of the Owner. The Facility Management Agreement may be terminated on the date and at the time this Lease is terminated and shall be deemed to be terminated for cause by Owner. XIII. GENERAL CONDITIONS; MISCELLANEOUS PROVISIONS A. Transactions Between Parties. I . Notice. As used in this Lease, notice includes but is not limited to the communication of notice, request, demand, approval, statement, report, acceptance, consent, waiver and appointment. No notice of the exercise of any option or election is required unless the provision ® giving the election or option expressly requires notice. All notices must be in writing. Notice is considered given either (a) when delivered in person or by facsimile transmission (however, if a Facsimile transmission is received after 5:00 p.m. local time, it shall be deemed received the Ground Lease, Pane 20 ® following day) to the recipient named as below, or (b) three (3) days after deposit in the United States mail in a sealed envelope, wrapper or container, either registered or certified mail, return receipt requested, postage and postal charges prepaid, addressed by name and address to the party or person intended as follows: Notice to Lessor: City of Baytown P. O. Box 424 Baytown, Texas 77522 Attention: City Manager Fax: (281) 420 -6586 With a copy to: City of Baytown P. O. Box 424 Baytown, Texas 77522 Attention: City Attorney Fax: (281) 420 -6586 Notice to Lessee: Edmundson Interests, L.L.C. P.O. Box 130713 Houston, Texas 77219 -0713 Attention: President Fax: (713) 523 -7555 Facsimile notices shall be followed by delivery by first class mail sent on the same date as the facsimile notice as provided above. Either party may, by notice given at any time or from time to time, require subsequent notices to be given to another person, whether a party or an officer or representative, or to a different address, or both. Notices given before actual receipt of notice of change shall not be invalidated by the change. 2. Nonmerger of Fee and Leasehold Estates. Notwithstanding any other provision of this Lease to the contrary, if both Lessor's and Lessee's estates in the Premises or the improvements or both become vested in the same owner, this Lease shall nevertheless not be destroyed by application of the doctrine of merger or any contrary provision of this Lease construable as requiring merger except at the express written election of Lessor. 3. Estoppel Certificates; Liquidated Damages. At any time and from time to time, within thirty (30) days after notice of request by Lessor or Lessee, the other party shall execute, acknowledge and deliver to the other or to such recipient as the notice shall direct, a statement certifying that this Lease is unmodified and in full force and effect, or, if there have been modifications, that it is in full force and effect as modified in the manner specified in the is statement. The statement shall also state the dates to which the rent and any other charges have been paid in advance and that there are no defaults hereunder, or if there are, specifying those Ground Lease, Page 21 defaults with particularity. The statement shall be such that it can be relied on by any auditor, creditor, commercial banker and investment banker and by any prospective purchaser or encumbrancer of the leasehold estate in the Premises or all or any part or parts of Lessor's or Lessee's respective interests under this Lease. 4. Joint and Several Obligations. If either Lessor or Lessee consists of more than one person, the obligation of all such persons is joint and several. B. Interpretation of Lease. Definitions. a. Person means person or persons or other entity or entities or any combination of persons and entities. b. Lessor means the person who is the owner at the time in question of the Premises, whether singular or plural in number, and whether named in this Lease as Lessor or having become the successor in interest of the named Lessor, or the successor of a successor, whether by assignment, foreclosure, or other transfer, and whether intentional or inadvertent or by operation of law. C. Lessee means the person named as Lessee in this Lease, whether singular or plural in number, or the person who at the time in question is the successor in interest of Lessee, or the successor of a successor, whether by assignment, foreclosure, or other transfer, and whether intentional or inadvertent or by operation of law. It does not, however, include any person claiming under any assignment or sublease or other transfer prohibited by this Lease, and this definition does not alter the provisions of this Lease relating to assignment or subletting. d. Premises are defined in Article 11. 2. Captions, Table of Contents. The table of contents, if any, of the Lease and the captions of the various Articles, Sections and Subsections of this Lease are for convenience and ease of reference only and do not define, limit, augment or describe the scope, content or intent of this Lease or of any part or parts of this Lease. 3. Gender. The neuter gender includes the feminine and masculine, the masculine includes the feminine and neuter, and the feminine includes the masculine and the neuter, and each includes corporation, partnership or other legal entity when the context so requires. 4. Singular and Plural. The singular number includes the plural whenever the context so requires. 