Agenda Item Summary: Meeting Doc Id Recommending Department LSR No

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AGENDA ITEM SUMMARY

Meeting: 8/5/2010 Recommending Department: Real Estate & Development DOC ID: 3504 LSR No: 11254
Resolution -- Authorizing the Mayor to Execute a Second Amended and Restated Entertainment Center Lease Agreement with Las Colinas Group, LP
Administrative Comments 1. This item supports Strategic Goal No. 3: Economic Development. 2. Impact: Approval of the second amended and restated lease will establish terms for the operation of the Irving Entertainment Center at Las Colinas. 3. This document amends the lease of the entertainment center to provide: (i) Following the first two twenty-five year terms, the fixed rent will be revised to the then fair market rental rate for the next renewal, but not less than $1,000,000 per year. (ii) Minimum number of performance days in the performance hall is increased from 150 to 200. (iii) Addition of an annual Tenant expenditure of $4,000,000 for free music, promotions and giveaway. (iv) Method for the Tenant or Concessionaire to finance and encumber personal property such as kitchen fixtures, and create a financing reserve equal to 12 months principal and interest on that financing. (v) Revisions to conform to the current financing program, anticipated revenues and federal tax issues. Recommendation The resolution be approved. ADDITIONAL COMMENTS: Contract Required: Yes Previous Action: Previous Action: RES-2009-533 Review Completed By: Karen Brophy Council Action: Council Action: First Amendment to the Amended and Restated Entertainment Center Lease and Development Agreements Amended and Restated Entertainment Center Lease Agreement Entertainment Center Lease Agreement
RES-2009-246 RES-2009-65 ATTACHMENTS:
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RES Second Amended Entertainment Center Lease Agreement - 7-30-10 (DOC) Second Amended Entertainment Center Lease Agreement - Bluelined - 7-30-10 (DOC) CURRENT YEAR FINANCIAL IMPACT: None REVISION INFORMATION: Prepared: 7/23/2010 12:31 PM by Cynthia Castro Last Updated: 7/29/2010 07:17 PM by Brenda McDonald
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CITY OF IRVING COUNCIL RESOLUTION NO. (ID # 3504)
WHEREAS, on February 5, 2009, the City Council approved Resolution No. RES-2009-65, which approved the Entertainment Center Lease Agreement between the City of Irving and Las Colinas Group, LP, for the tenancy and operation of the Entertainment Center by Las Colinas Group, LP; and WHEREAS, on June 11, 2009, the City Council approved Resolution No. RES-2009-246, which approved the Amended and Restated Entertainment Center Lease Agreement between the City of Irving and Las Colinas Group, LP, clarifying the schedule of obligations and creating a public area programming fund; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF IRVING, TEXAS: SECTION I. THAT the City Council hereby approves the attached Second Amended and Restated Entertainment Center Lease Agreement between the City of Irving and Las Colinas Group, LP, which establishes terms for the operation of the Entertainment Center, and the Mayor is authorized to execute said agreement substantially in the form of the agreement attached hereto, and as approved by the City Attorney. THAT this resolution shall take effect from and after its final date of passage, and it is accordingly so ordered.
SECTION II.
PASSED AND APPROVED BY THE CITY COUNCIL OF THE CITY OF IRVING, TEXAS, on August 5, 2010. ________________________________ HERBERT A. GEARS MAYOR ATTEST: _______________________________ Shanae Jennings Acting City Secretary APPROVED AS TO FORM: _______________________________ Charles R. Anderson City Attorney
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SECOND AMENDED AND RESTATED ENTERTAINMENT CENTER LEASE AGREEMENT
between
THE CITY OF IRVING
and
LAS COLINAS GROUP, LP
US 469828v.4
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Attachment: RES Second Amended Entertainment Center Lease Agreement - 7-30-10 (3504 : 29 Agree 2Nd Amend & Restated Entertain Ctr
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TABLE OF CONTENTS 1. DEMISE; CONVEYANCE; NET LEASE.......................................................................... 3 (a) Entertainment Center .......................................................................................... 3 (b) Urban Towers Parking Agreement ...................................................................... 3 (c) Net Lease............................................................................................................ 3 LEASE TERM ................................................................................................................. 3 (a) Development Period............................................................................................ 3 (b) Initial Term .......................................................................................................... 3 (c) Renewal Terms ................................................................................................... 4 (d) Lease Term ......................................................................................................... 4 RENTAL ......................................................................................................................... 4 (a) Fixed Rent........................................................................................................... 4 (b) Additional Rent.................................................................................................... 4 (c) Parking and Ticket Taxes; Taxable Series Payments.......................................... 5 (d) Rent .................................................................................................................... 6 (e) Utilities ................................................................................................................ 6 (g) City Audit Rights.................................................................................................. 6 (h) Partnership Audit Rights...................................................................................... 6 (i) Security Deposit .................................................................................................. 7 USE OF ENTERTAINMENT CENTER............................................................................ 7 (a) Use...................................................................................................................... 7 (b) Prohibited Uses................................................................................................... 7 (c) Compliance with Laws......................................................................................... 7 (d) Programming....................................................................................................... 8 (e) Naming Rights..................................................................................................... 8 (f) Operation of the Entertainment Center ................................................................ 8 (g) Free Music, Promotions, and Giveaways ............................................................ 9 JOINT OPERATION AND BOOKING AGREEMENT .................................................... 10 (a) EC Hotel and Daytime Advanced Booking......................................................... 10 (b) Nighttime Use.................................................................................................... 11 (c) City Suites......................................................................................................... 11 (d) Cross-Promotion ............................................................................................... 11 IMPROVEMENTS......................................................................................................... 11 (a) Plan Approval.................................................................................................... 11 (b) Alterations ......................................................................................................... 11 (c) Liens ................................................................................................................. 11 (d) Title to the Entertainment Center....................................................................... 12 (e) Surrender .......................................................................................................... 14 (f) Casualty Damage.............................................................................................. 14 (g) Maintenance of the Improvements; Capital Improvements Reserve; Maintenance and Operations Fund......................................................................................... 16 (h) Waiver of Fees .................................................................................................. 18 (i) City Consents.................................................................................................... 18 (j) Warranties......................................................................................................... 18 (k) Payment of Capital Improvements Costs........................................................... 19 (l) Parking Rent and Insurance Reserves .............................................................. 20
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SECOND AMENDED AND RESTATED ENTERTAINMENT CENTER LEASE AGREEMENT US 469828v.4
(i)
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7. 8.
QUIET ENJOYMENT.................................................................................................... 21 TAXES.......................................................................................................................... 21 (a) Tax Exempt Status ............................................................................................ 21 (b) Assignment or Sale by City ............................................................................... 21 (c) Payment of Personal Property Taxes ................................................................ 21 (d) Tax Contests ..................................................................................................... 22 (e) Exclusions......................................................................................................... 22 (f) Construction Sales Tax Exemption.................................................................... 22 CONDEMNATION ........................................................................................................ 23 (a) Right of Eminent Domain................................................................................... 23 (b) Notice; Cooperation........................................................................................... 23 (c) Total Taking ...................................................................................................... 23 (d) Partial Taking; Restoration ................................................................................ 23 (e) Temporary Taking ............................................................................................. 24 (f) Condemnation Award........................................................................................ 24 EASEMENTS, ZONING AND RESTRICTIONS ............................................................ 25 (a) Easements, Dedications, and Abandonments ................................................... 25 (b) Zoning ............................................................................................................... 25 INSURANCE................................................................................................................. 25 (a) Special Form Property Coverage For Entertainment Center.............................. 25 (b) The Partnership's Insurance.............................................................................. 25 (c) Mutual Release ................................................................................................. 26 SUBLETTING AND ASSIGNMENT BY THE PARTNERSHIP....................................... 27 (a) Right to Sublease.............................................................................................. 27 (b) Right to Assign .................................................................................................. 27 (c) Retail Subleases ............................................................................................... 27 (d) Recognition of Subleases.................................................................................. 27 (e) Notices of Default under Subleases................................................................... 28 FINANCING .................................................................................................................. 28 (a) Right to Mortgage Leasehold Estate.................................................................. 28 (b) Notices to Partnership Mortgagees ................................................................... 28 (c) Right to Cure ..................................................................................................... 28 (d) Option for New Lease........................................................................................ 29 (e) Obligation to Cure ............................................................................................. 29 (f) Modifications; Surrender.................................................................................... 30 (g) Rights Cumulative ............................................................................................. 30 (h) Partnership Mortgagee Designee ...................................................................... 30 DEFAULT ..................................................................................................................... 31 (a) Event of Default by the Partnership ................................................................... 31 (b) Monetary Default by the Partnership ................................................................. 31 (c) Failure by the Partnership to Carry Required Insurance .................................... 32 (d) Non-Monetary Default by the Partnership.......................................................... 32 (e) Cross Default Under the Development Agreement ............................................ 32 (f) Cross Default Under the Urban Towers Parking Agreement.............................. 32 (g) Cross Default Under any Concessionaire Agreement........................................ 32 (h) Enforcement of Remedies by the City ............................................................... 32 (i) No Waiver ......................................................................................................... 33
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( ii )
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(j) (k) 15.
Bankruptcy ........................................................................................................ 33 Default by the City ............................................................................................. 34
LIMITATIONS ON LIABILITY........................................................................................ 34 (a) Non-Liability of the City...................................................................................... 34 (b) Limitations on Liability of the Partnership .......................................................... 34 (c) Termination of Development Agreement ........................................................... 35 (d) Waiver of Consequential Damages ................................................................... 35 FORCE MAJEURE ....................................................................................................... 35 ESTOPPEL CERTIFICATES ........................................................................................ 35 LANDLORD'S LIEN ...................................................................................................... 36 REPRESENTATIONS AND WARRANTIES.................................................................. 36 (a) The City's Representations and Warranties....................................................... 36 (b) The Partnership's Representations, Warranties and Covenants........................ 37 MISCELLANEOUS ....................................................................................................... 38 (a) Relationship ...................................................................................................... 38 (b) Numbers and Gender........................................................................................ 38 (c) Memorandum of Lease...................................................................................... 38 (d) Heading............................................................................................................. 39 (e) References........................................................................................................ 39 (f) Notices .............................................................................................................. 39 (g) Laws and Venue................................................................................................ 40 (h) Partial Invalidity ................................................................................................. 40 (i) Entire Agreement; Amendments........................................................................ 41 (j) Counterparts ..................................................................................................... 41 (k) Successors and Assigns ................................................................................... 41 (l) Merger of Title ................................................................................................... 41 (m) Approvals; Consents ......................................................................................... 41 (n) Time is of the Essence ...................................................................................... 41 (o) Legal Costs ....................................................................................................... 41 (p) Brokers.............................................................................................................. 42 (q) Perpetuities ....................................................................................................... 42 (r) Obligations to Defend Validity of Lease ............................................................. 42 (s) Exclusive Dealing and Non-Compete Covenants .............................................. 42 (t) Business Days .................................................................................................. 42 (u) Relationship with ICVB...................................................................................... 43 (v) Charitable Fundraisers ...................................................................................... 43 CONCESSIONAIRE AGREEMENTS............................................................................ 43 (a) Concessionaire Agreements ............................................................................. 43 (b) Specific Requirements....................................................................................... 43 (b) Subsequent Concessionaires............................................................................ 44 PROMOTER PARTICIPATION ..................................................................................... 44 RESIDENTIAL DEVELOPMENT RIGHTS .................................................................... 45 ENVIRONMENTAL MATTERS ..................................................................................... 45 (a) Environmental Investigation and Remediation................................................... 45 (b) Presence and Use of Hazardous Materials........................................................ 45
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( iii )
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(c) (d) 25. 26.
Cleanup Costs; Default, and Indemnification ..................................................... 46 Hazardous Materials ......................................................................................... 47
PUBLIC AREA PROGRAMMING FUND....................................................................... 47 BONDS AND FUTURE AMENDMENTS ....................................................................... 48
( iv )
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SECOND AMENDED AND RESTATED ENTERTAINMENT CENTER LEASE AGREEMENT THIS SECOND AMENDED AND RESTATED ENTERTAINMENT CENTER LEASE AGREEMENT (this Lease) is entered into effective as of _______________, 2010 (the Execution Date), by the City of Irving, Texas, a municipal corporation of the State of Texas and home rule city (the City), and Las Colinas Group, LP, a Texas limited partnership (the Partnership). BACKGROUND: A. The City is the owner of the fee simple estate in a tract of land located in Irving, Dallas County, Texas, more particularly described on Exhibit A attached hereto (the Site), together with all Improvements (defined below) now or hereafter located on the Site (the Site and the Improvements being collectively, the Entertainment Center). The Entertainment Center consists of the Site and the following Improvements to be constructed thereon: (a) (b) a performance hall with a seated capacity of approximately 5,200 persons, including suites and boxes (the Performance Hall); fully-equipped luxury hotel rooms, along with a lobby, reception desk, concierge and valet parking services located in the Performance Hall building (the EC Hotel); related on-site restaurants with performance spaces, if applicable (the Restaurants); a landscaped pedestrian walkway (the Walkway) connecting the Entertainment Center to the Convention Center owned by the City to the north of the Site and the on-site promenade (the Promenade) outside of the Performance Hall and adjacent to the Restaurants; an open air plaza directly connected to the Performance Hall that will be utilized for outdoor festivals, concerts, and other events (the Plaza); an approximately 1,200 space structured parking garage (the Parking Facilities) that will serve the Entertainment Center; and on-site utilities and other above-ground and under-ground infrastructure supporting the Entertainment Center and off-site infrastructure required to connect to existing City utility infrastructure (collectively, the Entertainment Center Infrastructure).
