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HomeMy WebLinkAboutOctober 30, 2015 Agendatru�Rltl �'� � k, Friday, October 30, 2015 City of Denton Meeting Agenda City Council 2:30 PM City Hall 215 E. McKinney St. Denton, Texas 76201 www.cityofdenton.com Work Session Room After determining that a quorum is present, the City Council of the City of Denton, Texas will convene in a Special Called Work Session on Friday, October 30, 2015 at 2:30 p.m. in the Council Work Session Room at City Hall, 215 E. McKinney Street, Denton, Texas at which the following items will be considered: 1. Work Session Reports A. ID 15 -1058 Receive a report, hold a discussion, and give staff direction regarding a proposed Economic Development Chapter 380 Grant Agreement with O'Reilly Hotel Partners Denton for a convention center and hotel development to be located in Rayzor Ranch Town Center and a proposed third amendment to the economic development program grant agreement between the City of Denton and Allegiance Hillview (RED Development). Attachments: 1 Ordinance 380 agreement 2 OReilly 380 FINAL 102215 3 RED third amendment ordinance 4 Draft Third Amendment Exhibit 5 OReilly mgmt agrmt 102215 B. ID 15 -1025 Receive a report, hold a discussion, and give staff direction regarding a management contract between the City of Denton and the Dallas Entrepreneur Center for the management of co- working space and an entrepreneur center located at 608 East Hickory, Denton, Texas, 76201. Attachments: Exhibit 1 - Ordinance 2015 -300 Exhibit 2 - Management Agreement Exhibit 3 - Management Ordinance Following the completion of the Work Session, the City Council will convene in a Closed Meeting to consider specific items when these items are listed below under the Closed Meeting section of this agenda. The City Council reserves the right to adjourn into a Closed Meeting on any item on its Open Meeting agenda consistent with Chapter 551 of the Texas Government Code, as amended, or as otherwise allowed by law. 1. Closed Meeting: A. ID 15 -1059 Deliberations regarding Economic Development Negotiations - Under Texas Government Code Section 551.087. Receive a report and hold a discussion regarding economic development issues regarding a proposed economic development incentive agreement for O'Reilly City ofDenton Page I Printed on 1012612015 City Council Meeting Agenda October 30, 2015 Hotel Partners Denton and a proposed third amendment to the economic development program grant agreement between the City of Denton and Allegiance Hillview (RED Development). This discussion shall include commercial and financial information the City Council has received from O'Reilly Hotel Partners Denton and Allegiance Hillview (RED Development), business prospects which the City Council seeks to have locate, stay, or expand in or near the territory of the city, and with which the City Council is conducting economic development negotiations; deliberate the offer of a financial or other incentive to O'Reilly Hotel Partners Denton and the amendment of the economic development program grant agreement between the City of Denton and Allegiance Hillview (RED Development). B. ID 15 -1078 Consultation with Attorneys Under Texas Government Code Section 551.071. Consult with the City's attorneys regarding legal issues associated with a proposal for amending the Oak - Hickory Historic District overlay ordinance where a discussion of these legal matters would conflict with the duty of the City's attorneys under the Texas Disciplinary Rules of Professional Conduct of the State Bar of Texas. C. ID 15 -1087 Deliberations regarding Economic Development Negotiations - Under Texas Government Code Section 551.087. Receive a report and hold a discussion regarding economic development issues regarding a proposed economic development incentive agreement for Project Cartoon. This discussion shall include commercial and financial information the City Council has received from Project Cartoon, a business prospect, which the City Council seeks to have locate, stay, or expand in or near the territory of the city, and with which the City Council is conducting economic development negotiations; deliberate the offer of a financial or other incentive to Project Cartoon. D. ID 15 -1088 Deliberations Regarding Real Property Under Texas Government Code Section 551.072; Deliberations Regarding Economic Development Negotiations Under Texas Code Section 551.087; Consultation with Attorneys Under Texas Government Code Section 551.071 Receive information from staff, discuss, deliberate and provide staff with direction regarding the potential acquisition, exchange, lease or sale of real property located generally in the 200 block of N. Cedar and the 200 block of W. McKinney in the City of Denton, Denton County, Texas. Consultation with the City's attorneys regarding legal issues associated with the potential real property matter where a public discussion of these legal matters would conflict with the duty of the City's attorneys to the City of Denton and the Denton City Council under Disciplinary Rules of Professional Conduct of the State Bar of Texas jeopardize the City's legal position in any administrative proceeding litigation. the Texas , or would or potential Following the completion of the Closed Meeting, the City Council will convene in an Open Meeting at which the following items will be considered: City ofDenton Page 2 Printed on 1012612015 City Council Meeting Agenda October 30, 2015 1. Items for Individual Consideration A. ID 15 -1060 Consider adoption of an ordinance approving an Economic Development Agreement under Chapter 380 of the Local Government Code to promote economic development and to stimulate business activity in the city of Denton and under Chapter 351 to promote travel, tourism, meetings, conventions, and events for the economic growth of the city of Denton, between the City of Denton and O'Reilly Hotel Partners Denton (OHPD), regarding the development of an approximate 12 acre parcel of land generally located on the south side of U.S. Highway 380 (West University Drive) ending at Scripture Road, between I -35 and North Bonnie Brae Street in Denton, Texas; authorizing the expenditure of funds therefor; and providing an effective date. Attachments: OReilly ordinance and 380 with exhibits B. ID 15 -1061 Consider adoption of an Ordinance of the City of Denton, Texas approving a third amendment to an Economic Development Program Grant Agreement dated June 15, 2010 between the City of Denton and Allegiance Hillview; and providing an effective date. Attachments: Exhibit 1 - Ordinance 2014 -143 Second Amendment Exhibit 2 - Ordinance 2010 -142 First Amendment Exhibit 3 - Ordinance 2010 -210 Grant Agreement Exhibit 4 - Draft Third Amendment Exhibit 5 - Draft Ordinance C. ID 15 -1062 Consider adoption of an ordinance of the City Council of the City of Denton, Texas, authorizing the City Manager to execute a Management Agreement between the City of Denton and O'Reilly Hotel Partners Denton for the management of the Denton Convention Center; and providing an effective date. Attachments: 1 Ordinance management agreement 2 OReilly mgmt aqrmt 102315 OReilly ordinance and 380 with exhibits D. ID 15 -1026 Consider adoption of an ordinance of the City Council of the City of Denton, Texas, authorizing the City Manager to execute a Management Agreement between the City of Denton and the Dallas Entrepreneur Center for the management of the entrepreneur center located at 608 East Hickory, Suite 128, Denton, Texas, 76201; and providing an effective date. Attachments: Exhibit 1- Ordinance 2015 -300 Exhibit 2 -Draft Management Agreement Exhibit 3 -Draft Ordinance E. ID 15 -1080 Consider adoption of an ordinance of the City of Denton authorizing the City Manager, or his designee, to execute on behalf of the City of Denton a lease of property between the City of Denton, Monsignor King Outreach Center in substantially the same form as attached hereto and incorporated herein by reference, for the operation of a homeless shelter at 300 Woodrow Lane; and providing for an City ofDenton Page 3 Printed on 1012612015 City Council Meeting Agenda October 30, 2015 effective date. Attachments: Exhibit 1 MKOC Lease - Draft 10222015 Exhibit 2 MKOC Lease Exhibit 3 MKOC Lease - 10222015 2. Concluding Items A. Under Section 551.042 of the Texas Open Meetings Act, respond to inquiries from the City Council or the public with specific factual information or recitation of policy, or accept a proposal to place the matter on the agenda for an upcoming meeting AND Under Section 551.0415 of the Texas Open Meetings Act, provide reports about items of community interest regarding which no action will be taken, to include: expressions of thanks, congratulations, or condolence; information regarding holiday schedules; an honorary or salutary recognition of a public official, public employee, or other citizen; a reminder about an upcoming event organized or sponsored by the governing body; information regarding a social, ceremonial, or community event organized or sponsored by an entity other than the governing body that was attended or is scheduled to be attended by a member of the governing body or an official or employee of the municipality; or an announcement involving an imminent threat to the public health and safety of people in the municipality that has arisen after the posting of the agenda. CERTIFICATE I certify that the above notice of meeting was posted on the bulletin board at the City Hall of the City of Denton, Texas, on the day of , 2015 at o'clock (a.m.) (p.m.) CITY SECRETARY NOTE: THE CITY OF DENTON CITY COUNCIL WORK SESSION ROOM IS ACCESSIBLE IN ACCORDANCE WITH THE AMERICANS WITH DISABILITIES ACT. THE CITY WILL PROVIDE SIGN LANGUAGE INTERPRETERS FOR THE HEARING IMPAIRED IF REQUESTED AT LEAST 48 HOURS IN ADVANCE OF THE SCHEDULED MEETING. PLEASE CALL THE CITY SECRETARY'S OFFICE AT 349 -8309 OR USE TELECOMMUNICATIONS DEVICES FOR THE DEAF (TDD) BY CALLING 1- 800 - RELAY -TX SO THAT A SIGN LANGUAGE INTERPRETER CAN BE SCHEDULED THROUGH THE CITY SECRETARY'S OFFICE. City ofDenton Page 4 Printed on 1012612015 City Hall City of Denton 215 E. McKinney St. Denton, Texas 76201 www.cityofdenton.com D EN'FON File #: ID 15 -1058, Version: 1 Legislation Text Agenda Information Sheet DEPARTMENT: Development Services /Economic Development CM /ACM: Jon Fortune DATE: October 30, 2015 SUBJECT Receive a report, hold a discussion, and give staff direction regarding a proposed Economic Development Chapter 380 Grant Agreement with O'Reilly Hotel Partners Denton for a convention center and hotel development to be located in Rayzor Ranch Town Center and a proposed third amendment to the economic development program grant agreement between the City of Denton and Allegiance Hillview (RED Development). BACKGROUND "Destination Denton" is our City's vision for the future, and the City's Vision Statement reads in part that "Denton is an identifiable and memorable destination." O'Reilly Hotel Partners Denton's (OHPD) proposed convention center and hotel development can help Denton realize that vision by meeting growing demand for significant meeting and hotel space to accommodate visitors to our community. OHPD's plans include the construction of a 285 -318 room Embassy Suites Hotel, an approximately 70,000 - square -foot convention center, and a Houlihan's restaurant. The anticipated convention center meeting space is approximately 37,850 square feet, the same size as was previously planned for their Denton project located at the University of North Texas (UNT). The meeting space would be of sufficient size to accommodate conventions with up to 650 participants with a Grand Banquet room that will hold up to 1,750 people for banquet -style events. The hotel and convention center would be managed by O'Reilly Hospitality Management (OHM). The current proposal from OHPD varies significantly from the previous project at the UNT location. The following are the major advantages to the City under the new proposal: • The convention center and hotel will be located in the Rayzor Ranch Town Center, allowing it to serve as a catalyst project to ensure more timely and quality development. As a major anchor for the Town Center, the convention center and hotel can capitalize on the synergy associated with the planned shopping, entertainment, and restaurants located nearby. • The City is not being asked to fund any element of construction, nor will the City own the convention center. As such, the City would not issue any public debt for this project and would have virtually no financial risk. OHPD will privately finance the construction of the convention center and will be solely City of Denton Page 1 of 4 Printed on 10/26/2015 File #: ID 15 -1058, Version: 1 responsible for all debt obligations. • This proposal does not require the creation of a Tax Increment Reinvestment Zone as did the prior proposal. Financial participation by DISD or Denton County is not being sought. • Additional sales tax revenues can be captured through OHPD's participation in the Texas Direct Payment Program, under which they coordinate the purchase of construction materials in the City of Denton which will generate sales tax revenue to the City that was not previously possible. The City's financial contribution is limited only to the actual revenue generated by the project at the Rayzor Ranch site. To facilitate the development of this project, OHPD has approached the City to request a performance -based economic incentives via a Chapter 380 Economic Development Agreement that is based on the amount of revenue that the City previously considered using for the former convention center project. The incentive request is for a 100% rebate of the ad valorem tax, hotel occupancy tax, and sales tax generated by the proposed project for a maximum of 25 years or until the combined principal amount of $28 million and interest payment of $26 million, for a total aggregate amount of $54 million, is reached, whichever comes first. The incentive is capped at $54 million; however, the current pro forma staff prepared indicates the actual incentive will be between $35 -$40 million. There is an additional incentive request for 100% of the construction sales and use tax up to $850,000, at which time the grant will be reduced to 50 %. OHPD assumes all risk associated with the development of the project and their ability to receive any of these incentives is conditioned on their producing the anticipated project revenue. In order to rebate the hotel occupancy taxes generated by this convention center/hotel project to OHPD as part of a Chapter 380 Economic Development Grant, the City must have some management responsibility for the facility. As such, the City will assist in the management of certain sales missions and marketing functions for the Convention Center in order to further the public purpose of promoting economic growth and conventions, and to retain adequate public control over the use of public funds to ensure benefits to the City. It is necessary for the City and OHPD to enter into a management agreement to clearly define the parties' roles and responsibilities. The City plans to subcontract these duties to the Denton Convention and Visitors Bureau via an amendment to the existing contract. The location of the proposed hotel and convention center development by O'Reilly Hotel Partners Denton at Rayzor Ranch Town Center falls within the boundary of the existing Chapter 380 agreement between the City and Allegiance Hillview, L.P. (RED Development). Should the City Council approve an economic development program grant agreement with O'Reilly Hotel Partners Denton, it will be necessary to amend the Chapter 380 agreement with Allegiance Hillview, L.P. (RED Development). The current agreement with Allegiance Hillview, L.P. (RED Development) has the following terms: • 50% rebate on sales tax revenue for 20 years for Rayzor Ranch Marketplace (north side of University Drive); this incentive triggered in 2012 • 50% rebate on sales tax revenue for 25 years for Rayzor Ranch Town Center (south side of University Drive); this incentive is tiered and has an initial trigger of 300,000 square feet of retail space • The incentives allow for a $68 million total reimbursement to Allegiance Hillview, L.P. (RED Development) for public infrastructure costs. City of Denton Page 2 of 4 Printed on 10/26/2015 File #: ID 15 -1058, Version: 1 • While Allegiance Hillview, L.P. (RED Development) is in favor of the proposed convention center /hotel project at Rayzor Ranch Town Center, it has an impact on the Town Center development in the following ways: • O'Reilly Hotel Partners Denton acquired the land for the convention center /hotel project at a "pass through" cost from Allegiance Hillview, L.P. (RED Development) • The land for the convention center/hotel will no longer be available as retail acreage. • $4 -5 million in infrastructure improvements will have to be made to the site earlier than originally planned. Allegiance Hillview, L.P. (RED Development) estimates these changes will lead to a revenue loss of $5 million and has requested an amendment to its Chapter 380 Grant Agreement to mitigate that loss. The Economic Development Partnership (EDP) board recommended a 15% sales tax rebate on the Town Center until $5 million is reached. The thresholds require that 300,000 square foot of retail has been met and the convention center and hotel have a Certificate of Occupancy (8 -0). Staff analysis estimates that the $5 million will be reached in 11 years, 9 from Town Center contract initiation. PRIOR ACTION/REVIEW (Council, Boards, Commissions) October 14, 2015 - The Economic Development Partnership Board recommended approval of the economic development program grant agreement with O'Reilly Hotel Partners Denton (8 -0). October 14, 2015 - The Economic Development Partnership Board recommended approval of the third amendment to the economic development program grant agreement with Allegiance Hillview, L.P. (RED Development) (8 -0). May 13, 2014 - Second amendment to the economic development program grant agreement with Allegiance Hillview, L.P., is adopted by Council September 14, 2010 - First amendment to the economic development program grant agreement with Allegiance Hillview, L.P., is adopted by Council June 15, 2010 - Economic development program grant agreement with Allegiance Hillview, L.P., is adopted by Council EXHIBITS 1- Ordinance: Agreement with O'Reilly Hotel Partners Denton 2- Chapter 380 Grant Agreement with O'Reilly Hotel Partners Denton 3- Ordinance: Amended Agreement with Allegiance Hillview 4 -Third Amendment to the Chapter 380 Grant Agreement with Allegiance Hillview 5- Management Agreement Respectfully submitted: Aimee Bissett City of Denton Page 3 of 4 Printed on 10/26/2015 File M ID 15 -1058, Version: 1 Director of Development Services Prepared by: Caroline Booth Assistant Director for Economic Development City of Denton Page 4 of 4 Printed on 10/26/2015 ORDINANCE NO. AN ORDINANCE APPROVING AN ECONOMIC DEVELOPMENT AGREEMENT UNDER CHAPTER 380 OF THE LOCAL GOVERNMENT CODE TO PROMOTE ECONOMIC DEVELOPMENT AND TO STIMULATE BUSINESS ACTIVITY IN THE CITY OF DENTON AND UNDER CHAPTER 351 TO PROMOTE TRAVEL, TOURISM, MEETINGS, CONVENTIONS, AND EVENTS FOR THE ECONOMIC GROWTH OF THE CITY OF DENTON, BETWEEN THE CITY OF DENTON AND O'REILLY HOTEL PARTNERS DENTON (OHPD), REGARDING THE DEVELOPMENT OF AN APPROXIMATE 12 ACRE PARCEL OF LAND GENERALLY LOCATED ON THE SOUTH SIDE OF U.S. HIGHWAY 380 (WEST UNIVERSITY DRIVE) ENDING AT SCRIPTURE ROAD, BETWEEN I -35 AND NORTH BONNIE BRAE STREET IN DENTON, TEXAS; AUTHORIZING THE EXPENDITURE OF FUNDS THEREFOR; AND PROVIDING AN EFFECTIVE DATE. WHEREAS, O'Reilly Hotel Partners Denton ( "OHPD ") has an interest in land generally located in the Rayzor Ranch Town Center development, in the City of Denton, Denton County, Texas, which includes property located South of US Route 380 ending at Scripture Road, between IH -35 and North Bonnie Brae Street (the "Property "); and WHEREAS, OHPD has made a request, on or about September 7, 2015, of the City of Denton ( "City ") to establish economic development incentives under Chapter 380 of the Texas Local Government to stimulate the development of commercial property within the City of Denton and under Chapter 351 of the Texas Tax Code to promote travel, tourism, meetings, conventions, and events for the economic development and growth of the City of Denton on the Property ( "Grant Application "); and WHEREAS, the Grant Application was approved by the Economic Development Partnership Board as compliant with the City of Denton's Tax Abatement and Incentive Policy on October 14, 2015; and WHEREAS, City and OHPD have negotiated an Economic Development Agreement to reflect the terms of the incentive, a copy of which is attached hereto and made a part hereof by reference (the "Agreement "), as well as a related Management Agreement; and WHEREAS, the City Council of the City of Denton hereby finds that the contemplated use and development of the Property, the proposed improvements provided for in the Agreement, and the other terms and conditions of the Agreement, will promote economic development, increase employment, and stimulate business and commercial activity within the City of Denton for the benefit of the public and therefore meets the requirements under Chapter 380 of the Texas Local Government Code; and WHEREAS, the City Council of the City of Denton further finds that the proposed Project on the Property will promote tourism and the convention and hotel industry and therefore meets the requirements under Chapter 351 of the Texas Tax Code; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON, TEXAS HEREBY ORDAINS: SECTION 1. The recitals and findings contained in the preamble of this ordinance are incorporated into the body of this ordinance. SECTION 2. The City Manager, or his designee, is hereby authorized to execute the Agreement attached hereto on behalf of the City of Denton and to carry out the City's responsibilities and rights under the Agreement, including without limitation the authorization to make the expenditures set forth in the Agreement. SECTION 3. This ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the day of , 2015. ATTEST: JENNIFER WALTERS, CITY SECRETARY am APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY J-- Page 2 CHRIS WATTS, MAYOR ECONOMIC DEVELOPMENT AGREEMENT WITH O'REILLY HOTEL PARTNERS — DENTON, LLC This Economic Development Agreement ( "Agreement ") is made and entered into as of the effective date provided for below, by O'REILLY HOTEL PARTNERS — DENTON, LLC, a Missouri limited liability company, located at 2808 S. Ingram Mill Road, Building C100, Springfield, Missouri, 65804 ( "Grantee "), and the CITY OF DENTON, a Texas municipal corporation, located at 215 E. McKinney Street, Denton, Texas 76201 (the "City ") for the purposes and considerations stated herein. The City and the Grantee are collectively referred to as the "Parties." WHEREAS, this Agreement is authorized pursuant to Article III, Section 52 -a of the Texas Constitution and Chapter 380 of the Texas Local Government Code (the "Act ") to promote local economic development and to stimulate business and commercial activity in the City of Denton, and pursuant to Chapter 351 of the Texas Tax Code to promote travel, tourism, meetings, conventions, and events for the economic development and growth of the City of Denton and economic benefit of the Parties; and WHEREAS, Grantee owns or is under contract to acquire a tract of land generally located in the Rayzor Ranch Town Center development, Denton, Texas 76201, which is within the city limits of the City of Denton, Denton County, Texas, which includes property located South of US Route 380 ending at Scripture Road, between IH -35 and North Bonnie Brae Street, and more specifically described in Exhibit "A" attached hereto and incorporated by reference as if set forth at length herein (the "Property "); and WHEREAS, the Property is located in the Rayzor Ranch Overlay District which maintains requirements for design and architectural standards that will control when not inconsistent with this Agreement, pursuant to Denton Development Code 35.7.15; and WHEREAS, the Property is also located in the Rayzor Ranch Public Improvement District No. 1 ( "PID"), upon which special assessments have been levied by the City within the PID to cover the issuance of PID Bonds that may be used to fund actual costs of authorized public improvements on the Property, such public improvements to be dedicated to the City in accordance with City of Denton Resolution R2014 -022, and that said PID assessments are not waived by this Agreement; and WHEREAS, Grantee desires to construct a 285 -318 room Embassy Suites hotel "Hotel "), an approximately 70,000- square -foot convention center ( "Convention Center "), and a Houlihan's restaurant ( "Restaurant ") on the Property with an estimated capital investment of approximately $93 million ( "Project "); and WHEREAS, the Grantee, by separate agreement, is delegating to the City certain management functions of a Convention Center, including the visitors' programs and activities in accordance with the terms, provisions, and requirements of the separate agreement; and WHEREAS, on or about September 7, 2015, Grantee submitted a City of Denton Incentive Application ( "Grant Application ") shown in Exhibit "B" concerning the contemplated use and development of the Property in order to request economic development incentives to defray a portion or all of the costs of the development, construction and operation of the Project pursuant to the Act; and WHEREAS, the Grant Application was reviewed by the Economic Development Partnership Board ( "EDP board ") in accordance with the City of Denton's Tax Abatement and Incentive Policy on October 14, 2015 and the EDP board found the Project meets the qualifications for tax incentives and recommended approval of the incentives as outlined herein; and WHEREAS, the City intends to provide Grantee with economic development incentives subject to the terms herein until the earlier of the following: (1) 25 years; or (2) the combined principal amount of $28 million and interest payment of $26 million for a total aggregate amount of $54 million is reached; and WHEREAS, the City Council of the City of Denton hereby finds that the contemplated use and development of the Property, the proposed improvements provided for herein, and the other terms and conditions of this Agreement, will promote economic development, increase employment, and stimulate business and commercial activity within the City of Denton for the benefit of the public and therefore meets the requirements under Chapter 380 of the Texas Local Government Code; and WHEREAS, the City Council of the City of Denton further finds that the proposed Project on the Property will promote tourism and the convention and hotel industry and therefore meets the requirements under Chapter 351 of the Texas Tax Code; and NOW, THEREFORE, the City and Grantee for and in consideration of the Property and the promises contained herein do hereby contract, covenant and agree as follows: I. DEFINITIONS "Approved Franchise" means a franchise agreement approved by the City with an Approved Franchisor whereby O'Reilly Hotel Partners — Denton, LLC is permitted to operate the hotel and restaurant using the name and reservation system of any Approved Franchisor. "Approved Franchisor" means, initially, an Embassy Suites and a Houlihan's Restaurant and Bar; provided that, from and after the date the hotel opens for business to the public throughout the term of the Approved Franchise and in the event, after the expiration of the Approved Franchise, another franchise is entered into, such term after approval by the City within the City's sole discretion, shall also include a national or 2 international hotel franchisor for a Comparable Hotel Property and /or a national or international restaurant franchisor for a specific restaurant product of the same or higher quality than Houlihan's Restaurant and Bar. "Capital Investment" means the total actual capital cost to Grantee for the acquisition of land, development, and construction of the Project, including a reasonable capital operating reserve, and the furniture and equipment installed at the Project. "City HOT Returns" means City of Denton Hotel/Motel Occupancy Tax Reports on which the Grantee or other persons report and remit City of Denton hotel occupancy taxes imposed under Chapter 351 of the Texas Tax Code on amounts paid for hotel rooms in the Proj ect. Such Reports shall be submitted by the Grantee the first week of each month using the prior month's data and shall be in the form attached as Exhibit "C" hereto. "Comparable Convention Center" means the operation and maintenance of the Convention Center in a manner such that its condition shall demonstrate refined, high quality, and fully functional appointments; furniture, fixtures, and equipment; exterior and interior finishes; landscaping; and mechanical, electrical, and structural components consistent with convention centers of comparable size and operation within the State of Texas that are affiliated with Comparable Hotel Properties. For the purposes of this Economic Development Agreement, the term Comparable Convention Center shall include, as of the Effective Date (but which may not be included in the future if such properties no longer meet the definition of "Comparable Convention Centers "), the San Marcos, Texas, convention center and the Frisco, Texas, convention center. The City reserves the right to inspect the Convention Center in the Project from time to time as necessary to maintain compliance herein. "Comparable Hotel Properties" means a hotel that (1) is a full- service, "convention - oriented hotel" (not including so- called "budget" or "limited service" hotels or motels) or, (2) has at least two hundred fifty (250) keys, (3) contains features, finishes, and amenities that are available in hotels of similar age that are at all times during the term of this Economic Development Agreement, maintained so as to be considered an upscale, full- service, "convention- oriented" or full - service hotel, as applicable, that is operated and maintained according to standards similar to those of the Embassy Suites brand as such brand standards exist on the Effective Date of this Agreement, and (4) is located within the State of Texas. For the purposes of this Economic Development Agreement, the term Comparable Hotel Properties shall include, as of the Effective Date (but which may not be included in the future if such properties no longer meet the definition of "Comparable Hotel Properties "), Embassy Suites —San Marcos, Texas and Embassy Suites Frisco, Texas. "Convention Center" means an upscale convention center facility of approximately 70,000 square feet in size under roof, containing meeting space of approximately 37,850 square feet that will accommodate conventions with up to 650 people and a grand banquet room that will accommodate up to 1,750 people for banquet -style events, and related improvements, including landscaping, the required parking spaces as determined by the City's development standards, and required infrastructure. The convention center facility 3 shall be managed in whole or part by the City and shall be primarily used to host conventions and meetings. "Force Majeure" means any contingency or cause beyond the reasonable control of a party including, without limitation, acts of God or the public enemy, acts of terrorism, war, riot, civil commotion, insurrection, government or de -facto governmental action (unless caused by acts or omissions of the party), fires, explosions, rain or other weather delays, floods, strikes, slowdowns or work stoppages. "Full- service Hotel" means mid - price, upscale or luxury hotel with a restaurant, lounge facilities, and meeting space as well as minimum service levels including bell service and room service. "Hotel" means a building in which members of the public obtain sleeping accommodations for consideration. "Improvements" mean the construction and equipping of the Property as set forth in the Grant Application, including but not limited to: (1) costs related to the development and improvement of the real estate, including, without limitation, construction costs and design and engineering costs; and (2) tangible personal property located on or at the Property owned or controlled by Grantee, excluding inventory, supplies, and vehicles. "Management Agreement" means the agreement between the City and O'Reilly Hotel Partners — Denton, LLC setting forth the parties' respective functions in managing the Denton Convention Center in whole or in part and as amended in writing. "Monthly Sales Tax Report" means the monthly report received from the Texas State Comptroller that shows the amount of total taxable sales for a month period. "Restaurant" means