5. Exhibits, Addenda. The following Exhibits A through D are incorporated herein for all purposes, whether or not they are actually attached, provided that any not attached have been signed or initialed by the parties: Ground Lease, Page 22 ® Exhibit A - Bayland Park Exhibit B - Map Exhibit C - Lease Memorandum Exhibit D — Principals of Lessee Reference to "this Lease" includes matters incorporated by reference. 6. Entire Agreement. This Lease contains the entire agreement between the parties. No promise, representation, warranty or covenant not included in this Lease has been or is relied on by either party. Each party has relied on his own examination of this Lease, the counsel of his own advisors and the warranties, representations and covenants in this Lease itself. The failure or refusal of either party to inspect the Premises or improvements, to read the Lease or other documents or to obtain legal or other advice relevant to this transaction constitutes a waiver of any objection, contention or claim that might have been based on such reading, inspection or advice. This Lease may not be changed except by written instrument signed by both Lessor and Lessee. No attempted change of this Lease shall be effective unless it shall have been approved in writing by the holders of all Mortgages permitted by this Lease and of which Lessor has been notified. Holders of all Mortgages permitted by this Lease must approve or disapprove of the proposed amendment of this Lease within ten (10) days of receipt of such proposed amendment, else the amendment will be deemed approved by such mortgage holder(s). 7. Severability. The invalidity or illegality of any provision shall not affect the remainder of the Lease. 8. No Partnership, Joint Venture or Principal _Agent Relationship. Nothing in this Lease or any acts of the parties hereto shall be construed to create the relationship of principal and agent, or of partnership, or of joint venture, or of any association between the parties. 9. Time of Essence. Time is of the essence with respect to the performance of each of the terms, provisions, covenants and conditions contained in this Lease. 10. Governing Law; Venue. The construction, interpretation, performance of this Lease shall be governed by the laws of the State of Texas. Both parties hereby irrevocably agree that any legal proceedings arising out of or in connection with this Lease shall only be heard in the district courts of Harris County, Texas or in the United States District Court for the Southern District of Texas, Houston, Harris County Division. C. Successors. Each and all of the covenants and conditions of this Lease shall be binding on and shall inure to the benefit of the heirs, successors, executors, administrators, assigns and personal representatives of the respective parties. XIV. EXPIRATION; TERMINATION A. Lessee's Duty to Surrender. At the expiration or earlier termination of this Lease, Lessee shall surrender to Lessor possession of the Premises, together with all personalty located on the Premises owned by Lessee, and used in connection with operation of the Premises but specifically excluding Ground Lease, Page 23 ® Lessee's (and any operator of the hotel facility) computers, maintenance equipment, furniture, furnishings, and other office equipment, all of which Lessee shall have the right and option to remove (Lessee shall be responsible for all damage to the Project Improvements occasioned by such removal). Furthermore, in all events the operator of the hotel facility shall have the right to remove all signs and other indicia of its corporate or operating name from the Project Improvements. Lessee shall leave the surrendered Premises and any other property reasonably necessary to operate the Premises in good and marketable condition except as expressly provided to the contrary in other provisions of this Lease. All property that Lessee is required to surrender shall become Lessor's property at termination of the Lease. All property that Lessee is not required to surrender but that Lessee abandons shall, at Lessor's election, become Lessor's property at termination of the Lease. If Lessee fails to surrender the Premises at the expiration or sooner termination of this Lease, Lessee shall defend and indemnify Lessor in accordance with Article IX.0 from all liability and expense resulting from the delay or failure to surrender, including, without limitation, claims made by any succeeding Lessee founded on or resulting from Lessee's failure to surrender_ B. Holding Over. This Lease shall terminate without further notice at expiration of the term. Any holding over by Lessee after expiration shall not constitute a renewal or extension or give Lessee any rights in or to the Premises except as otherwise expressly provided in this Lease, and Lessee shall pay, as liquidated damages, the then current fair market rental value of the Premises and the improvements thereon, as determined by the Lessor, calculated on a per diem basis, multiplied by two (2) for the period during which Lessee possesses the Premises beyond the expiration hereof. Such amount is reasonable in the light of the anticipated or actual harm to Lessor caused by the Lessee's holding over, the difficulties of proof of loss, and the inconvenience of otherwise obtaining an adequate remedy. XV. BROKERAGE Lessee indemnifies and agrees to hold Lessor harmless from any claims for real estate, leasing commissions or finders fees in respect to the transaction entered into under this Lease alleged to be due because of any act of the Lessee and from any loss, liability, damage, cost or expense (including