B.
(c) (d)
(e) (f) (g)
C. D.
The Partnership wants to lease the Entertainment Center from the City on the terms specified below. The City and the Partnership entered into a separate and independent Second Amended and Restated Entertainment Center Development Agreement dated of even date
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herewith (the Development Agreement), that governs the design and construction of the Entertainment Center and the rights and obligations of the parties during the Development Period (defined below). E. Notwithstanding the execution of this Lease as of the Execution Date, the City and the Partnership agree that any use pursuant to this Lease shall commence only upon satisfaction of all of the applicable contingencies set forth in the Development Agreement, including the contingencies set forth in Sections 4.1 and 4.2 of the Development Agreement (collectively, the Development Agreement Contingencies). The City, as tenant, has entered into a Parking Lease Agreement with SP Millennium Center, L.P., as landlord (the Urban Towers Parking Agreement), covering certain parking rights in the complex known as Urban Towers, 222 East Las Colinas Blvd., Irving, Texas 75039 (the Urban Towers Parking Facilities). The City will assign its rights under the Urban Towers Parking Agreement to the Partnership on the terms specified below. The City and the Partnership entered into an Entertainment Center Lease Agreement dated as of February 9, 2009, as amended and restated in that certain Amended and Restated Entertainment Center Lease Agreement dated as of June 11, 2009, as amended by that certain First Amendment to Amended and Restated Entertainment Center Lease Agreement dated as of December 3, 2009 (collectively, the Prior Lease). The City and the Partnership want to amend and replace the Prior Lease by entering into this Lease. The City proposes to issue bonds (or, at the Citys option, have a local government corporation acting on behalf of the City issue bonds) to the extent permitted by applicable law to provide funds for a portion of the Venue Project Costs as follows (collectively, the Bonds): a. EC Bonds, the payment of which will be secured on a senior basis by a pledge of revenues received by the City from Brimer HOT Revenues (defined below), refunds from the State of state sales taxes and state mixed beverage taxes from the Entertainment Center, State hotel occupancy tax from the EC Hotel, and City sales taxes and City mixed beverage taxes from the Entertainment Center (the foregoing being collectively referred to as the Tax Exempt Revenues), and Build America Bond interest rate subsidies related to the EC Bonds, and on a subordinate basis by a pledge of revenues from the Citys 7% hotel occupancy tax. b. Taxable EC Bonds, the payment of which will be secured on a senior basis by a pledge of revenues received by the City in the form of Parking Taxes and Ticket Taxes, and Fixed Rent and Additional Rent (each as defined below) payable under this Agreement (collectively, the Taxable Series Payments), and on a subordinate basis by a pledge of Tax Exempt Revenues in excess of the amounts required to be applied to the EC Bonds, as limited by the terms of the ordinance(s) authorizing the EC Bonds and/or Taxable EC Bonds. The amount of the net proceeds from the Bonds, up to a maximum amount equal to $200,000,000 less costs funded by the City, whether from Brimer HOT Revenues, Bond
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H. I.
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proceeds under Section 1.30 of the Development Agreement, or otherwise, will be referred to as the Net Bond Proceeds. The Development Agreement sets forth and contains, and the ordinance(s) governing the issuance of the Bonds may contain, other terms and conditions regarding the structure and issuance of the Bonds. AGREEMENT: 1. DEMISE; CONVEYANCE; NET LEASE (a) Entertainment Center. Upon satisfaction of all Development Agreement Contingencies, the City leases to the Partnership, and the Partnership leases from the City, the Entertainment Center, to have and to hold the Entertainment Center, together with all rights, privileges, easements, and appurtenances belonging to or in any way pertaining to the Entertainment Center, upon the terms specified herein. Urban Towers Parking Agreement. Upon or before the earlier of (i) satisfaction of all Development Agreement Contingencies or (ii) August 31, 2012, the City assigns to the Partnership, and the Partnership assumes and agrees to perform, all of the City's rights and obligations under the Urban Towers Parking Agreement effective as of the earlier of (I) the first day of the Initial Term or (II) August 31, 2012. Net Lease. (i) The Rent (defined below) payable under this Lease and all other costs related to the Partnerships use or operation of the Entertainment Center shall be absolutely net to the City except as otherwise specified herein, and the Partnership shall pay during the Lease Term, without (except as otherwise expressly set forth herein) any offset or deduction whatsoever, all such Rent and other costs; and The City shall have no responsibility whatsoever for the construction, maintenance, operation, repair, or replacement of the Entertainment Center or any portion thereof (except as may be otherwise set forth herein or in the Development Agreement).
(b)
(c)
(ii)
2.
LEASE TERM (a) Development Period. The Development Period is the time period commencing on the date that the Bonds are issued by the City (the Bond Closing Date) and continuing through the last day of the calendar month in which a notice of completion of construction of the Improvements is recorded by the Partnership in the Official Public Records of Dallas County, Texas. Initial Term. The Initial Term of this Lease commences on the first day of the first full calendar month after the calendar month in which a notice of completion of construction of the Improvements is recorded by the Partnership in the Official Public Records of Dallas County, Texas, and continues for twenty-five (25) years thereafter. The Partnership will record the notice of completion of construction of
(b)
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the Improvements promptly after receipt by the Partnership of the final certificate of occupancy for the Entertainment Center from the City. (c) Renewal Terms. As an integral part of the consideration to the Partnership for its execution of this Lease, the City grants to the Partnership three (3) separate and successive options to extend the term of this Lease beyond the Initial Term for a period of twenty-five (25) years in each instance (each a Renewal Term), upon the same terms as the Initial Term except as specified to the contrary herein (including the changes to Fixed Rent during the second and third Renewal Term as set forth in Section 3(a)). Each successive Renewal Term will be deemed exercised by the Partnership unless the Partnership gives notice to the City at least six (6) months prior to the end of the Initial Term, or then effective Renewal Term, as the case may be, that the Partnership elects not to exercise the next Renewal Term; provided, however, so long as the Bonds issued in whole or in part pursuant to Chapter 334, Local Government Code in connection with the Entertainment Center, are outstanding, this Lease will automatically renew on a year-to-year basis until all obligations related to such bonds are paid in full. The parties acknowledge that, to the extent necessary to facilitate the financing of the construction of the Entertainment Center, the foregoing provisions regarding Renewal Terms may be modified by mutual agreement in each partys sole discretion. Lease Term. The Development Period, the Initial Term, and any Renewal Terms are collectively referred to as the Lease Term.
(d) 3.
RENTAL (a) Fixed Rent. Commencing on the first day of the Initial Term (the Fixed Rent Commencement Date) and continuing on the first day of each calendar month thereafter through the remainder of the Initial Term and throughout the first Renewal Term, if any, the Partnership shall pay to the City Fixed Rent in the amount of One Million Dollars ($1,000,000) per calendar year, payable in 12 monthly payments in the amount of Eighty-Three Thousand Three Hundred Thirty-Three and 33/100 Dollars ($83,333.33) each. Fixed Rent during the second and third Renewal Terms shall be determined as set forth on Exhibit D. Fixed Rent for any partial month will be prorated. Additional Rent. In addition to the Fixed Rent, on the fifteenth day of February in each calendar year commencing in the year after the year in which the Fixed Rent Commencement Date occurs, the Partnership shall pay to the City from revenues received by the Partnership during each such calendar year Additional Rent equal to the sum of: (i) The greater of $250,000 or two percent (2%) of the Partnership's gross revenues derived from the sum of (A) admission fees from all Festivals (defined below) during the prior calendar year plus (B) vendor booth fees (or comparable fees derived from making space available to vendors within the Festival) plus (C) sponsorship fees (net of any sponsorship payments reasonably allocated toward suites, tickets and other amenities and net of any Net Sponsorship Commissions (defined below)), but excluding (I) sales and Brimer taxes and (II) food and beverage revenues.
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(b)
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The term Festival means an event at the Entertainment Center that occurs on any part of at least two (2) consecutive days (but an event that starts on one day and finishes by 3:00 a.m. on the next day only counts as a one-day event) for which a customer admission fee is charged and that covers the Plaza, and the Promenade and/or all or any portion of the Walkway (and which may or may not include other portions of the Entertainment Center). An event that involves only the Performance Hall and the Plaza, but does not include the Promenade or any other portion of the Walkway, is not a Festival even if an admission fee is charged for the event. The term Net Sponsorship Commissions shall mean any commission, not to exceed 5%, paid during the applicable period to the concert promoter contemplated under Section 22 or to a third party that is not affiliated with either the Partnership or Concessionaire (defined in Section 6(d)(iii)(C)) as a commission for obtaining Festival sponsorships or for the sale of naming rights of the Entertainment Center, as applicable; provided that no portion of any such sponsorship commission other than as expressly provided in the foregoing sentence shall be included in the term Net Sponsorship Commission or be used to net against any Additional Rent calculation herein; and (ii) The greater of $250,000 or ten percent (10%) of the Partnership's revenues from (A) the sale of naming rights for the Entertainment Center as a whole, or (B) if the naming rights to the Entertainment Center as a whole are not sold, the sale of naming rights for the Performance Hall, during the prior calendar year (net of any Net Sponsorship Commissions). Except as set forth above with respect to the sale of the naming of the Performance Hall, no Additional Rent under this Section 3(b)(ii) shall accrue based on the sale of naming rights related only to portions of the Entertainment Center. The $250,000 minimum payments for each of the above categories of Additional Rent will be prorated for each partial calendar year.
(iii) (c)
Parking and Ticket Taxes; Taxable Series Payments. In addition to the Fixed Rent and the Additional Rent, commencing on the Fixed Rent Commencement Date and continuing as long and to the extent required in connection with the Bonds and the City ordinance(s) levying such taxes in accordance with the Act, the Partnership shall pay to the City a Parking Tax equal to $3.00 on each motor vehicle parked in the Parking Facilities and the Urban Towers Parking Facilities (but only during such periods as the Urban Towers Parking Facilities are available for use for the Entertainment Center in accordance with the Urban Tower Parking Agreement in connection with the Entertainment Center, and a Ticket Tax on each event held at the Entertainment Center equal to 10% of the price of the ticket sold as admission, in both instances as and to the extent authorized by Subchapter G of the Act (defined in Section 8(a)). The Parking Taxes and Ticket Taxes payable by the Partnership are referred to collectively as the Parking and Ticket Payments. Any Parking and Ticket Payments will be payable in accordance with a payment schedule to be provided to the Partnership by the City.
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(d)
Rent. The term Rent means the Fixed Rent, any Additional Rent, any Parking and Ticket Payments, and all other sums payable by the Partnership to the City under this Lease. No Rent is payable by the Partnership during the Development Period. Notwithstanding anything to the contrary herein, at the Citys election in its sole discretion any portion of the Rent may be decreased for such periods as the City determines in order to comply with any covenants made by the City in connection with the EC Bonds. Utilities. The Partnership is responsible for obtaining and paying for all utilities used in connection with the operation of the Entertainment Center. [Intentionally deleted.] City Audit Rights. If the City disagrees with the Partnerships calculation of any Additional Rent payment, then the City may request (by notice to the Partnership) that an audit be conducted by an independent auditor selected by the City. The audit must occur during normal business hours. The auditor must have at least five (5) years experience auditing charges under commercial/retail leases and may not be paid on a contingent basis. The sole written result of the audit will be a statement whether the Additional Rent has been overpaid, underpaid, or paid correctly, and the amount of any alleged overpayment or underpayment. The auditor shall provide the City and the Partnership with a written certification of the result of such audit but shall not provide to the City or the Partnership a copy of, or otherwise disclose to the public, any agreement related to the Additional Rent, or any of the Partnerships books and records with respect to the Additional Rent, or any of the contents of such documents. The results of the audit shall be deemed final, absent manifest error. If the audit reveals any overpayment or underpayment of Additional Rent, then the City and the Partnership, as the case may be, shall reimburse the other party for the amount due, or, if the City is unable to reimburse the Partnership for any overpayment from lawfully available excess Brimer HOT Revenues (defined below) (subject to, without limitation, the pledge of such Brimer HOT Revenues to the repayment of the Bonds as set forth in the City ordinance authorizing the Bonds), then the Partnership will be entitled to a credit in the amount due to the Partnership against the next succeeding Additional Rent payment(s) until such credit is exhausted. The costs of any audit shall be paid by the City unless the audit reveals any underpayments in excess of five percent (5%) of the Additional Rent due to the City on an aggregate basis, in which event the cost of the audit will be paid by the Partnership. Partnership Audit Rights. The Partnership shall have the right to audit, upon reasonable notice and, at its own expense, all of the Citys expenditures and financial records related to hotel occupancy tax revenues collected pursuant to Chapter 334, Texas Local Government Code, as amended (collectively, Brimer HOT Revenues), in excess of the amount of such Revenues required to pay debt service on the Bonds, if applicable. Upon written request by the Partnership, the City shall give the Partnership access to all records controlled by, or in the direct or indirect possession of the City (other than records subject to legitimate claims of attorney-client privilege) relating to Brimer HOT Revenues, and permit the Partnership to review and copy such records in connection with conducting a reasonable audit of such accounts.
(e) (f) (g)
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(i)
Security Deposit. The funds deposited and held by the City under this Section 3(i) are referred to herein as the Security Deposit, and will be held by the City in accordance with this Section 3(i) to secure the Partnerships performance under this Lease. On or before each of the first, second and third anniversaries of the first day of the Initial Term, the Partnership shall pay to the City the amount of $500,000. Thereafter, the Partnership shall deposit funds from time to time as necessary to maintain the Security Deposit in a minimum amount equal to $1,500,000. The Security Deposit is not an advance payment of Fixed Rent or Additional Rent, or a measure of limit of the Citys damages upon an Event of Default. The City may, from time to time following an Event of Default and without prejudice to any other remedy, use all or a part of the Security Deposit to perform any obligation the Partnership fails to perform hereunder (as such use may be limited by any covenants made by the City in connection with the EC Bonds). To the extent that following any such application of the Security Deposit the balance of the Security Deposit is less than $1,500,000, the Partnership shall pay to the City on demand such amount as is necessary to restore the Security Deposit to the minimum amount of $1,500,000. Provided no Event of Default has occurred and is continuing, the City shall, within 30 days after the expiration or termination of the Lease Term and the Partnerships surrender of the Entertainment Center in compliance with the provisions of this Lease, return to the Partnership the portion of the Security Deposit which was not applied to satisfy the Partnerships obligations. The Security Deposit shall be held in account controlled by the City. Any interest earned on the Security Deposit shall be retained in such account and shall be held in addition to, but may be used to satisfy, the minimum amounts of the Security Deposit required herein; any such interest shall be reported under the Partnerships federal tax identification number. The rights and obligations of the City and the Partnership under this Section 3(i) are subject to any other requirements and conditions imposed by Applicable Laws (defined below) related to the Security Deposit.
4.
USE OF ENTERTAINMENT CENTER (a) Use. The Partnership may use the Entertainment Center for the construction and operation of the Performance Hall, the Restaurants, the EC Hotel, the Walkway, the Plaza, the Promenade, the Parking Facilities, and the Entertainment Center Infrastructure, repairs and renovations to and replacements of the Entertainment Center, and any other related lawful use, including the operation of the Entertainment Center as a public multi-venue, multi-use entertainment venue with restaurants, hotel, performance suites, hospitality suites, retail, and motion picture theater. Prohibited Uses. The Partnership may not use the Entertainment Center for any use prohibited by the Act or other Applicable Laws or expressly prohibited under this Lease or in a manner that would render the insurance thereon void. Compliance with Laws. The Partnership shall, and shall cause its sublessees to, comply with all Applicable Laws. The Partnership may contest the enforcement or validity of any Applicable Laws. If requested by the Partnership, the City may join (but has no obligation to join) the Partnership as a party to any such contest at no out-of-pocket cost to the City.
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(b)
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(d)
Programming. The Partnership shall book and stage a minimum of two hundred (200) performance days per year in the Performance Hall, including any programming booked by and through the Irving Convention and Visitors Bureau (ICVB) for Thursday through Monday nights. Naming Rights. During the Lease Term, the Partnership has the exclusive authority, control, and rights in selecting the name of the Entertainment Center as a whole or for any portion thereof, but neither the Entertainment Center nor any portion thereof may be named for any entity whose business is a sexually oriented business and the Entertainment Center as a whole may not be named for any entity whose business is the manufacture, sale, or distribution of tobacco or alcohol products. Operation of the Entertainment Center. The Partnership shall manage and operate the Entertainment Center, or cause the Entertainment Center to be managed and operated, as a first class, multi-use, multi-venue public entertainment venue with restaurants and a hotel. Without limiting the generality of the foregoing, the Partnership shall, or shall cause its sublessee(s) to: (i) operate and maintain the Entertainment Center in accordance with Applicable Laws and in a good, safe, attractive, sanitary order and repair consistent with the industry standards and practices for a first-class multi-use, multi-venue public entertainment venue with restaurants; maintain all necessary licenses, permits and authorizations for the operation of the Entertainment Center; maintain, repair and, as needed, replace (including regular periodic inspection and testing) all heating, ventilation and cooling, electrical, plumbing, life safety and other systems within the Entertainment Center; maintain, repair and, as needed, replace the roof, foundation and other structural elements of the Entertainment Center; establish, coordinate and administer commercially reasonable preventative maintenance programs for the Entertainment Center and its constituent systems and elements; provide sufficient wait and other service staff, maintenance, cleaning, and other personnel necessary for the efficient and first-class operation of the Entertainment Center with Restaurants; subject to Section 14(h)(iii), use commercially reasonable efforts not to book artists and performances in the Entertainment Center without first taking into account consumer preferences of the local market and the ticket buying public; commence, defend and settle in good faith, at no out-of-pocket cost to the City, such legal actions or proceedings concerning the management and operation of the Entertainment Center as are necessary or required in the opinion of the Partnership;