a Houlihan's Restaurant and Bar, or another restaurant and bar of similar or higher quality and style, that will be located on the hotel site. "Sales Tax" means the 1% general municipal sales and use taxes imposed by the City of Denton pursuant to Section 321.103(a) of Texas Tax Code and 0.5% additional municipal sales and use tax imposed by the City of Denton from property tax reduction pursuant to Section 321.103(b) of the Texas Tax Code and arising (i) from any person's collection of sales taxes as a result of sales of taxable items consummated at the Project during the term of this Agreement, (ii) from any person's payments to vendors or directly to the Texas Comptroller of Public Accounts of City Sales Taxes on purchases of taxable items consummated at the Project during the term of this Agreement, and (iii) from City Sales Taxes paid by any person in connection with the construction or equipping of the Project. "Texas Comptroller of Public Accounts' Monthly Sales Tax Report" means reports from the Comptroller to the City as provided in Section 321.3022 of the Texas Tax Code that identify amounts paid from the Comptroller to the City, by period, of Sales Taxes. If M during the term of this Agreement, due to a change in law or policy the Comptroller ceases providing such reports with respect to the Sales Taxes, "Texas Comptroller of Public Accounts' Monthly Sales Tax Report" means alternative documentation that the Parties agree establishes the amounts of Sales Taxes received by the City. "Texas Direct Payment Permit" means that permit issued by the State of Texas authorizing Grantee to self - assess and pay applicable state and local use taxes directly to the State of Texas related to selected portions of Grantee's taxable purchases. "Three Diamond Rating" means a Three Diamond Rating under the AAA Diamond Rating Process or if the AAA Diamond Rating Process is not available, a comparable rating under the successor rating process; provided however, that in no event shall the hotel be operated in a manner that falls below the standard or quality of a Comparable Hotel Property. In no circumstance shall the Three Diamond Rating result in a standard with respect to the design, development, construction, furnishing, opening and operation of the hotel which is less than what would be required of by Three Diamond Rating as it exists of the Effective Date. "Upscale Condition" means, with respect to the Hotel, the operation and maintenance of the Hotel in a manner such that their condition shall demonstrate refined, high quality, and fully functional appointments; furniture, fixtures, and equipment; exterior and interior finishes; landscaping; and mechanical, electrical, and structural components consistent with Comparable Hotel Properties, normal wear and tear excepted, that is consistent with the standards of operations and operating plans necessary to obtain a Three Diamond Rating. The City reserves the right to inspect the Project and Property from time to time to determine compliance herein. "Upscale Manner" means the process of developing, designing, constructing, and maintaining the Convention Center, Hotel, and Restaurant as required so they will exist in an Upscale Condition. "Use Tax Certificate" means a certificate or other statement in a form acceptable to the City setting forth the Grantee's collection of use tax imposed by the City and received by the City from the State of Texas, for the use of taxable items (tangible personal property or taxable services) by Grantee at the Property for the applicable grant period which are to be used to determine Grantee's eligibility for a Grant, together with such supporting documentation required herein, and as the City may reasonably request. II. GRANT CONDITIONS A. Grantee covenants and agrees with the City that the City's obligations under this Agreement are subject to the fulfillment of the Grantee's obligations under this Agreement, and Grantee hereby agrees to perform and comply in all material respects to the terms, conditions, and provisions of this Agreement and in all other instruments and agreements between Grantee and the City with respect to the financial or other incentives provided herein. B. Improvements to the Property shall be made in substantial compliance with the description of the Project as set forth in the Grant Application. The City expressly is not obligated in any way to payment of costs and fees for the Improvements, and is only agreeing to the payments as described herein. The kind and location of the Improvements is more particularly described in the Grant Application. For the construction of Improvements and /or remodeling of existing improvements, Grantee shall comply with all City of Denton Code of Ordinances, the regulations of the Rayzor Ranch Overlay District, the City's Tax Abatement and Incentive Policy, Texas Department of Transportation Regulations and any other applicable federal, state, and local law. C. Grantee shall collaborate with the City to jointly select the name of the Convention Center as a whole or for any portion thereof. D. Notwithstanding anything contained in this Agreement to the contrary, no grant or payment shall be made to the Grantee under this Agreement unless and until Grantee has completed the Improvements to the Property no later than 30 months after the start of construction, subject to force inajeure delays as outlined herein, including but not limited to a 285 -318 room Full - Service Hotel with an Approved Franchisor, an approximately 70,000- square -foot Convention Center, and a Restaurant with an Approved Franchisor. As a grant condition, Grantee shall provide a total Capital Investment for the development of the Project of at least $80 million. Grantee is responsible for cooperating in the provision of any receipts or books to determine compliance with this section until Improvements are verified as completed. The Capital Investment shall generate a minimum increase in assessed real estate Improvements and business personal property valuation on the Property over the existing 2015 valuation in the amount of $20 million as a condition of the delivery of the Grant payments. Land and Inventory valuations are not included in the grant incentive calculations. E. Grantee shall continuously operate and maintain the Convention Center, Hotel, and Restaurant in an Upscale Manner for the term of this Agreement. Grantee's obligation to operate and maintain the Convention Center, Hotel, and Restaurant in an Upscale Manner shall survive the expiration of this Agreement and any such assignment of this Agreement authorized by Sec. 6.M. herein shall cause such assignee to be obligated to operate and maintain the Convention Center, Hotel and Restaurant in an Upscale Manner. 0 F. Grantee agrees that any incentive involving the use of Hotel Occupancy Tax funds shall be expended in a manner directly enhancing and promoting tourism and the convention and hotel industry and only as permitted by Chapter 351 of the Texas Tax Code, as amended. Grantee also acknowledges that while not anticipated to occur, if it is found by a court of competent jurisdiction or other official administrative body that the City does not have the legal authority to enter into this Agreement regarding the use of the Hotel Occupancy Tax, then such determination shall cause the incentive involving the use of Hotel Occupancy Tax funds to cease under this Agreement. The termination of this incentive shall not affect the other terms of this Agreement not related to the same. G. Grantee acknowledges and understands that the City shall provide certain management functions of the Convention Center in order for the Grantee to receive the Hotel Occupancy Tax Grant, including visitors' programs and activities pursuant to the terms of this Agreement. In the event that the City ceases to provide certain management functions, any incentive involving the Hotel Occupancy Tax funds shall cease. The City shall continue to provide limited management functions referred to in the Management Agreement for the term of the Management Agreement, unless a default occurs thereunder, with such functions not to be unreasonably withheld. A copy of the Management Agreement between Grantee and the City is attached as Exhibit D to this Agreement for reference. H. Grantee shall use good faith efforts to hire qualified residents of the City of Denton to work at the Project, consistent with business needs and its commitment to equal opportunity and subject to all applicable local, state and federal employment laws. Moreover, Grantee shall use a good faith effort to hire local Denton contractors and suppliers in constructing the Project where qualified and available. L Grantee shall be duly authorized and existing under U.S. law and is in good standing under such laws, and shall be registered to do business in the State of Texas. J. The Project is not exempt from the payment of PID assessments levied on the Property. The City acknowledges that Grantee and the previous owner of the Property, RED Development LLC ( "RED "), have executed an indemnity agreement whereby RED shall indemnify Grantee for any PID assessment due and owing on the Property. Grantee acknowledges that this separate agreement has no binding effect on the City and the City shall not be required to collect PID assessments directly from RED. K. Neither the Property nor any of the Improvements to the Property are owned or leased by any member of the City Council, nor any member of the City Planning and Zoning Commission. L. This Agreement is subject to rights of holders of outstanding bonds of the City, if any. M. In the event of any conflict between the City of Denton Code of Ordinances and federal, state, or other local regulations, and this Agreement, such ordinances and /or 7 regulations shall control; provided that, if there is a subsequent amendment to include any design criteria other than what was in the original Grant Application and to the extent it conflicts with criteria solely involving design in the Rayzor Ranch Overlay, then this Agreement, as amended, shall control. N. In accordance with Chapter 2264 of the Texas Government Code, Grantee shall not knowingly employ any person for or at the Project who is not lawfully admitted for permanent residence to the United States or who is not authorized under law to be employed in the United States ( "Undocumented Worker "). During the term of this Agreement, Grantee shall notify City of any complaint brought against Grantee alleging that Grantee has knowingly employed Undocumented Workers. In the event that Grantee is convicted of a violation under federal law, grant payments shall be terminated. III. TERMS OF GRANT A. Subject to and in exchange for Grantee's compliance with the terms and conditions of this Agreement and any federal, state, or local law, the City hereby agrees to, as an incentive, make the following Grant payments for a maximum of 25 years or until the combined principal amount of $28 million and interest payment of $26 million for a total aggregate amount of $54 million is reached, whichever comes first. The methodology for establishing Grant payments is as follows: 1. An annual grant beginning the first February 1st following the first January lst tax appraisal after receipt by Grantee of the certificate of occupancy for the Convention Center, Hotel, and Restaurant on the Property of lawfully available funds equal to One Hundred Percent (100 %) of ad valorem taxes collected and verified by the City for the prior tax year, exclusive of the taxable value of the underlying land or any increase in taxable value attributable to underlying land (the "City Ad Valorem Tax Grant "). The Ad Valorem Tax Grant shall be paid on or before 60 days after the City's receipt of all ad valorem taxes for the Property for the applicable tax year. The taxable assessed value shall be determined by the Denton County Appraisal District. Such grant shall be subject to annual appropriation by the City Council of the City in the annual budget and the City's obligations under this Agreement shall not constitute a general obligation of the City or indebtedness under the Constitution or laws of the State of Texas. 2. Quarterly grants after the conclusion of each calendar quarter beginning with the calendar quarter that includes the receipt by Grantee of the certificate of occupancy for the Convention Center, Hotel and Restaurant on the Property, of lawfully available funds in an amount equal to One Hundred Percent (100 %) of the City's Hotel Occupancy Tax attributable to amounts paid for hotel rooms on the Property for such calendar quarter, determined with reference to the City HOT Returns (the "Hotel Occupancy Tax Grant "). The Hotel Occupancy Tax Grant shall be paid on or before 60 days after the later of (i) the City's receipt of the City HOT Returns for all periods in a quarter and (ii) the City's receipt of the City HOT Report (in the for attached as Exhibit C hereto) for all periods in a quarter. 3. Quarterly grants after the conclusion of each calendar quarter beginning with the calendar quarter that includes the receipt by Grantee of the certificate of occupancy for the Convention Center, Hotel and Restaurant on the Property, of lawfully available funds in an amount equal to one hundred percent (100 %) of the City's Sales Tax received each quarter from the Project (the "Sales Tax Grant "), as established by the Texas Comptroller of Public Accounts' Monthly Sales Tax Report. The Sales Tax Grant shall be paid on or before 60 days after the later of (i) the City's receipt of the Texas Comptroller of Public Accounts' Monthly Sales Tax Report for all periods in a quarter that identify amount of Sales Taxes for all months of a quarter and (ii) the City's receipt of the Sales Tax for all periods in a quarter. Grantee agrees to provide the City any necessary forms required for release of this information for the verification of grant payments. Such grant shall be subject to annual appropriation by the City Council of the City in the annual budget and the City's obligations under this Agreement shall not constitute a general obligation of the City or indebtedness under the Constitution or laws of the State of Texas. B. A quarterly grant (the "Construction Sales and Use Tax Grant ") during the period of Construction of the Project, from lawfully available funds, in an amount equal to One Hundred Percent (100 %) of Sales Tax receipts, up to a maximum of $850,000.00, collected by the City of Denton on construction materials and furniture, fixtures, and equipment purchased for the development of the Property as set forth in the Texas Direct Payment quarterly sales tax returns submitted by Grantee to the Texas Comptroller of Public Accounts and verified by the City of Denton's Finance Department. Upon reaching a cumulative Construction Sales and Use Tax Grant maximum of $850,000.00, the quarterly grant will be reduced to Fifty Percent (50 %) of the Sales Tax receipts for the same. The Construction Sales and Use Tax Grant shall be paid on or before 60 days after the later of (i) the City's receipt of the Texas Direct Payment Report for all periods in a quarter that identify amount of Sales Taxes for all months of a quarter and (ii) the City's receipt of the Sales Tax for all periods in a quarter. Grantee shall submit the Texas Application for Direct Payment Permit in the form of Exhibit "E" to the Texas Comptroller of Public Accounts. C. The above referenced City Ad Valorem Tax Grant, Hotel Occupancy Tax Grant, Sales Tax Grant, and Construction Sales and Use Tax Grant may be collectively referred to as the "Grants." D. The City's obligation to pay the payments provided in this Agreement is subject to the fulfillment of the General Conditions set forth in Article 11 above. E. Grantee shall have the right to protest and contest any or all appraisals or assessments by the Denton County Appraisal District for the Property, the Improvements or any other tangible personal property owned or controlled by Grantee and located on the Property. The final amount of the Ad Valorem Tax Grant shall be based upon final 0 assessed values after any such protest or contest. The portion of the Ad Valorem Tax Grant corresponding to any taxable assessed values in dispute or under protest with the Denton Central Appraisal District shall be withheld from the annual grant until such protest or dispute has been resolved. Once resolved, the City shall pay any amounts corresponding to the final taxable assessed value as settled, and not previously paid, in the next following annual Ad Valorem Tax Grant. IV. RECORDS, AUDITS, AND EVALUATION OF PROJECT A. The City shall inspect the Convention Center from time to time to determine compliance with the operation of the Convention Center in the manner described herein and consistent with the Property's zoning, overlay, and other City of Denton ordinances. B. The City shall inspect the Hotel property from time to time to determine compliance with the operation of the Hotel in the manner described herein and consistent with the Property's zoning, overlay, and other City of Denton ordinances. C. Grantee shall provide access and authorize inspection of the Property by authorized City employees and allow sufficient inspection of financial information for the limited purpose of insuring that the Improvements are made according to the specifications and conditions of this Agreement. Such inspections shall be in addition to, and not in place of, any inspections required by City ordinance by the City in its governmental capacity for construction of the Improvements. The financial information shall include, without limitation, an inventory listing the kind, number, and location of and the total appraised value of all Improvements to the property, including the appraised value of all buildings and other structures and permanent improvements installed, renovated, repaired or located on the Property. D. Grantee shall deliver to the City no later than January 1 of each year during the term of this Agreement, a Certificate of Compliance utilizing the form attached as Exhibit "F ". The form is subject to revision by the City provided that such revision does not materially change Grantee's rights or obligations under this Agreement. In the Certificate of Compliance, Grantee shall warrant to the City that it is in full compliance with each of its obligations under this Agreement. The City and /or its representative(s), including third- parties contracted by the City, shall have the right to inspect all relevant records of Grantee as are reasonably necessary to verify compliance with all requirements of this Agreement. Such inspections shall be preceded by at least a one (1) week written notice to Grantee and shall not unreasonably interfere with Grantee's business activities. E. Quarterly and Annual Grant payments are predicated on Grantee's submission of and the City's verification of the Certificate of Compliance by January 1 of the applicable grant year. The City is not obligated to make any payments under this Agreement if Grantee fails to timely submit its Certificate of Compliance. If Grantee does not timely submit an annual Certificate of Compliance, within thirty (30) days from the date due after receiving a written notice from the City, the annual Ad Valorem Tax Grant, 10 the quarterly Hotel Occupancy Tax Grant, Sales Tax Grant, and Construction Sales and Use Tax Grant will be forfeited for that year. Upon timely compliance with submission of the Certificate of Compliance the following January 1 of the next year, the annual Ad Valorem Tax Grant, the quarterly Hotel Occupancy Tax Grant, Sales Tax Grant, and Construction Sales and Use Tax Grant shall resume, according to their terms. If Grantee fails to submit a timely Certificate of Compliance for two consecutive years regardless of a cure, this Agreement shall terminate. V. DEFAULT A. Each of the following shall constitute an Event of Default under this Agreement: Failure of the Grantee to continuously maintain and operate the Property to the standard of a Comparable Hotel Property for the term hereof and the Grantee does not cure such failure within one hundred twenty (120) days after written notice from the City to the Grantee describing such failure, or if such failure cannot be cured within such 120 -day period in the exercise of all due diligence, then if the Grantee fails to commence such cure within such 120 -day period or fails to cure such default within a reasonable time after the expiration of the first one hundred twenty (120) -day period, in no event to exceed three hundred sixty five (365) days after the written notice of default. 2. Failure to comply with the terms of the Management Agreement between the City and O'Reilly Hotel Partners — Denton, LLC for the management of the Denton Convention Center. 3. Any warranty, representation or statement made or furnished to the City by or on behalf of Grantee under this Agreement that is false or misleading in any material respect, either now or at the time made or furnished. Provided that, if Grantee learns that any such warranty, representation or statement has become false or misleading since the time that it was made, then Grantee shall provide written notice to the City of the false and misleading nature of such warranty, representation or statement within ten (10) calendar days 4. The dissolution or termination of Grantee's existence as a going business, Grantee's insolvency, appointment of receiver for any part of the Property, any assignment of all or substantially all of the assets of Grantee for the benefit of creditors of Grantee, any type of creditor workout for Grantee, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Grantee. 5. Grantee's failure to fulfill the Grant Conditions set forth in Article 11 herein. 11 6. Grantee allowing property taxes owed to the City, Denton County, or Denton Independent School District to become delinquent and failing to cure the same within thirty (30) days after receipt of written notice thereof from the City and or Denton Central Appraisal District. 7. An expenditure, by the Grantee, of Hotel Occupancy Tax Grant funds for a purpose not authorized by Chapter 351, Texas Tax Code, as amended. In the event the City determines that Grantee has made an improper or illegal expenditure of Hotel Occupancy Tax Grant funds, Grantee must, no later than thirty (30) days after receipt of written notification from the City, reimburse the City in an amount equal to the improper expenditure, plus interest at the rate of 5 %. Grantee's failure to make reimbursement will constitute a default of this agreement. The City shall have no liability in connection thereof. 8. Failure of Grantee to comply with or to perform any other term, obligation, covenant or condition contained in this Agreement or in any documents generated or otherwise created attendant to this Agreement or in any way related to this Agreement ( "Related Documents "), or failure of Grantee to comply with or to perform any other term, obligation, covenant or condition contained in any other agreement between the City and Grantee, fails to cure such failure within thirty (30) days after receipt of written notice from the City describing such failure, or if such failure cannot be cured within such 30 -day period in the exercise of all due diligence, then if Grantee fails to commence such cure within such 30 -day period or fail to continuously thereafter diligently prosecute the cure of such failure. B. Upon the occurrence and continuance of a default of this Agreement, the City may pursue any legal or equitable remedy or remedies, including, without limitation, specific performance or damages, (including reasonable attorneys' fees), and City may terminate this Agreement by giving written notice of such termination to Grantee; and, this Agreement shall terminate as of the date specified in such notice (which date shall be on or after the date of the notice of termination). If any Event of Default shall occur and Grantee fails to cure such default as provided herein, all commitments of the City under this Agreement, including without limitation, all Grant payments shall immediately terminate with respect to the year or quarter in which notice of the Event of Default is given and for all future years or quarters. Additionally, Grantee shall be obligated to repay the City an amount equal to one hundred percent (100 %) of all previous payments made by the City under this Agreement to the Grantee in the preceding compliance year. If Grantee is required to reimburse the City these amounts hereunder, the City shall notify the Grantee in writing of the amount to be repaid, and shall direct them to pay such amount directly to the City. All such amounts due hereunder shall be due upon demand by the City and if not paid within thirty (30) days following written demand hereunder, the unpaid amount due hereunder shall bear interest at the rate of 5% per annum after demand until paid. All remedies of the City under this Agreement shall be cumulative. 12 VI. GENERAL PROVISIONS A. All improvements to the Property shall be consistent with all federal, state and local law including the Denton Code of Ordinances as well as any other regulations or plans relative to the Property. This Agreement does not constitute a waiver by the City of any development ordinances or conditions. Further, Grantee acknowledges that by executing this Agreement, no entitlement or agreements concerning zoning or land use shall arise, either implied or otherwise. B. Grantee shall complete construction of all improvements to the Property within the timeframes provided for in this Agreement. Notwithstanding the foregoing, Grantee shall have such additional time to complete the Improvements as may be required in the event of Force Maj eure if Grantee is diligently and faithfully pursuing completion of the Improvements. In the event that Grantee requires additional time due to an event of Force Majeure, such additional time shall not exceed 180 days, unless otherwise approved by City Council. C. GRANTEE SHALL INDEMNIFY, SAVE, DEFEND AND HOLD HARMLESS THE CITY, ITS ELECTED OFFICIALS, OFFICERS, AGENTS, ATTORNEYS, EMPLOYEES, AND SUBCONTRACTORS (COLLECTIVELY, THE "INDEMNITEES ") FROM AND AGAINST ANY ADMINISTRATIVE OR INVESTIGATIVE PROCEEDING BY ANY GOVERNMENTAL AUTHORITY DIRECTLY OR INDIRECTLY RELATED, TO A CLAIM, DEMAND, ACTION OR CAUSE OF ACTION, ARISING FROM GRANTEE'S PERFORMANCE OF ITS OBLIGATIONS HEREUNDER. GRANTEE FURTHER INDEMNIFIES, SAVES, DEFENDS, AND HOLDS HARMLESS INDEMNITEES FROM ANY AND ALL LIABILITIES, CLAIMS, LOSSES, COSTS OR EXPENSES (INCLUDING ATTORNEY'S FEES, COURT COSTS, EXPERT WITNESS FEES) THAT ANY INDEMNITEES SUFFER OR INCUR AS A RESULT OF ANY OF THE FOREGOING, AS WELL AS ANY AND ALL LIABILITIES, CLAIMS, LOSSES, COSTS, OR DAMAGES ARISING OUT OF (1) ANY NEGLIGENT ACT OR OMISSION, ANY GROSS NEGLIGENCE OR ANY RECKLESS OR WILLFUL MISCONDUCT BY GRANTEE OR ITS OFFICER, DIRECTOR, AGENT, OR EMPLOYEE, AND (2) THE NON - PERFORMANCE OF GRANTEE'S OBLIGATIONS WHETHER NEGLIGENT, GROSSLY NEGLIGENT, RECKLESS OR WILLFUL, AND (3) ANY ACTION TAKEN BY GRANTEE OR ON BEHALF OF GRANTEE THAT IS NOT PERMITTED BY OR PURSUANT TO, THE PROVISIONS OF THIS AGREEMENT OR REASONABLY NECESSARY TO CARRYING OUT LENDER OR GRANTEE DUTIES.S. D. This Agreement, together with any related documents, constitutes the entire understanding and agreement of the parties as to the matters set forth in this Agreement. No alteration of or amendment to this Agreement shall be effective unless given in writing 13 and signed by the party or parties sought to be charged or bound by the alteration or amendment, and in the case of the City, approved by its governing body. E. This Agreement shall be governed by and construed in accordance with the laws of the State of Texas, and all obligations of the parties created hereunder are performable in Denton County, Texas. Venue for any action arising under this Agreement shall lie in Denton County, Texas. F. The signatories hereto shall be subject to all ordinances of the City, whether now existing or in the future arising. This Agreement shall confer no vested rights, as defined and referenced in Chapter 245 of the Texas Local Government Code, as amended, on the Property or Grantee. G. This Agreement shall become a binding obligation on the signatories upon execution by all signatories hereto, including their respective successors and assigns and upon all future owners of the Property. The City warrants and represents that the individual executing this Agreement on behalf of the City has full authority to execute this Agreement and bind the City to the same. Grantee warrants and represents that the individual executing this Agreement on its behalf has full authority to execute this Agreement and bind Grantee to same. H. In the event any provision of this Agreement shall be determined by any court of competent jurisdiction to be invalid or unenforceable, the Agreement shall, to the extent reasonably possible, remain in force as to the balance of its provisions as if such invalid provision were not a part hereof. L All notices required to be given under this Agreement shall be given in writing and shall be effective when actually delivered or when deposited in the United States mail, first class, postage prepaid, addressed to the party to whom the notice is to be given at the addresses shown below. Notices may be given via facsimile at the numbers below. Any party may change its address or fax no. for notices under this Agreement by giving written notice to the other parties, specifying that the purpose of the notice is to change the party's address. For notice purposes, each party agrees to keep the other informed at all times of its current address and fax number. GRANTEE: Tim O'Reilly O'Reilly Hospitality Management, LLC 2808 S. Ingram Mill Road, Building C100 Springfield, MO 65804 CC: David O'Reilly O'Reilly Wooten Offices 2831 S. Ingram Mill Road 14 Springfield, MO 65804 CITY: City Manager City of Denton 215 E. McKinney Denton, Texas 76201 J. Time is of the essence in the performance of this Agreement. K. Grantee represents that this Agreement is entered into by Grantee pursuant to authority granted by its Board of Directors to its Managing Director. A copy of a corporate resolution of Grantee, authorizing this Agreement is attached hereto and made a part hereof as Exhibit "G ". L. This Agreement is authorized by the City Council of the City at its meeting on the 27th day of October, 2015, authorizing the City Manager to execute this Agreement on behalf of the City. A copy of the City Council's ordinance authorizing this Agreement is attached hereto and made a part hereof as Exhibit "H ". M. Except as provided herein, this Agreement may not be assigned or transferred in whole or in part without the prior written approval of the parties, which shall not be unreasonably withheld. This Agreement may be assigned in whole by Grantee, with prior written approval of the City, for the limited purpose of merging or otherwise transferring assets to an entity sharing a degree of ownership or control with Grantee. The assignment, whether in whole or in part, will not take effect until City is provided written notice of such assignment and a copy of same. A permitted assignment by any Party of its interests in this Agreement shall not relieve the assigning Party from its obligations under this Agreement unless the non - assigning Party shall expressly consent in writing to any such release. Any assignee of any Party's rights under this Agreement, as a condition of such assignment, shall execute an assumption of the assigning Party's duties and obligations under this Agreement, including the obligations set forth in Article II herein upon the Grantee's assignment or transfer of this Agreement to any other party, such assumption to be in form reasonably acceptable to the other Parties to this Agreement. N. Grantee hereby agrees construction of the authorized public improvements as set forth in the PID and the dedication of those improvements and any corresponding public access easements to the City is roughly proportional to the need created by the development on the Property within the PID, and Grantee hereby waives any claim therefore that it may have in regards to such improvements. Grantee further acknowledges and agrees that all prerequisites to such a determination of rough proportionality have been met, and that any costs incurred relative to said construction and dedication are related both in nature and extent to the impact of the Project. Grantee further agrees to waive and release all claims it may have related to any and all rough proportionality and individual determination requirements mandated by the United States Supreme Court in Dolan v. City 15 of Tigard, 512 U.S. 374 (1994), and its progeny, and Chapter 212 of the Texas Local Government Code, as well as any other requirements of a nexus between development conditions and the projected impact of this Project. O. It is agreed by the parties to this Agreement that the terms of this Agreement are not intended to and shall not be deemed to create any partnership or j oint venture among parties. The City, its past and future officers, elected officials, employees, and agents expressly do not assume any responsibilities or liabilities to any third party in connection with the Project or the design, construction, or operation of any portion of the Improvements. P. Any party hereto may request an estoppel certificate from another party hereto, but no more frequently than annually, upon written request by the other Party not less than ten (10) business days prior to the need for such certificate, and so long as the certificate is requested in connection with a bona fide business purpose. The requesting Party shall execute, acknowledge and deliver to O'Reilly Hotel Management, LLC, or the City, as the case may be, a statement in writing certifying one or more of the following: (a) the remaining term of this Agreement, (b) that this Agreement is unmodified and in full force and effect (or if there have been any modifications, that the same is in full force and effect as modified and stating the modifications), (c) the number of years remaining for the payment of Grant Payments (d) the Grant Payments remitted to date, and (e) that, to the then current actual knowledge, without independent investigation of Party, no default hereunder on the part of the other Party exists, except that if any such default does exist, the certifying Party shall specify such default. Q. Notwithstanding anything to the contrary herein, Grantee acknowledges and agrees that this Agreement is subject to the provisions of Subchapter I of Chapter 271 of the Texas Local Government Code, as amended, and therefore limits any recovery from suit based on adjudicating claims for breach of this Agreement; however, such acknowledgement does not waive any defenses that the City may bring in the event of suit, including a defense of immunity. R. The City designates this Agreement as a revenue sharing agreement, thereby entitling the City to request sales tax information from the Comptroller pursuant Section 321.3022 of Texas Tax Code. However, Grantee shall cooperate in the provision of any forms necessary for the City to obtain such information, if requested. Grantee acknowledges that this Agreement is subject to the requirements of the Texas Public Information Act, pursuant to Chapter 552, Texas Local Government Code. Should information be requested concerning this Agreement by any person, regardless of whether the City seeks an opinion from the Texas Attorney General to withhold such information, the City may release said information without penalty or liability. This section shall survive termination of this Agreement for any reason whatsoever. This Agreement shall be effective as of the last date of signature of a party hereto as evidenced by the acknowledgment date for such signature (the "Effective Date "). 