attorney's fees) of defending or settling such claims. Lessor represents to Lessee that Lessor has not engaged any broker in connection with this Lease. XVI. EXECUTION; ABSTRACT, MEMORANDUM, OR SHORT FORM OF LEASE A. Execution in Counterparts. This Lease, or the memorandum of this Lease, or both, are executed in two or more counterparts, each of which shall be an original, but all of which shall constitute one and the same instrument. B. Recordation of Memorandum Only. Only a memorandum of this Lease in the form attached here to as Exhibit "C" shall be recorded (the "Lease Memo "). The Lease Memo shall be recorded only on or after the Commencement Date and Lessee's payment of the initial installment of rent as provided in Article W.A. Lessee's recordation of this Lease or any other memorandum of this Lease (other than ® the Lease Memo) shall be a default hereunder. Ground Lease, Page 24 This Lease is executed on the dates shown below to be effective for all purposes on the date first written above. CITY OF BAYTOWN, TEXAS By: Pete C. Alfaro, Mayor ATTEST: Eileen P. Hall, City Clerk APPROVED AS TO FORM: gn cio Ramirez, Sr., City ey EDM SON INTERESTS, L.L.C. B I %Zk William L. Edmun s n, III, Pres dent STATE OF TEXAS § § COUNTY OF HARRIS § Before me, / "' v hv,_ Be v K Ce v,the undersigned notary public, on this day personally appeared William L. Edmundson, III, in his capacity as President of Edmundson Interests, L.L.C., on behalf of such corporation, known to me; proved to me on the oath of ; or i/ proved to me through his current D L. t 30.5 9(o Div {description of identification card or other document issued by the federal overnment or any state government that contains the photograph and signature of the acknowledging person} (✓ one) to be the person whose name is subscribed to the foregoing instrument, and acknowledged to me that he executed that instrument for the purposes and consideration therein expressed. Ground Lease,Page 25 Given under my hand and seal of office this 2C1 day of September, 1998. �?� c 6 -€.4,1-lLW. & Notaryyublic in and for the State of Texas Hk My commission expires: (-Z 0 — �j 7 4j'E - • 4)44 0:4:0 ic,c6 \es., EXPO' Kw Nisi" 14 c:klh 110\contracts\Edmundsonlnterests\GroundLease092498 Ground Lease,Page 26 K-11 I � 11 S , y r rt cc I - jj , VU 4� 7 l� goo � ! v 1 � E H1W A J 7 Q � !il TEL i ONFERENC j CENTER RESTAURANT i 1 , S a. si ci 5' zS s 'I c E1 i .J,i i 1 J uu L� G5� 900 � i JJ �7 It I ,J / s • o ff \ HOTEL 1 r ONFERENC CENTER I RESTAURANT , I f ® Exhibit "C" El MEMORANDUM OF LEASE This is the Lease Memo referred to in Article XVI of that certain Ground Lease ( "Lease "), dated effective , 199_, between the CITY OF BAYTOWN, TEXAS ( "Lessor ") and EDMUNDSON INTERESTS, L.L.C., a Texas limited liability company ( "Lessee ") concerning the Premises described in Exhibit A, hereto attached and hereby made a part hereof. For good and adequate consideration, Lessor leased the Premises and appurtenances to Lessee, and Lessee leased and hired them from Lessor, for the term and on the provisions contained in the Lease, which is incorporated in this memorandum by reference. The term is forty (40) years beginning and ending This memorandum is not a complete summary of the Lease. Provisions in this memorandum shall not be used in interpreting the Lease provisions. In the event of conflict between this memorandum and other parts of the Lease, the other parts shall control. Execution hereof constitutes execution of the Lease itself. EXECUTED effective as of the _ day of Exhibit "C," Page I CITY OF BAYTOWN, TEXAS PETE C. ALFARO, Mayor "Lessor" EDMUNDSON INTERESTS, L.L.C. WILLIAM L. EDMUNDSON, III, President "Lessee" 0 § STATE OF TEXAS § COUNTY OF HARRIS § Before me, , the undersigned notary public, on this day personally appeared Pete C. Alfaro, in his capacity as Mayor of the City of Baytown, Texas, on behalf of such municipal corporation, known to me; proved to me on the oath of ; or proved to me through his current (description of identification card or other document issued by the federal government or any state government that contains the photograph and signature of the acknowledging person) (.f one) to be the person whose name is subscribed to the foregoing instrument, and acknowledged to me that he executed that instrument for the purposes and consideration therein expressed. Given under my hand and seal of office this _ day of , 199 Notary Public in and for the State of Texas My commission expires: STATE OF TEXAS § COUNTY OF HARRIS § Before me, , the undersigned notary public, on this day personally appeared William L. Edmundson, III, in his capacity as President of Edmundson Interests, L.L.C., on behalf of such corporation, known to me; proved to me on the oath of ; or proved to me through his current (description of identification card or other document issued by the federal government or any state government that contains the photograph and signature of the acknowledging person) (J one) to be the person whose name is subscribed to the foregoing instrument, and acknowledged to me that he executed that instrument for the purposes and consideration therein expressed. Given under my hand and seal of office this _day of •. 4D Notary Public in and for the State of Texas My commission expires: c:klh I Iftontracts\ EdmundsonInterests \GroundLcasc092493 Exhibit "C," Page 2 C: E -_ 11 Exhibit "D" PRINCIPALS OF LESSEE Lessee has only one principal, who is named hereinbelow: Exhibit "D," Page Solo William L. Edmundson, III