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(f)
(ii) (iii)
(iv) (v)
(vi)
(vii)
(viii)
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(ix)
issue parking tickets and account for all cars parking at the Entertainment Center (including those parking in the Urban Towers Parking Facilities in connection with the Entertainment Center during periods when the Urban Towers Parking Facilities are available for use for the Entertainment Center under the Urban Tower Parking Agreement) and timely pay to the City all Parking Taxes due thereon in accordance with Section 3(c); and require that the operator(s) of all buildings that are a part of the Entertainment Center but that are not part of the Performance Hall building, specifically as shown on Exhibit C attached hereto (collectively, the 60-40 Restaurants and individually, a 60-40 Restaurant); (A) operate the 60-40 Restaurants so that the gross sales from food on an annual basis from each 60-40 Restaurant represents at least sixty percent (60%) of total sales of food and alcoholic beverages (alcohol or any beverage containing more than onehalf of one percent (0.005%) of alcohol by volume, which is capable of use for beverage purposes, either alone or when diluted) from that 60-40 Restaurant (this requirement being referred to as the 60% Requirement); no later than the thirtieth (30th) day after each calendar quarter, provide to the Partnership and the City Secretary of the City an affidavit on an officially approved form provided by the City Secretary for each 60-40 Restaurant that reflects gross sales for the preceding three (3) calendar months and the preceding twelve (12) calendar month period (or since each 60-40 Restaurant opened for business, whichever is shorter), breaking down the sales between the sale of food and the sale of alcoholic beverages (each a Quarterly Gross Sales Report); and keep complete and accurate books and records concerning the sales of food and alcoholic beverages from each 60-40 Restaurant and allow the Partnership and the City and their respective designees, at any time after at least five (5) days advance notice, to inspect, audit, and copy those books and records at the home office(s) of the operator(s). Any audit must be conducted diligently and so as to minimize interference with the operations of the operator(s).
(x)
(B)
(C)
(g)
Free Music, Promotions, and Giveaways. The Partnership shall provide an aggregate of at least $4,000,000 (increasing 2% per calendar year beginning in the second calendar year of the Initial Term) of free music, giveaways and promotions at the Entertainment Center in each calendar year during the Initial Term and any Renewal Terms (prorated for partial calendar years). The $4,000,000 will include the following: (i) all costs directly related to the promotion and production of free music at the Entertainment Center; and
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(ii)
the face value and related direct costs for giveaways and other promotions at the Entertainment Center;
but any overhead costs of the Partnership will be excluded. Not later than March 1st of each year, the Partnership shall submit to the City written certification of the Partnerships compliance with the provisions of this Section 4(d), together with such back-up documentation reasonably evidencing the same. If the City disagrees with the Partnerships calculation of the Partnerships expenditures under this Section 4(g), then the City may request (by notice to the Partnership) that an audit be conducted by an independent auditor selected by the City. The audit must occur during normal business hours. The auditor must have at least five (5) years experience auditing expenses of the type specified above and may not be paid on a contingent basis. The sole written result of the audit will be a statement whether the Partnership has spent the minimum amount required on the type of expenses referenced in this Section 4(g) and, if not, the amount of any underpayment. The auditor shall provide the City and the Partnership with a written certification of the result of such audit but shall not provide to the City or the Partnership a copy of, or otherwise disclose to the public, any agreement related to the calculation under this Section 4(g), or any of the Partnerships books and records with respect to the calculation under this Section 4(g), or any of the contents of such documents. The results of the audit shall be deemed final, absent manifest error. If the audit reveals any underpayment of the calculation under this Section 4(g), then the Partnership shall deposit into the Public Area Programming Fund an amount equal to one hundred ten percent (110%) of the amount of such shortfall; such payment shall be made within 20 days after the Partnerships receipt of the auditors written certification as set forth above. The costs of any audit shall be paid by the City unless the audit reveals any underpayments in excess of five percent (5%) of the amount required to be spent under this Section 4(g), in which event the cost of the audit will be paid by the Partnership. 5. JOINT OPERATION AND BOOKING AGREEMENT It is the parties' intent that the Convention Center and the Entertainment Center be jointly operated as one City project. The City and the Partnership shall enter into an agreement regarding the relationship between the Convention Center and the Entertainment Center (the Booking Agreement) on terms mutually approved by the City and the Partnership; provided that the failure of any party to enter into a Booking Agreement shall not be a default by the Partnership hereunder so long as the City and the ICVB are afforded the rights set forth below. The Booking Agreement shall contain the following provisions: (a) EC Hotel and Daytime Advanced Booking. For dates that are twelve (12) months in advance of the date of booking and continuing on a rolling twelve (12) month basis, the City and ICVB have the exclusive first right to book the EC Hotel and events on open dates at the Performance Hall between the hours of 7:00 a.m. and 5:00 p.m., Irving, Texas time, at agreed upon rates as specified in the Booking Agreement. The City and ICVB shall have the right to book the EC Hotel and programming on the same terms and rates during such daytime hours within any rolling twelve (12) month period, subject to the then-current availability of the Entertainment Center.
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(b)
Nighttime Use. The City, ICVB, or any customer of the ICVB shall have a right to buy a portion or all of the tickets for an event at the Entertainment Center, subject to the then-current availability of tickets to such event; provided that neither the City nor ICVB may resell, and the City and ICVB shall use commercially reasonable efforts to prohibit any customer of ICVB from reselling, such tickets for greater than such tickets face value. Any purchase of at least fifty percent (50%) of the total number of tickets for a performance shall be subject to a reasonable minimum charge for food and beverage. If requested by the City, ICVB and/or a customer of ICVB, the Partnership shall cooperate with such party or parties to book a private event and/or an event with a performer selected by such party, subject to the then-current availability of the Entertainment Center and subject to compatibility with the Partnerships strategic programming plan for the Entertainment Center. City Suites. The City shall retain the right to exclusive use by the City or ICVB of one of the three (3) largest box suites in the Performance Hall and a hospitality suite within the Entertainment Center, the location of such suites to be mutually determined by the City and the Partnership. In addition, the Partnership shall provide the tickets in connection with such exclusive use at no cost to the City and a food and beverage credit to the City for its use of the box suite in the maximum annual amount of $150,000, such maximum amount to increase by two percent (2%) per annum. Cross-Promotion. The City, the ICVB, and the Partnership shall cooperate to develop complementary and cross-promotional programming and marketing opportunities related to, by way of example and not limitation, ticket packages (including parking), promotion of hotels located in the City of Irving, and complementary programming at the Entertainment Center with events hosted at the Convention Center.
(c)
(d)
6.
IMPROVEMENTS (a) Plan Approval. The City and the Partnership approved the plans and specifications, if any, listed on Exhibit B attached hereto (as modified from time to time, the Approved Plans), for the improvements (the Improvements) to be constructed on the Site and leased to the Partnership as part of the Entertainment Center. Any material changes to the Approved Plans, or any plans and specifications for any Improvements other than the Approved Plans, are subject to approval by the City and the Partnership. Alterations. After completion of construction of the Entertainment Center under the Development Agreement, the Partnership may, at any time and from time to time and at no out-of-pocket cost to the City, alter structurally or otherwise remodel, reconstruct, and add to the Entertainment Center, or any part thereof, subject to approval by the City of any structural alterations to the Entertainment Center, and subject to Sections 6(g)(ii) and 6(k). Liens. The Partnership shall protect, indemnify, defend, and hold harmless the City from and against all bills, claims, liens, and rights to liens for labor and materials and architects', contractors' and subcontractors' claims related to the construction and completion of any alterations or additions to the Improvements.
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This indemnity provision shall survive termination or expiration of this Lease or the Partnerships right of possession hereunder. Upon bonding over any such liens, providing other adequate security, or establishing sufficient reserves (to be held in the Maintenance and Operations Fund, in each case acceptable to the City, the Partnership may contest any and all bills, fees, and claims, being obligated to pay the contested item only if and when liability is established against the Partnership or against the Entertainment Center, but in no event later than such time as necessary to prevent foreclosure by the holder of the lien. (d) Title to the Entertainment Center. (i) Site and Improvements. The City will own the Entertainment Center and all Improvements and additions and alterations thereto existing or to be constructed thereon, subject to Section 6(d)(ii). Personal Property. All items of personal property (if any) that are purchased, in whole or in part, with the Net Bond Proceeds (defined in the Development Agreement) and all replacements thereof (regardless of the source of funds therefor) will be owned by the City in accordance with the terms hereof, including any removable floor seating for the Performance Hall. Items of personal property purchased with Partnership funds that become fixtures (other than trade fixtures) or otherwise are attached to the improvements in the Entertainment Center and/or that are reasonably necessary to the operation of any such improvement (for example, elevators, escalators, HVAC systems, security equipment, sound and lighting equipment, acoustic materials, curtains, stage rigging and fixed audience seats at the Performance Hall) will be owned by the City in accordance with the terms hereof; provided, however, the foregoing provision may be limited by the covenants made by the City in connection with the EC Bonds. The Partnership and its sublessees may place or install in or on the Entertainment Center other items of personal property (for example, furniture (other than fixed audience seats at the Performance Hall), trade fixtures (including kitchen equipment that constitutes trade fixtures) and office equipment) as the Partnership deems desirable for its operation (such personal property and trade fixtures are referred to herein as the Partnership Personal Property), and the Partnership and any Concessionaire may finance the acquisition of such Partnership Personal Property in accordance with Section 13(i). Such items of Partnership Personal Property placed by the Partnership and its sublessees on or in the Entertainment Center will not become part of the real property, even if nailed, screwed, or otherwise fastened to the improvements or buildings, but will retain their status as personal property. Such Partnership Personal Property may be removed by the Partnership or its sublessees at any time, so long as the Partnership is not in default under this Lease and so long as any damage occasioned by such removal is thereupon repaired. Likewise, such items of personal property purchased by performing arts groups or private citizens (for example and without limitation, musical instruments, sets, music, recordings and computers) will not be owned by the City.
(ii)
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(iii)
Intellectual Property. (A) Intellectual Property means all intellectual property rights of any kind and reasonably related rights with respect to the Entertainment Center (e.g., sublicensable license rights to a third partys intellectual property) including patent rights (whether design or utility), copyrights, trademark and service mark rights, trade dress rights, utility model rights, moral (personal) rights, rights of publicity, trade secret rights, industrial design rights, and web site and internet domain rights, excluding rights related to the filming of productions and performances at the Entertainment Center and the subsequent replay and distribution thereof (the excluded rights being collectively the Content Rights). The Partnership hereby irrevocably assigns, free and clear of all liens and encumbrances, all Intellectual Property rights that it has or may have that are not otherwise conveyed by other instrument or party to the City other than the Content Rights. The City will own all Intellectual Property related to the plans and specifications for the construction of the Entertainment Center (together with any other Intellectual Property assigned to the City by the Partnership hereunder, the City Intellectual Property Rights). The Partnership represents and warrants to the City that it has the right and authority to transfer to the City all Intellectual Property that it has or may have, in each case to the extent such Intellectual Property is reasonably necessary for the City's ownership, operation and full enjoyment of the Entertainment Center and that all such Intellectual Property assigned by the Partnership to the City is free and clear of all liens and encumbrances. The City assigns to the Partnership an irrevocable license during the term of the Lease to use all City Intellectual Property Rights in connection with the construction, repair, replacement, remodeling, renovation, and physical operation of the Entertainment Center. The City and the Partnership acknowledge that BB Concepts, LLC (Concepts) will own all Intellectual Property related to the Entertainment Center other than the City Intellectual Property Rights and the Content Rights (collectively, the Concepts Intellectual Property Rights), and that Concepts has previously granted a perpetual license of such Concepts Intellectual Property Rights to the City pursuant to that certain Intellectual Property License Agreement dated as of March 25, 2009 (the IP License Agreement). Upon the termination of the Partnerships agreement with Concepts, whether as a result of a termination of this Agreement or otherwise, Concepts shall assign the Concepts Intellectual Property Rights to the City solely for use in connection with the operation of the Entertainment Center. The term Concessionaire means any of Concepts (i.e., the entity responsible for developing concepts and intellectual property),
(B)
(C)
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B Concessionaire - Las Colinas, LLC (i.e., the food and beverage operations concessionaire), B Retail, LLC (i.e., the retail entity), and Blue Marble 360, LLC (i.e., the content entity), either individually or collectively, together with any of their respective affiliates and their respective successors, assigns, and substitute and replacement entities. An affiliate of an entity is an entity that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, a specified entity. For purposes of the prior sentence, control means the power to direct or cause the direction of the management and policies of the relevant entity, whether through the ownership of voting securities, by contract, or otherwise. (D) The rights granted in Subsection 6(d)(iii)(B) will at all times be subject to, and the Partnership will be bound by, the restrictions and licenses contained in the agreements the City has with the creator, licensor or transferor of the City Intellectual Property Rights, to the extent disclosed to the Partnership in advance and in writing.
(e)
Surrender. At the natural expiration of this Lease, the Partnership shall, and shall cause its sublessees, to surrender to the City possession of the Entertainment Center with all the Improvements thereon (excluding all furniture, furnishings, trade fixtures, equipment, and other personal property therein owned or paid for by the Partnership or its sublessees) in good condition and repair, ordinary wear and tear and damage by casualty or Taking excepted. If this Lease or the Partnerships right to possession of the Entertainment Center is terminated following an Event of Default by the Partnership, the Partnership shall surrender possession of the Entertainment Center to the City, a Partnership Mortgagee, or one of their respective designees in accordance with this Agreement, but subject to the rights of any sublessee. Casualty Damage. (i) Subject to Section 6(f)(ii), if the Entertainment Center is wholly or partially destroyed by fire or other casualty, then the Partnership shall promptly repair and restore the damage to the condition existing prior to the damage, subject to receipt by the Partnership of insurance proceeds from special form property insurance sufficient to cover the costs of the repair and restoration and receipt of building permits and other necessary approvals from Governmental Authorities. The Partnership shall file all claims and negotiate all settlements with insurance carriers related to the damage. The Partnership may make alterations and additions to the Improvements in connection with its repair and restoration, subject to approval by the City of any structural changes. If the Entertainment Center is damaged by fire or other casualty to the extent of fifty percent (50%) or more of the Entertainment Center being rendered untenantable at any time or twenty five percent (25%) or more of the Improvements being rendered untenantable during the last three (3) years of any Renewal Term, then the Partnership shall not be required
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to repair and restore the Entertainment Center, and the Partnership may terminate this Lease by giving notice of termination to the City if the Partnership elects not to repair and restore the Entertainment Center. (iii) If there is any casualty damage to the Entertainment Center and: (A) this Lease is not terminated, then: (1) Rent will abate proportionately on the portion of the Entertainment Center rendered untenantable from the date of the casualty damage until repair and restoration thereof is completed; and the Partnership may elect to extend the Initial Term or then current Renewal Term, as applicable, for a time period equal to the time period from the date of the casualty damage until repair and restoration of the Entertainment Center is completed (but in no event for a time period longer than five (5) years), in which event the commencement dates for any subsequent Renewal Terms will be extended by the same time period; and
(2)
(B)
this Lease is terminated, then the Rent on the untenantable portion of the Entertainment Center will abate as provided in Subsection 6(f)(iii)(A) and Rent on the remainder of the Entertainment Center will cease as of the date of termination.
(iv)
If the Partnership terminates this Lease under clause (ii) above and the City does not elect to rebuild the Entertainment Center, then: (A) the Partnership shall promptly cause the remainder of the Improvements to be demolished and removed from the Site. The costs of the demolition and removal will be paid first out of the available portion of the property insurance proceeds allocable to the City as specified below, but the Partnership's demolition and removal obligations will not be limited to the amount of insurance proceeds received; all property insurance proceeds allocable to the Improvements will be paid to the City to be used: (1) first, to be made available to the Partnership for the payment of demolition and removal of the Entertainment Center pursuant to Section 6(f)(iv)(A); and then, as the City may determine; and
(B)
(2) (C)
all property insurance proceeds allocable to furniture, furnishings, trade fixtures, equipment, or other personal property installed in the Entertainment Center and owned by the Partnership or any