16 CITY OF DENTON, TEXAS M GEORGE C. CAMPBELL CITY MANAGER ATTEST: JENNIFER WALTERS CITY SECRETARY I:• APPROVED AS TO FORM: ANITA BURGESS CITY ATTORNEY I: O'REILLY HOTEL PARTNERS — DENTON, LLCa Missouri Limited Liability Company LOW Its: 17 ACKNOWLEDGMENTS STATE OF TEXAS COUNTY OF DENTON The foregoing Economic Development Agreement was executed before me on the day of 12015 by George C. Campbell, City Manager of the City of Denton, Texas, a Texas municipal corporation, on behalf of said Municipal Corporation. Name: Notary Public in and for the State of Texas STATE OF TEXAS COUNTY OF DENTON The foregoing Economic Development Program Agreement was executed before me on the day of , 2015 by of O'Reilly Hotel Management, LLC., on behalf of said corporation. Name: Notary Public in and for the State of Texas In EXHIBIT A (PROPERTY LEGAL DESCRIPTION) At the time of the backup deadline on 10/22/15, this information was not finalized. It will be provided as soon as possible. 19 EXHIBIT B CITY OF DENTON INCENTIVE APPLICATION 20 EXHIBIT C CITY OF DENTON HOTEL OCCUPANCY TAX REPORT FORM 21 EXHIBIT D MANAGEMENT AGREEMENT 22 EXHIBIT E TEXAS APPLICATION FOR DIRECT PAYMENT PERMIT 23 EXHIBIT F CERTIFICATE OF COMPLIANCE FORM 24 EXHIBIT G (CORPORATE RESOLUTION FOR AUTHORITY) At the time of the backup deadline on 10/22/15, this information was not finalized. It will be provided as soon as possible. 25 EXHIBIT H ORDINANCE AUTHORIZING AGREEMENT 26 sAlegal \our documents \ordinances\l5\red third amendment.docx ORDINANCE NO. AN ORDINANCE OF THE CITY OF DENTON, TEXAS, APPROVING A THIRD AMENDMENT TO AN ECONOMIC DEVELOPMENT PROGRAM GRANT AGREEMENT DATED JUNE 15, 2010 BETWEEN THE CITY OF DENTON AND ALLEGIANCE HILLVIEW; AND PROVIDING AN EFFECTIVE DATE. THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The City Manager, or his designee, is hereby authorized to execute a Third Amendment to Economic Development Program Grant Agreement (the "Third Amendment "), in substantially the form of the Third Amendment which is attached hereto and made a part of this ordinance for all purposes. SECTION 2. The City Manager, or his designee, is authorized to exercise the City of Denton's rights and duties as set forth in the Amendment. SECTION 3. This ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the day of 12015. CHRIS WATTS, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY • APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY BY:1% / f STATE OF TEXAS ) COUNTY OF DENTON ) THIRD AMENDMENT TO ECONOMIC DEVELOPMENT PROGRAM GRANT AGREEMENT WITH ALLEGIANCE HILLVIEW, L.P. This Third Amendment to Economic Development Program Grant Agreement with Allegiance Hillview, L.P. (this "Second Amendment ") is made and entered into as of the day of , 2015, by Allegiance Hillview, L.P., a New York limited partnership ( "Grantee "), DB Denton II LLC, a Delaware limited liability company ( "Assignee "), and the City of Denton, Texas, a Texas municipal corporation (the "City "), Grantee, Assignee, and the City are individually referred to as a "Party" and collectively as the "Parties." WHEREAS, on June 15, 2010, Grantee and the City entered into that certain Economic Development Program Grant Agreement with Allegiance Hillview, L.P. (the "Agreement "); WHEREAS, on September 14, 2010, Grantee, Assignee, and the City entered into that certain First Amendment to Economic Development Program Grant Agreement with Allegiance Hillview, L.P., (the "First Amendment "), which First Amendment approved the assignment of certain right, title, and interest of Grantee in and to the Agreement to Assignee; WHEREAS, on May 13, 2014, Grantee, Assignee, and the City entered into that certain Second Amendment to Economic Development Program Grant Agreement to expand the categories of Eligible Improvements, to increase the total cost of the Eligible Improvements, to approve Phase I Costs and Eligible Phase 11 Costs, to expand the definition of Total Taxable Sales, to define Retail Improvements in Phase II to include "Initial" and "Additional" improvements, and to extend the Program Grant for Phase II; and WHEREAS, the Parties desire to further amend the Agreement to facilitate the development of a Hotel and Convention Center in Phase 11. NOW THEREFORE, for good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the Parties agree to amend the Agreement and First Amendment as follows: 1. Revised Definitions a. Total Taxable Sales. The term "Total Taxable Sales" is revised in its entirety to read as follows: "Total Taxable Sales means the total amount of all sales (including mixed beverage sales covered by HB 3572 effective January 1, 2014) from which the City receives sales tax with a point of sale in Phase I or Phase II, regardless of whether such sales are retail sales and use occurring at a business located in Phase I or Phase II (excluding sales occurring at any Dillard's, J.C. Penney Co., Macy's, Sears Roebuck and Co., Barnes & Noble, DSW (Discount Shoe Warehouse), and Ross Dress for Less that locates within the Property and closes any store located within the retail shopping area commonly known as the 'Golden Triangle Mall'), and excluding all sales occurring at the Hotel, Convention Center, and Restaurant developed by O'Reilly Hotel Partners Denton, as depicted in Exhibit A. All references in the Agreement that indicate that the Total Taxable Sales and the information shown on the Monthly Sales Tax Report are limited to sales from businesses located within Phase I or Phase II shall be expanded to include mixed beverage sales and all sales with a point of sale in Phase I or Phase II, regardless of whether such sales are retail sales occurring at a business located in Phase I or Phase 11. 2. Program Grant for Phase II. a. Section 3.2 of the Agreement is revised in its entirety to read as follows: "Program Grant for Phase IL This Agreement shall be effective as of the date executed by the City and Grantee. At any time following execution of this Agreement and following Substantial Completion of the Required Infrastructure for Initial Retail Improvements in Phase II (but not later than January 1, 2018), Assignee may designate the first day of any month to be the Program Effective Date for Phase II by providing written notice to the City at least 60 days prior to the designated Program Effective Date for Phase IL The City will begin making Program Grant for Phase 11 monthly installment payments on the designated Program Effective Date for Phase II and shall continue to make such monthly installment payments for 300 consecutive months as provided by this Agreement. This Agreement will terminate with respect to the Program Grant for Phase II upon the earlier to occur of (i) the date Assignee has been paid for the full amount of the Eligible Phase II Costs, or (ii) 300 months after the Program Effective Date for Phase II regardless of whether Assignee has been paid the full amount of the Eligible Phase 11 Costs. Additional Program Grant for Hotel and Convention Center Project, as depicted in Exhibit A. The City will begin making Additional Program Grant for Hotel and Convention Center Project monthly installment payments commencing the first year following receipt of the certificate of occupancy of the Hotel and Convention Center and following commencement of Phase II Grant Payments, and paid monthly until Grantee has received full reimbursement of $5,000,000." b. The first paragraph of Section 5.2 of the Agreement is revised in its entirety to read as follows: "Program Grant for Phase IL Program Grant for Phase 11 monthly installment payments during the term of the Program Grant for Phase II shall be calculated as 50% of the 1.5% sales tax collected by the City with respect to the Total Taxable Sales allocable to Phase II during the preceding month as established by the most recent State Comptroller's Monthly Sales Tax Report. The City's obligation to make such payments is contingent upon the City's receipt of the sales taxes from the Texas State Comptroller and the Monthly Sales Tax Report; provided, however, if the State Comptroller ceases to issue Monthly Sales Tax Reports, the Parties shall cooperate to arrive at a reasonably equivalent and mutually agreeable alternative method of computing the Program Grant for Phase II monthly installment payments. Payments of the Program Grant for Phase II monthly installment payments will be used to repay Assignee for Eligible Phase II Costs not otherwise paid with Program Grant for Phase I payments (up to a maximum of $21,000,000.00 upon Substantial Completion of the Initial Retail Improvements in Phase II and up to an additional $27,000,000.00 upon Substantial Completion of the Additional Retail Improvements in Phase II). Additional Program Grant for Hotel and Convention Center Project. Program Grant for Hotel and Convention Center Project shall be calculated as 15% of the 1.5% sales tax collected by the City with respect to the Total Taxable Sales allocable to Phase I and Phase 11 during the preceding month as established by the most recent State Comptroller's Monthly Sales Tax Report. The City's obligation to make such payments is contingent upon the City's receipt of the sales taxes from the Texas State Comptroller and the Monthly Sales Tax Report; provided, however, if the State Comptroller ceases to issue Monthly Sales Tax Reports, the Parties shall cooperate to arrive at a reasonably equivalent and mutually agreeable alternative method of computing the Program Grant for the Hotel and Convention Center Project monthly installment payments. Payments of the Program Grant for the Hotel and Convention Center Project monthly installment payments will be used to repay Assignee lost Phase II revenue and costs associated with the Hotel and Convention Center Project, up to $5,000,000." 3. Conflicts; Effect of Third Amendment. To the extent of any inconsistency between the terms and provisions of this Third Amendment and the Agreement, the First Amendment and the Second Amendment, the terms and provisions of this Third Amendment will control. Except as amended by this Third Amendment, all of the terms, covenants and conditions of the Agreement, the First Amendment, and the Second Amendment are in full force and effect and the Agreement, First Amendment, and Second Amendment are hereby ratified and confirmed. 4. Binding Effect. ffect. This Third Amendment will be binding upon and will inure to the benefit of the Parties and their respective successors and permitted assigns. 5. Counterparts. This Third Amendment may be executed in one or more counterpart copies, all of which will constitute and be deemed an original, but all of which together will constitute one and the same instrument binding on the Parties. Delivery by facsimile or electronic mail of this Third Amendment or an executed counterpart hereof will be deemed a good and valid execution and delivery hereof. CITY CITY OF DENTON, TEXAS A TEXAS MUNICIPAL CORPORATION GEORGE CAMPBELL, CITY MANAGER ATTEST: JENNIFER WALTERS, CITY SECRETARY APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY ALLEGIANCE HILLVIEW, L.P., a New York limited partnership By: TH GP LLC (d/b /a TH Denton GP LLC, in the State of Texas), a Delaware limited liability company Its: General Partner By: Name: Its: ACKNOWLEDGMENT STATE OF ) COUNTY OF ) This instrument was ACKNOWLEDGED before me on by , the of TH GP LLC (d /b /a TH Denton GP LLC, in the State of Texas), a Delaware limited liability company, the general partner of Allegiance Hillview, L.P., a New York limited partnership, on behalf of such limited partnership. Notary Public Printed Name of Notary Public [SEAL] My Commission Expires: DB DENTON II LLC, a Delaware limited liability company By: DB Denton Holdings LLC, a Delaware limited liability company Its: Sole Member By: RED Rayzor Ranch, LLC, a Delaware limited liability company Its: Managing Member By: Michael Ebert Its: Manager ACKNOWLEDGMENT STATE OF ) COUNTY OF ) This instrument was ACKNOWLEDGED before me on 1 , by Michael Ebert, the manager of RED Rayzor Ranch, LLC, a Delaware limited liability company, the managing member of DB Denton Holdings LLC, a Delaware limited liability company, the sole member of DB Denton II LLC, a Delaware limited liability company, on behalf of such limited liability company. Notary Public Printed Name of Notary Public [SEAL] My Commission Expires: CITY OF DENTON, TEXAS George A. Campbell, City Manager ACKNOWLEDGMENT STATE OF TEXAS ) COUNTY OF DENTON 1 This instrument was ACKNOWLEDGED before me on 1 , by Mark A. Burroughs, the Mayor of the City of Denton, Texas, on behalf of the City of Denton, Texas. Notary Public Printed Name of Notary Public [SEAL] My Commission Expires: w f m #< g ¢ LLI L U CID CD G t� CONVENTION CENTER MANAGEMENT AGREEMENT BETWEEN THE CITY OF DENTON AND O'REILLY HOTEL PARTNERS — DENTON,LLC THIS AGREEMENT is made between the City of Denton, Texas, a municipal corporation formed under the laws of the State of Texas and located at 215 E. McKinney Street, Denton, Texas 76201 (the "City "), and O'Reilly Hotel Partners — Denton, LLC, a Missouri Limited Liability Company whose principal place of business is located at 2808 S. Ingram Mill Road, Building C100, Springfield, Missouri, 65804 ( "Owner ") for the limited management of a Convention Center. (The City and the Owner are collectively referred to as "the Parties "). WHEREAS, the Owner owns a tract of land generally located in the Rayzor Ranch Town Center development in the City of Denton, Denton County, Texas, which includes property located South of US Route 380 ending at Scripture Road, between IH -35 and North Bonnie Brae Street, and more specifically described in Exhibit "A" attached hereto and incorporated by reference herein (the "Property "); WHEREAS, the Owner's development of the Property includes an approximately 70,000 square foot convention center ( "Convention Center ") that is the subject of an Economic Development Agreement with the City of Denton executed between the Parties on , 2015 ( "Development Agreement "), which said Development Agreement is attached for reference hereto; WHEREAS, the Convention Center development shall serve to promote travel, tourism, meetings, conventions and events for the economic development and growth of the City of Denton and the economic benefit of the Parties; WHEREAS, the Parties desire that the City assist in the management of certain sales missions and marketing functions for the Convention Center as stated herein in order to further the public purpose of promoting economic growth and conventions, and to retain adequate public control over the use of public funds to ensure benefits to the City. NOW, THEREFORE, for the mutual promises and consideration as described herein, the Parties agree as follows: L TERMS A. Owner Management of the Convention Center. The Owner has the exclusive responsibility and discretion in the operation, direction, management and supervision of the Convention Center, subject only to the limitations expressed herein. In addition to its other duties as a reasonable convention center owner, the Owner, or a third party designated by the Owner, shall perform the following: 1 1. Day -to -day management and operations of the Convention Center, including, but not limited to determining all terms for admittance and charges for rooms, facilities, commercial space, if any, equipment rental, telecommunications services, audiovisual equipment, labor and other amenities and services provided at or with respect to the Convention Center. 2. All repairs, maintenance, upkeep and replacement of furniture, fixtures, and equipment; and, purchase and upkeep of all other inventories necessary to the operation of the Convention Center, as well as the Convention Center structure and accessory structures. 3. Event booking, coordination, and collection of sums due the Owner for rental or use and admissions. 4. Crowd control, security, box office supervision, admission procedures and servicing of users at conventions, trade shows, exhibits and entertainment. 5. Perform obligations of any third -party operations agreements such as reciprocal easements, concessions, parking, and leases. 6. Perform any catering or food- and beverage- related services with respect to the Convention Center. 7. Determine all labor policies, wages and salaries, fringe benefits, and any other personnel benefits with respect to the Convention Center in compliance with local, state, and federal law. 8. Implement all sales, advertising, public relations and promotional policies not covered by this Agreement. 9. Hire or terminate such persons or organizations as employees or manager of any of the functions stated herein that are the responsibility of the Owner. 10. Establish and maintain the master set of all booking records and schedules for the Convention Center (such records and schedules shall be provided to the City and to such third parties as directed by the City, at any time upon reasonable notice of request, and shall remain the property of the City). B. City Management Assistance. The Owner hereby authorizes and engages the City, or its designee as the law permits, to manage the Convention Center during the term of this Agreement as limited and described herein. The City hereby accepts such engagement subject to the terms and conditions expressed in this Agreement. The Owner shall cooperate with the City to the extent necessary for the City to fulfill its duties under this Agreement. The authority of the City to manage shall include the City's use of the Convention Center for public purposes. This Agreement does not change the character of such use and employees of the City using the 2 Convention Center for public purposes shall enjoy invitee status, as any other member of the public. Without limiting the generality of the foregoing, the City is hereby authorized and shall be obligated to do as follows in its discretion and as is allowed under the City's budget processes: 1. Advertise and conduct solicitations and promotional programs to attract tourists and convention delegates or registrants to the Denton Convention Center, including, but not limited to: i. Marketing at the state and local level (including market analysis, campaign development, branding, promotion, etc.); ii. Collecting and reporting metrics on marketing activity; iii. Sales missions developed in conjunction with the Owner's hotel sales team to pre- identify and pre - qualify business - appropriate meetings for the Property; and iv. Partnership development to create collaborative opportunities with local private, public, and non - profit sector entities. 2. Provide meeting, event, and pre- convention services, including, but not limited to: i. Conducting site visits and familiarization tours for potential clients; ii. Customized servicing for groups (registration assistance, delegate name badge preparation, welcome packets, off -site function arrangements, etc.); and iii. Serving as liaison between meeting planner client and hotel, local business, and transportation. 3. Identifying, collecting rate bids from, and securing overflow hotels in Denton for convention delegates. The City's duties described above shall specifically not include event coordinator duties for the Convention Center and those duties shall be the sole responsibility of Owner. C. No Joint Venture /No Joint Employment. This Agreement does not create a joint venture as to the Convention Center development or any separate business enterprise owned by Owner and physically joined to the Convention Center, such as the Hotel and Restaurant; and, the City, or its designee if permitted by law, shall remain independent of the actual operations of the Convention Center and shall only serve in a limited management position for the promotion of tourism and visitors to the City, which duties shall not require oversight or control by the Owner. The City, or its designee, shall not be considered a joint employer in performance under this Agreement and shall have no authority whatsoever over employees of Owner, its representatives, or of any lessee of the Convention Center; and, shall have no control over the terms and conditions 3 of their employment. This Agreement shall not be construed to cause the City, or its designee if permitted by law, to have obligations regarding federal and state employment laws with respect to those employees of Owner, regardless if those employees perform similar duties as the City herein. There shall be no shared employees. D. Expenses. The City shall not receive a management fee. The City shall only be responsible for costs associated with the performance of its duties under Section I.B. herein and shall not be responsible for any other costs incurred by Owner in performing its duties or otherwise operating the Convention Center. From time to time, if the City agrees to additional duties not defined herein, those costs shall be assessed against the Owner and not the City, and such duties shall be included in this Agreement in the form of a written addendum. Any responsibility of the City for costs associated with the management assistance as described in this Agreement shall be subject to annual appropriation by the City Council in the annual budget and the City's obligations under this Agreement shall not constitute a general obligation of the City or indebtedness under the Constitution or laws of the State of Texas. E. Booking Policy. The Owner acknowledges that the interest of the City requires a booking policy that takes into account not only those events which generate substantial direct revenue for the Convention Center, but also takes into account those events which produce less direct revenue, but generate significant peripheral economic benefits in the form of City hotel utilization, increased tourist revenues, and provide a stimulus to the general economy of the City of Denton. Owner agrees to use its commercially reasonable best efforts to accommodate this policy in the operation of the Convention Center. F. Insurance. Owner shall require that proper Certificates of Insurance evidencing general liability, automobile, bodily injury, property damage, death and workers compensation coverage shall be furnished, with copies to the City, and require that all policies be kept in force during the term of the Agreement by all vendors, concessionaires, subcontractors and service providers in the minimum amounts approved by the City. Such policies shall name the City as an additional insured. The Owner further agrees to maintain at all times during the term of this Agreement and the Development Agreement, with responsible insurance companies, insurance as follows: 1. Such worker's compensation, employer's liability or similar insurance as may be required by law, or such greater amounts which Owner shall deem advisable but no less than $1,000,000/$2,000,000; 2. A general liability insurance policy in the amount of at least $1,000,000 per person or $2,000,000 per occurrence for bodily injury or death; 3. An umbrella coverage insurance policy of at least $10,000,000 per occurrence; 4. Such other insurance against such other operation risks as Owner or City deems advisable to insure against, including, without limitation, auto liability insurance, liquor liability insurance and fidelity bonds; 5. Errors & Omissions or Professional Liability Coverage in the amount of at least $1,000,000. 6. Fire insurance and insurance against such other hazards ordinarily included by an all - risk form of extended coverage endorsement on the buildings, operating supplies, M furniture, furnishings and equipment in an amount equal to at least one hundred percent (100 %) of actual replacement cost (without deduction for depreciation) thereof, and all alterations, substitutions and replacements therefore, and bearing a standard noncontributory mortgagee loss payable endorsement in favor of the holders of any Mortgage on the Convention Center and providing, if reasonably available, for waiver of subrogation against such holder and the debt and security of such Mortgage in the event that the Convention Center is restored. This insurance shall include business interruption insurance. The Owner shall add the City as an additional insured on policies required by this Agreement. Moreover, the Owner shall assume all risks in connection with the adequacy of any insurance or self - insurance program and waives any claim against the City for any liability, costs or expenses arising out of any uninsured claim, in part or in full, of any nature whatsoever. Within a reasonable period of time after the effective date of this Agreement, Owner shall provide the City with a Certificate of Insurance showing compliance with this section. Any changes to coverage shall cause Owner to immediately notify the City in writing of such change. G. Compliance. Owner shall make all reasonable efforts to comply with all laws, rules, regulations, requirements, orders, notices, determinations, and ordinances of the City of Denton, including without limitation, the state and local liquor authorities, and the requirements of any insurance companies covering any of the risks against which the Convention Center is insured. Owner shall indemnify and hold harmless the City from any loss, cost, damage, or expense associated with compliance hereunder. H. Management Term. The term of this Agreement shall commence on the date the Agreement is approved by the City Council and shall continue for as long as the term of the Development Agreement, or as otherwise terminated thereby or hereunder. L Termination. The Agreement may be terminated prior to the expiration of the Agreement upon the occurrence of one or more of the following events: 1. Upon any default of the Development Agreement between the City and the Owner dated following the expiration of applicable cure periods; 2. Upon at least thirty (30) days prior written notice to the other party, if (i) the Convention Center is damaged or destroyed by fire or another casualty; (ii) all or a substantial part of the Convention Center is taken in a condemnation or eminent domain proceeding, or (iii) the Owner advises the City in writing prior to the Effective Date that the Owner has abandoned the development of the Convention Center; 3. Upon at least thirty (30) days prior written notice if Owner shall apply for or consent to the appointment of a receiver, trustee or liquidator of it or all or a substantial part of its assets; file a voluntary petition for bankruptcy; or, become otherwise insolvent; 4. If Owner permanently ceases operation of the Convention Center; 5 5. If Owner fails to provide or maintain insurance as required under this Agreement; or 6. If the Development Agreement results in a cessation of the incentive involving Hotel Occupancy Tax, then this Agreement terminates until such time as such incentive is resumed II. MISCELLANEOUS A. Assignability. If the Owner sells the Property, it shall provide the City at least sixty (60) days written notice of such sale identifying the buyer and whether the buyer intends to assume Owner's obligations under this Agreement and the Development Agreement. The City may assign its duties and /or designate a third party non - profit entity to perform the obligations hereunder in its own discretion and without approval of Owner; however, the City shall provide notice of such assignment within fifteen (15) days of the assignment. Failure to provide such notice does not constitute a waiver under this Agreement. B. Subcontract for Performance of Services. Nothing in this agreement shall prohibit, nor be construed to prohibit, the agreement by the City with another entity, person, or organization for the performance of those services described herein. In the event that the City enters into any arrangement, contractual or otherwise, with such other entity, person, or organization, the City shall cause other such entity, person, or organization to adhere to, conform to, and be subject to all provisions, terms, and conditions of this Agreement. C. Indemnification. OWNER AGREES TO INDEMNIFY, HOLD HARMLESS, AND DEFEND THE CITY, ITS OFFICERS, OFFICIALS, AGENTS, EMPLOYEES, AND REPRESENTATIVES FROM AND AGAINST ANY AND ALL CLAIMS (ADMINISTRATIVE OR JUDICIAL) OR SUITS FOR INJURIES, DEATH, DAMAGES, LOSSES AND EXPENSES (INCLUDING BUT NOT LIMITED TO REASONABLE ATTORNEYS' FEES FOR PRE - TRIAL, TRIAL AND APPELLATE PROCEEDINGS, ACCOUNTING FEES, APPRAISAL FEES AND CONSULTING AND EXPERT WITNESS FEES), ARISING OUT OF (1) ANY NEGLIGENT ACT OR OMISSION, ANY GROSS NEGLIGENCE OR ANY RECKLESS OR WILLFUL MISCONDUCT BY OWNER, ITS OFFICERS, DIRECTORS, AGENTS OR EMPLOYEES; (2) OWNER'S NON - PERFORMANCE OF ITS OBLIGATIONS HEREUNDER (WHETHER NEGLIGENT, GROSSLY NEGLIGENT, RECKLESS, OR WILLFUL); OR (3) ANY ACTION TAKEN BY OR ON BEHALF OF OWNER RELATING TO THIS AGREEMENT WHICH IS NOT PERMITTED BY, OR PURSUANT TO THE PROVISIONS OF THIS AGREEMENT OR REASONABLY NECESSARY TO CARRYING OUT LENDER AND /OR OWNER'S DUTIES. ANY INDEMNIFICATION SHALL APPLY REGARDLESS OF WHETHER OR NOT SAID CLAIM, DAMAGE, LOSS, OR EXPENSE IS COVERED BY INSURANCE AS HEREIN PROVIDED. IN THE D EVENT THAT A CLAIM IS ASSERTED AGAINST EITHER PARTY OR BOTH, OWNER SHALL PROVIDE CITY WITH A COPY OF SUCH CLAIM WITHIN A REASONABLE TIME FROM RECEIPT. OWNER FURTHER AGREES TO INDEMNIFY, HOLD HARMLESS, AND DEFEND THE CITY, ITS OFFICERS, OFFICIALS, AGENTS, EMPLOYEES, AND REPRESENTATIVES AGAINST ALL SUCH CLAIMS OR CAUSES OF ACTION RELATING TO COURSE OF EMPLOYMENT, WORKING CONDITIONS, WAGES AND /OR COMPENSATION OF OWNER EMPLOYEES OR FORMER OWNER EMPLOYEES AT THE CONVENTION CENTER AND RELATED HOTEL AND /OR RESTAURANT, INCLUDING VIOLATIONS OF ANY STATE, LOCAL, OR FEDERAL EMPLOYMENT LAW WHETHER COMMON LAW OR STATUTORY, AND AGAINST CLAIMS OF ANY PAST OR FUTURE LIFE /SAFETY CODE VIOLATIONS. D. Notice. Any notice required to be given under this Agreement or any statute, ordinance, or regulation, shall be effective when given in writing and deposited in the United States mail, certified mail, return receipt requested, or by hand - delivery, addressed to the respective parties as follows: CITY O'REILLY HOTEL PARTNERS — DENTON, LLC City Manager Tim O'Reilly City of Denton O'Reilly Hospitality Management, LLC 215 E. McKinney 2808 S. Ingram Mill Road, Building C100 Denton, TX 76201 Springfield, MO 65804 E. Inurement. This Agreement and each provision hereof, and each and every right, duty, obligation, and liability set forth herein shall be binding upon and inure to the benefit and obligation of the City and OWNER and their respective successors and assigns. F. Application of Laws. All terms, conditions, and provisions of this Agreement are subject to the Charter of the City of Denton, all ordinances passed pursuant thereto, and all judicial determinations relative thereto. This Agreement shall be governed by the laws of the State of Texas and venue shall lie in Denton County, Texas. G. Exclusive Agreement. This Agreement contains the entire understanding and constitutes the entire agreement between the parties hereto concerning the subject matter contained herein. There are no representations, agreements, arrangements, or understandings, oral or written, express or implied, between or among the parties hereto, relating to the subject matter of this Agreement, which are not fully expressed herein. The terms and conditions of the Agreement shall prevail notwithstanding any variance in this Agreement from the terms and conditions of any other document relating this transaction or these transactions. This Agreement may not be modified, amended, surrendered or changed, except by a written instrument executed by both parties. 