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sublessee will be paid to the Partnership and the applicable sublessees as their interests appear. (v) If the Partnership terminates this Lease under clause (ii) above and the City elects to rebuild the Entertainment Center, then (A) the Partnership shall be relieved of any obligation to demolish and remove the Entertainment Center, and all property insurance proceeds allocable to the Improvements will be paid to the City; and all property insurance proceeds allocable to furniture, furnishings, trade fixtures, equipment, or other personal property installed in the Entertainment Center and owned by the Partnership or any sublessee will be paid to the Partnership and the applicable sublessees as their interests appear.
(B)
(g)
Maintenance of the Improvements; Capital Improvements Reserve; Maintenance and Operations Fund. (i) Maintenance. Subject to Sections 6(f) and 9, the Partnership shall keep and maintain, or cause to be kept and maintained, the Improvements in accordance with Section 4(f) subject to ordinary wear and tear. Capital Improvements Reserve. All Brimer HOT Revenues received from time to time by the City in excess of the required debt service on the Bonds, and subject to the requirements of the ordinance(s) governing the Bonds, as finally approved, will be used to fund a Capital Improvements Reserve in an amount equal to $1,050,000 per calendar year (increasing 1.5% per calendar year commencing in the second calendar year of the Initial Term) or any other amount mutually approved by the City and the Partnership, and then into redemption account(s) for the EC Bonds in accordance with the ordinance(s) governing the Bonds. So long as any of the Bonds are outstanding, the Capital Improvements Reserve shall be held by the Trustee of the Bonds (the Bond Trustee); thereafter, Capital Improvements Reserve will be held in a bank account selected by the City on which the City will have signatory authority. If the Partnership proposes that any amounts be funded from the Capital Improvements Reserve for capital improvements to the Entertainment Center during any fiscal year of the City, then the Partnership must provide the City with plans and specifications and a capital budget for the proposed capital improvements no later than July 15 in each calendar year prior to the construction of such capital improvements. If the City receives a timely request for capital improvements funding, then the City shall either approve the request or submit detailed objections to the plans and specifications or the capital budget to the Partnership on or prior to August 15. If the City timely gives notice of detailed objections, then the City and the Partnership will cooperate in good faith to resolve the City's objections. Once the City approves the request for capital improvements, the City will notify the Bond Trustee of the Citys approval if the Bond Trustee is holding the Capital Improvements Reserve. Then, the
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Partnership will proceed with the construction of the capital improvements and the City will fund, or cooperate with the Partnerships request for the Bond Trustee to fund, the costs of the capital improvements as provided in Section 6(k). Upon the expiration or earlier termination of this Lease or the removal of the Partnership as the lessee hereunder, the funds in the Capital Improvements Reserve will be paid to the City or be handled in such other manner as the City designates. (iii) Maintenance and Operations Fund. While the Taxable EC Bonds are outstanding and subject to the requirements of the ordinance(s) governing the Taxable EC Bonds, as finally approved, any Taxable Series Payments in excess of the amount necessary to pay required debt service on the Taxable EC Bonds, subject to the requirements of the ordinance(s) governing the Taxable EC Bonds, as finally approved, will be deposited by the City in the following order and amounts: (A) first into the Maintenance and Operations Fund until the amount in the Maintenance and Operations Fund equals $480,000 per calendar year (increasing 1.5% per calendar year commencing in the second calendar year of the Initial Term) or any other amount mutually approved by the City and the Partnership (provided that if that the Taxable Series Payments are not sufficient to fully fund such amounts in this Section 6(g)(iii)(A), surplus Tax Exempt Revenues, to the extent available and subject to the requirements of the ordinance(s) governing the Bonds, shall be deposited up to an amount that fully funds the amounts set forth in this Section 6(g)(iii)(A)); then into redemption account(s) for the Taxable Bonds up to an amount equal to $3,000,000 per calendar year; then, commencing in the 11th full calendar year of the Initial Term, up to $1,500,000 (as may be limited by any covenants made by the City in connection with the EC Bonds) into the Citys general fund; then into the Public Area Programming Fund (defined in Section 25) up to $1,000,000 per calendar year (increasing 2% per calendar year commencing in the second calendar year of the Initial Term); and finally into the Maintenance and Operations Fund.
(B) (C)
(D)
(E)
So long as any of the Bonds are outstanding, the Maintenance and Operations Fund shall be held by the Bond Trustee; thereafter, Maintenance and Operations Fund will be held in a bank account selected by the Partnership and approved by the City on which the Partnership will have signatory authority. Absent approval from the City, the Partnership may not use any funds from the Maintenance and Operations Fund for any purpose other than expenditures for the maintenance, repair, replacement and operation of the Entertainment Center
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(excluding any general overhead and administrative expenditures), as defined under Treasury Regulation Section 1.141-4(c)(2)(i)(C). Expenditures from the Maintenance and Operations Fund will not include expenditures that add to the value, or substantially prolong the useful life, of the Entertainment Center (i.e., capital expenditures). Funds in the Maintenance and Operations Fund shall be used for maintenance and operating expenses of the Entertainment Center, as approved by the City and the Partnership. On or before the last day of each calendar year, the Partnership will provide its maintenance and operations budget estimates for the following calendar year to the City, which budget shall include aggregate expenditures contemplated in this paragraph in an amount not less than the amount of funds then currently held in the Operating and Maintenance Fund; then during such following calendar year, the Partnership shall incur and pay for maintenance and operating expenditures equal or greater to such budgeted estimates (provided, however, nothing in this sentence shall limit the Partnerships maintenance and obligations under this Agreement, including without limitation Section 4(f)). While the Maintenance and Operations Fund is held by the Bond Trustee, the Partnership shall submit draws to the City for payments from the Maintenance and Operations Fund to cover maintenance and operating expenses of the Entertainment Center, and the City will notify the Bond Trustee of the Citys approval of such submission and thereafter cooperate with the Partnerships request for the Bond Trustee to fund the draws to the Partnership. Upon the expiration or earlier termination of this Lease or the removal of the Partnership as the lessee hereunder, the funds in the Maintenance and Operations Fund will be paid to the City or be handled in such other manner as the City designates (in any event, in such a manner as may be limited by any covenants made by the City in connection with the EC Bonds). (h) Waiver of Fees. The City waives all permit, license, inspection, impact, tap, and other fees payable to the City in connection with the design, construction, repair, renovation, replacement, and operation of the Entertainment Center. City Consents. During the term of this Lease, the City Manager of the City or such City Managers designee has full authority to administer this Lease on behalf of the City. The Partnership is entitled to rely on the authority of the City Manager for such purposes under this Lease. Warranties. All rights under construction warranties related to the construction, renovation, or replacement of the Entertainment Center will be assigned to the City as owner of the Entertainment Center but will be administered by the Partnership on behalf of the City; provided, however, that any net funds received by the Partnership after deduction of expenses by the parties in settlement or compromise of, or otherwise resulting from, rights associated with any of such warranties will promptly be paid by the Partnership to repair, replace or correct any properties or facilities of the Entertainment Center to conform to approved plans and specifications. Any excess of such funds will be deposited in the Capital Improvements Reserve. The City shall take all commercially reasonable steps to facilitate the Partnerships administration of the warranties.
(i)
(j)
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(k)
Payment of Capital Improvements Costs. If the City approves a request from the Partnership related to capital improvements under Section 6(g)(ii), then the City shall disburse, or notify the Bond Trustee of the Citys approval of such request and thereafter cooperate with the Partnerships request for the Bond Trustee to disburse, funds from the Capital Improvements Reserve to pay the costs of such capital improvements, provided that a Payment Certificate (defined below) authorizing such payment is duly completed in the manner described in Section 6(k)(i). (i) Payment Certificate shall mean a written certificate in the form of AIA G702 and G703 (or such other form as is reasonably acceptable to the City and the Partnership) in each case prepared by the Partnership, a copy of which is provided to the City, that: (A) (I) reasonably identifies and represents that the identified capital improvements costs are due and owing and authorized to be paid pursuant to such Payment Certificate and (II) certifies that the amounts payable do not include contract retentions (other than those that are due); has attached to it a copy of invoice(s) relating to such capital improvements costs that reasonably identifies the payee (or payees), the goods, services, and materials provided by such payee (or payees) and the total amount due and owing with respect to such goods, services, and materials; and has been executed by the Partnership or its designee to certify that the fees, costs, expenses, and other charges reflected on the Payment Certificate constitute capital improvements costs and are due and owing.
(B)
(C)
(ii)
If a Payment Certificate is completed and executed in accordance with Section 6(k)(i) above and is submitted to the City, then the City shall promptly, and in no event later than ten (10) business days after receipt of the Payment Certificate by the City, either note the Citys approval of payment from the Capital Improvements Reserve and return it to the Partnership or, if the City questions the correctness of the Payment Certificate, deliver a detailed notice to the Partnership specifying its objections. If the City timely gives notice of its disapproval, then payment with respect to disputed portion(s) of the Payment Certificate will not be made until the Partnership and the City jointly settle such dispute. The City and the Partnership shall meet promptly and cooperate in good faith to resolve any such disputes as expeditiously as possible. Within two (2) business days after the City approves each Payment Certificate, the City shall wire transfer, or notify the Bond Trustee of the Citys approval of such Payment Certificate and thereafter cooperate with the Partnerships request for the Bond Trustee to wire transfer, the amount requested in the Payment Certificate (or the undisputed portions thereof if only a portion of the Payment Certificate is disputed) to the Partnership from the Capital Improvements Reserve in accordance with wire transfer instructions provided by the Partnership.
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(l)
Parking Rent and Insurance Reserves. (i) Parking Rent Reserve. On or before the first anniversary of the first day of the Initial Term, in order to fund a Parking Rent Reserve, the Partnership shall deposit in an account described below an amount equal to six months rent payable under the Urban Towers Parking Lease, and thereafter maintain in such account a minimum amount equal to six months rent payable under the Urban Towers Parking Lease taking into account any increase in the rent payable under the Urban Towers Parking Lease. The Parking Rent Reserve will be held in a bank account selected by the Partnership and approved by the City on which the Partnership and the City each will have signatory authority. The Partnership may not use any funds from the Parking Rent Reserve, except that during any period in which the Entertainment Center is temporarily closed during and/or following any Casualty or Taking, the Partnership may use the Parking Rent Reserve solely for the purpose of paying rent under the Urban Towers Parking Lease. After the occurrence of an Event of Default by the Partnership, the City may use funds from the Parking Rent Reserve for the purpose of paying rent under the Urban Towers Parking Lease. Within 30 days following any such use of funds in the Parking Rent Reserve by the Partnership or the City, the Partnership will replenish the funds in the Parking Rent Reserve to the then-required amount. Upon the expiration or earlier termination of this Lease following an Event of Default or the removal of the Partnership as the lessee hereunder, the funds in the Parking Rent Reserve will be paid to the City or be handled in such other manner as the City designates (in any event, in such a manner as may be limited by any covenants made by the City in connection with the EC Bonds). Insurance Reserve. On or before each January 1, April 1, July 1, and October 1 during the Lease Term, in order to fund an Insurance Reserve, the Partnership shall deposit in an account described below one-fourth (1/4th) of the annual premiums for the insurance required under Section 11 herein. The Insurance Reserve will be held in a bank account selected by the Partnership and approved by the City on which the Partnership and the City each will have signatory authority. The Partnership may not use any funds from the Insurance Reserve for any purpose other than the payment of insurance premiums as they come due. After the occurrence of an Event of Default by the Partnership or if the City has not timely received notice that the insurance required under Section 11(a) will continue in effect without disruption following the expiration of the then-current policy, the City may use funds from the Insurance Reserve for the payment of insurance premiums as they come due. Upon the expiration or earlier termination of this Lease following an Event of Default or the removal of the Partnership as the lessee hereunder, the funds in the Insurance Reserve will be paid to the City or be handled in such other manner as the City designates (in any event, in such a manner as may be limited by any covenants made by the City in connection with the EC Bonds). On or before the last day of each
(ii)
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calendar year, the Partnership will provide its insurance budget estimates for the following calendar year to the City. 7. QUIET ENJOYMENT The City has full right to make this Lease and, subject to the terms hereof, the Partnership shall have quiet and peaceful enjoyment of the Entertainment Center during the term of this Lease. 8. TAXES (a) Tax Exempt Status. As of the Execution Date, pursuant to Section 334.044 of Chapter 334 of the Texas Local Government Code (the Act), while an approved venue project (such as the Entertainment Center) is owned, used, and held for public purposes by a municipality, Section 25.07(a) of the Texas Tax Code does not apply to a leasehold or other possessory interest held by a municipality. The Act, the Texas Constitution, the Texas Tax Code, and all other laws, statutes, ordinances, regulations, codes, guidelines, and regulations of all governmental or quasi-governmental entities and agencies having jurisdiction over the Entertainment Center (such entities and agencies being collectively, Governmental Authorities) are collectively referred to herein as Applicable Laws. It is the intent of the parties that any additions to and alterations to the Entertainment Center will also be exempt properties under Applicable Laws. If any Governmental Authority challenges the tax exempt status of the Entertainment Center or any alterations or additions thereto, then the City shall take all actions necessary (as determined by the City in its sole discretion) to attempt to establish the tax exempt status thereof. If the City is unsuccessful in doing so, then the Partnership will be responsible for and pay the cost of any ad valorem taxes or other taxes or assessments levied or assessed against the Entertainment Center or any alterations or additions thereto (EC Ad Valorem Taxes). The Partnership will cooperate with the City in any such action upon request by the City. If the Partnership is required to pay any EC Ad Valorem Taxes, then the Partnership may credit the amount of the EC Ad Valorem Taxes paid by the Partnership to the City (but not paid to any other taxing jurisdiction) in any calendar year against the Fixed Rent for such calendar year. In no event may such credit exceed the amount of Fixed Rent due the City in the applicable calendar year. Assignment or Sale by City. The City may not assign its interest in this Lease except in connection with a sale of the Entertainment Center. If any sale of the Entertainment Center by the City or any successor results in any EC Ad Valorem Taxes being assessed or levied against the Entertainment Center or a loss of the sales tax exemption under Section 8(f), then the new owner of the Entertainment Center will be solely responsible for the EC Ad Valorem Taxes and the payment of any such sales taxes. Payment of Personal Property Taxes. The Partnership shall pay, or cause to be paid, all taxes, special assessments, and governmental charges of every character imposed during the term of this Lease upon any personal property and trade fixtures owned by the Partnership or any sublessee from the Partnership located in the Entertainment Center, or any part thereof. The Partnership shall
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pay, or cause to be paid, all such taxes, charges, and assessments before the same become delinquent. The Partnership shall indemnify and save harmless the City from all such taxes, charges and assessments. This indemnity provision shall survive termination or expiration of this Lease or the Partnerships right of possession hereunder. The Partnership and its sublessees have the exclusive right to render such personal property and trade fixtures located in the Entertainment Center for all taxing jurisdictions. (d) Tax Contests. The Partnership and its sublessee(s) at no cost to the City may contest the validity or amount of any such personal property taxes, charges, and assessments it or any sublessee is obligated to pay under this Lease, in which event the payment thereof may be deferred during the pendency of the contest. Exclusions. The Partnership is not responsible for: (i) any income taxes imposed under any existing or future laws of the United States or any state or any political or taxing authority on the Rent provided for in this Lease; any estate, inheritance, gift, capital gains tax, or other tax imposed under any existing or future laws of the United States or any state or any political or taxing authority on the transfer of the interest of the City or any successor to the City by death or otherwise; any gross receipts, sales, excise, or use taxes, if any, imposed on Rent paid under this Lease; any margin tax, franchise tax, or license fee levied upon or against the City or any successor; or any taxes and fees similar to any of the above excepted taxes and fees imposed on the City or any successor.
(e)
(ii)
(iii) (iv) (v) (f)
Construction Sales Tax Exemption. To the extent requested by the Partnership, the City shall cooperate with the Partnership in seeking a ruling from the Comptroller of Public Accounts of the State of Texas confirming that items of tangible personal property (other than machinery or equipment and its accessories, and repair and replacement parts not incorporated into the real property and leased or rented tangible personal property used in the performance of the construction, repair, renovation, or replacement of the Entertainment Center) acquired by the City pursuant to this Lease will be exempt from sales tax. The City and the Partnership shall take reasonable steps to establish and maintain the foregoing exemption, including without limitation, by (i) structuring construction contracts and subcontracts as separated contracts within the meaning of the Texas Tax Code, containing separately stated contract prices for materials and labor, (ii) executing and delivering an agreement or agreements between the City and the Partnership providing for donation and assignment of items of tangible personal property (including without limitation materials, equipment and supplies) to the City as and when incorporated into the Entertainment Center (subject to other applicable provisions of this Lease regarding acceptance of improvements comprising the Entertainment Center by
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the City, issuance of certificates of occupancy, compliance with construction codes, the timing of general and special warranties) or as and when delivered to the Site, except that the construction contracts the Partnership enters into with its contractors shall provide that for incorporated tangible personal property and for delivered tangible personal property stored on or away from the Site, (x) the risk of loss shall remain with the contractor until final completion and acceptance of the improvements; and (y) special warranties given for the tangible personal property incorporated or stored shall not commence until final completion and acceptance of the improvements, (iii) the Citys confirming in writing to the Partnership the Citys acceptance of delivery of the donation of such tangible personal property, and (iv) the Partnerships issuing exemption certificates to its contractors provided by the City and requiring that all contractors issue resale certificates to their subcontractors, in each case claiming appropriate exemption from tax. 9. CONDEMNATION (a) Right of Eminent Domain. The City shall use reasonable efforts to cause all other Governmental Authorities to refrain from exercising any right of eminent domain related to the Entertainment Center or any interest of the Partnership under this Lease or any personal property and trade fixtures located in the Entertainment Center owned by the Partnership or any sublessee from the Partnership. Notice; Cooperation. If any eminent domain proceeding is filed against the City or the Partnership or any sublessee from the Partnership for any public or quasi-public use or improvements by virtue of eminent domain (a Condemnation Proceeding), then each party shall promptly notify the other party of the filing of the Condemnation Proceeding. Each party may file its own claim for a separate award in any Condemnation Proceeding, but the parties shall cooperate, to the extent possible, in an attempt to maximize the award to be received by each in the Condemnation Proceeding. Total Taking. If a Condemnation Proceeding results in the taking of all or substantially all of the Entertainment Center or, in the Partnership's sole discretion access to the Entertainment Center is materially impaired by taking under the Condemnation Proceeding, then this Lease will terminate as of the date the condemning authority takes possession of the Entertainment Center or the applicable portions thereof (a Taking). Partial Taking; Restoration. If a Condemnation Proceeding results in a Taking of less than all or substantially all of the Entertainment Center, then this Lease will remain in effect as to that part of the Entertainment Center not taken, unless so much of the Entertainment Center or the access thereto is taken as to render the balance unsuitable for use by the Partnership for the uses and purposes contemplated, in which event the Partnership may terminate this Lease by giving notice of termination to the City within six (6) months after the date of the Taking. If this Lease is not terminated, then (i) the Partnership shall restore or repair the portion of the Improvements, if any, then on the Entertainment Center not taken in the Condemnation Proceeding and will be reimbursed from the proceeds awarded in the Condemnation Proceeding for the costs incurred by the
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Partnership for the restoration or repair from the awards given in the Condemnation Proceeding and (ii) the Fixed Rent will equitably reduce based on the part of the Entertainment Center so taken effective as of the date of the Taking. The Partnership's obligation to repair and restore is limited to the aggregate amount of awards available to the Partnership from the Condemnation Proceeding. (e) Temporary Taking. If there is a Taking of all or part of the Entertainment Center for temporary public or quasi-public use, then this Lease does not terminate, the Rent will not be adjusted, the Partnership will repair and restore any damage to the Entertainment Center resulting from such Taking, and the Partnership is entitled to the full award made or damages granted in connection with the temporary taking attributable to any period prior to the expiration of the Lease Term, including any Renewal Terms. Condemnation Award. In any Condemnation Proceeding, the City and the Partnership are each entitled to such separate awards as may be given to them by the condemning Governmental Authority, subject to the following: (i) If this Lease is not terminated as a result of the Taking, then all awards will be applied first to the costs of repair and restoration by the Partnership as specified in Section 9(d). If this Lease is terminated as a result of any Taking, then, subject to approval by the condemning Governmental Authority: (A) The City will be entitled to an amount equal to the value of the portion of the Entertainment Center taken considered as unimproved, raw land, valued as a separate tract not part of a larger assemblage of land and valued on the basis of such parcels then highest and best use, but encumbered by this Lease (i.e., the value of the remainder interest of the City), which amount, to the extent necessary, will be applied first to the payment of the then-outstanding Bonds before being available for the Citys use for other purposes; The City will be entitled to an amount equal to the then current fair market value of the portion of the Improvements owned by the City and situated on the portion of the Site taken in its condition existing at the time of Taking, but encumbered by this Lease (i.e., the value of the remainder interest of the City), which amount, to the extent necessary, will be applied first to the payment of the applicable then-outstanding Bonds before being available for the Citys use for other purposes; and The Partnership will be entitled to receive the balance of the award, including any awards allocable to then current fair market value of all fixtures, equipment, and other improvements owned or paid for by the Partnership or any of its sublessees that are a part of the Improvements, and all moving expenses for, and reduction
(f)
(ii)
(B)
(C)
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in value of other property owned by, the Partnership and its sublessees. 10. EASEMENTS, ZONING AND RESTRICTIONS (a) Easements, Dedications, and Abandonments. In order to develop and operate the Entertainment Center, it may be necessary or desirable that street, water, sewer, drainage, gas, power lines, set back lines, and other easements, and dedications, and similar rights be granted or dedicated over or within portions of the Entertainment Center by plat, replat, grant, deed or other appropriate instrument or that existing easements and rights-of-way be abandoned by the City. The City shall, on request of the Partnership, join with the Partnership in executing and delivering such documents, from time to time, and throughout the Lease Term, as may be appropriate, necessary or required by the several governmental agencies, public utilities and companies for the purposes of granting such easements and dedications or obtaining such abandonments, in each case in order to develop and operate the Entertainment Center. Zoning. If the Partnership deems it necessary or appropriate to obtain use, zoning, site plan approval or any permit from the City or any other governmental entity having jurisdiction over the Entertainment Center, or any part thereof, the City, in its capacity as owner of Site and not in its capacity as the controlling municipal authority, shall cooperate with the execution of petitions, applications or other similar documents as may be reasonably necessary for the construction or operation of the Entertainment Center.
(b)
11.
INSURANCE (a) Special Form Property Coverage For Entertainment Center. During the Lease Term, the Partnership shall, at no out-of-pocket cost to the City, keep and maintain causes of loss special form (ISO Form CP 10 30) property insurance covering the Entertainment Center and related facilities for the full replacement value of the Improvements, subject to reasonable deductibles as determined by the Partnership not to exceed $1,000,000, together with business income and expense coverage in an amount sufficient to cover 12 months of Fixed Rent and the annual minimum amounts of Additional Rent. The Partnership's Insurance. The Partnership must maintain, or cause to be maintained, the following insurance (the Partnership's Insurance) during the Lease Term:
Policy Limit(s) State required limits and policy form (subject to the paragraph below) Injury by accident or disease: $1,000,000 Each Occurrence: $1,000,000 General Aggregate: $2,000,000 Products-Completed Operations: $2,000,000 Each occurrence/aggregate $25,000,000 Per accident/aggregate: $1,000,000 Each occurrence/aggregate: $25,000,000
(b)
Insurance Coverage Workers' Compensation Employer's Liability Commercial general liability ISO Form CG 00 01 12 04, or equivalent Liquor Liability Business auto liability Umbrella/excess liability insurance
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Causes of loss-special form property insurance Garage Coverage ISO Garage Coverage Form CA 00 05 1001
100% of replacement cost of the Partnership's business personal property and leasehold improvements Limits as required under the Urban Towers Parking Agreement
The carriers for all insurance policies required herein must have an A.M. Best Insurance Guide "Best's Rating" of at least A- and a "Financial Size Category" of at least Class VII and be authorized to sell insurance in Texas. All liability insurance policies and the Garage Coverage must name the City as an "additional insured" and the liability policies must be primary, with the City's liability policies being secondary and noncontributing. All property insurance policies must waive subrogation against the City and the Partnership. The Partnership must deliver to the City certificates evidencing all required insurance and copies of all required endorsements prior to entering the Entertainment Center, and thereafter at least thirty (30) days prior to expiration of each insurance policy. The rights of any Partnership Mortgagee (defined below) to any proceeds under any insurance required under the Lease shall be subordinate to the rights of the City to such proceeds. If approved in advance by the City in its sole discretion (as determined by the City Manager), the Partnership, in lieu of Workers Compensation insurance, may provide NonSubscriber Coverage in such minimum amounts as approved by the City Manager. (c) Mutual Release. The City and the Partnership release each other and any Partnership Mortgagee(s) and any sublessees from all Claims for Losses of or to (i) the Entertainment Center, (ii) furniture, fixtures, equipment, and other tangible and intangible property owned by the Partnership and any sublessees, or (iii) business or revenues, provided the Losses are covered by the releasing party's property insurance or would have been covered by the required insurance if the releasing party does not maintain the property insurance coverages required by this Lease. The party incurring the Loss is responsible for any deductible or self-insured retention under its property insurance; but the Partnership, not the City, is responsible for any deductible or self-insured retention under the insurance obtained under Section 11(a). The parties will notify the issuing property insurance companies of the releases set forth in this Section and will have the property insurance policies endorsed, if necessary, to prevent invalidation of coverage. THE WAIVERS AND RELEASES IN THIS SECTION APPLY NOTWITHSTANDING ANY SINGLE ACTION RULE UNDER WORKERS' COMPENSATION STATUTES OR IF THE LOSS IS CAUSED IN WHOLE OR IN PART BY THE NEGLIGENCE OR STRICT LIABILITY OF THE RELEASED PARTY, BUT DO NOT APPLY TO THE EXTENT THE LOSS IS CAUSED BY THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE RELEASED PARTY. Claim means the assertion of a legal right, including a demand, legal action, suit, or proceeding, whether filed or threatened, alleging responsibility for a Loss. Loss means any actual or alleged liability, cost, or expense (including Legal Costs), loss, damages, judgment, or penalty of any nature or description suffered by a person or property, including (A) harm to, impairment, loss, or diminution in the value of tangible or intangible property or its use, and loss of business or revenues, or (B) physical harm to or death of a natural person.
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12.
SUBLETTING AND ASSIGNMENT BY THE PARTNERSHIP (a) Right to Sublease. The Partnership may not sublease the Entertainment Center in whole or in part at any time without the City's consent except as otherwise specified in this Lease. The making of any sublease does not release the Partnership from, or otherwise affect in any manner, any of the Partnership's obligations under this Lease. All of the Partnerships agreements with any Concessionaire will be deemed subleases for the purposes of this Lease, and subject to the terms of Section 21. Right to Assign. The Partnership may assign this Lease at any time with the City's consent in its sole discretion (except as may be expressly provided for otherwise herein); provided that the following transactions also shall be deemed to be an assignment of this Lease by the Partnership requiring the Citys consent: (1) if any entity succeeds to the interest of the Partnership as tenant hereunder by merger, consolidation, or other reorganization, (2) if the Partnership permits the transfer of an ownership interest in the Partnership so as to result in a change in the current direct or indirect control of the Partnership, or (3) sell or otherwise transfer, in one or more transactions, a majority of the Partnerships assets (any of the events listed in sub-clauses (1), (2) and (3) with respect to the Partnership under this Section 12(b) or with respect to any other entity referenced herein, as applicable, being referred to herein as a Change in Control). If a Change in Control occurs in connection with an equity investment in the Partnership by a Qualified Investor (defined below), then the City may not unreasonably withhold or condition its approval of the Change in Control. A Qualified Investor is any investor who has, or whose parent company has, a net worth of $50,000,000 or more. The Partnership shall, in each case other than a Change in Control or an assignment to a Partnership Mortgagee or its designee, deliver to the City an instrument in recordable form, if requested by the City, under which the assignee of the Partnership's interest in this Lease assumes and/or ratifies the performance of the Partnership's obligations hereunder. After delivery by the Partnership to the City of the assignment and assumption described above for an assignment of the Lease approved by the City other than a Change in Control, the Partnership shall be relieved of any and all future liabilities or obligations hereunder that first arise after the date of such assignment, and the City will look only to such successor of the Partnership for performance of all obligations of the Partnership under this Lease of every kind and character thereafter to accrue. Each successor to the Partnership may make a further assignment of this Lease and be relieved from future liability hereunder as long as the conditions of this Section 12(b) are fulfilled. Retail Subleases. The City may not unreasonably withhold, delay, or condition its consent to any sublease by the Partnership of any retail space in the Entertainment Center. Upon request by any approved retail subtenant, the City will enter into a mutually approved subordination, attornment, and non-disturbance agreement with the retail subtenant, the approval of which is in the City's sole discretion. Recognition of Subleases. If the City terminates this Lease due to any default by the Partnership, then the City will not terminate any sublease(s) of the Entertainment Center, or any portion or portions thereof, or disturb the
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possession or leasehold rights of such sublessee(s), except for a default by such sublessee(s) of the provisions of such sublease(s). The City shall continue all non-defaulting sublease(s) in effect and, if requested by any sublessee, enter into a direct lease between the City (or any successor to the Partnership as lessee under this Lease) and the sublessee. The Partnership must include in all its subleases a comparable provision to the foregoing that requires the sublessee to enter into a direct lease with the City (or any successor to the Partnership as lessee under this Lease) if the City so elects. Any direct lease with any sublessee under this Section 12(d) shall be in substantially the same form of sublease as previously approved by the City. (e) Notices of Default under Subleases. The Partnership shall use commercially reasonable efforts to copy the City on all notices of default sent by the Partnership under any sublease and to deliver promptly to the City a copy of any notice of default by the Partnership under any sublease received by the Partnership.
13.
FINANCING (a) Right to Mortgage Leasehold Estate. Subject to Section 13(i), the Partnership and its sublessees (excluding Concessionaire but including sub-sublessees from Concessionaire) may from time to time and at any time encumber by one or more mortgages, deeds of trust, security agreements, or other instruments in the nature thereof (each, a Mortgage; a Mortgage granted by the Partnership being a Partnership Mortgage), as security for loans, indebtedness, or obligations (each, a Debt; a Debt of the partnership being a Partnership Debt), its leasehold or sub-leasehold interest, as applicable, in the Entertainment Center. Any such Debt and Mortgage may be for such amount and on such other terms as the Partnership may approve. Neither the Partnership nor any of its sublessees have the right to grant any Mortgage that encumbers the City's fee interest in the Entertainment Center or any portion thereof, and any such Mortgage that purports to do so will be invalid. Notwithstanding the foregoing, nothing in this Lease shall be deemed to have granted any rights other than those set forth in this Section 13(a) to any holder of any Mortgage other than the rights expressly granted herein to the holder of a Partnership Mortgage. Notices to Partnership Mortgagees. If at any time after any Partnership Mortgage is recorded in the Official Public Records of Dallas County, Texas, the Partnership or the holder of the Partnership Mortgage notifies the City in writing of the existence of the Partnership Mortgage and furnishes the City with the address(es) to which the Partnership Mortgagee desires copies of notices to the Partnership under this Lease be sent (each such holder of a Partnership Mortgage of whom the City is given notice being a Partnership Mortgagee), then the City shall thereafter use commercially reasonable efforts to mail to each Partnership Mortgagee or agent thereof, at the address so given, by any method of delivery permitted hereunder at the same time that the notice is placed in the mail or otherwise delivered to the Partnership, duplicate copies of any and all notices of default required to be sent pursuant to Section 14. Right to Cure. Any Partnership Mortgagee, at its option, acting either directly or indirectly through a designee, may cure the default and perform any other
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obligation of the Partnership as necessary to prevent the forfeiture of this Lease and/or the dispossession of the Partnership as lessee under this Lease. All actions taken by the Partnership Mortgagee or its designee will be effective to prevent a forfeiture of the rights of the Partnership hereunder as if timely done and performed by the Partnership. Any Partnership Mortgage may, if the Partnership desires, provide that, as between any Partnership Mortgagee or its designee and the Partnership, the Partnership Mortgagee or its designee, on curing any such default or defaults or performing any obligations on the part of the Partnership, will be thereby subrogated to or put in the position of assignee of any or all of the rights of the Partnership under this Lease covered by the Partnership Mortgage (subject to Section 13(e)). The Citys failure to deliver to copies of any notices to any Partnership Mortgagee will not impair or negate the validity or effectiveness of any notice delivered to the Partnership nor delay the Citys right to pursue any available remedy other than termination of this Lease or dispossession of the Partnership as lessee under this Lease, but will delay the start of any cure periods afforded to such Partnership Mortgagee under this Section 13 until such time as such notices are delivered to the Partnership Mortgagee, or, with respect solely to those Events of Default for which no cure period is applicable, delay the Citys right to terminate this Lease or dispossess the Partnership under this Lease for a period of ten days. (d) Option for New Lease. If this Lease terminates for any reason other than expiration by passage of time of the Initial Term or any Renewal Term, then the Partnership shall, and the City shall use commercially reasonable efforts to, deliver notice of the termination to any Partnership Mortgagee about which the City has been notified. Upon request by any Partnership Mortgagee received by the City within ninety (90) days after the Partnerships Mortgagee's receipt of the notice of termination, the City will enter into a new lease of the Entertainment Center with the Partnerships Mortgagee or its designee for the unexpired balance of the Lease Term, including any Renewal Terms, on the same terms as this Lease promptly after the Partnerships Mortgagee or its designee satisfies the conditions set forth in Section 13(e). If more than one (1) Partnership Mortgagee exercises the foregoing option for a new lease, the City shall enter into a new lease with the Partnership Mortgagee, or its designee, having the highest priority among those Partnership Mortgagees who exercised the option. Obligation to Cure. In order for any Partnership Mortgagee or its designee to become the lessee of the Entertainment Center, whether pursuant to the Partnership Mortgagees right of subrogation under Section 13(c), a new lease under Section 13(d), or otherwise, the Partnership Mortgagee or its designee must first: (A) (B) cure any monetary default of the Partnership; cure any non-monetary default of the Partnership, excluding those that by their nature are incapable of cure by any other person or entity (provided that any new successor to the Partnership shall not be permitted to continue such default of the Partnership or any similar default with respect to the new successor to the Partnership going forward); and
(e)
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(C)