7 H. Severability. If any section, subsection, paragraph, sentence, clause, phrase, or word in this Agreement, or application thereof to any person or circumstance is held invalid by any court of competent jurisdiction, such holding shall not affect the validity of the remaining portions of this Agreement, and the parties hereby declare they would have enacted such remaining portions despite any such invalidity. L No Representation. In entering into this Agreement, the parties acknowledge that the City has made no representation to the Owner regarding Owner's potential earnings, the possibility of future success or any other similar matter respecting the Convention Center and the City's assistance hereunder, and that the City expressly makes no guarantee as to the success of its assistance as provided hereby. This Agreement is effective as of the day of 12015. ATTEST: JENNIFER WALTERS, CITY SECRETARY APPROVED AS TO FORM: ANITA BURGESS, CITY ATTORNEY CITY OF DENTON, TEXAS BY: GEORGE C. CAMPBELL CITY MANAGER O'REILLY HOTEL PARTNERS — DENTON, LLC a Missouri Limited Liability Company ma Its: ACKNOWLEDGMENTS STATE OF TEXAS } COUNTY OF DENTON } The foregoing Management Agreement was executed before me on the day of 12015 by George C. Campbell, City Manager of the City of Denton, Texas, a Texas municipal corporation, on behalf of said Municipal Corporation. Name: Notary Public in and for the State of Texas STATE OF TEXAS } COUNTY OF DENTON } The foregoing Management Agreement was executed before me on the day of , 2015 by of O'Reilly Hotel Partners — Denton, LLC., on behalf of said corporation. Name: Notary Public in and for the State of Texas 0 City Hall City of Denton 215 E. McKinney St. Denton, Texas 76201 www.cityofdenton.com D EN'FON File #: ID 15 -1025, Version: 1 Legislation Text Agenda Information Sheet DEPARTMENT: Development Services /Economic Development CM/ ACM: Jon Fortune Date: October 30, 2015 SUBJECT Receive a report, hold a discussion, and give staff direction regarding a management contract between the City of Denton and the Dallas Entrepreneur Center for the management of co- working space and an entrepreneur center located at 608 East Hickory, Denton, Texas, 76201. BACKGROUND The Dallas Entrepreneur Center (DEC) was established to provide a central location to serve entrepreneurs by providing education, training, programming, mentorship and access to capital. The DEC is a 501(c) 3 nonprofit organization governed by a volunteer Board of Directors. The DEC's vision can be summarized within the following bullet points: • The DEC is a business support hub. It generates economic growth by offering startups the knowledge and resources necessary for success. • The DEC believes that investment into up- and - coming entrepreneurs is an investment in the future of the community and economy. • The DEC removes many of the challenges faced by entrepreneurs and startup companies by providing them with a physical location that has direct access to resources, education and guidance to achieve success. • The DEC serves as a collaborative space where everyone has something to offer the startup ecosystem. • The DEC aims to make North Texas a bigger known presence amongst the entrepreneurial and business scene across the United States. The DEC successfully hosts over one hundred events per year, and has brought in over 10,000 people into their space in Dallas for events, tours, and potential members. The DEC houses more than fifty companies, roughly 120 people, in their Dallas space full time and another 10 companies that co -work or drop -in regularly to work from their space. The DEC has launched many highly recognized programs such as DEC Education (classes to train entrepreneurs), DEC Incubation (hands -on mentoring and resources to coach companies through growing a business, and DEC White Board Sessions (investors spend half of a day each month at the DEC meeting with members to advise and coach towards fundraising). Additionally, the DEC has been partly or directly responsible for bringing a growing number of national programs into North Texas, including the Startup Next Program, the Co- Founder's Lab, 1 Million Cups, and TechCocktail. City of Denton Page 1 of 3 Printed on 10/26/2015 File #: ID 15 -1025, Version: 1 The DEC currently contracts with the City of Addison to manage and operate the Addison Treehouse, a co- working space and entrepreneur center. The City of Denton has invested in the launch of a co- working space and entrepreneur center which will be focused on growing and supporting technology -based companies in Denton. The center is scheduled to open on March 1, 2016. Due to the DEC's success in North Texas, their ability to replicate their operating model in multiple cities within North Texas, and the growing network of entrepreneurship across the area, the City is proposing to enter into a management agreement for the DEC to manage and operate the new co- working space and entrepreneur center to be located at 608 East Hickory in Denton. Membership in the Denton program will include satellite membership in Addison and Dallas as a member benefit. This network affords more opportunities for collaboration and the attraction of national entrepreneur programs and investors. As the manager of the program and the co- working space, the DEC will have the following responsibilities: • Coordinate with the Rail Yard developer on the design and layout of the space, including tenant finish- out selections, interior design, and architectural/construction decisions. The Manager will solicit feedback from the City during this process but will serve as the primary point of contact during construction. • Coordinate with the City's marketing /advertising designee to finalize all branding, logos, program markers, and marketing materials for the promotion and launch of the entrepreneur center. • Coordinate the selection and procurement of all furniture, fixtures, and equipment for the space while working directly with the City and all applicable purchasing laws. • Coordinate with the City to finalize membership eligibility, terms, application requirements, selection process, operating hours, performance measures and all other programmatic elements. • Commencing with the term of the Commercial Lease Agreement, day -to -day management and operations of the entrepreneur center and all associated programs, including but not limited to the following: • Membership recruitment and collection of all membership fees • Coordinate, plan and host events and training for members • Coordinate all programming for the space • Create a business - support hub for tech -based companies and start -ups • The DEC will pay a percentage of operating expenses associated with the Commercial Lease Agreement as follows: • Ten percent of all membership fees collected by Manager will be paid quarterly to the Landlord (Rail Yard Partners, Ltd) as a contribution towards associated operating expenses • All payments will be made directly to the Landlord and will be credited towards the City's operating expense account • The DEC will solicit sponsorships, donations, programming, speakers and all other support as necessary to successfully operate the entrepreneurial space and associated programs. • The DEC will provide a quarterly financial report to the City that shows a separate accounting of all revenue and expenses associated with the operation of the space in Denton, and an accounting of all revenue and expenses associated with the DEC's full operations. The City will provide the space located at 608 East Hickory for the operation of the entrepreneur center. The City will provide appropriate technology, furniture, fixtures, and equipment for the space, and will provide staff support and resources to the DEC to assist in operations. The City will also provide marketing resources and assistance as available and budgeted, and will license the use of any and all branding, logos, program markers, City of Denton Page 2 of 3 Printed on 10/26/2015 File #: ID 15 -1025, Version: 1 websites and other materials to the DEC for the promotion of the program. OPTIONS The City Council may approve the proposed Management Agreement with the DEC, may request changes to the Agreement or request more information, or may deny the proposal. RECOMMENDATION Staff recommends approval of the Management Agreement with the DEC. ESTIMATED SCHEDULE OF PROJECT Upon execution of the Agreement, the DEC will immediately begin working to fulfill its responsibilities prior to the launch of the program scheduled for March 1, 2016. PRIOR ACTION/REVIEW (Council, Boards, Commissions) On September 15, 2015 the City Council approved the Commercial Lease Agreement and the Grant Agreement with Rail Yard Partners, Ltd. On January 16, 2015 the Tax Increment Reinvestment Zone Number One (Downtown TIF) received a report regarding an innovation and technology recruitment initiative and potential partnership opportunities, and recommended approval of an incentive 5 -0. On October 14, 2014 the EDP received a report regarding an innovation and technology recruitment initiative and potential partnership opportunities and recommended that staff proceed with a vote by the Downtown TIF Board. In a Budget Workshop on July 31, 2014, and in a Budget Work Session on August 19, 2014, the City Council heard a budget request for $220,000 for the formation of this program. This program has been funded for the 2014 -15 Fiscal Year and is included in the City Manager's Proposed Budget for Fiscal Year 2015 -16. In a joint meeting between EDP and the City Council on April 7, 2014, program components were presented and discussed. EDP and the City Council gave staff direction to consider pursuing the initiative and developing the program. FISCAL INFORMATION The Management Agreement requires the DEC to contribute ten percent of membership income towards the operating expenses associated with the Commercial Lease Agreement between the City of Denton and Rail Yard Partners, Ltd. EXHIBITS 1 - Ordinance 2015 -300 - Rail Yard Lease and Grant Agreement 2 - Draft Management Agreement 3 - Draft Ordinance Respectfully submitted: Aimee Bissett Director of Development Services City of Denton Page 3 of 3 Printed on 10/26/2015 s: \legal \our documents \ordinances \15 \ordinance approving rail yard lease and incentive agreements updated 9- 9- 15.docx Exhibit 1 ORDINANCE NO. 2015 -300 AN ORDINANCE OF THE CITY OF DENTON, TEXAS APPROVING AN ECONOMIC DEVELOPMENT AGREEMENT FOR AN INCENTIVE GRANT BETWEEN THE CITY OF DENTON AND RAIL YARD PARTNERS, LTD; AND A COMMERCIAL LEASE AGREEMENT BETWEEN THE CITY OF DENTON AND RAIL YARD PARTNERS, LTD. INVOLVING DEVELOPMENT AT THE PROPERTY LOCATED AT 608 EAST HICKORY STREET, DENTON, TEXAS, 76201; PROVIDING AUTHORITY FOR THE CITY MANAGER TO EXECUTE THE AGREEMENTS SUBJECT TO FINAL LANGUAGE APPROVAL BY THE CITY ATTORNEY; AND PROVIDING AN EFFECTIVE DATE. WHEREAS, on September 16, 2014, the City of Denton adopted the 2014/15 Program of Services and Budget, including a line item for a technology recruitment initiative; and WHEREAS, on the 7th day of December, 2010, the City of Denton, Texas (the "City ") established Tax Increment Reinvestment Zone (TIRZ) Number One (Downtown TIF) (Ordinance 2010 -316) as authorized by Chapter 311 of the Texas Code (the "Act "); and WHEREAS, on the 5th day of August, 2014, the City of Denton, Texas amended the Tax Increment Reinvestment Zone Number One Project Plan to allow the City of Denton to utilize City -owned property located in a reinvestment zone to facilitate economic projects which the City and TIF Board deem appropriate and desirable. The City may acquire, lease, sell or otherwise transfer property to accomplish the public purpose of economic development that is consistent with the Project Plan; and WHEREAS, the City Council by this ordinance is establishing an economic development program under Chapter 380 which will stimulate business activity in the City and promote the public interest (the "Program "); and WHEREAS, to effectuate the Program, the City and Grantee have negotiated an Economic Development Agreement for an incentive grant (the "Grant Agreement "), a copy of which is attached hereto and made a part hereof by reference; and WHEREAS, to effectuate the Program, the City and Grantee have negotiated a Commercial Lease Agreement (the "Lease Agreement "), a copy of which is attached hereto and made a part hereof by reference; and WHEREAS, the City Council finds that the Program, the Grant Agreement, and the Lease Agreement promote economic development and will stimulate commercial activity within the City of Denton for the benefit of the public; NOW, THEREFORE; THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The recitals and findings contained in the preamble of this ordinance are incorporated into the body of this ordinance. sAlegal \our documents \ordinances \15 \ordinance approving rail yard lease and incentive agreements updated 9- 9- 15.docx Exhibit 1 SECTION 2. The City Manager, or his designee, is hereby authorized to execute the Grant Agreement on behalf of the City of Denton and to carry out the City's responsibilities and rights under the Grant Agreement, including without limitation the authorization to make the expenditures set forth in the Grant Agreement. SECTION 3. The City Manager, or his designee, is hereby authorized to execute the Lease Agreement on behalf of the City of Denton and to carry out the City's responsibilities and rights under the Lease Agreement, including without limitation the authorization to make the expenditures set forth in the Lease Agreement. SECTION 4. The City Manager, or his designee, is authorized to exercise the City of Denton's rights and duties as set forth in the Grant Agreement and the Lease Agreement. SECTION 5. This ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the CS day of , 2015. ,mv 'III: WATTS, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY I:• APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY BY. .... Page 2 Exhibit 1 ECONOMIC DEVELOPMENT PROGRAM GRANT AGREEMENT WITH RAIL YARD PARTNERS, LTD. This Economic Development Program Grant Agreement ( "Agreement ") is made and entered into as of the effective date provided for below, by RAIL YARD PARTNERS, LTD. (the "Grantee "), a Texas limited partnership, and the CITY OF DENTON (the "City "), a Texas municipal corporation, for the purposes and considerations stated below: WHEREAS, this Agreement is authorized by and made pursuant to the economic development program provisions of Chapter 380 of the Texas Local Government Code (the "Act ") to promote local economic development and to stimulate business and commercial activity in the City of Denton; and WHEREAS, Grantee is contemplating a catalyst transit - oriented development of that certain real property located at 608 East Hickory, Denton Texas, 76201, within the city limits of the City of Denton as more particularly described in Exhibit "A" attached hereto and made a part hereof by reference (the "Property "); and WHEREAS, the project will involve Grantee investing approximately $12 million in Denton, and is expected to provide co- working and incubator space for an economic development program focused on the creation of high -tech companies and jobs; and WHEREAS, on the 22 t of January 2015, Grantee submitted an application for economic development incentives to the City concerning the contemplated use and development of the Property, which is on file in the City's Office of Economic Development, a copy of which is attached hereto and made a part hereof by reference as Exhibit `B ", and WHEREAS, on the 14th of October 2014, the Economic Development Partnership Board considered and recommended a local incentive for Rail Yard Partners, Ltd., and on the 16th of January 2015, the Tax Increment Reinvestment Zone Number One ( "TIRZ 1") Board of Directors recommended a local incentive for Rail Yard Partners, Ltd. in order to accomplish certain objectives stated within the Downtown TIF (TIRZ 1) Project Plan, a copy of which is attached hereto and made a part hereof by reference as Exhibit "C "; and WHEREAS, the City Council finds that the contemplated use and development of the Property, the proposed improvements provided for herein and the other terms and conditions of this Agreement will promote economic development and will stimulate development activity within the City of Denton for the benefit of the public. NOW, THEREFORE, the City and Grantee for and in consideration of the Property and the promises contained herein do hereby contract, covenant and agree as follows: 1 Exhibit 1 I. CONDITIONS OF THE GRANT A. Grantee covenants and agrees with the City that the City's obligations under this Agreement are subject to the fulfillment of the Grantees' obligations under this Agreement, and Grantee (or through Related Parties) hereby agrees to perform and comply in all material respects to the terms, conditions, and provisions of this Agreement and in all other instruments and agreements between Grantee, Related Parties, and the City with respect to the financial or other incentives provided herein. In consideration of a Grant Agreement and subject to the Grantee meeting all the terms and conditions of the Grant as set forth herein, the City hereby grants the following: A grant (the "TIRZ Grant ") equal to $76,000 annually, from the Tax Increment Reinvestment Zone Number One Fund, commencing on March 1, 2016 and paid annually on March 1St for five years, terminating on March 1, 2 02 1. B. A condition of the TIRZ Grant is that the Commercial Lease Agreement between the City of Denton and Rail Yard Partners, LTD remains in effect for the term of the grants, a copy of which is attached hereto and made a part hereof by reference as Exhibit "D ". C. The terms "Improvements" or "Contemplated Improvements" are defined as the construction, renovation and equipping of the Property including but not limited to (1) costs related to the development and improvement of the real estate, including, without limitation, construction costs and design and engineering costs; (2) tangible personal property located on or at the Property owned or controlled by Grantee, The kind and location of the Contemplated Improvements is more particularly described in the Incentive Application (the "Incentive Application ") submitted by Grantee to the City on January 22, 2015. D. Upon approval by the City Council, the Grantee and the City shall have the right to renew or extend the term of the TIRZ Grant in the event that the Commercial Lease Agreement between the City and Rail Yard Partners, LTD is renewed or extended. II. GENERAL PROVISION In the event of any conflict between the City zoning ordinances, or other City ordinances or regulations, and this Agreement, such ordinances or regulations shall control, provided however the City shall not diminish the benefits to the Grantee under this Agreement through ordinances or regulations (whether now or hereafter in effect). 2 Exhibit 1 III. TERMS AND CONDITIONS OF GRANT A. Subject to the terms and conditions of this Agreement, the City hereby agrees to pay to Grantee: 1. Upon execution of Commercial Lease Agreement and occupancy of property by City of Denton, a grant totaling $76,000 annually for five years commencing March 1, 2016. B. Grantee shall have the right to protest and contest any or all appraisals or assessments by the Denton County Appraisal District for the Property, the Improvements or any other tangible personal property owned or controlled by Grantee and located on the Property. IV. RECORDS, AUDITS, AND EVALUATION OF PROJECT Grantee shall provide access and authorize inspection of the Property by authorized City employees and allow sufficient inspection of financial information to insure that the Improvements are made according to the specifications and conditions of this Agreement. Such inspections shall be done in a way that will not interfere with Grantee's business operations or reveal confidential or proprietary information. The City shall, on an annual basis, evaluate the Project to ensure compliance with this Agreement. Grantee shall provide information to the City on a form provided by the City for the evaluation. The information shall include, without limitation, an inventory listing the kind, number, and location of and the total investment value of all Improvements to the Property, including those Improvements installed, renovated, repaired or located on the Property. V. FAILURE TO MEET CONDITIONS In the event (i) Grantee or the Owner of the Property allow their ad valorem real property taxes owed to the City with respect to the Property, or ad valorem taxes owed to the City with respect to any tangible personal property owned or controlled by the Grantee and which is located on the Property to become delinquent and fails to timely and properly follow the legal procedures for protest and /or contest of any such ad valorem real property or tangible personal property taxes; or, (ii) any other material conditions of this Agreement are not substantially met by Grantee, then a "Condition Failure" shall be deemed to have occurred. It is understood that a Condition Failure shall not be deemed to occur merely because at a particular time it cannot be determined whether such condition has been or will be met, but shall occur only if at a particular time it can be determined that such condition will not be met after notice and reasonable Exhibit 1 opportunity for Grantee to cure such failure. In the event that a Condition Failure occurs, the City shall give Grantee written notice of such Condition Failure and if the Condition Failure has not been cured or satisfied within ninety (90) days of said written notice, this Agreement may be terminated by the City; provided, however, that if such Condition Failure is not reasonably susceptible of cure or satisfaction within such ninety (90) day period and Grantee has commenced and is pursuing the cure or satisfaction of same, then after first advising the City of efforts to cure or satisfy same, Grantee may utilize such additional time as may be reasonably required to cure such Condition Failure, but not more than one hundred eighty (180) days, provided, however that the City may, in its discretion, authorize additional time in order to facilitate a cure of such Condition Failure. If a Condition Failure is not cured or satisfied after the expiration of the applicable notice and cure or satisfaction periods ( "Condition Failure Default "), the City may, as the City's sole and exclusive remedies, (a) terminate any payment(s) due pursuant to Section A.1. or A.2. above, and (b) require that Grantee repay to the City an amount equal to fifty percent (50 %) of such payments made in year of termination. Notwithstanding the foregoing, in no event shall Grantee be required to repay all or any portion of any payments made to Grantee pursuant to Section III A.1, or Section III A.2, above. VI. ASSIGNMENT Without the prior consent of the City, this Agreement and Grantee's rights and obligations hereunder may only be assigned to an affiliate of Grantee, and such assignment shall only be effective upon delivery of written notice of same to the City. Upon any assignment permitted in accordance with the terms of this Section VI, the assignee will be deemed the "Grantee" hereunder, such that any reference in this Agreement to "Grantee" or to "Rail Yard Partners, Ltd." shall be deemed to refer to such assignee. Consent of the City will not be unreasonably withheld. In the event that Grantee ceases to operate on the Property, this Agreement shall terminate and all obligations of the City, as set forth herein, shall terminate and be of no further force and effect. VII. NOTICE All notices called for or required by this Agreement shall be addressed to the following, or such other party or address as either party designated in writing, by certified mail postage prepaid or by hand delivery: COMPANY: Rail Yard Partners, Ltd. Orison Holdings, LLC, General Partner ATTN: Brandon Martino 525 S. Loop 288, Suite 105 Denton, TX 76205 4 Exhibit 1 CITY: City Manager City of Denton 215 E. McKinney Denton, Texas 76201 BOARD: Board of Directors of Reinvestment Zone Number One c/o City of Denton 215 E. McKinney Street Denton, Texas 76201 VIII. CITY COUNCIL AUTHORIZATION This Agreement is authorized by the City Council at its meeting on the day ol-���, 2015, authorizing the City Manager to execute this Agreement on behalf of the City. IX. INTENTIONALLY OMITTED X. SEVERABIILTY In the event any section, subsection, paragraph, sentence, or phrase is held invalid, illegal or unconstitutional, the balance of this Agreement shall stand, shall be enforceable and shall be read as if the parties intended at all times to delete said invalid, illegal or unconstitutional provision. XI. ESTOPPEL CERTIFICATE Any party hereto may request an estoppel certificate from another party hereto so long as the certificate is requested in connection with a bona fide business purpose. The certificate, which if requested will be addressed to Rail Yard Partners, Ltd. shall include, but not necessarily be limited to, statements that this Agreement is in full force and effect without default (or if default exists the nature of default and curative action, which should be undertaken to cure same), the remaining Term of this Agreement, the levels and remaining Term of the Annual Payments in effect, and such other matters reasonably requested by the party(ies) to receive the certificates. XII. RAIL YARD PARTNERS, LTD. STANDING Grantee, as a party to this Agreement, shall be deemed a proper and necessary party in any litigation questioning or challenging the validity of this Agreement or any of Exhibit 1 the underlying ordinances, resolutions, or City Council actions authorizing same and Grantee shall be entitled to intervene in said litigation. XIII. APPLICABLE LAW This Agreement shall be construed under the laws of the State of Texas. Venue for any action under this Agreement shall be the appropriate court serving Denton County, Texas. This Agreement is fully performable in Denton County, Texas. XIV. FORCE MAJEURE If, because of flood, fire, explosions, civil disturbances, strikes, war, acts of God, or other causes beyond the control of either Party, either Party is not able to perform any or all of its obligations under this Agreement, then the respective Party's obligations hereunder shall be suspended during such period but for no longer than such period of time when the party is unable to perform. XV. AMENDMENT This Agreement is the entire agreement of the parties and may only be modified by a written instrument executed by both parties. XVI. EFFECTIVE DATE This Agreement is effective as of the ' day alp.w . , 2015. CITY OF DENTON, TEXAS ... y� BY (rl:�tll C. CAM PBI�i Exhibit 1 APPROVED AS TO FORM: ANITA BURGESS, CITY ATTORNEY RAIL YARD PARTNERS, LTD. ORISON HOLDINGS, LLC, GENERAL PARTNER BY 13randori Marti._ ,...,�..m ...�.�.. � ._�..._ no ITS: A� Managing Partner ACKNOWLEDGMENTS STATE OF TEXAS COUNTY OF DENTON The foregoing Economic Development Program Agreement was executed before me on the _ day of y , 2015 by George C. Campbell, City Manager of the City of Denton, Texas, a Texas municipal corporation, on behalf of said municipal corporation. Name: Notary Public in and for the State of Texas 7 Exhibit 1 STATE OF TEXAS COUNTY OF DENTON The foregoing Economic Development Prograrti greci et t was executed before me on the day of :. __ . 2015 by � t� �n behalf of said corporation. 8 n_ Name Notary Public in and for the Y „ State of Texas < 8 Exhibit I Axis Realty Group � °�NTC'mR ftmUmas Cofflowuldd NORTH TEXAS COMMERCIAL ASSOCIATION OF REALTORS0 COMMERCIAL LEASE AGREEMENT between Rail Yard Partners, LTD and City of Denton TABLE OF CONTENTS Article i. Defined Terms 2. Lease and Term 3. Rent and Security Deposit 4. Taxes 5. Insurance and Indemnity 6. Use ofPremises 7. Property Condition, Maintenance, Repairs and Alterations 8. Damage or Destruction S. Condemnation 10. Assignment and Subletting 11. Default and Remedies 12. Landlord's Contractual Lien 13. Protection of Lenders 14. Environmental Representations and Indemnity 15. Professional Service Fees 18. Miscellaneous and Additional Provisions Axis Realty Group, 1517 Centre Place Drive TX 76205 Phone: 940.891.2947 Fax: 940.891.2948 Alex Payne City of Denton Produced with zipFormO by zipLoglx 18070 Fifteen Mile Road, Fraser, Michigan 48026 jMWZlQL9,g-1&9RM Exhibit 1 COMMERCIAL LEASE AGREEMENT [Throughout this Lease, complete all blanks and check all boxes that apply. Blanks not completed and boxes not checked do not apply.] For good and valuable consideration, the parties to this Commercial Lease Agreement (the "Lease ") agree as follows: ARTICLE ONE DEFINED TERMS As used in this Lease, the terms set forth in this Article One have the following meanings: 1.01 Effective Date: The last date beneath the signatures of Landlord and Tenant on this Lease. Partners, 1.02 Landlord: Rail Yard Par , LTD m .. IT m Address: 525 mS Loop 288, Suite 105 Denton TX 76205 Telephone: (940)­3.82­-­5000 -� Fax: Email: 1.03 Tenant: City of Denton Address: 215 E . McKinney .._5treet �.. .........._ ....��...�. ...._._�_...... Denton TX 76201 ..... ..... Telephone: ... _ Fax: . ... .. -..mm _ ...... Email: -. i 1.04 Premises include Suite or Unit No., if applicable]: 608 E E Hickory St, Ste 128 _... ......�,_ Denton TX 76201 A. Building Name: The Rail B. Street address: 608 E. Hickory, „St., Ste 128 .... IT Denton, TX 76201 in ,,Denton County, Texas. C. Legal description: The property on which the Premises are situated is described as:East Hickory Addition, Block A, Lots 1 and 2 and may be more particularly described on the attached Exhibit "A ", Survey or Legal Description (the "Property "). The term "Property" includes the land described on Exhibit "A ", and any improvements on the land (including the Premises). D. Floor Plan or Site Plan: Being a floor area of approximately .,. 9216 square feet, or a land area of approximately square feet or approximately acres, and being more particularly shown in outline form on the attached Exhibit "B ", Floor Plan or Site Plan. COMMERCIAL LEASE AGREEMENT - Page 2 ©NTCAR 2014 - Form No. 2 (3/2014) Produced with zlpForm® by zlpLoglx 18070 Fifteen Mile Road, Fraser, Michigan 48026 www.zlpLoglx.com City of Denton Exhibit 1 E. Tenant's Pro Rata Share: _.........32.532 %, 1.05 Term: 5 years and _,.....� months beginning on March 1 , 2016 (the "Commencement Date ") and ending on February 28 _- , 2021 (the "Expiration Date "). Unless the context requires otherwise, references in this Lease to the "Term" include any renewal or extension of this Lease. [See Addendum "A ", Renewal Options, if applicable]. 1.06 Base Rent: Base Rent is due and payable in monthly installments during the Term of this Lease as set forth in this Section. Base Rent and all other sums due or payable by Tenant to Landlord under this Lease are collectively referred to in this Lease as the "Rent." Base Rent Payment Schedule On or before the first day of each month during the Term of this Lease, Tenant shall pay monthly installments of Base Rent as follows: Dates Monthly Base Rent From March 1, 2016 to February 28, 2017 $ 7,490.67; From March 1, 2017 to _........ 