to the extent the City has appointed or entered into any arrangement with a replacement or successor lessee under this Lease or other operator of the Entertainment Center (any such party, a City-Designated Successor), reimburse the City for any costs incurred by the City related to terminating or otherwise unwinding any such arrangement between the City and a CityDesignated Successor.
(f)
Modifications; Surrender. (i) Except in connection with exercising the Citys remedies following an Event of Default for which any Partnership Mortgagee(s) has received notice and been afforded any applicable cure periods hereunder, the City may not accept any surrender of or agree to any termination of this Lease without the prior written consent thereto by any Partnership Mortgagee(s). Any attempt to do so without such written consent will be void and of no force and effect. The City may modify this Lease from time to time for the purpose of incorporating herein such additional mortgagee protective provisions as may be reasonably requested by any Partnership Mortgagee if such modifications are reasonably acceptable to the City, impose no additional material obligations on the City or restrict any of the Citys rights hereunder (including restricting remedies following an Event of Default), and are not inconsistent with any of the monetary terms of this Lease or standards of performance set forth herein.
(ii)
(g) (h)
Rights Cumulative. All rights of any Partnership Mortgagee under this Lease are cumulative and non-exclusive. Partnership Mortgagee Designee. As used in this Lease, any designee of a Partnership Mortgagee shall include a designee selected by the Partnership Mortgagee, and any third party that acquires the right to become the lessee under this Lease by assignment, as a purchaser, by foreclosure or deed-in-lieu of foreclosure, or otherwise. Notwithstanding anything to the contrary herein, if any designee of a Partnership Mortgagee that is not a wholly owned subsidiary of such Partnership Mortgagee seeks to become lessee under this Lease, then such designee may do so only with the Citys prior written approval, not to be unreasonably withheld or delayed; provided, however, if the Partnership Mortgagee selects the then-current operator of the Citys Convention Center as the Partnership Mortgagees designee, then such operator/designee shall be deemed approved without any further action required by the City. If any Partnership Mortgagee elects itself or a wholly owned subsidiary to become the lessee under this Lease pursuant to such Partnership Mortgagees rights hereunder, no further consent of the City shall be required. The provisions of this Section 13(h) shall apply both with respect to this Lease and any new lease entered into under Section 13(d) or otherwise. Partnership Personal Property. The Partnership and any Concessionaire from time to time may obtain financing for the purpose of acquiring any Partnership Personal Property, and may secure such purchase-money financing (but not any
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other financing) with liens encumbering any such Partnership Personal Property (any such financing referred to herein as a PPP Financing). The Partnership shall provide the City written notice of and within ten days after entering into any PPP Financing. Any such PPP Financing shall be subject to the terms and conditions of this Agreement. Without limiting the generality of the foregoing, any PPP Financing shall: (i) (ii) permit (but not obligate) the City and/or any replacement operator of the Entertainment Center to cure and/or assume such PPP Financing, and require the City to receive any notices of default or event of default under any PPP Financing.
If any PPP Financing is not guaranteed by a guarantor satisfactory to the City in the Citys sole discretion (which may include the right of the City to enforce such guaranty against the guarantor), then in order to fund a PPP Financing Reserve, within six months after entering into any PPP Financing (defined below), the Partnership shall deposit and thereafter maintain so long as any such PPP Financing is outstanding (including making any additional deposits to so maintain) a minimum amount equal to 12 months principal and interest debt service on all outstanding PPP Financings. The PPP Financing Reserve will be held in a bank account selected by the Partnership and approved by the City on which the Partnership and the City each will have signatory authority. The Partnership may not use any funds from the PPP Financing Reserve for any purpose. After the occurrence of an Event of Default by the Partnership or if the City receives a notice of default by any PPP Financing lender or servicer, the City may use funds from the PPP Financing Reserve for the payment of debt service on any PPP Financing as such debt service payments come due. Upon the expiration or earlier termination of this Lease following an Event of Default or the removal of the Partnership as the lessee hereunder, the funds in the PPP Financing will be paid to the City or be handled in such other manner as the City designates (in any event, in such a manner as may be limited by any covenants made by the City in connection with the EC Bonds). To the extent any Concessionaire seeks to obtain financing for any equipment, trade fixtures or other personal property used in the operation of the Entertainment Center, the Partnership shall cause such operator to comply with the provisions of this Section 13(i). 14. DEFAULT (a) Event of Default by the Partnership. Each of the failures specified in Sections 14(b), 14(c), 14(d), 14(e), 14(f) and 14(g) constitute an Event of Default by the Partnership under this Lease if not cured by the Partnership within any applicable time period specified in the applicable Section or immediately upon the occurrence thereof if no cure time is specified. Monetary Default by the Partnership. If the Partnership defaults in payment of Fixed Rent or Additional Rent under this Lease, then the City shall deliver to the Partnership a notice specifying the default. If the default continues for ten (10) days after the date of delivery of the notice, then the City may at the City's election take any of the remedies set forth hereinafter. If the Partnership defaults
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in payment of any other money required to be paid to the City by the Partnership under this Lease, then the City shall deliver to the Partnership a notice specifying the default. If the default continues for ten (10) days after the date of delivery of the notice, then the City may at the City's election take any of the remedies set forth hereinafter. (c) (d) Failure by the Partnership to Carry Required Insurance. The failure by the Partnership at any time to carry the insurance required by it under Article 11. Non-Monetary Default by the Partnership. If the Partnership defaults in the performance of any of its obligations under this Lease other than its monetary obligations as specified in Section 14(b) or its obligation to maintain required insurance coverages as specified in Section 14(c), then the City shall deliver to the Partnership a notice specifying the default. If the Partnership does not commence to cure the default within ten (10) days, or does not complete the cure within thirty (30) days, after the date of delivery of the notice, then the City may at the City's election take any of the remedies set forth hereinafter; provided, if the default is one that is not capable of being cured within thirty (30) days, then the City may not exercise its remedies unless the Partnership does not commence to cure the default within ten (10) days, or does not complete the cure within sixty (60) days, after the date of delivery of the notice. Cross Default Under the Development Agreement. The occurrence of an Event of Default (as defined in the Development Agreement) by the Partnership under the Development Agreement. Cross Default Under the Urban Towers Parking Agreement. The occurrence of an Event of Default (as defined in the Urban Towers Parking Agreement) by the Partnership under the Urban Towers Parking Agreement. Cross Default Under any Concessionaire Agreement. The occurrence of an event of default by the Partnership beyond all applicable notice and cure periods under any agreement with any Concessionaire. Enforcement of Remedies by the City. (i) Upon the occurrence of an Event of Default by the Partnership, and subject to any rights of a Partnership Mortgagee or its designee under Section 13, the City may pursue any available remedy or enforce the performance of this Lease in any mode provided in this Agreement or by law, or this Lease may be terminated at the City's discretion. Upon the City's giving valid notice of its election to terminate or to dispossess the Partnerships right to possess the Entertainment Center, this Lease or the Partnerships right of possession shall terminate as if that were the date originally fixed herein for the expiration of the term hereof. The Citys remedies are cumulative and the Citys exercise of any specific remedy will not prevent the City from exercising any other available remedy. No waiver by the City of any default by the Partnership will be treated as a waiver of any subsequent delay by the Partnership.
(e)
(f)
(g)
(h)
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(ii)
Without limiting the generality of clause (i) above, upon the occurrence of an Event of Default by the Partnership, the City may perform (or cause to be performed) any act that the Partnership is obligated to perform under the terms of this Lease (and enter upon the Entertainment Center in connection therewith if necessary) in the Partnerships name and on the Partnerships behalf, without being liable for any claim for damages therefor, and the Partnership shall reimburse the City on demand for any actual, out-of-pocket expenses which the City may incur in thus effecting compliance with the Partnerships obligations under this Lease (including, but not limited to, collection costs and legal expenses), plus interest thereon at a default rate equal to the lesser of eighteen percent (18%) per annum or the maximum rate permitted under Applicable Law. If the Partnership breaches its obligations under Section 4(f)(vii), then the Citys sole and exclusive remedy for the breach is to collect liquidated damages from the Partnership in the amount of $15,000 per breach. The provisions of this Section 14(h)(iii) prevail if there is a conflict with any other provisions of this Lease. If any two consecutive Quarterly Gross Sales Reports for a 60-40 Restaurant delivered to the Partnership and the City under Section 4(f)(x) show that the 60% Requirement is not satisfied for the applicable 12month periods (in each such instance, the applicable 60-40 Restaurant will be referred to as a Non-Compliant Restaurant), then the Partnership shall pay liquidated damages to the City in the amount of $50,000 per Non-Compliant Restaurant per occurrence. In addition, if the Partnership is liable for liquidated damages under Section 14(h)(iv) for a Non-Compliant Restaurant and any subsequent Quarterly Gross Sales Report for the Non-Compliant Restaurant shows the 60% Requirement was not satisfied, then the Partnership shall pay liquidated damages to the City in the amount of $50,000 per occurrence per Non-Compliant Restaurant. Notwithstanding the provisions of Sections 14(h)(iv) and 14(h)(v), if the Partnership pays liquidated damages under either or both of those Sections for a Non-Compliant Restaurant and thereafter three (3) or more consecutive Quarterly Sales Reports for the Non-Compliant Restaurant shows that the 60% Requirement was satisfied, then the provisions of Section 14(h)(iv) will be applicable with respect to subsequent Quarterly Sales Reports that show the 60% Requirement was not satisfied until the provisions of Section 14(h)(v) again apply.
(iii)
(iv)
(v)
(vi)
(i)
No Waiver. No waiver by either party of any default or breach of any covenant, condition, or stipulation herein contained will be treated as a waiver of any subsequent default or breach of the same or any other covenant, condition, or stipulation hereof. Bankruptcy. The bankruptcy or insolvency of the Partnership, an assignment by the Partnership for the benefit of the Partnership's creditors, the appointment of a trustee, liquidator or receiver for the Partnership, reorganization by the
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(j)
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Partnership, an admission by the Partnership of its inability to pay its debts as the same become due, or the seeking or granting of any order of relief in any proceeding commenced by or against the Partnership under any present or future federal or state bankruptcy, insolvency, or creditors relief statute does not affect this Lease so long as all covenants of the Partnership are continued in performance by the Partnership or its successors or legal representatives. (k) Default by the City. If the City defaults in the performance of any of its obligations under this Lease and does not cure the default within thirty (30) days after the date of a notice from the Partnership specifying the default, then the Partnership may enforce the performance of this Lease against the City, abate payment of any Rent as long as the default remains uncured, and exercise any other remedy available to the Partnership at law or in equity, including, without limitation, curing the default on behalf of the City and setting off against future Rent the reasonable costs incurred by the Partnership in effecting the cure; provided, however, the Citys obligation for any damages (other than the foregoing abatement and setoff rights) will be limited to the extent of lawfully available excess Brimer HOT Revenues (subject to, without limitation, the pledge of such Brimer HOT Revenues to the repayment of the Bonds as set forth in the City ordinance authorizing the Bonds) and/or lawfully available proceeds from the Bonds for such damages. The Partnership's remedies are cumulative and the Partnership's exercise of any specific remedy will not prevent the Partnership from exercising any other available remedy. No waiver by the Partnership of any default by the City will be treated as a waiver of any subsequent default by the City.
15.
LIMITATIONS ON LIABILITY (a) Non-Liability of the City. The City is not liable to the Partnership or to the Partnership's employees, subtenants, patrons, or visitors for any injury to persons or damage to property caused by any negligence or any other act of the Partnership, its agents, employees, and sublessees, or due to fire or other casualty, or due to any building on the Entertainment Center and appurtenances thereon being improperly constructed, or being or becoming out of repair, or due to any cause whatsoever by reason of the use, occupancy, or enjoyment of the Entertainment Center by the Partnership and its sublessees. Limitations on Liability of the Partnership. The term "the Partnership," as used in this Lease means only the holder for the time in question of the Partnership's interest in this Lease. Notwithstanding anything to the contrary contained in this Lease, the liability of Las Colinas Group, LP under this Lease for a default by Las Colinas Group, LP under this Lease is limited to the interest of Las Colinas Group, LP in the Entertainment Center under this Lease and the revenues derived therefrom, and to the Security Deposit and reserves required to be maintained by the Partnership hereunder. The prior sentence is personal to Las Colinas Group, LP and does not apply to any successor to Las Colinas Group, LP. Notwithstanding anything to the contrary herein, the provisions of this Section 15(b) will govern in the event of any conflict with any other provision herein.
(b)
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(c)
Termination of Development Agreement. If the Development Agreement terminates or is terminated pursuant to an express termination right under either Section 4.1 or Section 4.2 of the Development Agreement, or for any reason other than completion of construction of the Entertainment Center, then this Lease shall automatically terminate and neither the City nor the Partnership shall have any rights, liabilities or obligations hereunder except those that expressly survive the termination of this Lease; provided, however, nothing in the foregoing provision shall limit the rights or remedies of a non-defaulting party if the Development Agreement is terminated as a result of the default of the other party. Waiver of Consequential Damages. Notwithstanding anything in this Lease to the contrary, (a) the City hereby waives any consequential damages, compensation or claims for inconvenience, loss of business, rents or profits as a result of any injury or damage, whether or not caused by the willful or wrongful act of the Partnership or its representatives, agents or employees, and (b) the Partnership hereby waives any consequential damages, compensation or claims for inconvenience, loss of business, rents or profits as a result of any injury or damage, whether or not caused by the willful or wrongful act of the City or its representatives, agents or employees.
(d)
16.
FORCE MAJEURE If the curing of any default (other than failure to pay Rent, taxes, insurance premiums, or other sums of money) or the performance of any other obligation under this Lease is delayed by war; riots; civil commotion; terrorist acts or activities; acts of God; governmental restrictions, regulations, or interferences; fire or other casualty; strikes; lockouts; labor shortages; or shortages of or delays in obtaining materials; acts or failure to act by any Governmental Authority (including changes in interpretation of building codes, ordinances, and regulations and delays in issuing or failure or refusal to issue permits and approvals); casualty damage; Takings; unusually adverse weather conditions; or any other circumstances reasonably beyond the control of the party obligated or permitted under the terms hereof to do or perform the same and without such party's fault, regardless whether any such circumstance is similar to any of those enumerated or not; then such party will be excused from doing or performing the same during the period of delay.
17.
ESTOPPEL CERTIFICATES The City and the Partnership shall each, from time to time, without additional consideration and promptly upon request, execute and deliver to each other or to any person whom the requesting party may designate, an estoppel affidavit consisting of statements, if true (or modified as necessary to make them true), that: (i) this Lease is in full force and effect, with Fixed Rent and Additional Rent current through the date of the certificate (or stating the date through which Fixed Rent and Additional Rent has been paid); (ii) this Lease has not been modified or amended (or setting forth all modifications and amendments); (iii) to such party's knowledge, the other party is not then in default, and the Partnership and the City have fully performed all of the Partnership's and the City's obligations hereunder; and (iv) the transactions, if any, described in the request do not constitute an Event of Default under this Lease.
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18.
LANDLORD'S LIEN The City waives all landlord's liens that the City may hold, constitutional, statutory, or otherwise, on any furniture, fixtures, equipment, inventory, and other tangible and intangible property located in the Entertainment Center and owned by the Partnership or any sublessee.
19.
REPRESENTATIONS AND WARRANTIES (a) The City's Representations and Warranties. The City hereby represents and warrants to the Partnership as of the Execution Date: (i) Existence. The City is a municipal corporation and a home rule city of the State of Texas duly incorporated and currently existing pursuant to the constitution and laws of the State of Texas, including the Texas Local Government Code and Texas Government Code. Authority. The City has all requisite power and authority to own the Entertainment Center, to execute and deliver this Lease and to consummate the transactions herein contemplated, and by proper action in accordance with all Applicable Law has duly authorized the execution and delivery of this Lease, and the consummation of the transactions herein contemplated. Binding Obligation. This Lease is a valid and binding obligation of the City and is enforceable against the City in accordance with its terms. No Defaults. The execution by the City of this Lease and the consummation by the City of the transactions contemplated hereby (A) do not, as of the Execution Date, result in a breach of any of the terms or provisions of, or constitute a default, under the City's charter or any resolution, indenture, agreement, instrument or obligation to which the City is a party or by which the Entertainment Center or any portion thereof is bound; and (B) do not, to the knowledge of the City, constitute a violation of any law, order, rule or regulation applicable to the City or any portion of the Entertainment Center of any court or of any federal or state or municipal regulatory body or administrative agency or other governmental body having jurisdiction over the City of any portion of the Entertainment Center. Consents. No permission, approval or consent by third parties or any other governmental authorities is required in order for the City to enter into this Lease, make the agreements herein contained or perform the obligations of the City hereunder other than those which have been obtained. Proceedings. There are no actions, suits or proceedings pending or, to the City's knowledge, threatened or asserted against the City affecting the City's obligations under this Lease or any portion of the Entertainment Center, at law or in equity or before or by any federal, state, municipal or
(ii)
(iii) (iv)
(v)
(vi)
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other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign. (vii) Impositions. The City has not received any notice of any condemnation actions, special assessments or increases in the assessed valuation of taxes or any impositions of any nature that are pending or being contemplated with respect to the Entertainment Center or any portion thereof. Compliance with Laws. The City has not received any notice of any violation of any ordinance, regulation, law or statute of any governmental agency pertaining to the Entertainment Center or any portion thereof. Encumbrances. The City has not placed or granted any liens or security interests against the Entertainment Center, and there are no actions pending, to the City's knowledge, that would result in the creation of any lien on any portion of the Entertainment Center, including, but not limited to, water, sewage, street paving, electrical or power improvements which give rise to any lien, completed or in progress. During the Lease Term, the City shall not grant any lien, security interest, encumbrance, easement, restriction, covenant or other exception to title on all or any portion of the Entertainment Center that unreasonably impairs the Partnership's use of the Entertainment Center without the prior written consent of the Partnership, which consent shall not be unreasonably withheld or conditioned and with all due consideration to facilitating the further development and utilization of the Entertainment Center. Limitations. Except as otherwise expressly provided herein, the Entertainment Center is leased by the City on an "AS IS, WHERE IS, WITH ALL FAULTS" basis, without representation or warranty of any kind, either express or implied, as to the condition of the Entertainment Center (or any portion thereof), its merchantability, its condition or its fitness for the Partnership's intended use or for any particular purpose.
(viii)
(ix)
(x)
(b)
The Partnership's Representations, Warranties and Covenants. The Partnership hereby represents and warrants to the City as of the Execution Date, and covenants (as to clause (vii) only) as specified below: (i) Existence. The Partnership is duly organized, validly existing and in good standing under the laws of the State of Texas, and shall maintain said status during the Lease Term. Authority. The Partnership has all requisite power and authority to own its property, operate its business, enter into this Lease and consummate the transactions herein contemplated, and by proper action has duly authorized the execution and delivery of this Lease and the consummation of the transactions herein contemplated. Binding Obligations. This Lease is a valid obligation of the Partnership and is binding upon the Partnership in accordance with its terms.
(ii)
(iii)
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(iv)
No Default. The execution by the Partnership of this Lease and the consummation by the Partnership of the transactions contemplated hereby do not, as of the Execution Date, result in a breach of any of the terms or provisions of, or constitute a default or condition which upon notice or lapse of time or both would ripen into default under, the organizational documents of the Partnership or under any indenture, agreement, instrument or obligation to which the Partnership is a party or is bound. Consents. No other permission, approval or consent by third parties or any other governmental authorities is required in order for the Partnership to enter into this Lease or consummate the transactions herein contemplated, other than those which have been obtained. As-Is. Except as otherwise expressly provided herein, the Entertainment Center is accepted by the Partnership on an "AS IS, WHERE IS, WITH ALL FAULTS" basis, without representation or warranty of any kind, either express or implied, as to the condition of the Entertainment Center, its merchantability, its condition or its fitness for the Partnership's intended use or for any particular purpose. Balance Sheets and Income Statements. Throughout the Lease Term, the Partnership shall furnish to the City promptly (A) an unaudited, compiled annual balance sheet and income statement of the Partnership certified by an authorized representative of the Partnership and (B) the Partnership's regular quarterly balance sheet and income statement regarding the Entertainment Center that describes, in reasonable detail, the revenues and expenses of the Entertainment Center for such quarter and year-to-date (each on a calendar quarter and calendar year basis, as applicable).
(v)
(vi)
(vii)
20.
MISCELLANEOUS (a) Relationship. Nothing herein contained may be deemed or construed by the parties hereto, nor by any third party, as creating the relationship of principal and agent or of partnership or of joint venture between the parties hereto, it being understood and agreed that neither the computation of Rent, nor any other provision contained herein, nor any acts of the parties hereto, may be deemed to create any relationship between the parties hereto other than the relationship of landlord and tenant. Numbers and Gender. Whenever the singular number is used, the same includes the plural, and words of any gender include each other gender. Memorandum of Lease. On the Bond Closing Date, the City and the Partnership shall execute and deliver a Memorandum of Lease in a mutually approved form to provide public notice of this Lease. The Partnership, at its cost, may record the Memorandum of Lease in the Official Public Records of Dallas County, Texas. If this Lease expires or is validly terminated in accordance with its terms, then, within thirty (30) days after request from the City, the Partnership will deliver a recordable release of the Memorandum of Lease. The Partnership's
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obligations under this Section 20(c) survive the expiration or earlier termination of this Lease. (d) Heading. The headings, captions, and arrangements used in this Lease are, unless specified otherwise, for convenience only and shall not be deemed to limit, amplify, or modify the terms of this Lease, not affect the meaning thereof. References. All references to "Article", "Articles", "Exhibit", "Exhibits", "Section", "Sections", "Subsection", or "Subsections" contained in this Lease are, unless specifically indicated otherwise, references to articles, exhibits, sections, and subsections of this Lease. All Exhibits attached to this Lease are incorporated herein and made a part hereof for all purposes. Notices. All notices, demands, requests, approvals, or other communications required or permitted under this Lease must be in writing and, unless personal delivery is effected earlier, will be deemed delivered: (i) three (3) business days after deposit in the United States Mail, postage prepaid, registered or certified mail, return receipt requested, on a business day during business hours; or the next business day after delivery to any nationally recognized overnight delivery service on a business day during business hours for prepaid delivery on the next business day; or on the business day sent, if sent by facsimile (and the sending facsimile generates a written confirmation of sending) or e-mail prior to 3:00 p.m., Irving, Texas time, with a confirming copy being sent by one of the other specified methods on the same business day;
(e)
(f)
(ii)
(iii)
in each case addressed as follows: If to the City: City of Irving 825 West Irving Blvd. Irving, Texas 75060 Attention: City Manager Telephone: 972.721.2586 Fax: 972.721.2420 E-mail: tgonzalez@cityofirving.org With a copy to: City of Irving 825 West Irving Blvd. Irving. Texas 75060 Attention: City Attorney Telephone: 972.721.2541 Fax: 972.721.2750 E-mail: canderso@cityofirving.org
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and if to the Partnership to: Las Colinas Group, LP 222 West Las Colinas Blvd. Suite 1715-North Irving, Texas 75039 Attention: William F. Beuck, II Telephone: 972.444.2200 Fax: 972.444.2201 E-mail: bbeuck@lascolinasgroup.com With a copy to: CSE Commercial Real Estate 4956 N. O'Connor Blvd. Irving, Texas 75062 Attention: Charles E. Cotten Telephone: 469.417.0101 Fax: 469.417.0104 E-mail: charles@csecre.com And to: Munsch Hardt Kopf & Harr, P.C. 3800 Lincoln Plaza 500 North Akard Street Dallas, Texas 75201 Attention: Carl Klinke Telephone: 214.855.7533 Fax: 214.978.4310 E-mail: cklinke@munsch.com If to any Partnership Mortgagee, at an address to be provided by the Partnership as specified in Article 13. Any party or Partnership Mortgagee may change its address and specify as its address for the purposes hereof any other address in the United States of America by giving the other party and Partnership Mortgagee or both parties, as applicable at least fifteen (15) days' prior notice. Notices given by counsel for any party or any Partnership Mortgagee are effective as notices by the party or Partnership Mortgagee, as applicable. (g) Laws and Venue. This Lease is being executed and delivered, and is intended to be performed, in the State of Texas, and the applicable laws of such State and of the United States govern the rights and duties of the parties hereto and the validity, construction, enforcement and interpretation hereof. Venue for any action to interpret or enforce the rights of either party under this Lease will be in a court of competent jurisdiction in Dallas County, Texas. Partial Invalidity. If any provision of any of this Lease is held to be illegal, invalid, or unenforceable under present or future laws effective during the term hereof,
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such provision is fully severable; this Lease will be construed and enforced as if such illegal, invalid, or unenforceable provision had never comprised a part hereof; and the remaining provisions hereof will remain in full force and effect and will not be affected by the illegal, invalid, or unenforceable provision or by its severance therefrom. Furthermore, in lieu of such illegal, invalid, or unenforceable provision, there will be added automatically as a part of this Lease a provision as similar in terms to such illegal, invalid, or unenforceable provision as may be possible and be legal, valid, and enforceable. (i) Entire Agreement; Amendments. This Lease embodies the entire agreement between the parties relating to the subject matter hereof, supersedes all prior agreements and understandings, if any, relating to the subject matter hereof, including, without limitation, the Prior Lease, and may be amended only by an instrument in writing executed jointly by the City and the Partnership. Counterparts. This Lease may be executed in a number of identical counterparts, each of which constitutes an original and all of which constitute, collectively, one agreement; but in making proof of this Lease, it shall not be necessary to produce or account for more than one such counterpart. Facsimile and e-mail signatures are binding on the party providing same. Successors and Assigns. This Lease is binding upon and inures to the benefit of the City and the Partnership and their respective successors and assigns. Merger of Title. No merger of the Partnership's interest in this Lease or of the leasehold estate created by this Lease with the fee simple estate in the Entertainment Center, or any part thereof, will occur by reason of the fact that the same person may acquire or own or hold, directly or indirectly, (i) the Partnership's interest in this Lease or the leasehold created by this Lease and (ii) the fee estate in the Entertainment Center or any part thereof or any interest therein, and no such merger will occur unless and until all persons having an interest in the ownership interests described in (i) and (ii) above join in a written instrument effecting such merger and record same. Approvals; Consents. Neither the City nor the Partnership may unreasonably withhold, condition, or delay any consent or approval related to this Lease; provided, that the foregoing restriction does not apply to any approval required by the City in the exercise of its governmental functions. Time is of the Essence. Time is of the essence with respect to this Lease. Legal Costs. If either party does not comply with any of the terms of this Lease to be complied with on its part and the other party commences a legal proceeding or arbitration or mediation to enforce the terms of the Lease, the prevailing party in any such proceeding or arbitration or mediation will be entitled to receive from the other party its reasonable Legal Costs. Legal Costs means court costs, attorneys' and paralegals' fees, experts' fees, and other costs and expenses incurred in investigating, preparing, prosecuting, or settling any legal action or proceeding or arbitration, mediation, or other method of alternative dispute resolution.
(j)
(k) (l)
(m)
(n) (o)
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(p) (q)
Brokers. The City and the Partnership each represent and warrant to the other that it has not been represented by any broker in the negotiation of this Lease. Perpetuities. To the extent that the rule against perpetuities is applicable hereto, but not otherwise, the rights and options hereunder granted to the Partnership, any Partnership Mortgagee, or a designee of any Partnership Mortgagee, expire upon the earlier to occur (i) the last day of the last Renewal Term, or (ii) twenty (20) years after the date of death of the last to die of the following parties: (a) the present living issue of the forty-first President of the United States, George Herbert Walker Bush, or (b) each presently living person who was born in a hospital located in Dallas County, Texas, during the calendar year ending December 31, 2008. Obligations to Defend Validity of Lease. If litigation is filed by a third party against the Partnership or the City in an effort to enjoin either partys performance of this Lease, then the parties hereto shall take all commercially reasonable steps to support and defend the validity and enforceability of this Lease. Either party may intervene in any such matter in which the other party hereto has been named as a defendant. Each party is responsible for its Legal Costs in connection with any such litigation. Exclusive Dealing and Non-Compete Covenants. (i) During the Lease Term, the Partnership, Concessionaire, and any affiliated entity, successor or assign, will not solicit or accept any proposal of, or enter into any plan or agreement with, any county or any city other than the City regarding any project or facility having a purpose similar to the Entertainment Center (meaning any similarly sized performance venue with adjacent or incorporated retail and restaurant element(s)) within 150 miles of the Entertainment Center or within the Austin, San Antonio, and Oklahoma City metropolitan areas. Further, neither the Partnership nor Concessionaire will own or operate any other facility or project having a purpose similar to the Entertainment Center within 150 miles of the Entertainment Center or within the Austin, San Antonio, and Oklahoma City metropolitan areas. Nothing in this Section 20(s)(i) prevents the Partnership or Concessionaire from owning or operating a facility or project having a purpose similar to the Entertainment Center in the Houston metropolitan area. Nothing in this Section 20(s)(i) imposes any limitations on the concert promoter for the Entertainment Center. During the Lease Term, the City will not, directly or indirectly, own, manage, operate, control, finance, sponsor, develop, provide City-owned land or in any other way participate in or cooperate with (subject to Applicable Laws) any entertainment or multi use venue similar to the Entertainment Center located anywhere within the City, excluding any existing City facilities and excluding any similar facility currently under negotiation by the City as of the date of this Lease.
(r)
(s)
(ii)
(t)
Business Days. Business days are all weekdays other than New Year's Day, Martin Luther King, Jr. Day, Memorial Day, Independence Day, Labor Day,
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Thanksgiving Day and the day after Thanksgiving, Christmas Eve and Christmas Day. (u) Relationship with ICVB. The parties acknowledge that the ICVB is a department of the City of Irving, Texas, and that the Citys execution of this Lease shall bind the ICVB with respect to the provisions hereof, including the rights and obligations of the ICVB set forth in Section 5 herein. Charitable Fundraisers. At least once each calendar year, commencing with the calendar year in which the first day of the Initial Term occurs, the Partnership agrees to make the Performance Hall available at no cost (other than labor costs directly related to staging the event) to a non-profit, charitable organization or group of non-profit, charitable organizations that generally support the arts for a fundraising event for such organization(s). The Partnership may select the same organization(s) from year to year or may select a different organization(s) each year. The Partnership agrees, and shall cause the concert promoter for the Entertainment Center, to cooperate with such organization(s) in booking each fundraising event. The Partnership further agrees to provide a $100,000 food and beverage credit to the organization(s) for each annual fundraising event.
(v)
21.
CONCESSIONAIRE AGREEMENTS (a) Concessionaire Agreements. Each Concessionaire and any agreement between the Partnership and a Concessionaire (each a Concessionaire Agreement, and collectively the Concessionaire Agreements) shall be subject to the approval of the City in accordance with this Section 21. The Partnership represents and warrants to the City that the Partnership has entered into, and the City has approved, the following contracts with a Concessionaire: (i) (ii) Concepts Agreement dated as of May 28, 2010, between the Partnership and BB Concepts, LLC, a Texas limited liability company; Concession Agreement dated as of May 28, 2010, between the Partnership and B Concessionaire-Las Colinas, LLC, a Texas limited liability company, dba Texas Hospitality Group; Retail Sublease dated as of May 28, 2010, between the Partnership and B Retail, LLC, a Texas limited liability company; and Content Agreement dated as of June 3, 2010, between the Partnership and Blue Marble 360, LLC, a Texas limited liability company.
(iii) (iv)
Any new, replacement, or substitute Concessionaire Agreement, or material modification thereof, shall be in a form acceptable to the City. (b) Specific Requirements. Without limiting the generality of Section 21(a): (i) The Concessionaire Agreement with Concepts, or with such other Concessionaire responsible for developing concepts and intellectual property, must contain a provision requiring such Concessionaire to grant the City a license to use the Concepts Intellectual Property Rights to
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continue to operate the Entertainment Center only and not any other similar facility for the remainder of the Lease Term (including unexercised Renewal Terms) if the City terminates this Lease due to a default by the Partnership and also terminates the Concepts contract due to a default by Concepts; provided, however, the Partnership may satisfy this obligation by having such Concessionaire enter into an agreement in form and substance similar to the IP License Agreement or otherwise acceptable to the City. (ii) The Partnership shall cause B Concessionaire Las Colinas, LLC, or such other Concessionaire responsible for food and beverage operations, to maintain at all times during the Lease Term liquor liability insurance in an amount of at least $25,000,000 that otherwise complies with the provisions of this Agreement (including Article 11) as if the Partnership were required to maintain such insurance.
(c)
Subsequent Concessionaires. The City approves the Concessionaires specifically named in Section 21(a) above. The City may approve or not approve any subsequent Concessionaire in the Citys sole discretion; provided, however, if such subsequent Concessionaire is a Qualified Concessionaire, the Citys approval may not be unreasonably withheld or conditioned. As used herein, Qualified Concessionaire means one or more natural persons or an entity with at least 10 years professional experience in the area of operations for which such Concessionaire will be responsible in connection with the Entertainment Center, is sufficiently creditworthy to perform the obligations of the Concessionaire under its Concessionaire Agreement with the Partnership, has a good reputation in the business community and will not harm the reputation of the Entertainment Center. By way of example but not limitation with respect to the first criterion in the preceding, a food and beverage operations Concessionaire must have at least 10 years professional experience in operating restaurants or similar establishments as those in the Entertainment Center, but shall not be required to have experience in booking programming if such Concessionaire will not be responsible for performing that function for the Entertainment Center. Any Change of Control for any Concessionaire shall be deemed to be a change in the Concessionaire and, thus, a cause for the City to reapprove such Concessionaire and the agreements between the Partnership and such Concessionaire.
22.
PROMOTER PARTICIPATION The Citys obligations under this Lease are conditioned upon Concepts entering into a booking agreement with a concert producer and promoter approved by the City. The City preapproves Live Nation, AEG Worldwide, and Front Line Management, Inc. The Partnership and the City acknowledge that Concepts has entered into a Booking and Consulting Services Agreement Las Colinas Entertainment Center with Live Nation dated effective as of November 19, 2009, as amended by First Amendment dated as of April 14, 2010, and agree that such agreement or other agreement entered into in accordance with this Section 22 shall be in full force and effect with no default thereunder prior to the issuance of the Bonds; otherwise, the City may terminate this Lease and its participation hereunder.
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23.