02/28/2018 $ 7,767.15 ; From March ITIT1,ITm 2018 to 02/28/2019 8m,049.16 From 03/01/2019 to 02/28/2020 $ 8 r 33681 From 03/01/20 20 to Februa IT rlr 28 , 2021 $ _ 8 , 630 .21 ; From to [Rent for any Renewal Term is determined pursuant to a separate Addendum, if applicable, and should not be set forth here.] 1.07 Percentage Rental Rate:.... ................. %. [See Addendum "D ", Percentage Rental and Gross Sales Reports, if applicable] 1.08 Security Deposit: $ 17,280. 00 _ (due upon execution of this Lease). [See Section 3.04] 1.09 Expense Reimbursements: A. Tenant shall pay Landlord as additional Rent (or pay the charges directly to the service provider, if applicable) the following expenses (or a portion of the expenses, if applicable) (each an "Expense Reimbursement" and collectively the "Expense Reimbursements ") that are incurred by or assessed against the Premises (as each of these terms is defined in this Lease) [check all boxes that apply]: ❑ Real Estate Taxes; ❑ Insurance Premiums; ❑ Common Area Maintenance (CAM) Expenses; ® Operating Expenses; ❑ Roof and Structural Maintenance Expenses; ❑ Electricity; ❑ Cable; ❑ Gas; ❑ Internet Access; COMMERCIAL LEASE AGREEMENT - Page 3 ©NTCAR 2014 - Form No. 2 (3/2014) Produced with zipForm® by zipLogix 18070 Fifteen Mlle Road, Fraser, Michigan 48026 www.zlr)Loalx.com City of Denton Exhibit 1 ® Water; ® Sewer; ❑ Telephone; ❑ Trash Removal; and ❑ All other Utilities. B. Expense Definitions. 1. Real Estate Taxes. "Real Estate Taxes" means all general real estate taxes, ad valorem taxes, general and special assessments, parking surcharges, rent taxes, and other similar governmental charges levied against or applicable to the Property for each calendar year. 2. Insurance Premiums. "Insurance Premiums" means all Landlord's insurance premiums attributable to the Property, including but not limited to insurance for fire, casualty, general liability, property damage, medical expenses, extended coverage, and loss of rents coverage for up to 12 months' Rent. 3. Common Area Maintenance Expenses. "Common Area Maintenance Expenses" or "CAM Expenses" means all costs of maintenance, inspection and repairs of the Common Areas of the Property, including, but not limited to, those costs for security, lighting, painting, cleaning, decorations and fixtures, Utilities, ice and snow removal, trash disposal, project signs, roof repairs, pest control, project promotional expenses, property owners' association dues, wages and salary costs of maintenance personnel, and other expenses benefiting all the Property that may be incurred by Landlord, in its discretion, including sales taxes and a reasonable service charge for the administration thereof. The term "Common Areas" is defined as that part of the Property intended for the collective use of all tenants including, but not limited to, the parking areas, driveways, loading areas, landscaping, gutters and downspouts, plumbing, electrical systems, HVAC systems, roof, exterior walls, sidewalks, malls, promenades (enclosed or otherwise), meeting rooms, doors, windows, corridors and public rest rooms. CAM Expenses do not include the cost of capital improvements, the cost of management office equipment and furnishings, depreciation on Landlord's original investment, the cost of tenant improvements, real estate brokers' fees, advertising of space for lease, or interest or depreciation on capital investments. 4. Operating Expenses. "Operating Expenses" means all costs of ownership, building management, maintenance, repairs and operation of the Property, including but not limited to Real Estate Taxes, Insurance Premiums, CAM Expenses, reasonable management fees, wages and salary costs of building management personnel, overhead and operational costs of a management office, janitorial, Utilities, and professional services such as accounting and legal fees. Operating Expenses do not include the cost of capital improvements, the cost of management office equipment and furnishings, depreciation on Landlord's original investment, the cost of tenant improvements, real estate brokers' fees, advertising of space for lease, or interest or depreciation on capital investments. 5. Roof and Structural Maintenance Expenses. "Roof and Structural Maintenance Expenses means all costs of maintenance, repair and replacement of the roof, roof deck, flashings, skylights, foundation, floor slabs, structural components and the structural soundness of the building in general. 6. Utilities. "Utilities" means charges for electricity, cable, gas, Internet access, water, sewer, telephone, trash removal, and any other services that are commonly understood to be utilities, including connection charges. 7. Other Terms. Other terms that are not expressly defined are intended to have the meanings given those terms in common usage. COMMERCIAL LEASE AGREEMENT - Page 4 ©NTCAR 2014 — Form No. 2 (3/2014) Produced wlth zlpForm® by zlpLoglx 18070 Fifteen Mile Road, Fraser, Mlchlgan 48026 www.zlpLoalx.com City of Denton Exhibit 1 C. Expense Reimbursement Limitations. The amount of Tenant's Expense Reimbursement will be determined by one of the following methods as described and defined below [check only one]: ❑ Base Year Adjustment; ❑ Expense Stop Adjustment; ® Pro Rata Adjustment; ❑ Fixed Amounts; or ❑ Net Lease. D. Expense Reimbursement Limitation Definitions. 1. Base Year Adjustment. If "Base Year Adjustment" has been checked above, Tenant shall pay to Landlord as additional Rent Tenant's Pro Rata Share of increases in the applicable expenses (those checked in Section 1.09.A. above) for the Property for any calendar year during the Term or during any Extension of this Lease, over such amounts p y (the "Base Year "). aid b Landlord for the Base Year 2. Expense Stop Adjustment. If "Expense Stop Adjustment" has been checked above, Tenant shall pay to Landlord as additional Rent Tenant's Pro Rata Share of increases in the applicable expenses (those checked in Section 1.09.A. above), for the Property for any calendar year during the Term or during any Extension of this Lease, over $ � ...µµµµµµw per square foot of floor area (as set forth in Section 1.04D) per year. 3. Pro Rata Adjustment. If "Pro Rata Adjustment" has been checked above, Tenant shall pay to Landlord as additional Rent Tenant's Pro Rata Share of the total amount of the applicable expenses (those checked in Section 1.09.A. above) for every calendar year during the Term and during any extension of this Lease. 4. Fixed Amounts. If "Fixed Amounts" has been checked above, Tenant shall pay to Landlord as additional Rent the following monthly amounts (regardless of whether they have been checked in Section 1.09.A. above) as Tenant's Expense Reimbursements to Landlord for the following expenses that are incurred by or assessed against the Property: Real Estate Taxes per month. Insurance Premiums per month. CAM Expenses $ ,,,,,_ per month. Operating Expenses $ ...._ -.. per month. Roof & Structural Maintenance Expenses $ _p per month. Electricity $ _ . per month. Cable $ _,. -. per month. Gas $ per month. Internet Access $ per month. Water per month. Sewer $ per month. Telephone $...... �.. .. per month. Trash Removal $ ........ _-._ per month. All Other Utilities $ _.. .. ....... ...,._ per month. 5. Net Lease. If "Net Lease" has been checked above, then notwithstanding anything contained in this Lease to the contrary in Section 6.02, Article Seven or otherwise, Tenant shall be responsible for paying Tenant's Pro Rata Share of all costs of compliance with laws, ownership, maintenance, repairs, replacements, operation of the Premises, and operation of the Property, including but not limited to all costs of Real Estate Taxes, Insurance Premiums, Common Area Maintenance Expenses, Operating Expenses, Roof and Structural Maintenance Expenses, and all Utilities (regardless of whether they have been checked in Section 1.09.A. above). COMMERCIAL LEASE AGREEMENT - Page ONTCAR 2014 — Form No. 2 (3/2014) Produced with zlpForm® by zipLoglx 18070 Fifteen Mlle Road, Fraser, Michigan 48026 www.zleLOalx.com City of Benton Exhibit 1 E. First Payment. The sum of the Monthly Base Rent for the first month of the Term for which Base Rent is due (which may be later than the first month of the Term, if there is a free rent period), and the initial estimated monthly Expense Reimbursement payments (before adjustments) is set forth below. Upon the execution of this Lease, in addition to the Security Deposit, Tenant shall pay the first monthly payment in the sum of the amounts set forth below. Initial Monthly Base Rent $ _490.67 Real Estate Taxes $ —... -- Insurance Premiums $_ _ -- CAM Expenses $ .. .... - Operating Expenses $ 3,456.00 Roof & Structural Maintenance Expenses $ -- ...... Electricity $ _ ...._ Cable_W Gas Internet Access $. - .. - . Water $ ...... ................ Sewer $. __ Telephone $. ...... ........... Trash Removal $._...._ All Other Utilities $ - -mm- Total $ 10 946.67 [Complete the amount of the first Base Rent payment to be due, as well as estimated amounts of any other monthly payments that start at the beginning of the Term of this Lease. Put N/A or strike through the rest. Any estimated amounts are subject to adjustment pursuant to other provisions of this Lease. If any expense payments are not due at the beginning of the Term, they may begin later in the Term pursuant to other provisions of this Lease.] F. Expense Reimbursement Payments. Tenant agrees to pay any end -of -year lurnp SUrn Expense Reimbursement within 30 days after receiving an invoice from Landlord. Any time during the Term, Landlord may direct Tenant to pay monthly an estimated portion of the projected future Expense Reimbursement arnount. Any such payment directed by Landlord will be due and payable monthly on the same day that the Base Bent is due. Landlord may, at Landlord's option and to the extent allowed by applicable law, impose a. Late Charge oil. any Expense Reimbursement payments that are not actually received by Landlord oil or before the due date, in the amount and manner set forth in Section 3.03 of this Lease. Any Expense Reimbursements relating to partial calendar years will be prorated accordingly. If Tenant's Pro Rata Share is not expressed in Section 1.04.E of this Lease, then Tenant's Pro Rata Share of such Expense Reimbursements will be based on the square footage of useable area contained in the Premises in proportion to the square footage of useable building area of the Property. Tenant may audit or examine those items of expense in Landlord's records that relate to Tenant's obligations under this Lease. Landlord shall promptly refund to Tenant any overpayment that is established by an audit or examination. If the audit or examination reveals an error of more than 5% over the figures billed to Tenant, Landlord shall pay the reasonable cost of the audit or examination. G. ❑ Gross -Up Provisions. [Check this only if applicable.] If the Property is a multi- tenant building and is not fully occupied during the Base Year or any portion of the Term, an adjustment will be made in computing the variable costs for the Base Year and each applicable calendar year of the Term. Variable costs will include only those items of expense that vary directly proportionately to the occupancy of the Property. Variable costs that are included in the CAM Expenses, Operating Expenses and Utilities will be increased proportionately to the amounts that, in Landlord's reasonable judgment, would have been incurred had 95% of the useable area of the Property been occupied during those years. COMMERCIAL LEASE AGREEMENT - Page 6 ONTCAR 2014 — Form No. 2 (3/2014) Produced with zlpForm® by zlpLoglx 1 8070 Fifteen Mlle Road, Fraser, Michigan 40026 www.zloLcclx.com City of Denton Exhibit 1 1.10 Permitted Use: office [See Section 6.011 1.11 Party to whom Tenant is to deliver payments under this Lease is the Landlord, unless one of the following boxes is checked, in which case Tenant shall deliver payments to: ❑ Principal Broker, or ❑ Other [Set forth name and address, if other than Landlord or Principal Broker]: 1.12 Principal Broker: Axis Realty Group , is acting as the agent for Landlord exclusively, unless one of the following boxes is checked, in which case Principal Broker is acting as: ❑ the agent for Tenant exclusively, or ❑ an intermediary. 1.13 Principal Broker's Address: 1,517 Centre Place Denton TX 76205 Telephone: (940) 8_91 -2947 Email: alex @axisrealwty.biz Cooperating Broker: is acting as the agent for Tenant exclusively, which case Cooperating Broker is acting as: intermediary. Fax: (940) 891 -2948 unless one of the following boxes is checked, in ❑ the agent for Landlord exclusively, or ❑ an Cooperating Broker's Address: - Telephone: ... ........ Fax: Email 1.14 The Professional Service Fee (the "Fee "): A. The percentages applicable in Section 15.01 and Section 15.02 to leases will be -% of the Base Rent to Principal Broker and % of the Base Rent to Cooperating Broker. If the Fee is based on an amount per square foot, that amount is $ per square foot to Principal Broker and $ _...._. _ per square foot to Cooperating Broker. The Fee will be paid in the manner described in Subsection 15.01A (half on execution and half on the Commencement Date), unless this box ❑ is checked, in which case the Fee will be paid in the manner described in Subsection 15.01 B (monthly). B. The percentages applicable in Section 15.03 in the event of a sale will be m % to Principal Broker and .,,.- % to Cooperating Broker, 1.15 Disclosure of Dual Capacity as Broker and Principal. [Complete if applicable] A. is a licensed Texas real estate broker and is acting in a dual capacity as broker for Landlord and as a principal in this transaction, as he or she may be Landlord (or one of the owners of Landlord). B. _IT _ is a licensed Texas real estate broker and is acting in a dual capacity as broker for Tenant and as a principal in this transaction, as he or she may be Tenant (or one of the owners of Tenant). 1.16 Exhibits and Addenda. Any exhibit or addendum attached to this Lease (as indicated by the boxes checked below) is incorporated as a part of this Lease. Any term not specifically defined in an Addendum will have the same meaning given to it in the body of this Lease. ® Exhibit "A" Survey and /or Legal Description of the Property ® Exhibit "B" Floor Plan and /or Site Plan ® Exhibit "C" Information About Brokerage Services ® Exhibit "D" Other Grant Agreement COMMERCIAL LEASE AGREEMENT - Page 7 ONTCAR 2014 - Form No. 2 (3/2014) Produced with zlpForm® by zlpLoglx 18070 Fifteen Mlle Road, Fraser, Michigan 48026 www.zloLoglx.com City of Denton ® Addendum "A" ® Addendum "B" ❑ Addendum "C" ❑ Addendum "D" ❑ Addendum "E" ❑ Addendum "F" ® Addendum "G" ❑ Addendum "H" ❑ Addendum "I" ❑ Addendum "J" ® Addendum "K" Exhibit 1 Renewal Options Construction of Improvements by Landlord Construction of Improvements by Tenant Percentage Rental and Gross Sales Reports Right of First Refusal for Additional Space Guaranty Rules and Regulations Rooftop Lease Parking Additional Provisions Addendum Other work Letter ARTICLE TWO LEASE AND TERM 2.01 Lease of Premises for Term. Landlord leases the Premises to Tenant and Tenant leases the Premises from Landlord for the Term stated in Section 1.05. The Commencement Date is the date specified in Section 1.05, unless advanced or delayed under any provision of this Lease. 2.02 Delays in Commencement. Landlord will not be liable to Tenant if Landlord does not deliver possession of the Premises to Tenant on the Commencement Date specified in Section 1.05 above. Landlord's non - delivery of possession of the Premises to Tenant on the Commencement Date will not affect this Lease or the obligations of Tenant under this Lease. However, the Commencement Date will be delayed until possession of the Premises is delivered to Tenant. The Term will be extended for a period equal to the delay in delivery of possession of the Premises to Tenant, plus the number of days necessary for the Term to expire on the last day of a month. If Landlord does not deliver possession of the Premises to Tenant within 60 days after the Commencement Date specified in Section 1.05, Tenant may cancel this Lease by giving a written notice to Landlord at any time after the 60 -day period ends, but before Landlord actually delivers possession of the Premises to Tenant. If Tenant gives such notice, this Lease will be canceled effective as of the date of its execution, any prepaid amounts will be reimbursed to Tenant, and no party will have any rights or obligations under this Lease. If Tenant does not give such notice within the time specified, Tenant will have no right to cancel this Lease, and the Term will commence upon the delivery of possession of the Premises to Tenant. If delivery of possession of the Premises to Tenant is delayed, Landlord and Tenant shall, upon such delivery, execute an amendment to this Lease setting forth the revised Commencement Date and Expiration Date of the Term. 2.03 Early Occupancy. If Tenant occupies the Premises before the Commencement Date, Tenant's occupancy of the Premises will be subject to all of the provisions of this Lease. Early occupancy of the Premises will not advance the Expiration Date. Unless otherwise provided in this Lease, Tenant shall pay Base Rent and all other charges specified in this Lease for the period of occupancy. 2.04 Holding Over. Tenant shall vacate the Premises immediately upon the expiration of the Term or earlier termination of this Lease. Tenant shall reimburse Landlord for and indemnify Landlord against all damages incurred by Landlord as a result of any delay by Tenant in vacating the Premises. If Tenant does not vacate the Premises upon the expiration of the Term or earlier termination of this Lease, Tenant's occupancy of the Premises will be a day -to -day tenancy, subject to all of the terms of this Lease, except that the Base Rent during the holdover period will be increased to an amount that is one - and - one -half (11/2) times the Base Rent in effect on the expiration or termination of this Lease, computed on a daily basis for each day of the holdover period, plus all additional sums due under this Lease. This Section will not be construed as Landlord's consent for Tenant to hold over or to extend this Lease. COMMERCIAL LEASE AGREEMENT - Page ONTCAR 2014 - Form No. 2 (3/2014) Produced with zlpForm® by zlpLoglx 18070 Fltteen Mlle Road, Fraser, Michigan 48026 www.zlpLgglx.com City of Denton Exhibit 1 ARTICLE THREE RENT AND SECURITY DEPOSIT 3.01 Manner of Payment. Tenant shall pay the Rent to Landlord at the address set forth in Section 1.02, unless another person is designated in Section 1.11, or to any other party or address Landlord may designate in any written notice delivered to Tenant. Landlord may designate, in a written notice delivered to Tenant, the party authorized to receive Rent and act on behalf of Landlord to enforce this Lease. Any such authorization will remain in effect until it is revoked by Landlord in a subsequent written notice delivered to Tenant. Any payments made to a third party designated by Landlord will be deemed made to Landlord when received by the designated third party. All sums payable by Tenant under this Lease, whether or not expressly denominated as Rent, will constitute rent for the purposes of Section 502(b)(6) of the Bankruptcy Code and for all other purposes. 3.02 Time of Payment. Upon execution of this Lease, Tenant shall pay the installment of Base Rent for the first month of the Term for which Base Rent is due (which may be later than the first month of the Term, if there is a free rent period). On or before the first day of the next month and each month thereafter, the installment of Base Rent and other sums due under this Lease will be due and payable, in advance, without off -set, deduction or prior demand. Tenant shall cause payments to be properly mailed or otherwise delivered so as to be actually received (and not merely deposited in the mail) by Landlord (or the party identified in Section 1.11, or any other third party designated by Landlord) on or before the due date. If the Term commences or ends on a day other than the first or last day of a calendar month, the rent for any partial calendar month following the Commencement Date or preceding the end of the Term will be prorated. Tenant shall pay any such prorated portion for a partial calendar month at the beginning of the Term on the Commencement Date. Tenant shall pay any such prorated portion for a partial calendar month at the end of the Term on the first day of that calendar month. 3.03 Late Charges. Tenant's failure to promptly pay sums due under this Lease may cause Landlord to incur unanticipated costs. The exact amount of those costs is impractical or extremely difficult to ascertain. The costs may include, but are not limited to, processing and accounting charges and late charges that may be imposed on Landlord by any ground lease or deed of trust encumbering the Premises. Payments due to Landlord under this Lease are not an extension of credit. Therefore, if any payment under this Lease is not actually received on or before the due date (and not merely deposited in the mail), Landlord may, at Landlord's option and to the extent allowed by applicable law, impose a Late Charge on any late payments in an amount equal to 10% of the amount of the past due payment (the "Late Charge ") after the payment is more than five days past due. A Late Charge may be imposed only once on each past due payment. Any Late Charge will be in addition to Landlord's other remedies for nonpayment of Rent. If any check tendered by Tenant under this Lease is dishonored for any reason, Tenant shall pay to Landlord a dishonored check fee of $30.00, plus (at Landlord's option) a Late Charge as provided above until Good Funds (defined below) are received by Landlord. The parties agree that any Late Charge and dishonored check fee represent a fair and reasonable estimate of the costs Landlord will incur by reason of the late payment or dishonored check. If there are any Late Charges, dishonored check fees, installments of Base Rent, and any other unpaid charges or reimbursements due to Landlord, then Landlord may apply any payments received from Tenant to any amounts due in any order Landlord may choose. Notwithstanding the foregoing, Landlord will not impose a Late Charge as to the first late payment in any calendar year, unless Tenant fails to pay the late payment to Landlord within three business days after the delivery of a written notice from Landlord to Tenant demanding the late payment be paid. However, Landlord may impose a Late Charge without advance notice to Tenant on any subsequent late payment in the same calendar year. 3.04 Security Deposit. Upon execution of this Lease, in addition to the installment of Base Rent due under Section 3.02, and in addition to any other amounts that are due from Tenant upon the execution of this Lease, Tenant shall deliver to Landlord a Security Deposit in the amount stated in Section 1.08. Landlord may apply all or part of the Security Deposit to any unpaid Rent, and damages and charges for which Tenant is legally liable under this Lease, and damages and charges that result from a breach of this Lease, including but not limited to, the cost to cure Tenant's failure to comply with Section 7.05 and any other provision that requires Tenant to leave the Premises in a certain condition upon the expiration or termination of this Lease. If Landlord uses any part of the Security Deposit, Tenant shall COMMERCIAL LEASE AGREEMENT - Page 9 ©NTCAR 2014 — Form No. 2 (3/2014) Produced with zlpForm® by zlpLoglx 18070 Fllteen Mlle Road, Fraser, Michigan 48026 www.ZIDLoalx.com City of Denton Exhibit 1 restore the Security Deposit to its full amount within 10 days after Landlord's written demand. Tenant's failure to restore the full amount of the Security Deposit within the time specified will be a default under this Lease. No interest will be paid on the Security Deposit. Landlord will not be required to keep the Security Deposit separate from its other accounts, and no trust relationship is created with respect to the Security Deposit. After the expiration of this Lease, Landlord shall refund the unused) portion of the Security Deposit, if any„ to Tenant within 60 days after the date Tenant surrenders possession of the Premises and provides a written notice to Landlord of Tenant's forwarding address for the purpose of refunding the Security Deposit. The provisions of this Section will survive the expiration of, termination of this Lease. 3.05 Good Funds Payments. If any two or more payments by check from Tenant to Landlord for Rent are dishonored and returned unpaid, thereafter Landlord may, at Landlord's option„ by the delivery of a written notice to Tenant, require that all future payments of Rent for the remaining Torre° of this Lease must be made by cash, certified check, cashier's check, official bank check, money order, wire transfer or automatic electronic funds transfer ("Good Funds "), and that the delivery of Tenant's personal or corporate check will no longer constitute payment of Rent under this Lease. Any acceptance by Landlord of a payment for Rent by Tenant's personal or corporate check thereafter will not be construed as a waiver of Landlord's right to insist upon payrnent by Good Funds as set forth in this Section. ARTICLE FOUR TAXES 4.01 Payment by Landlord. Landlord shall pay the real estate taxes on the Premises during the Term, subject to reimbursement by Tenant pursuant to any other provision in this Lease. 4.02 Improvements by Tenant. If the real estate taxes levied against the Premises for the year in which the Term commences are increased as a result of any additions or improvements rnade by Tenant, or by Landlord at Tenant's request, Tenant shall pay to Landlord Upon demand the amount of the increase and continue to pay the increase during the Term. Landlord shall use reasonable efforts to obtain from the tax assessor a written statement of the amount of the increase due to such additions or improvements. 4.03 Joint Assessment. If the real estate taxes are assessed against the Premises jointly with other property that is not part of the Premises, the real estate taxes applicable to the Premises will be equal to the amount bearing the same proportion to the aggregate assessment that the total square feet of building area in the Premises bears to the total square feet, of building area included in the joint assessment. If there are no improvements on the Property or the other property, then nand area will be used instead of building area for the calculation of the proportional assessment. If there are improvements on one of the jointly assessed properties but not on the other property, then the calculation of the proportional assessment must be done in a reasonable manner. 4.04 Personal Property Taxes. Tenant shall pay all taxes assessed against trade fixtures, furnishings, equipment, inventory„ products, or any other personal property belonging to Tenant. Tenant shall use reasonable efforts to have Tenant's property taxed separately from the Premises. If any of Tenant's property is taxed with the Premises, Tenant shall pay the taxes for Tenant's property to Landlord within 16 days after Tenant receives a written statement from Landlord for the property taxes. 4.05 Waiver of Right to Protest Taxes. Unless otherwise provided in this Lease: (i) Landlord retains the right to protest the tax assessment of the Property, and Tenant waives the right to protest; and (ii) Tenant waives Landlord's obligation to provide Tenant with a notice of the tax valuation of the Property. ARTICLE FIVE INSURANCE AND INDEMNITY 5.01 Property Insurance. During the Term, Landlord shall maintain insurance policies covering damage to the Premises in an amount or percentage of replacement value as Landlord deems reasonable in relation to the age, location, type of construction and physical condition of the Premises COMMERCIAL LEASE AGREEMENT - Page 10 ONTCAR 2014 — Form No. 2 (3/2014) Produced with zipForm® by zlpLoglx 18070 Fifteen Mlle Road, Fraser, Michlgan 48026 www.zlpLoalx.com City of Denton Exhibit 1 and the availability of insurance at reasonable rates. The policies will provide protection against risks and causes of loss that Landlord reasonably deems necessary. Landlord may, at Landlord's option, obtain insurance coverage for Tenant's fixtures, equipment and improvements in or on the Premises. Promptly after the receipt of a written request from Tenant, Landlord shall provide a certificate of insurance showing the insurance coverage then in effect. Tenant shall, at Tenant's expense, obtain and maintain insurance on Tenant's fixtures, equipment and improvements in or on the Premises as Tenant reasonably deems necessary to protect Tenant's interest. Any property insurance carried by Landlord or Tenant will be for the sole benefit of the party carrying the insurance and under its sole control. 5.02 Increases in Premiums. Tenant shall not conduct or permit any operation or activity, or store or use any materials, in or around the Premises that would cause suspension or cancellation of any insurance policy carried by Landlord. If Tenant's use or occupancy of the Premises causes Landlord's insurance premiums to increase, then Tenant shall pay to Landlord, as additional Rent, the amount of the increase within 10 days after Landlord delivers written evidence of the increase to Tenant. 5.03 Liability Insurance. During the Term, Tenant shall maintain a commercial general liability insurance policy, at Tenant's expense, insuring Tenant against liability arising out of the use or occupancy of the Premises, and naming Landlord as an additional insured. The initial amounts of the insurance must be at least $1,000,000 or, if the following blank is completed $ for Each Occurrence, $2,000,000 or, if the following blank is completed $ General Aggregate per policy year, and $10,000 for Medical Expense. If Tenant's liability insurance coverage is less than $5,000,000, and if this box ❑ is checked, then Tenant must also maintain a commercial liability umbrella policy in amount to provide a combination of liability insurance coverage to equal a $5,000,000 total limit. The coverage amounts will be subject to periodic increases as Landlord may reasonably determine from time to time. The amounts of the insurance will not limit Tenant's liability or relieve Tenant of any obligation under this Lease. The policies must contain cross - liability endorsements and must insure Tenant's performance of the indemnity provisions of Section 5.04. The policies must contain a provision that prohibits cancellation or modification of the policy except upon 30 days' prior written notice to Landlord. Tenant shall deliver a copy of the policy or certificate of insurance to Landlord before the Commencement Date and before the expiration of the policy during the Term. If Tenant fails to maintain the policy, Landlord may elect to maintain the insurance at Tenant's expense. 5.04 Indemnity. Landlord will not be liable to Tenant or to Tenant's employees, agents, invitees or visitors, or to any other person, for any injury to persons or damage to property on or about the Premises or any adjacent area owned by Landlord caused by the negligence or misconduct of Tenant, Tenant's employees, subtenants, agents, licensees or concessionaires or any other person entering the Premises under express or implied invitation of Tenant, or arising out of the use of the Premises by Tenant and the conduct of Tenant's business, or arising out of any breach or default by Tenant in the performance of Tenant's obligations under this Lease. TeiqaRt heFeby affees te defeRd, 0W4AV "d kW effl_`a" f a@ a-i t y° Tenant will not be liable for any injury or damage caused by the negligence or misconduct of Landlord, or Landlord's employees or agents, and Landlord agrees to indemnify and hold Tenant harmless from any loss, expense or damage arising out of such damage or injury. 5.05 Waiver of Subrogation. Each party to this Lease waives any and every claim that arises or may arise in its favor against the other party during the Term of this Lease for any and all loss of, or damage to, any of its property located within or upon, or constituting a part of, the Premises, to the extent the loss or damage is covered by and recoverable under valid and collectible insurance policies. These mutual waivers are in addition to, and not in limitation or derogation of, any other waiver or release contained in this Lease with respect to any loss of, or damage to, property of the parties. Inasmuch as these mutual waivers will preclude the assignment of any such claim by way of subrogation to an insurance company (or any other person), each party agrees to immediately give to each insurance company that has issued an insurance policy to such party written notice of the terms of such mutual waivers, and to cause the policies to be endorsed to prevent the invalidation of the insurance coverage by reason of these waivers. COMMERCIAL LEASE AGREEMENT - Page 11 ©NTCAR 2014 — Form No. 2 (3/2014) Produced with zlpForm® by zlpLoglx 18070 Fifteen We Road, Fraser, Michigan 48026 www zioLo,�lx.com City of Denton Exhibit 1 ARTICLE SIX USE OF PREMISES 6.01 Permitted Use, Tenant may use tine Promises only for the Permitted Use stated in Section 1.10. Tenant acknowledges that (I) the current use of the Premises or the improvements located on the Prer°nises, or both, may not conform to city ordinances or restrictive covenants with respect to the porrritted use, zoning, height limitations, setback requirements„ minirrrurn parking requirements, coverage ratio of Improvements to land area., and other matters that may have a significant impact upon the Tenant's Intended use of the Premises; (li) Tenant has independently investigated and verilled to Tenant's satisfaction the extent of any limitations or non - conforming uses of the Premises; and (iii) Tenant is not relying upon any representations of Landlord or the Brokers with respect to any such matters. L"tor A &Jcr1O W ` -ed jt S +Wd1 5- 1 VO- e -vt,A' 'b WxVei 0. `Wi rd 6.02 Compliance with Laws. Tenant shall comply with all governmental laws, ordinances and regulations applicable to the use of the Premises, and will promptly comply with all governmental orders and directives for the correction, prevention and abatement of nuisances and other activities in or upon„ or connected with the Premises, all at "Tenant "s sole expense, including any expense or cost resulting front the construction or installation of fixtures arid improvements or other rwccomrnodations L r,�tr" MpXA.0 for handic ""apped or disabled persons required for compliance with governmental laws and regulations, CLv��GC Including but not limited to the Texas Architectural Barriers Act (the "'TABA " ") and the Arnorioans with Disabilities Act (the' "AUA " "), To the extent any alterations to the Premises are required by the TABA, r ate the ACA or other applicable taws or regulations, Tenant shall bear the expense of the alterations. To the alterations to areas of the Property outside the Premises are required by the TABA, the Fr q �� extent any AIWA or other applicable taws or regulations (for "path of travel" requirements or otherwise), Landlord .D shall bear the expense of the alterations, 6.03 Certificate of Occupancy. Il required, Tenant shall apply for Certificate of Occupancy fronn the municipality in which the Property Is located before the Coi "nrrrencement Bate, and obtain a Certificate of Occupancy betore Tenant occupies the Premises. If Tenant is unable to obtain a Certificate of Occupancy after making an application and diligently pursuing it, then 'Tenant may, terminate this Lease by delivering a written notice to Landlord, unless either Landlord or Tenant 1s willing and able to cure Vie defects that prevented the issuance of the Certificate of Occupancy. Either landlord or Tenant may cure any such defects, at their own expense, Including any repairs, replacernents, or installations of any items that are not presently existing on the Premises, but noilher of them have any obligation to do so (unless another provision of this Lease states otherwise), It Tenant defivers a written termination notice to Landlord under this Section, and then any defects are cured and a Certificate of Occupancy is, issued within 15 days rafter Tenant delivered The notice, then this (..ease will remain In force, if this Lease Is terrninated because Landlord and Tenant cannot gel a Certificarle of Occupancy, then Landlord will return to Tenant any prepaid rent and any Security Deposit, and the�� parties will have no further obligations under this Lease. References in this Lease to a "Certificate of Occupancy " rnean a Cerlitfcate of Occupancy sutlicient to allow the Tenant to occupy the Promises for the Permitted Use. 6.04 Signs. Without the prior written consent of Landlord, "tenant may not place any signs, ornaments or other objects on the Premises or the Property, including but not lirnited to the roof or exterior of the building or other improvements on ilia Property, or paint or otherwise decorate or deface the exterior of the building or other improvements on the Property, Any signs installed by Tenant must conform to applicable laws, deed restrictions, and other applicable requirements. Tenant must remove all signs, decorations and ornaments at the expiration or termination of this Lease„ and must repair any damage and close any holes caused by installation or removal. 6.05 Utility Services. Unless otherwise provided in this Lease, Tenant shall pay the cost of all Utilities used for the Premises, and the cost of replacing light bulbs and tubes, Unless otherwise required by law„ Landlord Is the party enfdiled to designate utility and telecornmunicaatioo) service providers to the Property and the Premises. Landlord rrray, at Landlord's option, allow Tenant to select the provider., If Tenant selects the provider any access or alterations to the Property or the Premises necessary for the! Utilities may be made only with Landlord's prior consent, which Landlord will not unreasonably withhold or defray, if Landlord incurs any utility or connection charges that COMMERCIAL LEASE AGREEMENT ® Page 12 TCAR 2014 m Form No. 2 (3/2014) Produced with z1grFaffnO by aipLo ®Ix 18070 Flltaen FARO Road, Fraser, Michigan 40026 Zffl5LZJ2LQ9J&MM City of Denton Exhibit 1 Tenant is responsible to pay and Landlord pays the charges, Tenant shall reimburse Landlord immediately upon receipt of a written notice from Landlord stating the amount of the charges. 6.06 Landlord's Access. Landlord and Landlord's agents will have the right to, upon reasonable advance notice, and without unreasonably interfering with Tenant's business, enter the Premises: (a) to inspect the general condition and state of repair of the Premises, (b) to make repairs required or permitted under this Lease, (c) to show the Premises or the Property to any prospective tenant or purchaser, and (d) for any other reasonable purpose. If Tenant changes the locks on the Premises, Tenant must provide Landlord with a copy of each separate key upon Landlord's request. During the last 150 days of the Term, Landlord and Landlord's agents may erect signs on or about the Premises advertising the Premises for lease or for sale. 6.07 Possession. If Tenant pays the Rent, properly maintains the Premises, and complies with all other terms of this Lease, Tenant may occupy and enjoy the Premises for the full Term, subject to the provisions of this Lease. 6.08 Exemptions from Liability. Landlord will not be liable for any damage to the business (including any loss of income), goods, inventory, furnishings, fixtures, equipment, merchandise or other property of Tenant, Tenant's employees, invitees or customers, or for any injury to Tenant or Tenant's employees, invitees, customers or any other person in or about the Premises, whether the damage or injury is caused by or results from: (a) fire, steam, electricity, water, gas or wind; (b) the breakage, leakage, obstruction or other defects of pipes, sprinklers, wires, appliances, plumbing, air conditioning or lighting fixtures or any other cause; (c) conditions arising on or about the Premises or other portions of the Property, or from other sources or places; or (d) any act or omission of any other occupant of the Property. The provisions of this Section will not, however, exempt Landlord from liability for Landlord's gross negligence or willful misconduct. ARTICLE SEVEN PROPERTY CONDITION, MAINTENANCE, REPAIRS AND ALTERATIONS 7.01 Property Condition. Except as disclosed in writing by Landlord to Tenant before the execution of this Lease, to the best of Landlord's actual knowledge: (i) the Premises have no known latent structural or construction defects of a material nature; and (ii) none of the improvements to the Premises have been constructed with materials known to be a potential health hazard to occupants of the Premises. Unless otherwise expressly set forth in this Lease, Landlord represents that on the Commencement Date (and for a period of 30 days thereafter): (a) the fixtures and equipment serving the Premises are in good operating condition, including the plumbing, electrical and lighting systems, any fire protection sprinkler system, the HVAC (defined below) systems and equipment, the roof, skylights, doors, overhead doors, windows, dock levelers and elevators; and (b) the interior of the Premises is in good condition. Tenant will have a period of 30 days after the Commencement Date to inspect the Premises and notify Landlord in writing of any defects and maintenance, repairs or replacements required to the above named fixtures, equipment and interior. Within a reasonable period of time after the timely receipt of any such written notice from Tenant, Landlord shall, at Landlord's expense, correct the defects and perform the maintenance, repairs and replacements. 7.02 Acceptance of Premises. Tenant has inspected, or has had an opportunity to inspect, the Premises, before the execution of this Lease. Tenant has determined that the Premises may be used for the Permitted Use. Subject to the provisions in Section 7.01, and any other express obligations of Landlord in this Lease to construct any improvements, make repairs, or correct defects, Tenant agrees to accept the Premises in "AS IS" condition and with all faults (other than latent defects). To the extent permitted by applicable law, Tenant waives any implied warranties of Landlord as to the quality or condition of the Premises or the Property, or as to the fitness or suitability of the Premises or the Property for any particular use. 7.03 Maintenance and Repairs. Landlord will not be required to perform any maintenance or repairs, or management services, in the Premises, except as otherwise provided in this Lease. Tenant will be fully responsible, at Tenant's expense, for all maintenance and repairs, and management services, other than those that are expressly set forth in this Lease as Landlord's responsibility. COMMERCIAL LEASE AGREEMENT - Page 13 ©NTCAR 2014 — Form No, 2 (3/2014) Produced with zlpForm® by zlpLoglx 1 8070 Fifteen Mlle Road, Fraser, Michigan 48026 www.zlgLoalx.com City of Denton Exhibit 1 A. Landlord's Obligations. (1) Subject to the provisions of rt cle E�'i Lit;, (Damage or Destruction) and Article Ninq (Condemnation) and except for damage caused by any act or omission of Tenant, Landlord shall keep the roof, skylights, foundation, structural components and the structural portions of exterior walls of the Premises in good order, condition and repair. Landlord will not be obligated to maintain or repair windows, doors, overhead doors, plate glass or the surfaces of walls. In addition, Landlord will not be obligated to make any repairs under this Section until a reasonable time after receipt of written notice from Tenant of the need for repairs. If any repairs are required to be made by Landlord, Tenant shall, at Tenant's sole cost and expense, promptly remove Tenant's furnishings, fixtures, inventory, equipment and other property, to the extent required to enable Landlord to make repairs. Landlord's liability under this Section will be limited to the cost of those repairs or corrections. Tenant waives the benefit of any present or future law that might give Tenant the right to repair the Premises at Landlord's expense or to terminate this Lease because of the condition. (2) All repairs, maintenance, management and other services to be performed by Landlord or Landlord's agents involve the exercise of professional judgment by service providers, and Tenant expressly waives any claims against Landlord for breach of warranty arising from the performance of those services. B. Tenant's Obligations. Subject to the provisions of Section 7.01, Section 7.03, Article_f4toht (Damage or Destruction) and Article Nine (Condemnation)„ Tenant ,hall„ at all times, keep all other portions of the Premises in good order, condition and repair (except for normal weal" and tear), including, but not limited to, maintenance, repairs and all necessary replacements of the windows, plate glass, doors, overhead doors, HVAC equipment, electrical and lighting systems, fire protection sprinkler system, dock levelers, elevators, interior and exterior plumbing, the interior and exterior of the Premises in general, pest control and extermination, down spouts, gutters, paving, railroad siding, care of landscaping and regular rnowung of grass. ]in addition, Tenant shall, at Tenant's expense, repair any damage to any portion of the Property, including the roof, skylights, foundation, or structural components and exterior walls of the Premises, caused by Tenant's acts or omissions. If Tenant fails to maintain and repair the Property as required by this Section, Landlord may, on 10 days' prior written notice, enter the Premises and perform the maintenance or repair on behalf of Tenant, except that no notice is required in case of emergency, and Tenant shall reimburse Landlord immediately upon demand for all costs incurred in performing the maintenance or repair, plus a reasonable service charge. C. HVAC Service. This Section pertains to the heating, ventilation and air - conditioning ( "HVAC ") systems and equipment that service the Premises. [Check one box only.] ❑ (1) Landlord is obligated to provide the HVAC services to the Premises only during the operating hours of the Property (as described below). ❑ (2) Landlord will provide the HVAC services to the Premises during the operating hours of the Property (as described below) for no additional charge and will, at Tenant's request, provide HVAC services to the Premises during other hours for an additional charge of $ ..... per hour. Tenant will pay Landlord the charges under this paragraph promptly after receipt of Landlord's invoice. Hourly charges are charged oil a half -hour basis. Any partial hour will be rounded rap to the next half hour. Tenant will comply wlth Landlord's procedures to make a request to provide the additional HVAC services in advance. ® (3) Tenant will pay for the HVAC services under this Lease. For any HVAC system that services only the Premises, Tenant shall, at Tenant's own cost and expense, enter into a regularly scheduled preventative maintenance and service contract for all such HVAC systems and equipment during the Term. If Tenant fails to enter into such a service contract acceptable to Landlord, Landlord may do so on Tenant's behalf and Tenant agrees to pay Landlord the cost and expense thereof, plus a reasonable service charge, periodically upon demand. COMMERCIAL LEASE AGREEMENT - Page 1 @NTCAR 2014 — Form No. 2 (3/2014) Produced with zlpForm® by zlpLoglx 18070 Fllteen Mile Road, Fraser, Mlchlgan 48026 www zleLcalx.com City of Denton Exhibit 1 D. Operating Hours of the Property. The operating hours of the Property are the times reasonably determined by Landlord unless they are specified here. [specify the operating hours of the Property including the days of the week, and whether Saturdays, Sundays and holidays are included]: 24 hours per day, 7 days per week are permitted._ E. Cleaning. Tenant must keep the Premises clean and sanitary and promptly dispose of all trash in appropriate receptacles. Tenant will provide, at Tenant's expense, janitorial services to the Premises, unless this box ❑ is checked, in which case Landlord will provide janitorial services to the Premises that are customary for the property type. Tenant will maintain, at Tenant's expense, any grease trap on the Property that Tenant uses, including but not limited to periodic emptying and cleaning, as well as making any modification to the grease trap that may be necessary to comply with any applicable law. 7.04 Alterations, Additions and Improvements. Tenant may not create any openings in the roof or exterior walls without the prior written consent of Landlord. Tenant may not make any alterations, additions or improvements to the Premises ( "Alterations ") without the prior written consent of Landlord. However, Tenant is not required to obtain the Landlord's prior written consent for non - structural Alterations that do not cost more than $5,000 and that do not modify or affect the roof, plumbing, HVAC systems or electrical systems. Consent for non - structural Alterations in excess of $5,000 or that modify or affect plumbing, HVAC systems or electrical systems will not be unreasonably withheld, conditioned or delayed by Landlord. Tenant may erect or install trade fixtures, shelves, bins, machinery, HVAC systems, and refrigeration equipment, provided that Tenant complies with all applicable governmental laws, ordinances, codes, and regulations. At the expiration or termination of this Lease, Tenant may, subject to the restrictions of Section 7.05, remove items installed by Tenant, provided Tenant is not in default at the time of the removal and Tenant repairs, in a good and workmanlike manner, any damage caused by the installation or removal. Tenant shall pay for all costs incurred or arising out of Alterations and will not permit any mechanic's or materialman's lien to be filed against the Premises or the Property. Upon request by Landlord, Tenant shall deliver to Landlord proof of payment, reasonably satisfactory to Landlord, of all costs incurred in connection with any Alterations. 7.05 Condition upon Termination. Upon the expiration or termination of this Lease, Tenant shall surrender the Premises to Landlord broom clean and in the same condition as received, except for normal wear and tear and any damage caused by a casualty that Tenant is not otherwise obligated to repair under any provision of this Lease. Tenant will not be obligated to repair any damage that Landlord is required to repair under Article Seven (Property Condition) or Article Eight (Damage or Destruction). In addition, Landlord may require Tenant to remove any Alterations before the expiration or termination of this Lease and to restore the Premises to their prior condition, all at Tenant's expense. However, Tenant will not be required to remove any Alterations that were made with Landlord's consent or that were otherwise permitted under the terms of this Lease. All Alterations that Tenant does not remove will become Landlord's property upon the expiration or termination of this Lease. In no event may Tenant remove any of the following items without Landlord's prior written consent: (i) electrical wiring or power panels; (ii) lighting or lighting fixtures; (iii) wall coverings, drapes, blinds or other window coverings; (iv) carpets or other floor coverings; (v) HVAC equipment; (vi) plumbing equipment; (vii) fencing or gates; or (viii) any fixtures, equipment or other items that, if removed, would affect the operation or the appearance of the Property. However, Tenant may remove Tenant's trade fixtures, equipment used in Tenant's business, and personal property. The provisions of this Section will survive the expiration or termination of this Lease. COMMERCIAL LEASE AGREEMENT - Page 15 ONTCAR 2014 - Form No. 2 (3/2014) Produced with zlpForm® by zlpLoglx 18070 Fifteen Mlle Road, Fraser, Michigan 4B026 www,zloLoalx.c M City of Denton Exhibit 1 ARTICLE EIGHT DAMAGE OR DESTRUCTION 8.01 Notice. If any buildings or other improvements situated on the Property are damaged or destroyed by fire, flood, windstorm, tornado or other casualty, Tenant shall immediately give written notice of the damage or destruction to Landlord. 8.02 Partial Damage. If the Premises are damaged by fire, tornado or other casualty, and rebuilding and repairs can be completed within 120 days after the date Landlord receives written notification from Tenant of the occurrence of the damage, then this Lease will not terminate, but Landlord shall proceed with reasonable diligence to rebuild and repair the Premises (other than leasehold improvements made by Tenant or any assignee, subtenant or other occupant of the Premises) to substantially the condition they were in before the damage. To the extent the Premises cannot be occupied (in whole or in part) after the casualty, the Rent payable under this Lease during the period the Premises cannot be fully occupied will be adjusted equitably. If the casualty occurs during the last 18 months of the Term, Landlord will not be required to rebuild or repair the damage unless Tenant exercises Tenant's renewal option (if any) within 15 days after the date Landlord receives written notification of the occurrence of the damage. If the casualty occurs during the last 18 months of the Term and Tenant does not so exercise Tenant's renewal option, or if there is no renewal option in this Lease, Landlord may, at Landlord's option, terminate this Lease by delivering a written termination notice to Tenant, in which case the Rent will be abated for the unexpired portion of the Term, effective on the date Landlord received written notification of the damage. 8.03 Substantial or Total Destruction. If the Premises are substantially or totally destroyed by fire, tornado, or other casualty, or so damaged that rebuilding and repairs cannot reasonably be completed within 120 days after the date Landlord receives written notification from Tenant of the occurrence of the damage, either Landlord or Tenant may terminate this Lease by promptly delivering a written termination notice to the other party, in which event the monthly installments of Rent will be abated for the unexpired portion of the Term, effective on the date of the damage or destruction. If neither party promptly terminates this Lease, Landlord shall proceed with reasonable diligence to rebuild and repair the Premises (except that Tenant shall rebuild and repair Tenant's fixtures and improvements in the Premises). To the extent the Premises cannot be occupied (ins whole or in part) after the casualty, the Rent payable under this Lease during the period the Premises cannot be fully occupied will be adjusted equitably. ARTICLE NINE CONDEMNATION If, during the Term, all or a substantial part of the Premises are taken for any public or quasi - public use under any governmental law, ordinance or regulation or by right of eminent domain, or are conveyed to the condemning authority under threat of condemnation, this Lease will terminate and the monthly installments of Rent will be abated during the unexpired portion of the Term, effective on the date of the taking. If less than a substantial part of the Premises is taken for public or quasi - public use under any governmental law, ordinance or regulation, or by right of eminent domain, or is conveyed to the condemning authority under threat of condemnation, Landlord shall promptly, at Landlord's expense, restore and reconstruct the Premises (other than leasehold improvements made by Tenant or any assignee, subtenant or other occupant of the Premises) in order to make the Premises reasonably suitable for the Permitted Use. The Rent payable under this Lease during the unexpired portion of the Term will be adjusted equitably. If there is a taking of the Property that has a material, adverse effect on the operation of Tenant's business in the Premises, then the Rent will be adjusted equitably. Landlord and Tenant will each be entitled to receive and retain such separate awards and portions of lump sum awards as may be allocated to their respective interests in any condemnation proceeding. The termination of this Lease will not affect the rights of the parties to those awards. COMMERCIAL LEASE AGREEMENT - Page 16 ©NTCAR 2014 — Form No. 2 (3/2014) Produced with zlpForm@ by zlpLoglx 18070 Fllteen We Road, Fraser, Michigan 48026 www.zlpLouix.com City of Denton Exhibit 1 ARTICLE TEN ASSIGNMENT AND SUBLETTING Tenant may not assign this Lease or sublet the Premises or any portion thereof, without the prior written consent of Landlord, which consent will not be unreasonably withheld or delayed. Any assignment or subletting will be expressly subject to all terms and provisions of this Lease, including the provisions of Section 6.01 pertaining to the use of the Premises. In the event of any assignment or subletting, Tenant will remain fully liable for the full performance of all of Tenant's obligations under this Lease. Tenant may not assign Tenant's rights under this Lease or sublet the Premises without first obtaining a written agreement from the assignee or sublessee whereby the assignee or sublessee agrees to assume the obligations of Tenant under this Lease and to be bound by the terms of this Lease. If a Default occurs while the Premises is assigned or sublet, Landlord may, at Landlord's option, in addition to any other remedies provided in this Lease or by law, collect directly from the assignee or subtenant all rents becoming due under the terms of the assignment or subletting and apply the rents against any sums due to Landlord under this Lease. No direct collection by Landlord from any assignee or subtenant will release Tenant from Tenant's obligations under this Lease. ARTICLE ELEVEN DEFAULT AND REMEDIES 11.01 Default. Each of the following events is a default under this Lease (a "Default "): A. Failure of Tenant to pay any installment of the Rent or other sum payable to Landlord under this Lease on the date that it is due, and the continuance of that failure for a period of five days after Landlord delivers written notice of the failure to Tenant. This clause will not be construed to permit or allow a delay in paying Rent beyond the due date and will not affect Landlord's right to impose a Late Charge as permitted in Section 3.03; B. Failure of Tenant to comply with any term, condition or covenant of this Lease, other than the payment of Rent or other sum of money, and the continuance of that failure for a period of 30 days after Landlord delivers written notice of the failure to Tenant; C. Failure of Tenant or any guarantor of Tenant's obligations under this Lease to pay its debts as they become due or an admission in writing of inability to pay its debts, or the making of a general assignment for the benefit of creditors; D. The commencement by Tenant or any guarantor of Tenant's obligations under this Lease of any case, proceeding or other action seeking reorganization, arrangement, adjustment, liquidation, dissolution or composition of it or its debts under any law relating to bankruptcy, insolvency, reorganization or relief of debtors, or seeking appointment of a receiver, trustee, custodian or other similar official for it or for all or any substantial part of its property; E. The commencement of any case, proceeding or other action against Tenant or any guarantor of Tenant's obligations under this Lease seeking to have an order for relief entered against it as debtor, or seeking reorganization, arrangement, adjustment, liquidation, dissolution or composition of it or its debts under any law relating to bankruptcy, insolvency, reorganization or relief of debtors, or seeking appointment of a receiver, trustee, custodian or other similar official for it or for all or any substantial part of its property, and Tenant or any guarantor: (i) fails to obtain a dismissal of such case, proceeding, or other action within 60 days of its commencement; or (ii) converts the case from one chapter of the Federal Bankruptcy Code to another chapter; or (iii) is the subject of an order of relief that is not fully stayed within seven business days after the entry thereof; and F. Vacancy or abandonment by Tenant of any substantial portion of the Premises or cessation of the use of the Premises for the purpose leased, and the continuance of that vacancy, COMMERCIAL LEASE AGREEMENT - Page 17 ©NTCAR 2014 — Form No. 2 (3/2014) Produced with zlpFormO by zlpLoglx 18070 Fifteen We Road, Fraser, Mlchigan 46026 wwlry zlpLoalx.com City of Denton Exhibit 1 abandonment or cessation for a period of 30 days after Landlord delivers a written notice to Tenant. 11.02 Remedies. Upon the occurrence of any Default listed in Section 11.01, Landlord may pursue any one or more of the following remedies without any prior notice or demand. A. Landlord may terminate this Lease, in which event Tenant shall immediately surrender the Premises to Landlord. If Tenant fails to surrender the Premises, Landlord may, without prejudice to any other remedy that Landlord may have for possession of the Premises or Rent in arrears, enter upon and take possession of the Premises and expel Tenant and any other person who may be occupying the Premises or any part thereof, without being liable for any claim for damages due to the termination of this Lease or termination of possession. Tenant shall pay to Landlord on demand the amount of all Rent and loss and damage Landlord may suffer by reason of the termination or inablllly to relet the Premises up to the date of termination, in addition to any other liabilities that survive the termination of this Lease. B. Landlord may enter upon and take possession of the Premises, without terminating this Lease and without being liable for any claim for damages due to termination of possession, and expel Tenant and any other person who may be occupying the Premises or any part thereof. Landlord may relet the Premises and receive runt from the new occupant. Tenant agrees to pay to Landlord monthly, or on demand from time to time„ any deficiency that may arise by reason of any such reletting. In determining the amount of the deficiency, professional service fees, reasonable attorneys' fees, court costs, remodeling expenses and other costs of reletting will be subtracted from the amount of rent received from the new occupant. C. Landlord may enter upon the Premises, without terminating this Lease and without being liable for any claim for damages due to such entry, and do whatever " Fenant is obligated to do under the terms of this Lease. Tenant agrees to pay Landlord on demand for expenses that Landlord incurs in performing Tenant's obligations gander this Lease, together with interest thereon at the rate of 12% per annum from the date spent until paid. D. Landlord may sue Tenant for damages for breach of this Lease after Tenant's Default and abandonment of the Premises, or after Landlord terminates Tenant's possession and Tenant vacates the Premises, in which case the measure of damages is the sum of: (i) the unpaid Rent up to the date of the abandonment or vacancy, plus (ii) the difference between the Rent for the remainder of the Term after abandonment or vacancy, and the fair market rental value of this Lease for the remainder of the Term after abandonment or vacancy, such difference to be discounted to present value at a rate equal to the rate of interest that is allowed by law in the State of Texas when the parties to a contract have not agreed on any particular rate of interest (or, in the absence of such law, at the rate of 6% per annum). Neither the enforcement or collection by Landlord of those amounts nor the payment by Tenant of those amounts will constitute a waiver by Landlord of any breach, existing or in the future, of any of the terms or provisions of this Lease by Tenant or a waiver of any rights or remedies that the Landlord may have with respect to any breach. E. In addition to the foregoing remedies, Landlord may change or modify the locks on the Premises if Tenant fails to pay the Rent when due. Landlord will not be obligated to provide another key to Tenant or allow Tenant to regain entry to the Premises unless and until Tenant pays Landlord all Rent that is delinquent. Tenant agrees that Landlord will not be liable for any damages resulting to the Tenant from the lockout. When Landlord changes or modifies the locks, Landlord or Landlord's agent shall post a written notice in accordance with Section 93.002 of the Texas Property Code, or its successor statute. Tenant may be subject to legal liability if Tenant or Tenant's representative tampers with any lock after the locks have been changed or modified. F. No re -entry or taking possession of the Premises by Landlord will be construed as an election to terminate this Lease, unless a written notice of that intention is given to Tenant. Notwithstanding any re- entry, taking possession or reletting, Landlord may, at any time COMMERCIAL LEASE AGREEMENT - Page 18 ©NTCAR 2014 — Form No. 2 (3/2014) Produced with zlpForm® by zipLoglx 18070 Fifteen Mlle Road, Fraser, Michigan 48026 www.zloLoalx.com City of Denton Exhibit 1 thereafter, elect to terminate this Lease for a previous Default. Pursuit of any of the foregoing remedies will not preclude pursuit of any other remedies provided by law, nor will pursuit of any remedy provided in this Lease constitute a forfeiture or waiver of any Rent due to Landlord under this Lease or of any damages accruing to Landlord by reason of the violation of any of the provisions in this Lease. Failure of Landlord to declare any Default immediately upon its occurrence, or failure to enforce one or more of Landlord's remedies, or forbearance by Landlord to enforce one or more of Landlord's remedies upon a Default, will not be deemed to constitute a waiver of any of Landlord's remedies for any Default. Pursuit of any one of the remedies will not preclude pursuit by Landlord of any of the other remedies provided in this Lease. The loss or damage that Landlord may suffer by reason of a Default by Tenant under this Lease, or the deficiency from any reletting, will include the expense of taking possession and any repairs performed by Landlord after a Default by Tenant. If Landlord terminates this Lease at any time for any Default, in addition to other Landlord's remedies, Landlord may recover from Tenant all damages Landlord may incur by reason of the Default, including the cost of recovering the Premises and the Rent then remaining unpaid. G. Nothing in this Lease will be construed as imposing any duty upon Landlord to relet the Premises. Landlord will have no duty to mitigate Landlord's damages except as required by applicable law. Any duty imposed by law on Landlord to mitigate damages after a Default by Tenant will be satisfied if Landlord undertakes to lease the Premises to another tenant (a "Substitute Tenant ") in accordance with the following criteria: (1) Landlord will have no obligation to solicit or entertain negotiations with any other prospective tenant for the Premises until Landlord obtains full possession of the Premises including, without limitation, the final and unappealable legal right to relet the Premises free of any claim of Tenant; (2) Landlord will not be obligated to lease or show the Premises on a priority basis, or offer the Premises to a prospective tenant when other space in the Property suitable for the prospective tenant's use is (or soon will be) available; (3) Landlord will not be obligated to lease the Premises to a Substitute Tenant for an amount less than the current fair market rent then prevailing for similar uses in comparable buildings in the same market area as the Property, nor will Landlord be obligated to enter into a new lease under other terms and conditions that are unacceptable to Landlord under Landlord's then current leasing policies for comparable space in the Property; (4) Landlord will not be obligated to enter into a lease with a Substitute Tenant whose use would: (i) violate any restriction, covenant, or requirement contained in the lease of another tenant of the Property; (ii) adversely affect the reputation of the Property; or (iii) be incompatible with other uses of the Property. (5) Landlord will not be obligated to enter into a lease with a Substitute Tenant that does not have, in Landlord's reasonable opinion, sufficient financial resources to pay the Rent under the new lease and operate the Premises in a first class manner; and (6) Landlord will not be required to spend any amount of money to alter, remodel, or otherwise make the Premises suitable for use by a proposed Substitute Tenant unless: (i) Tenant pays any such sum to Landlord in advance of Landlord's execution of a lease with the Substitute Tenant (which payment will not be in lieu of any damages or other sums to which Landlord may be entitled as a result of Tenant's Default under this Lease); or COMMERCIAL LEASE AGREEMENT - Page 19 ONTCAR 2014 — Form No. 2 (3/2014) Produced wllh zlpFornnG by zlpLoglx 18070 Fifteen Mlle Road, Fraser, Michigan 48026 WM- zl®Loalx.com City of Denton Exhibit 1 (ii) Landlord, in Landlord's reasonable discretion, determines that any such expenditure is financially justified in connection with entering into a lease with the Substitute Tenant. H. No right or remedy of Landlord is intended to be exclusive of any other right or remedy, and each and every right and remedy will be cumulative and in addition to any other right or remedy now or hereafter existing under this Lease, at law, in equity or by statute. Landlord will not be liable for any damages resulting to Tenant from any right or remedy exercised by Landlord, regardless of the cause, even if it is caused by the sole, joint or concurrent negligence of Landlord. 