RESIDENTIAL DEVELOPMENT RIGHTS Under Amended and Restated Supplementary Declaration No. 148, Las Colinas Area CXLVIII and Termination of Supplementary Declaration No. 207, Dallas County, Texas, by The Las Colinas Association, a Texas non-profit corporation, dated June 6, 2007, as Instrument No. 20070260683 in the Official Public Records of Dallas County, Texas (A&R SD 148), the City is the holder of the right to develop no more than one hundred (100) for sale condominiums or other for sale residential condominium units as specified in Section 148.a of A&R SD 148 and the PRC development rights as defined in Exhibit B attached to A&R SD 148 in Las Colinas Area CXLVIII (as defined therein) (collectively, the Residential Development Rights). Upon satisfaction of all Development Agreement Contingencies, the City assigns the Residential Development Rights to the Partnership for use in connection with the Site; but, this assignment terminates automatically as to any development rights not exercised by the Partnership or its successors or assigns within ten (10) years after the Bond Closing Date. If the Partnership gives the City notice that the Partnership intends to use any of the Residential Development Rights in connection with the Site, then the City and the Partnership will negotiate in good faith an appropriate amendment to this Lease and related agreements necessary to allow the Partnership to exercise the Residential Development Rights.
24.
ENVIRONMENTAL MATTERS (a) Environmental Investigation and Remediation. The Partnership is responsible for performing any environmental investigation and remediation work that may be required in connection with the use and occupancy of the Entertainment Center (or any portion thereof) caused by the presence of Hazardous Materials (defined below) in, on, under or about the Entertainment Center. Such environmental investigation and remediation work will be carried out in accordance with all Applicable Laws. The Partnership will notify and advise the City of the remediation the Partnership will undertake and the procedures to be used. The Partnership will complete the remediation with due diligence and comply with, and shall cause its agents and contractors to comply with, all Applicable Laws regarding the use, removal, storage, transportation, disposal and remediation of Hazardous Materials. The Partnerships obligation as provided above to undertake environmental investigation and remediation of the Entertainment Center is a continuing obligation of the Partnership throughout the Lease Term. Presence and Use of Hazardous Materials. The Partnership may not, without the Citys prior consent, keep on or around the Entertainment Center, for use, disposal, treatment, generation, storage, or sale, any substance designated as, or containing components designated as hazardous, dangerous, toxic, or harmful, including without limitation Hazardous Materials, or subject to regulation, by federal, state, or local law, regulation, statute, or ordinance, unless such use by the Partnership is in accordance with prudent property management practices with respect to the intended purpose and use of the Entertainment Center and is in compliance with all Applicable Laws. With respect to any such Hazardous Materials, the Partnership shall:
(b)
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(i)
Comply promptly with all government requirements for reporting, keeping, and submitting manifests, and obtaining and keeping current identification numbers. Submit to the City true and correct copies of all reports, manifests, and identification numbers at the same time as they are required to be and/or are submitted to the appropriate government authorities. Within thirty (30) days of the Citys request, submit written reports to the City regarding the Partnerships use, storage, treatment, transportation, generation, disposal, or sale of Hazardous Materials and provide evidence satisfactory to the City of the Partnerships compliance with the Applicable Laws. Allow the City or the Citys agent or representative to come on the Entertainment Center at all times to check the Partnerships compliance with all applicable government regulations regarding Hazardous Materials; provided, however, that the City will at all times use reasonable efforts to minimize any disruption to the use of the Entertainment Center by the Partnership. Comply with all Applicable Laws regarding the proper and lawful use, sale, transportation, generation, treatment, and disposal of Hazardous Materials. Any and all costs to the City and associated with the Citys routine inspection of the Entertainment Center and the Citys routine monitoring of the Partnerships compliance with this Section, including the Citys Legal Costs, will be the obligation and liability of the City; provided, however, that if it is ever determined that Hazardous Materials are present on, in, under or at the Entertainment Center in violation of this Section, then the Partnership shall be required to reimburse the City for all of the reasonable out-of-pocket costs incurred by the City with respect to the Citys inspection of the Entertainment Center and the Citys monitoring of the Partnerships use, storage, treatment, transportation and disposal of the Hazardous Materials that are located at the Entertainment Center.
(ii)
(iii)
(iv)
(v)
(c)
Cleanup Costs; Default, and Indemnification. The Partnership will be fully and completely liable for any and all cleanup costs, and any and all other charges, fees, and penalties (civil and criminal) imposed by any government authority with respect to the Partnerships use, disposal, transportation, generation, or sale of Hazardous Materials, in, on, under, or about the Entertainment Center. If the Partnership breaches its obligations under this Section and such breach is not cured following notice and within the applicable cure period, the City may take any and all action reasonably appropriate to remedy such breach, including taking all appropriate action to clean up or remediate any contamination resulting from the Partnerships use, generation, storage, or disposal of Hazardous Materials in violation of the provisions of this Lease, and the Partnership will promptly pay all reasonable out-of-pocket costs incurred by the City in connection therewith. The Partnership will defend, indemnify, and hold harmless the City, its officers, agents, employees, and Council Members, from and against any and all claims, demands, liabilities, causes of action, suits, judgments,
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damages, and expenses (including reasonable out-of-pocket Legal Costs of clean up and remediation) arising from the Partnerships failure to comply with the provisions of this Section. This indemnity provision shall survive termination or expiration of this Lease or the Partnerships right of possession hereunder, even if the Citys knowledge of any breach by the Partnership of the Partnerships obligations under this Section first arises after the expiration or termination of the Lease Term. (d) Hazardous Materials. The term Hazardous Materials means any substance, material, or waste now or hereafter classified or considered to be hazardous, toxic, or dangerous under any federal, state, or local laws, rules and regulations affecting the Entertainment Center relating to pollution or the protection or regulation of human health, natural resources, or the environment, including, but not limited to, as defined in the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, the Texas Hazardous Substances Spill Prevention and Control Act, as amended, the Resource Conservation and Recovery Act of 1976, as amended, and regulations promulgated thereunder, but does not include normal cleaning and restaurant supplies and petroleum products in vehicles in the Parking Facilities to the extent used in compliance with Applicable Laws.
25.
PUBLIC AREA PROGRAMMING FUND A Public Area Programming Fund will be funded in accordance with Section 6(g)(iii) and will be used solely for the purpose of funding the costs of Festivals and other promotional activities on the Walkway, the Promenade, the Plaza, and other outdoor areas of the Entertainment Center (excluding any general overhead and administrative expenditures and any capital expenditures). The Public Area Programming Fund will be held in a bank account selected by the City on which the City will have signatory authority. During each calendar year, the Partnership will incur and pay expenses contemplated under this Section 25 in an amount not less than the amount of funds held in the Public Area Programming Fund as of the last day of the prior calendar year. If the Partnership proposes that any amounts be funded from the Public Area Programming Fund, then the Partnership must provide the City with plans and a budget for the proposed promotional activities no later than 60 days prior to the date of the proposed promotional activities. If the City receives a timely request for promotional activities funding, then the City shall either approve the request or submit detailed objections to the plans or the budget for the promotional activities to the Partnership within 20 Business Days after its receipt of the Partnerships request. If the City timely gives notice of detailed objections, then the City and the Partnership will cooperate in good faith to resolve the City's objections. Once the City approves the request for the proposed promotional activities, then the Partnership will proceed with the proposed promotional activities and the City will release funds to the Partnership from the Public Area Programming Fund to apply against the costs of the proposed promotional activities; provided, that the Partnership will be liable for all costs, liabilities, and obligations related to the promotional activities contemplated in this Section 25 in excess of the amounts funded from the Public Area Programming Fund. Upon the expiration or earlier termination of this Lease or the removal of the Partnership as the lessee hereunder, the funds in the Public Area Programming Fund will be paid to the City or be handled in such other manner as the City designates. Excess funds in the Public Area
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Programming Fund will be deposited by the City in the Capital Improvements Reserve in an amount mutually determined by the City and the Partnership (in any event, in such a manner as may be limited by any covenants made by the City in connection with the EC Bonds). Any excess funds not deposited to the Capital Improvements Reserve will be paid to the City or be handled in such other manner as the City designates (in any event, in such a manner as may be limited by any covenants made by the City in connection with the EC Bonds). 26. BONDS AND FUTURE AMENDMENTS The City and the Partnership agree to enter into one or more amendments to this Agreement as may be necessary or reasonably appropriate, but only to the extent necessary or reasonably appropriate, to conform with the ordinance(s) governing the Bonds or any documents related to the Bonds. [Signature pages follow.]
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EXECUTED as of the Execution Date first written above.
THE CITY OF IRVING
By: Herbert A. Gears, Mayor (Seal) ATTEST:
City Secretary APPROVED AS TO FORM:
City Attorney
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THE PARTNERSHIP: LAS COLINAS GROUP, LP, a Texas limited partnership By: Las Colinas Group GP, LLC, a Texas limited liability company, its General Partner
By: Name: Title:
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EXHIBIT A LEGAL DESCRIPTION OF THE SITE Being a tract of land in the McKinney and Williams Survey, Abstract No. 1056, and being part of a 25.832 acre tract of land described in deed to the City of Irving, a municipality and a home rule city in the State of Texas, as recorded in Volume 2001214, Page 5844, D.R.D.C.T., and all of an 0.863 acre abandonment of Fuller Drive as recorded in City of Irving Ordinance Number ORD2008- 8980, D.R.D.C.T., and being more particularly described as follows: BEGINNING at a point for the northeast end of a corner clip at the intersection of Fuller Drive (a 135 foot wide right-of-way), as recorded in Volume 82073, Page 878, D.R.D.C.T., and Las Colinas Boulevard (a 110 foot wide right-of-way), as recorded In Volume 2003168, Page 2909, D.R.D.C.T., from which a 1/2-inch iron rod with yellow plastic cop stamped "Halff Associates, Inc." (hereinafter referred to as "with cap") found for the southwest end of said corner clip bears South 32 degrees 21 minutes 27 seconds West, a distance of 56.55 feet, said point being a southeasterly corner of said 25.832 acre tracts. THENCE South 32 degrees 21 minutes 27 seconds West, along the north right-of-way line of said Fuller Drive, a distance of 9.17 feet to a point for corner in the new north right-of-way line of said Fuller Drive according to said Ordinance Number ORD-2008-8980, said point being the beginning of a non-tangent circular curve to the right with a radius of 3,748.41 feet, and whose chord bears South 08 degrees 19 minutes 05 seconds East, a distance of 20.38 feet; THENCE along said new north right-of-way Iine of Fuller Drive, the following bearings and distances: Southeasterly, along said curve to the right, through a central angle of 00 degrees 18 minutes 41 seconds, an arc distance of 20.38 feet to the point of compound curvature of a non-tangent circular curve to the right with a radius of 90.00 feet, and whose chord bears South 34 degrees 21 minutes 53 seconds West, a distance of 122.39 feet; Southwesterly along said curve to the right, through a central angle of 85 degrees 40 minutes 43 seconds, an arc distance of 134.58 feet to a point or corner; South 77 degrees 12 minutes 11 seconds West, a distance of 391.96 feet to a point for the beginning of a circular curve to the right with a radius of 88.14 feet, and whose chord bears North 75 degrees 08 minutes 54 Seconds West, a distance of 81.80 feet; Northwesterly, along, said curve to the right, through a central angle of 55 degrees 17 minutes 44 seconds, an arc distance of 85.06 feet to a point for corner at the intersection of said Fuller Drive, and State Highway No. 114 (also referred to as John Carpenter Freeway, a variable width right-of-way), said corner being the point of compound curvature of a non- tangent circular curve to the right with a radius of 3,669.72 feet, and whose chord bears North 07 degrees 46 minutes 38 seconds West, a distance of 667.12 feet;
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THENCE Northerly, along the east right-of-way line of said State Highway No. 114, and along said curve to the right, through a central angle of 10 degrees 25 minutes 49 seconds, an arc distance of 668.04 feet to a 1/2-inch iron rod with cap stamped "Prism Survey" found for corner; THENCE North 01 degree 45 minutes 58 seconds West, along said east right-of-way line, a distance of 119.38 feet to a 1/2-inch iron rod with cap stamped "Prism Survey" found for corner; THENCE North 00 degrees 16 minutes 16 seconds West, along said east right-of-way line, a distance of 449.64 feet to point for corner, from which a 1/2-inch iron rod with cap stamped "Prism Survey" found for the northwest corner of said 25.832 acre tract bears North 00 degrees 16 minutes 16 seconds West, a distance of 25.93 feet; THENCE departing said east right-of-way line, and over and across said 25.832 acre tract, the following bearings and distances: South 89 degrees 59 minutes 47 seconds East, a distance of 630.92 feet to a point for the beginning of a non-tangent circular curve to the left with a radius of 43,943.00 feet; and whose chord bears North 23 degrees 50 minutes 37 seconds East, a distance of 425.68 feet; Northeasterly, along said curve to the left, through a central angle of 00 degrees 33 minutes 18 seconds, an arc distance of 425.68 feet to a point for the beginning of a non-tangent circular curve to the right with a radius of 35.96 feet, and whose chord bears South 67 degrees 20 minutes 31 seconds East, a distance of 1.64 feet; Southeasterly, along said curve to the right, through a central angle of 02 degrees 36 minutes 48 seconds, on arc distance of 1.64 feet to point for corner; South 66 degrees 02 minutes 19 seconds East, a distance of 67.88 feet to a point for the beginning of a non-tangent circular curve to the right with a radius of 35.96 feet, and whose chord bears South 35 degrees 50 minutes 42 seconds East, a distance of 36.24 feet; Southeasterly, along said curve to the right, through a central angle of 60 degrees 30 minutes 58 seconds, an arc distance of 37.98 feet to a point for corner in the west right- of-way line of said Las Colinas Boulevard; THENCE South 23 degrees 58 minutes 11 seconds West, along said west right-of-way line, a distance of 368.11 feet to a point for the beginning of a circular curve to the left with a radius of 1,687.02 feet, and whose chord bears South 06 degrees 04 minutes 55 seconds West, a distance of 1,036.35 feet; THENCE SOUTHERLY, ALONG SAID CURVE TO THE LEFT, AND ALONG SAID WEST RIGHT-OF-WAY LINE THROUGH A CENTRAL ANGLE OF 35 DEGREES 46 MINUTES 32 SECONDS, AN ARC DISTANCE OF 1,053.38 FEET TO THE POINT OF BEGINNING AND CONTAINING 772,074 SQUARE FEET, OR 17.724 ACRES OF LAND, MORE OR LESS.
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EXHIBIT B LIST OF THE APPROVED PLANS
[LCG will provide a list of Approved Plans]
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EXHIBIT C
60-40 RESTAURANTS
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EXHIBIT D FIXED RENT DURING SECOND AND THIRD RENEWAL TERMS The Fixed Rent payable for each month during each of the second Renewal Term and the third Renewal Term shall be the prevailing rental rate (the Prevailing Rental Rate) at the commencement of such Renewal Term for entertainment venues of comparable quality, size, and uses as the Entertainment Center. Not earlier than 24 months, nor later than 18 months, prior to the scheduled expiration of the first or second Renewal Term, as applicable, the Partnership shall deliver to the City in writing a proposed Prevailing Rental Rate for the upcoming Renewal Term (the Partnership PRR) and supporting information evidencing the Partnerships determination of its Partnership PRR. Within 30 days after receipt of the Partnerships notice of its Partnership PRR, the City shall notify the Partnership in writing whether the City accepts the Partnership PRR and, if not, the notice must include the Citys determination of the Prevailing Rental Rate (the City PRR), together with supporting information evidencing the Citys determination of its City PRR. If the City and the Partnership do not agree on the determination of the Prevailing Rental Rate, the parties shall negotiate in good faith to determine the Prevailing Rental Rate for the upcoming Renewal Term; provided, that if the parties do not agree upon the Prevailing Rental Rate for the upcoming Renewal Term within 30 days after the Citys notice to the Partnership of the City PRR, then the determination of the Prevailing Rental Rate will be made in accordance with the following provisions: (a) The City and the Partnership shall each mutually approve a qualified commercial/retail broker with at least ten years experience in the Irving-Dallas-Fort Worth area (a Qualified Broker, the Qualified Broker so mutually approved being the Approved Broker). Within 30 days after being mutually approved, the Approved Broker shall deliver written notice to the City and the Partnership stating whether the City PRR or the Partnership PRR is closer to the Approved Broker's determination of the Prevailing Rental Rate, which PRR selected by the Approved Broker will be the Prevailing Rental Rate for the upcoming Renewal Term.. The Approved Broker shall not provide to the City or the Partnership a copy of, or otherwise disclose to the public, its determination of the Prevailing Rental Rate or the method by which it made its determination. The Approved Brokers decision is final and binding on the City and the Partnership. (b) If the City and the Partnership do not mutually approve an Approved Broker within 60 days after the Citys notice to the Partnership of the City PRR, then each party shall select a Qualified Broker. The two Qualified Brokers shall jointly approve a third Qualified Broker to serve as the Approved Broker in accordance with the provisions of clause (a) above. If the two Qualified Brokers are unable to agree upon a third Qualified Broker to serve as the Approved Broker within 10 days after being appointed, then either party may appeal to the President of the Dallas Chapter of the American Arbitration Association and request that he select a Qualified Broker to serve as the Approved Broker, which selection will be binding on the parties. The Partnership shall pay all costs incurred by the Approved Broker mutually approved by the City and the Partnership. Each party shall pay the costs incurred by the Qualified Broker it appoints and 50% of the costs incurred by the Approved Broker mutually approved by the Qualified Brokers or selected by the President of the Dallas Chapter of the American Arbitration Association.
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AGENDA ITEM SUMMARY

RES-2009-246 RES-2009-65 ATTACHMENTS:

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CITY OF IRVING COUNCIL RESOLUTION NO. (ID # 3504)

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SECOND AMENDED AND RESTATED ENTERTAINMENT CENTER LEASE AGREEMENT

THE CITY OF IRVING

LAS COLINAS GROUP, LP

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(j) (k) 15.

Bankruptcy ........................................................................................................ 33 Default by the City ............................................................................................. 34

16. 17. 18. 19.

22. 23. 24.

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(c) (d) 25. 26.

Cleanup Costs; Default, and Indemnification ..................................................... 46 Hazardous Materials ......................................................................................... 47

PUBLIC AREA PROGRAMMING FUND....................................................................... 47 BONDS AND FUTURE AMENDMENTS ....................................................................... 48

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(e) (f) (g)

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