11.03 Notice of Default. Tenant shall give written notice of any failure by Landlord to perform any of Landlord's obligations under this Lease to Landlord and to any ground lessor, mortgagee or beneficiary under any deed of trust encumbering the Premises whose name and address have been furnished to Tenant in writing. Landlord will not be in default under this Lease unless Landlord (or the ground lessor, mortgagee or beneficiary) fails to cure the nonperformance within 30 days after receipt of Tenant's notice. However, if the nonperformance reasonably requires more than 30 days to cure, Landlord will not be in default if the cure is commenced within the 30 -day period and is thereafter diligently pursued to completion. 11.04 Limitation of Landlord's Liability. As used in this Lease, the term "Landlord" means only the current owner or owners of the fee title to the Premises, or the leasehold estate under a ground lease of the Premises, at the time in question. Each Landlord is obligated to perform the obligations of Landlord under this Lease only during the time such Landlord owns such title or estate. Any Landlord who transfers its title, estate or other interest is relieved of all liability with respect to the obligations of Landlord under this Lease accruing on or after the date of the transfer, and Tenant agrees to recognize the transferee as Landlord under this Lease. However, each Landlord shall deliver to its transferee the Security Deposit held by Landlord, to the extent the Security Deposit has not then been applied under the terms of this Lease. ARTICLE TWELVE LANDLORD'S CONTRACTUAL LIEN In addition to the statutory Landlord's lien, Tenant hereby grants to Landlord a security interest to secure payment of all Rent and other sums of money becoming due under this Lease from Tenant, upon all inventory, goods, wares, equipment, fixtures, furniture and all other personal property of Tenant situated in or on the Premises, together with the proceeds from the sale thereof. Tenant may not remove such property without the consent of Landlord until all Rent in arrears and other sums then due to Landlord under this Lease have been paid. Upon the occurrence of a Default, Landlord may, in addition to any other remedies provided in this Lease or by law, enter upon the Premises and take possession of any and all goods, wares, equipment, fixtures, furniture and other personal property of Tenant situated in or on the Premises without liability for trespass or conversion, and sell the property at public or private sales, with or without having the property at the sale, after giving Tenant reasonable notice of the time and place of any such sale. Unless otherwise required by law, notice to Tenant of the sale will be deemed sufficient if given in the manner prescribed in this Lease at least 10 days before the time of the sale. Any public sale made under this Article will be deemed to have been conducted in a commercially reasonable manner if held on the Premises or where the property is located, after the time, place and method of sale and a general description of the types of property to be sold have been advertised in a daily newspaper published in the county where the Premises is located for five consecutive days before the date of the sale. Landlord or its assigns may purchase at a public sale and, unless prohibited by law, at a private sale. The proceeds from any disposition pursuant to this Article, less any and all expenses connected with the taking of possession, holding and selling of the property (including reasonable attorneys' fees and expenses), will be applied as a credit against the indebtedness secured by the security interest granted in this Article. Any surplus will be paid to Tenant or as otherwise required by law, and Tenant shall promptly pay any deficiencies. Landlord is authorized to file a financing statement to perfect the security interest of Landlord in the aforementioned property and proceeds thereof under the provisions of the Texas Business and Commerce Code in effect in the State of Texas. Provided Tenant is not in default under any of the COMMERCIAL LEASE AGREEMENT - Page 20 ONTCAR 2014 — Form No. 2 (3/2014) Produced with zlpForm® by zlpLoglx 18070 Fifteen Mlle Road, Fraser, Mlchigan 48026 www.zioLoalx.com City of Denton Exhibit 1 terms of this Lease, upon written request by Tenant, Landlord shall deliver a written subordination of Landlord's statutory and contractual liens to any liens and security interests securing any institutional third party financing of Tenant. Landlord shall not unreasonably withhold or delay the delivery of Landlord's written subordination. ARTICLE THIRTEEN PROTECTION OF LENDERS 13.01 Subordination and Attornment. Landlord may subordinate this Lease to any future ground Lease, deed of trust or mortgage encumbering the Premises, and advances made on the security thereof and any renewals, modifications, consolidations, replacements or extensions thereof, whenever made or recorded. Landlord's right to subordinate is subject to Landlord providing Tenant with a written Subordination, Non - disturbance and Attornment Agreement from the ground lessor, beneficiary or mortgagee wherein Tenant's right to peaceable possession of the Premises during the Term will not be disturbed if Tenant pays the Rent and performs all of Tenant's obligations under this Lease and is not otherwise in default, in which case Tenant shall attorn to the transferee of or successor to Landlord's interest in the Premises and recognize the transferee or successor as Landlord under this Lease. Tenant's rights under this Lease are subordinate to any existing ground lease, deed of trust or mortgage encumbering the Premises. However, if any ground lessor, beneficiary or mortgagee elects to have this Lease be superior to its ground lease, deed of trust or mortgage and gives Tenant written notice thereof, then this Lease will be deemed superior to the ground lease, deed of trust or mortgage whether this Lease is dated prior or subsequent to the date of the ground lease, deed of trust or mortgage or the date of recording thereof. 13.02 Signing of Documents. Tenant shall sign and deliver any document that may be requested to evidence any attornment or subordination, or any agreement to attorn or subordinate, as long as the document is consistent with the provisions of Section 13.01. If Tenant fails to do so within 10 days after a written request, Tenant hereby irrevocably appoints Landlord as Tenant's attorney -in -fact to execute and deliver the attornment or subordination document. 13.03 Estoppel Certificates. A. Upon Landlord's written request, Tenant shall execute and deliver to Landlord a written statement (an "Estoppel Certificate ") certifying: (1) whether Tenant is an assignee or subtenant; (2) the Expiration Date of this Lease; (3) the number of renewal options under this Lease, if any, and the total period of time covered by the renewal options; (4) that none of the terms or provisions of this Lease have been changed since the original execution of this Lease, except as shown on any attached amendments or modifications; (5) that no default exists under the terms of this Lease by either Landlord or Tenant; (6) that Tenant has no claim against Landlord under this Lease and has no defense or right of offset against collection of Rent or other charges accruing under this Lease; (7) the amount and payment date of the last payment of Rent, the period of time covered by that payment, and the amount of any rental payments made in advance; (8) the amount of any Security Deposit and other deposits, if any; and (9) the identity and address of any guarantor of this Lease. Tenant shall deliver the statement to Landlord within 10 days after Landlord's request. Landlord may forward any such statement to any prospective purchaser or lender of the Premises. The purchaser or lender may rely conclusively upon the statement as true and correct. B. If Tenant does not deliver the Estoppel Certificate to Landlord within the 10 -day period, Landlord, and any prospective purchaser or lender, may conclusively presume and rely upon the following facts: (1) that the terms and provisions of this Lease have not been COMMERCIAL LEASE AGREEMENT - Page 21 ONTCAR 2014 — Form No. 2 (3/2014) Produced with zipForm@ by zipLoglx 18070 Fifteen We Road, Fraser, Michigan 48026 www.zlQLoaix.cam City of Denton Exhibit I changed except as otherwise represented by Landlord that this Lnuoa has not been terminated except as otherwise represented by &endford: (3) that not more than one installment of Base Rent d other �a u been paid � dinadvan���uh�e o/- �nz'olo�ns against Landlord nor any defenses or rights of offset against collection of Rent; and )�a Landlord is not In default under this, Lem$e . In such event, Tenant will be outoppod from denying the truth of the presumed facts. O. Also, W Tenant dues, not deliver lhm Estoppel Certificate to Landlord within the 10-doy period, Landlord moay deliver owritten notice to Tenant stating that Tenant must deliver on Estoppel Certificate under this Section wn|th\n M*edays �horTenant nuua|veu the notice. If Tenant does mmtdm4��rmn E�o��� ��d�|uahoho Landlord within five days after Tenant receives the notice, then Tenant's failure to deliver Estoppel Certificate will constitute a Default under this Lease, notwithstanding any longer period of time under Section 11.01 that Tenant would otherwise be allowed to cure a failure before the failure would become a QVIEW 299; ARTICLE FOURTEEN ENVIRONMENTAL REPRESENTATIONS AND INDEMNITY 14,01 Tenant's Compliance with Environmental Laws. Tenant, at Tenant's expense, shall comply with, all Iaws, rules, orders, ordinances, directions, regulations and requirements of Federal, State, county and municipal authorities pertaining to Tenjant,s rise of the Property and with Ole recorded covenant,.;,, conditions and restric0ons, regardless of when they become effective, includl%, wilhOL11 11mitalinn, all applicable Federal, State and local laws, regulations oir ordinances pertaining to, air and water quality, Hazardous Materials (as defined in a2gtgLi _14,05), waste disposal, air emissions and other environmental matters, all zoning and other land use matters, and willij any direction of' any public officer or officers, pursuant to law, which impose any duty upon Landlord or Tenant with respect to the use or occupancy of the Property. 14.02 Tenant's Indemnification. Tenant shall not cause or pomnh any Hazardous Materials to be brought — upon, kept d in or about the Property by Tenant, or Tenmnt's*@eetS employees, without the prior written consent of Landlord. If the presence of Hazardous Materials on the Property caused or permitted by Tenant results in contamination of the Property eF then WLA mtess, from any and all claims, judgments, luding, without imitation, diminution in value sie of rentable or unusable space or of any rig frorn any adverse lrnpact on marketing of iv-, vr ing, space or land area, surns paid In settlement of claims, reasonable attorneys'fees, court cosits, 4A&Z consultant fees and expert feesi) that arise during or alter the Term as a result of the coritarninalIon, This Indern0lication of Landlord by, Tenant friCkides, wtthotti, lirvitallon, costs Incurred In connection e/(A,.,,? will, any Investigatiort of site conditions or any clean-Lip, rernedial work, removal or restoration work required by any Federal, State or local government agency because oil Hazardous, Materials present In the soil or ground water on or under ti,le property. Without limiting tlTe foregoing, if lhe presence of any lals�jj_7 �-results In fly on m 1101 -Page 22 QNTCAR 2014 — Form No. 2 (3/2014) Produced with mffoffnG byupt.ogt"`80mnNeen W" Flood. Fraser, Michigan 40026 MUaLKLgj&gjLoo City mDenton Exhibit 1 14.03 Landlord's Representations. Landlord represents, to the best of Landlord's actual knowledge, that: (i) any handling, transportation, storage, treatment or usage of Hazardous Materials that has occurred on the Property to date has been in compliance with all applicable Federal, State, and local laws, regulations and ordinances; and (ii) no leak, spill, release, discharge, emission or disposal of Hazardous Materials has occurred on the Property to date and that the soil or groundwater on or under the Property is free of Hazardous Materials as of the Commencement Date, unless expressly disclosed by Landlord to Tenant in writing. 14.04 Landlord's Indemnification. Landlord hereby indemnifies, defends and holds Tenant harmless from any claims, judgments, damages, penalties, fines, costs, liabilities, (including sums paid in settlements of claims) or loss, including, without limitation, reasonable attorneys' fees, court costs, consultant fees, and expert fees, which arise during or after the Term of this Lease from or in connection with the presence or suspected presence of Hazardous Materials in the soil or groundwater on or under the Property, unless the Hazardous Material is released by Tenant or is present as a result of the negligence or willful conduct of Tenant. Without limiting the generality of the foregoing, the indemnification provided by this Section will specifically cover costs incurred in connection with any investigation of site conditions or any clean -up, remedial work, removal or restoration work required by any Federal, State or local governmental authority. 14.05 Definition. For purposes of this Lease, the term "Hazardous Materials" means any one or more pollutant, toxic substance, hazardous waste, hazardous material, hazardous substance, solvent or oil as defined in or pursuant to the Comprehensive Environmental Response, Compensation and Liability Act, as amended, the Clean Water Act, as amended, the Water Pollution Control Act, as amended, the Solid Waste Disposal Act, as amended, or any other Federal, State or local environmental law, regulation, ordinance, or rule, whether existing as of the date of this Lease or subsequently enacted. 14.06 Survival. The representations and indemnities contained in this Article Fourteen will survive the expiration or termination of this Lease. ARTICLE FIFTEEN PROFESSIONAL SERVICE FEES 15.01 Amount and Manner of Payment. Professional service Fees due to the Principal Broker and Cooperating Broker (together, the "Brokers ") will be calculated and paid as follows: A. Lump Sum. Unless the box for Section 15.01 B is checked in Section 1.14A, then Landlord agrees to pay to each of the Brokers a lump sum professional service Fee for negotiating this Lease, plus any applicable sales taxes, equal to: (i) the percentages stated in Section 1.14A of the total Base Rent to become due to Landlord during the Term, if the blanks for percentages are completed; or (ii) the amounts per square foot in the Premises stated in Section 1.14A, if the blanks for amounts per square foot are completed. The Fees will be paid to the Brokers (i) one -half on the date of final execution of this Lease, and (ii) the balance on the Commencement Date of this Lease. B. Monthly. If the box for this Section 15.01B is checked in Section 1.14A, then Landlord agrees to pay to each of the Brokers a monthly professional service Fee for negotiating this Lease, plus any applicable sales taxes, equal to the percentages stated in Section 1.14A of each monthly Base Rent payment at the time the payment is due. 15.02 Payments on Renewal, Expansion or New Lease. Subject to the termination date stated in this Section below, if Tenant or Tenant's successors or assigns: (a) exercises any right or option to renew or extend the Term (whether contained in this Lease or in any amendment to this Lease) or enters into a new lease covering the Premises, a portion of the Premises, or the Premises and additional space; or (b) enters into any new lease, expansion or other rental agreement as to any premises located on or constituting all or part of any real property owned by Landlord adjacent to the Property, then Landlord shall pay to each of the Brokers an additional Fee covering the full period of COMMERCIAL LEASE AGREEMENT - Page 23 ©NTCAR 2014 — Form No. 2 (3/2014) Produced with zlpForm® by zlpLoglx 18070 Fifteen We Road, Fraser, Michigan 48026 www.zloLoolx.com City of Denton Exhibit 1 the renewal, extension, new lease, expansion or other rental agreement. The additional Fees will be due on the date of exercise of a renewal option, or the date of execution in the case of a new lease, expansion or other agreement. The additional Fees will be computed and paid under Section 15.01 A or Section 15.01 B above (whichever has been made applicable under Section 1.14), as if a new lease had been made for such period of time. The Brokers' right to receive these additional Fees will terminate on the date that is 10 years after the expiration of the Term of this Lease, as amended or extended. 15.03 Payments on Sale. Subject to the termination date stated in this Section below, if Tenant or Tenant's successors or assigns, purchases the Premises pursuant to a purchase option contained in this Lease (or in any amendment to this Lease or any other agreement) or otherwise purchases the Premises, the Property or any portion of either the Premises or the Property, then Landlord shall pay to each of the Brokers a Fee equal to the percentages stated in Section 1.1413 of the purchase price, payable in Good Funds at the closing. Upon the closing of a sale to Tenant, any monthly lease Fees will terminate upon payment of the Fee on the sale. The Brokers' right to receive the Fees set forth in this Section 15.03 will terminate on the date that is 10 years after the expiration of the Term of this Lease, as amended or extended. 15.04 Other Brokers. Both Landlord and Tenant represent to the other party that they have had no dealings with any person, firm or agent in the negotiation of this Lease other than the Broker(s) named in this Lease, and no other broker, agent, person, firm or entity other than the Broker(s) is entitled to any commission or fee in connection with this Lease. 15.05 Landlord's Liability. Landlord will be liable for payment of all Fees solely to the Brokers, and Landlord will not be obligated to pay any claims by any undisclosed broker. The Principal Broker may pay a portion of the Fee to any Cooperating Broker pursuant to a separate agreement between the Brokers. 15.06 Joint Liability of Tenant. If Tenant enters into any new lease, extension, renewal, expansion, or other agreement to rent, occupy, or purchase any property described in Section 15.02 or Section 15.03 within the time specified in those Sections, the negotiations must be communicated through the Principal Broker (which may be done through the Cooperating Broker), otherwise Tenant will be jointly and severally liable with Landlord for any payments due or to become due to the Principal Broker. 15.07 Assumption on Sale. In the event of a sale or other transfer of the Premises by Landlord, Landlord shall assign this Lease to the purchaser or other transferee, and obtain from the purchaser or other transferee an Assumption Agreement in recordable form whereby the purchaser or other transferee agrees to pay the Brokers all Fees payable under this Lease. Landlord shall deliver a fully executed original counterpart of the Assumption Agreement to each of the Brokers upon the closing of the sale or other transfer of the Premises. Landlord will be released from personal liability for subsequent payments of Fees payable under this Lease only upon the delivery of the Assumption Agreement to the Brokers. 15.08 Termination. Landlord and Tenant agree that the Brokers are third party beneficiaries of this Lease with respect to the Fees, and that no change may be made by Landlord or Tenant as to the time of payment, amount of payment or the conditions for payment of the Fees without the written consent of the Brokers. The termination of this Lease by the mutual agreement of Landlord and Tenant will not affect the right of the Brokers to continue to receive the Fees agreed to be paid under this Lease, just as if Tenant had continued to occupy the Premises and had paid the Rent during the entire Term. Amendment or termination of this Lease under Article Eiaht (Damage or Destruction) and Article Nine (Condemnation) will not amend or terminate the Brokers' right to collect the Fees. 15.09 Intermediary Relationship. A. If either of the Brokers has indicated in Section 1.12 or Section 1.13 or otherwise that they are acting as an intermediary, then Landlord and Tenant consent to the intermediary relationship, authorize such Broker or Brokers to act as an intermediary between Landlord and Tenant in connection with this Lease, and acknowledge that the source of any expected compensation to the Brokers will be Landlord, and the Brokers may also be paid a fee by Tenant. A broker, and any broker or salesperson appointed to communicate COMMERCIAL LEASE AGREEMENT - Page 24 ONTCAR 2014 — Form No. 2 (3/2014) Produced with zlpForm® by zlpLogix 18070 Fifteen Mile Road, Fraser, Michigan 48026 www.zloLoclx.com City of Denton Exhibit 1 with and carry out instructions of one party, who acts as an intermediary is required to act fairly and impartially, and may not: (1) disclose to Tenant that Landlord will accept a rent less than the asking rent, unless otherwise instructed in a separate writing by Landlord; (2) disclose to Landlord that Tenant will pay a rent greater than the rental submitted in a written offer to Landlord, unless otherwise instructed in a separate writing by Tenant; (3) disclose any confidential information, or any information a party specifically instructs the real estate broker or salesperson in writing not to disclose, unless: (a) the broker or salesperson is otherwise instructed in a separate writing by the respective party; (b) the broker or salesperson is required to disclose the information by the Texas Real Estate License Act or a court order; or (c) the information materially relates to the condition of the property; (4) treat a party to the transaction dishonestly; or (5) violate the Texas Real Estate License Act. B. Appointments. Each Broker is authorized to appoint, by providing written notice to the parties, one or more license holders associated with the Broker to communicate with and carry out instructions of one party, and one or more other license holders associated with the Broker to communicate with and carry out instructions of the other party. An appointed license holder may provide opinions and advice during negotiations to the party to whom the license holder is appointed. ARTICLE SIXTEEN MISCELLANEOUS AND ADDITIONAL PROVISIONS 16.01 Disclosure. Landlord and Tenant understand that a real estate broker is not an expert in matters of law, tax, financing, surveying, hazardous materials, engineering, construction, safety, zoning, land planning, architecture, the TABA, or the ADA. The Brokers hereby advise Tenant to seek expert assistance on such matters. Brokers do not investigate a property's compliance with building codes, governmental ordinances, statutes and laws that relate to the use or condition of a property and its construction, or that relate to its acquisition. If the Brokers provide names of consultants or sources for advice or assistance, Tenant acknowledges that the Brokers do not warrant the services of the advisors or their products and cannot warrant the suitability of property to be acquired or leased. Furthermore, the Brokers do not warrant that the Landlord will disclose any or all property defects, although the Brokers will disclose to Tenant any actual knowledge possessed by Brokers regarding defects of the Premises and the Property. In this regard, Tenant agrees to make all necessary and appropriate inquiries and to use diligence in investigating the Premises and the Property before signing this Lease. Tenant acknowledges and agrees that neither the Principal Broker nor any Cooperating Broker has made any representation to Tenant with respect to the condition of the Premises, and that Tenant is relying exclusively upon Tenant's own investigations and the representations of Landlord, if any, with respect to the condition of the Premises. Landlord and Tenant agree to hold the Brokers harmless from any and all damages, claims, costs and expenses resulting from or related to Landlord's furnishing to the Brokers any inaccurate information with respect to the Premises, or Landlord's concealing any material information with respect to the Premises. Landlord and Tenant hereby agree to indemnify and defend the Brokers against any and all liabilities, claims, debts, damages, costs, or expenses, including but not limited to reasonable attorneys' fees and court costs, related to or arising out of or in any way connected to (a) representations concerning matters properly the subject of advice by experts; or (b) any dispute directly between Landlord and Tenant regarding this Lease. In addition, to the extent permitted by applicable law, the Brokers' COMMERCIAL LEASE AGREEMENT - Page 25 ©NTCAR 2014 — Form No. 2 (3/2014) Produced wllh zlpForm® by zlpLogix 18070 Fllteen Mlle Road, Fraser, Mlchlgan 48026 wwsv.zloLoalx.00m City of Denton Exhibit 1 liability for errors, omissions, or negligence is limited to the return of the Fee, if any, paid to the Brokers pursuant to this Lease. 16.02 Force Majeure. If performance by Landlord of any term, condition or covenant in this Lease is delayed or prevented by any Act of God, strike, lockout, shortage of material or labor, restriction by any governmental authority, civil riot, flood, or any other cause not within the control of Landlord, the period for performance of the term, condition or covenant will be extended for a period equal to the period Landlord is so delayed or prevented. 16.03 Interpretation. The captions of the Articles or Sections of this Lease are to assist the parties in reading this Lease and are not part of the terms or provisions of this Lease. Whenever required by the context of this Lease, the singular will include the plural and the plural will include the singular, and the masculine, feminine and neuter genders will each include the other. 16.04 Waivers. Any waivers of any provisions of this Lease must be in writing and signed by the waiving party. Landlord's delay or failure to enforce any provisions of this Lease or Landlord's acceptance of late installments of Rent will not be a waiver and will not prevent Landlord from enforcing that provision or any other provision of this Lease in the future. No statement on a check from Tenant or in a letter accompanying a check will be binding on Landlord. Landlord may, with or without notice to Tenant, negotiate, cash, or endorse the check without being bound to the conditions of any such statement. 16.05 Severability. A determination by a court of competent jurisdiction that any provision of this Lease is invalid or unenforceable will not invalidate the remainder of that provision or any other provision of this Lease, which will remain in full force and effect. 16.06 Joint and Several i Liability. All parties signing this Lease as Tenant will be jointly and severally liable for all obligations of Tenant. Tenant will be responsible for the conduct, acts and omissions of Tenant's agents, employees, customers, contractors, invitees, agents, successors or others using the Premises with 'tenant 's express or implied permission. 16.07 Amendments or Modifications. This Lease is the only agreement between the parties pertaining to the lease of the Premises and no other agreements are effective unless made a part of this Lease. All amendments to this Lease must be in writing and signed by all parties. 16.08 Notices. All notices and other communications required or permitted under this Lease must be in writing and will be deemed delivered, whether actually received or not, on the earlier of: (i) actual receipt if delivered in person or by messenger with evidence of delivery; or (ii) receipt of an electronic facsimile transmission ( "Fax ") with confirmation of delivery„ or (iii) upon deposit in the United States Mail as required below. Notices may be transmitted by Fax to the Fax telephone numbers specified in Article One of this Lease, if any. Notices delivered by mail must be deposited in the U.S. Postal Service, certified mail, return receipt requested, postage prepaid, and properly addressed to the intended recipient as set forth in Article One. Notices sent by any other means will be deemed delivered when actually received, with proof of delivery. After possession of the Premises by Tenant, Tenant's address for notice purposes will be the address of the Premises unless Tenant notifies Landlord in writing of a different address to be used for that purpose. Any party may change its address for notice by delivering written notice of its new address to all other parties in the manner set forth above. Copies of all notices should also be delivered to the Brokers, but failure to notify the Brokers will not cause an otherwise properly delivered notice to be ineffective. Also, copies of all notices must also be delivered to the following persons [if the blanks have been completed]: Copies of notices to Landlord are to be delivered to: Rail Yard Partners, LTD Address: 525 S. Loop 288, Suite J05 Denton TX 76205 Telephone: Email: COMMERCIAL LEASE AGREEMENT - Page 26 ©NTCAR 2014 - Form No. 2 (3/2014) Produced with zlpForm® by zlpLoglx 18070 Fifteen We Road, Fraser, Michigan 48026 www.zloLoalx.com City of Denton Exhibit 1 Copies of notices to Tenant are to be delivered to: Citv of Denton Address: 215 E. MoKinnev Street Denton TX 76201 Telephone: J940)349-8200 wwM Fax: Email:. - _..._... ❑ Landlord also consents to receive any notices by e-mail. [Check the box, if applicable.] ❑ Tenant also consents to receive any notices by e-mail. [Check the box, if applicable.] 16.09 Attorneys' Fees. If, on account of any breach or default by any party to this Lease in its obligations to any other party to this Lease (including, but not limited to, the Brokers), it becomes necessary for a party to employ an attorney to enforce or defend any of its rights or remedies under this Lease, the non - prevailing party agrees to pay the prevailing party its reasonable attorneys' fees and court costs, if any, whether or not suit is instituted in connection with the enforcement or defense. 16.10 Venue. All obligations under this Lease, including, but not limited to, the payment of Fees to the Brokers, will be performed and payable in the county in which the Property is located. The laws of the State of Texas will govern this Lease. 16.11 Survival. All obligations of any party to this Lease that are not fulfilled at the expiration or the termination of this Lease will survive such expiration or termination as continuing obligations of the party. 16.12 Binding Effect. This Lease will inure to the benefit of, and be binding upon, each of the parties to this Lease and their respective heirs, representatives, successors and assigns. However, Landlord will not have any obligation to Tenant's successors or assigns unless the rights or interests of the successors or assigns are acquired in accordance with the terms of this Lease. 16.13 Right to Claim a Lien. If a commission agreement or other agreement to pay Fees to the Brokers is not included in this Lease, then be advised that pursuant to Chapter 62 of the Texas Property Code, each Broker hereby discloses the Broker's right to claim a lien based on a separate written commission agreement or other agreement to pay Fees to the Broker, and this disclosure is incorporated in the commission agreement or other agreement to pay Fees. 16.14 Patriot Act Representation. Landlord and Tenant each represent to the other that: (1) its property interests are not blocked by Executive Order No. 13224, 66 Fed. Reg. 49079; (2) it is not a person listed on the Specially Designated Nationals and Blocked Persons list of the Office of Foreign Assets Control of the United States Department of the Treasury; and (3) it is not acting for or on behalf of any person on that list. 16.15 Counterparts. This Lease may be executed in a number of identical counterparts, and all counterparts will be construed together as one agreement. 16.16 Offer. The execution of this Lease by the first party to do so constitutes an offer to lease the Premises. Unless this Lease is signed by the other party and a fully executed copy is delivered to the first party by the earlier of this date or the date that is 10 days after the date of execution by the first party, such offer to lease will be deemed automatically withdrawn. Any acceptance of an offer that has been withdrawn will only be effective if the party that withdrew the offer subsequently agrees to the acceptance either in writing or by course of conduct. COMMERCIAL LEASE AGREEMENT - Page 27 ©NTCAR 2014 - Form No. 2 (3/2014) Produced with z1pForrn8 by zlpLogix 18070 Fifteen Mlle Road, Fraser, Michigan 48026 www.zloLoaix.com City of Denton Exhibit 1 16.17 Additional Provisions. Landlord and Tenant agree to any provisions set forth on the attached Addenda (if any) and the following additional provisions (if any): 1. In addition to the rent stated in Section 1.06, the City of Denton has entered into an Economic Development Program Grant Agreement under which the City will grant $76,000 per year for the term of this lease, subject to compliance with the Terms and Conditions of the Grant Agreement (Exhibit D) . 2. Landlord acknowledges that the programming use for the premises will involve a 3rd party organization that will manage the facility and sublease the space to other office tenants in a co- working environment. This use or agreement with a managing entity will not be considered a sublease that will require Landlord approval as stated in Article 10. COMMERCIAL LEASE AGREEMENT - Page 28 ©NTCAR 2014 - Form No. 2 (3/2014) Produced with zlpForm® by zlpLoglx 18070 Flfteen Mlle Road, Fraser, Mlchlgan 48026 www.zloLoalx.com City of Denton Exhibit 1 16.18 Consult an Attorney. This Lease Is an enforceable, legally binding agreement. Read it carefully. The Brokers involved in the negotiation of this Lease cannot give you legal advice. Landlord and Tenant acknowledge that they have been advised by the Brokers to have this Lease reviewed by competent legal counsel of their choice before signing this Lease. By executing this Lease, Landlord and Tenant each agree to the provisions contained in this Lease. This Lease has been executed as of the Effective Date (as defined in Section 1.01). LANDLORD: Rail Yard Partners, LTD LANDLORD: By [Sign a, ture] : � _...�...... By [Signature]:.._. Name: Name: .......� Titl a of . - ., � Date of Execution: f, f Title: ��� " TENANT: TENANT: City of Dent~ can . ?pKgygcd_as to farm: _..._W. t �'� i Campbell Name: B [Signature] By [Signature].' .�..� Y � Name: George C" Anita �3txr e1�s Title' �_�....._��� .,�-- Cit��ratey Date of Execution: s _ Date of Execution._" _.. . PRINCIPAL BROKER: COOPERATING BROKER: Axis Realty Groff B Si nature : —., ._...... By [Signature]: _W_... Name: Alex t�ne... . Name: . Title: _,.,, Title:. Address: _ _ _ Address: Broker's License No.: __ __�� Broker's License No.:. Tax ID No. __.._.._�... .. ®WWW_. .......... Tax ID No.: _ __ PERMISSION TO USE: This form is 1»-ovided for the use of members of the North Texas Commercial Association of REALTORS ©, Inc. ( "NTCAR "), members of the Non h Texas Commercial Association of Real Estate Professionals, Inc. and other licensed users of an NTCAR electronic fans system. Permission is given to make limited copies of the ctu•rent version of This faun for use in a particular Texas real estate tainsaction. Please contact the NTCAR office to confirm that you are using the current version of this form. Mass production, or reproduction for- resale, is not allowed without express permission. Any changes to this form ,nest be made in a nhanner that is obvious. If any words a•e deleted, they must be left in the form with a line drawn turough them. If changes are made that are not obvious, the person who made the change could be subject to a claim of fraud a• misrepresentation fop- passing off an altered form as if it were the genuine NTCAR form. COMMERCIAL LEASE AGREEMENT - Page 29 ONTCAR 2014 — Form No. 2 (3/2014) Produced with zipForm® by zlpLoglx 18070 Fifteen Mlle Road, Fraser, Michigan 48026 W- WADLoolx.com City of Denton Exhibit 1 Axis Realty Group NORTH TEXAS COMMERCIAL ASSOCIATION OF REALTORSO ADDENDUM "A" TO LEASE RENEWAL OPTIONS Address of the Premises: 6 „08 E . ofcorSt, Ste 128 , Denton Tx_ 76201 1. Option to Extend the Term. Landlord grants to Tenant _ 2 option(s) (each an "Option ") to extend the Term for an additional term of 60 months each (the "Extension "), on the same terms, conditions and covenants set forth in this Lease, except as provided below. Each Option may be exercised only by written notice delivered to the Landlord no earlier than One Hundred Eichtv 180 ) days before, and no later than One �mmITmne Hundred Twenty ( 120 ) days before, the expiration of the Term or the preceding Extension of the Term, whichever is applicable. If Tenant fails to deliver to Landlord a written notice of the exercise of an Option within the prescribed time period, such Option and any succeeding Options will lapse, and there will be no further right to extend the Term. Each Option may only be exercised by Tenant on the express condition that, at the time of the exercise, Tenant is not in default under any of the provisions of this Lease. The Options are personal to Tenant and may not be exercised by an assignee or subtenant without Landlord's written consent. 2. Calculation of Rent. The Base Rent during the Extension(s) will be determined by one of the following methods [check one]: 0 A. Fair Market Rental. The Base Rent during the Extension will be the Fair Market Rental determined as follows: a. The "Fair Market Rental" of the Premises means the price that a ready and willing tenant would pay as of the commencement of the Extension as monthly rent to a ready and willing landlord of Premises comparable to the Premises if the property were exposed for lease on the open market for a reasonable period of time, and taking into account the term of the Extension, the amount of improvements made by Tenant at its expense, the creditworthiness of the Tenant, and all of the purposes for which the property may be used and not just the use proposed to be made of the Premises by Tenant. Upon proper written notice by Tenant to Landlord of Tenant's intention to elect to exercise the renewal Option, Landlord shall, within 180 days thereafter, notify Tenant in writing of Landlord's proposed Fair Market Rental amount, and Tenant shall thereupon notify Landlord of Tenant's acceptance or rejection of Landlord's proposed amount. Failure of Tenant to reject Landlord's Fair Market Rental amount within 120 days after receipt of Landlord's notice will be deemed Tenant's acceptance of Landlord's proposed Fair Market Rental amount. b. If Landlord and Tenant have not been able to agree on the Fair Market Rental amount within 40 days following the exercise of the Option, the Fair Market Rental for the Extension will be determined by the following appraisal process. Landlord and Tenant shall endeavor in good faith to select a single Appraiser. The term "Appraiser" means a State Certified Real Estate Appraiser licensed by the State of Texas to value commercial property. If Landlord and Tenant are able to agree upon and select a single Appraiser, that Appraiser will determine the Fair Market Rental for the Extension. If Landlord and Tenant are unable to agree upon a single Appraiser within __IT.__ days after the end of the 40 -day period, each will then appoint one Appraiser by written notice to the other, given within days after the end of the 40 -day period. Within five business days after the two Appraisers are appointed, the two Appraisers will appoint a third Appraiser. If either Landlord or Tenant fails to appoint its Appraiser within the prescribed time period, the single Appraiser appointed will determine the Fair Market Rental amount of the Premises. Each party will bear the cost of the appraiser appointed by it and the parties will share equally the cost of the third appraiser. The Fair Market Rental of the Premises will be the average of two of the three appraisals that are closest in amount, and the third appraisal will be disregarded. ADDENDUM "A” TO LEASE — Page 1 ONTCAR 2014 - Form No. 2 (3/2014) Axis Realty Group, 1517 Centre Place Drive Denton, TX 76205 Phone: 940.891.2947 Fax: 940.891.2948 Alex Payne City of Denton Produced with zipFormO by zipLogix 18070 Fifteen Mile Road, Fraser, Michigan 48026 www.zioLoaix.com Exhibit 1 c. In no event will the Base Rent be reduced for any Extension, regardless of the Fair Market Rental determined by any appraisal. If the Fair Market Rental is not determined before the commencement of the Extension, then Tenant shall continue to pay to Landlord the Base Rent applicable to the Premises immediately before the Extension until the Fair Market Rental amount is determined, and when it is determined, Tenant shall pay to Landlord the difference between the Base Rent actually paid by Tenant to Landlord and the new Base Rent. ❑ B. Consumer Price Index Adjustment. The monthly Base Rent during the Extension will be determined by multiplying the monthly installment of Base Rent during the last month of the Term by a fraction determined as follows: a. The numerator will be the Latest Index that means either [check one]: ❑ (1) the Index published for the nearest calendar month preceding the first day of the Extension, or ❑ (2) the Index for the month of Extension. preceding the first day of the b. The denominator will be the Initial Index that means either [check one]: ❑ (1) the Index published for the nearest calendar month preceding the Commencement Date, or ❑ (2) the Index for the month of Date. preceding the Commencement [If no blanks are filled in above, the choice (1) including the phrase "the nearest calendar month preceding" will apply. If the Index is not yet published for the nearest calendar month preceding the applicable date, then "the nearest calendar month" means the first month preceding the applicable date for which the Index is published]. c. The Index means the Consumer Price Index (CPI) for All Urban Consumers (All Items) U.S. City Average (unless this box is checked ❑ in which case the CPI for the Dallas /Fort Worth Consolidated Metropolitan Statistical Area will be used) published by the U. S. Department of Labor, Bureau of Labor Statistics (Base Index of 1982 -84 =100). If the Index is discontinued or revised, the new index or computation that replaces the Index will be used in order to obtain substantially the same result as would have been obtained if it had not been discontinued or revised. If such computation would reduce the Rent for the particular Extension, it will be disregarded, and the Rent during the immediately preceding period will apply instead. ❑ C. Fixed Rental Adjustments. The monthly installments of Base Rent during the Extension(s) will be increased beginning on the following dates to these amounts: Date: .. IT Amount: $ Date: . Amount: $ Date: — — ._ Amount: $ Date: ........._ .............._. Amount: $ ADDENDUM "A" TO LEASE — Page 2 ONTCAR 2014 — Form No. 2 (3/14) Produced with zipFormG by zipLoglx 18070 Fifteen Mile Road, Fraser, Michigan 48026 www.zioLoa ..com City of Denton Exhibit 1 Axis Realty Group NORTH TEXAS COMMERCIAL ASSOCIATION OF REALTORS® ADDENDUM "B" TO LEASE CONSTRUCTION OF IMPROVEMENTS BY LANDLORD Y , Dentonw, ITTX 76201 Address of the Premises: 608 E. Hickor St Ste 128,... _. 1. Plans. Landlord agrees to construct (or complete) improverrients to the Premises in accordance with plans and specifications (the "Plans ") to be promptly prepared by Landlord and delivered to Tenant. If Tenant does not respond to the request for approval of the Plaits within five days after Tenant's receipt of the Plans, Tenant will be deemed to have approved the Plans. Upon approval by Tenant, two or more sets of the Plans will be signed by both parties, with one signed set retained by each party. Changes to the Plans may be made only by written amendments signed by both parties. 2. Construction of Improvements. Upon approval of the Plans and the cost of construction, Landlord shall promptly begin construction and pursue the construction to its completion with reasonable diligence and in a good and workmanlike manner. 3. Estimated Completion Date. It is estimated by Landlord that the improvements specified in the Plans will be completed by March, 1. 2016 (the "Estimated Completion Date"), 4. Notice of Completion. Landlord shall deliver a written notice to Tenant that the improvements have been completed in accordance with the Plans, specifying the date (the "Date of Completion ") tine improvements were completed, within two days after the Date of Completion. Tenant shall then prorptly inspect the irrlprovements and if they have in fact been completed in accordance with the Plans„ then the Term will begin upon the Date of Completion or on the Commencement Date, whichever is later. 5. Objections. If Tenant reasonably determines that the improvements have not been completed in accordance with the Plans, Tenant may deliver a written notice to Landlord specifying the incomplete items. If Tenant does not, within 10 days after Landlord's notice of completion, deliver such a written notice to Landlord, then Tenant will be deemed to have approved the Improvements as constructed, and the Date of Completion stated in Landlord's notice will be the Date of Completion. If the improvements have not in fact been completed in accordance with the Plans, and Tenant has delivered to Landlord a written notice specifying the incomplete items, then Landlord shall promptly proceed to finish the incomplete items, and the Term will begin upon the date the items are In fact complete. 6. Substantial Completion. Completion, as used in this Addendum, means Substantial Completion. "Substantial Completion " will be deemed to have occurred when (i) a Certificate of Occupancy is issued by the local municipal authorities that have jurisdiction over the Premises, and (ii) the construction is sufficiently complete in accordance with the Plans so that Tenant is able to occupy the Premises for the Penititted Use, except for minor "punch list" items remaining to be completed. 7, Letter of Acceptance. Upon Substantial Completion of the improvements to the Premises, Tenant agrees to execute and deliver to Landlord, with a copy to tine Princi al Broker, a letter (tire " "Letter of Acceptance ") addressed to Landlord and signed by Imenant or Tenant's authorized representative) acknowledging: (I) that construction has been completed in accordance with the Plans; (ii) acceptance of the improvements (subject to "punch list " Items to be completed); (iii) the Date of Completion, and (iv) the Commencement Date of the Term. 8. Taking of Possession. The taking of possession of the Premises by Tenant will be deemed to be acknowledgment by Tenant that construction has been completed in accordance with Plans (except for any latent defects and "punch fist " items) and that the Term has begun as of the Date of Completion, regardless of whether a Certificate of Occupancy has been issued or Tenant has delivered a Letter of Acceptance. Axis Realty Group, 1517 Centre Place Drive Denton, TX 76205 Phone: 940.891.2947 Fax: 940.891 2948 Alex Payne City of Denton Produced with zipForm® by zipLogix 18070 Fifteen Mile Road, Fraser, Michigan 48026 www.zioLoaix.com Exhibit 1 9. Failure to Complete. if the Improvements have not been completed in accordance with the Glans by the Estimated Completion Date, or by such date as extended by application of Section 16,0 force I aiieure , Tenant, riray give Landlord a written notice of Tenant's intention to terminate as of a certain date specified by Tenant in the notice (the "Termination Date") if such improvements have not been c rnpleted by the Termination Date. The notice roust be given to Landlord not less than 20 days before the Termination Date. If the improvements have riot been completed by the Termination Date, then this Lease will terminate, with no further liability of one party to the other, runless the Termination Date is extended by Tenant in writing. If Landlord Is able to cause Substantial Completion of the improvements to occur before the Termination Date, then this Lease will not terminate. 10. Finish -Out Allowance. Landlord shall pay the cost of construction under this Addendum in an amount not to exceed $ 552 , 960.00 (the "Landlord's Cost "). If an Addendum for Construction of Improvements by Tenant is also attached to this Lease, then Landlord may also provide an Allowance (as defined in that Addendum) to be applied to the cost of construction in that Addendum. Tenant shall pay any costs of construction in excess of the Landlord's Cost and any Allowance. ADDENDUM "B" TO LEASE — Page 2 ©NTCAR 2014 — Form No. 2 (3/2014) Produced with zipFormG by zipLogix 18070 Fifteen Mile Road, Fraser, Michigan 48026 www.zioLoaix.com City of Denton Exhibit 1 Axis Realty Group NORTH TEXAS COMMERCIAL ASSOCIATION OF REALTORS® ADDENDUM "G" TO LEASE RULES AND REGULATIONS c .. S ..._...� r TX 76201 Address of the Premises: 608 E . Hickory St Ste 128 Denton, 1. Application. Tenant, and Tenant's employees and invitees, shall abide by the following standards for the mutual safety, cleanliness, care, protection, comfort and convenience of all tenants and occupants of the Property. These Rules and Regulations apply to all of the Property as defined in this Lease including, but not limited to, the Premises, the building(s), the parking garages, if any, the common areas, driveways, and parking lots. 2. Consent Required. Any exception to these Rules and Regulations must first be approved in writing by Landlord. For purposes of these Rules and Regulations, the term "Landlord" includes the building manager, the building manager's employees, and any other agent or designee authorized by Landlord to manage or operate the Property. 3. Rules and Regulations: a. Tenant may not conduct any auction, "flea market" or "garage sale" on the Premises nor store any goods or merchandise on the Property except for Tenant's own business use. Food may not be prepared in the Premises except in small amounts for consumption by Tenant and Tenant's officers and employees. Vending machines or dispensing machines may not be placed in the Premises without Landlord's written approval. The Premises may not be used or occupied as sleeping quarters or for lodging purposes. Animals may not be kept in or about the Property. b. Tenant shall not obstruct sidewalks, driveways, loading areas, parking areas, corridors, hallways, vestibules, stairs and other similar areas designated for the collective use of tenants, or use such areas for Tenant's storage, temporary or otherwise, or for any purpose other than going to and from the Premises. Tenant shall comply with parking rules and guidelines as may be posted on the Property from time to time. c. Tenant shall not make any loud noises, unusual vibrations, unpleasant odors, objectionable or illegal activities on the Property. Tenant shall not permit the operation of any equipment in the Premises that annoys other occupants of the Property. Tenant shall not interfere with the possession of other tenants of the Property. d. Tenant may not bring any flammable, explosive, toxic, noxious, dangerous or hazardous materials onto the Property, except in small quantities as needed in Tenant's business and used, stored, and disposed of in accordance with applicable laws. e. Installation of security systems, telephone, television and other communication cables, fixtures and equipment must comply with Section 7.04 of the Lease, except that routine installation and construction of normal communication devices that do not require any holes in the roof or exterior walls of the Property do not require the written approval of Landlord. f. Movement into or out of the building through public entrances, lobbies or corridors that requires use of a hand truck, dolly or pallet jack to carry freight, furniture, office equipment, supplies and other large or heavy material, must be limited to the service entrances and freight elevators only and must be done at times and in a manner so as not to unduly inconvenience other occupants of the Property. All wheels for such use must have rubber tires and edge guards to prevent damage to the building. Tenant shall be responsible for and shall pay all costs to repair damages to the building caused by the movement of materials by Tenant. WO ` - ti . I Axis Realty Group, 1517 Centre Place Drive Denton, TX 76205 Phone: 940.891.2947 Fax: 940.891.2948 Alex Payne City of Denton Produced with zipForm® by zipLogix 18070 Fifteen Mile Road, Fraser, Michigan 48026 www.zioLoaix.cam Exhibit 1 g. Requests by Tenant for building services, maintenance and repair must be made in writing to the office of the building manager designated by Landlord and must be dated. Tenant shall give prompt written notice to Landlord of any significant damage to or defects in the Premises or the Property, including plumbing, electrical and mechanical systems, heating, ventilating and air conditioning systems, roofs, windows, doors, foundation and structural components, regardless of whose responsibility it is to repair such damage or defects. h. Tenant shall not change locks or install additional locks on doors without the prior written consent of Landlord. If Tenant changes locks or installs additional locks on the Property, Tenant shall provide Landlord with a copy of each separate key to each lock upon Landlord's request. Upon termination of Tenant's occupancy of the Premises, Tenant must surrender all keys to the Premises and the Property to Landlord. I. Harmful liquids, toxic wastes, bulky objects, insoluble substances and other materials that may cause clogging, stains or damage to plumbing fixtures or systems must not be placed in the lavatories, water closets, sinks, or drains. Tenant must pay the costs to repair and replace drains, plumbing fixtures and piping that is required because of damage caused by Tenant. j. Tenant shall cooperate with Landlord and other occupants of the Property in keeping the Property and the Premises neat and clean. Nothing may be swept, thrown or left in the corridors, stairways, elevator shafts, lobbies, loading areas, parking lots or any other common areas on the Property. All trash and debris must be properly placed in receptacles provided therefor. k. Landlord may regulate the weight and position of heavy furnishings and equipment on the floor of the Premises, including safes, groups of filing cabinets, machines, and any other item that may overload the floor. Tenant shall notify Landlord when heavy items are to be taken into or out of the building, and the placement and transportation of heavy items may be done only with the prior written approval of Landlord. I. No window screens, blinds, draperies, awnings, solar screen films, window ventilators or other materials visible from the exterior of the Premises may be placed in the Premises without Landlord's approval. Landlord is entitled to control all lighting that may be visible from the exterior of the building. m. No advertisement, sign, notice, handbill, poster or banner may be exhibited, distributed, painted or affixed on the Property. No directory of tenants is allowed on the Property other than that provided by Landlord. n. Tenant agrees to cooperate with and assist Landlord in the prevention of peddling, canvassing and soliciting on the Property. o. Tenant accepts any and all liability for damages and injuries to persons and property resulting from the serving or sales of alcoholic beverages by or on behalf of Tenant on or from the Property. p. Any person entering and leaving the building before and after normal working hours, or building hours if posted by Landlord, whichever applies, may be required to identify himself to security personnel by signing a list and giving the time of day and destination or location of the applicable Premises. Normal building business hours are established by Landlord from time to time. 4. Revisions. Landlord reserves the right to revise or rescind any of these Rules and Regulations and to make additional rules that Landlord may determine are necessary from time to time for the safety, protection, comfort and convenience of the tenants and visitors of the Property and for the care, protection and cleanliness of the Property. Revisions and additions will be binding upon the Tenant as if they had been originally prescribed herein when furnished in writing by Landlord to Tenant, provided the additions and revisions apply equally to all tenants occupying the Property and do not impose any substantial cost to Tenant. 5. Enforcement. Any failure or delay by Landlord in enforcing these Rules and Regulations will not prevent Landlord from enforcing these Rules and Regulations in the future. If any of these Rules and Regulations is determined to be unenforceable, it will be severed from this Lease without affecting the remainder of these Rules and Regulations. ADDENDUM "G" TO LEASE — Page 2 ©NTCAR 2014 — Form No. 2 (3/2014) Produced with zipForm® by zipLogix 18070 Fifteen Mile Road, Fraser, Michigan 48026 www.zlpLooix.com City of Benton Exhibit I Axis Realty Group EXHIBIT "A" SURVEY AND/OR LEGAL DESCRIPTION 608 E. Hickory St, Ste 128, Denton, TX 76201 East Hickory Addition, Lots 1 & 2, Block A EXCL LISTING AGREEMENT GCopyright 2014 NTCAR Form No. 4 (7-22-14) Axis Realty Group, 1517 Centre Place Drive Denton, TX 76205 Phone: 940.891.2947 Fax: 940.891.2948 Alex Payne City of Denton Produced with zlpForraG by zipLoglx 16070 Fitteen Mile Road, Fraser, Michigan 49026 MU8LKWLUgjj= Exhibit 1 Axis Realty Group EXHIBIT "C" INFORMATION ABOUT BROKERAGE SERVICES Texas law requires all real estate licensees to give the following information about brokerage services to prospective buyers, tenants, sellers and landlords. Before working with a real estate broker, you should know that the duties of a broker depend on whom the broker represents. If you are a prospective seller or landlord (owner) or a prospective buyer or tenant (buyer), you should know that the broker who lists the property for sale or lease is the owner's agent. A broker who acts as a subagent represents the owner in cooperation with the listing broker. A broker who acts as a buyer's agent represents the buyer. A broker may act as an intermediary between the parties if the parties consent in writing. A broker can assist you in locating a property, preparing a contract or lease, or obtaining financing without representing you. A broker is obligated by law to treat you honestly. IF THE BROKER REPRESENTS THE OWNER: The broker becomes the owner's agent by entering into an agreement with the owner, usually through a written listing agreement, or by agreeing to act as a subagent by accepting an offer of subagency from the listing broker. A subagent may work in a different real estate office. A listing broker or subagent can assist the buyer but does not represent the buyer and must place the interests of the owner first. The buyer should not tell the owner's agent anything the buyer would not want the owner to know because an owner's agent must disclose to the owner any material information known to the agent. IF THE BROKER REPRESENTS THE BUYER: The broker becomes the buyer's agent by entering into an agreement to represent the buyer, usually through a written buyer representation agreement. A buyer's agent can assist the owner but does not represent the owner and must place the interests of the buyer first. The owner should not tell a buyer's agent anything the owner would not want the buyer to know because a buyer's agent must disclose to the buyer any material information known to the agent. IF THE BROKER ACTS AS AN INTERMEDIARY: A broker may act as an intermediary between the parties if the broker complies with The Texas Real Estate License Act. The broker must obtain the written consent of each party to the transaction to act as an intermediary. The written consent must state who will pay the broker and, in conspicuous bold or underlined print, set forth the broker's obligations as an intermediary. The broker is required to treat each party honestly and fairly and to comply with The Texas Real Estate License Act. A broker who acts as an intermediary in a transaction: (1) shall treat all parties honestly; (2) may not disclose that the owner will accept a price less than the asking price unless authorized in writing to do so by the owner; (3) may not disclose that the buyer will pay a price greater than the price submitted in a written offer unless authorized in writing to do so by the buyer; and (4) may not disclose any confidential information or any information that a party specifically instructs the broker in writing not to disclose unless authorized in writing to disclose the information or required to do so by The Texas Real Estate License Act or a court order or if the information materially relates to the condition of the property. With the parties' consent, a broker acting as an intermediary between the parties may appoint a person who is licensed under The Texas Real Estate License Act and associated with the broker to communicate with and carry out instructions of one party and another person who is licensed under that Act and associated with the broker to communicate with and carry out instructions of the other party. If you choose to have a broker represent you, you should enter into a written agreement with the broker that clearly establishes the broker's obligations and your obligations. The agreement should state how and by whom the broker will be paid. You have the right to choose the type of representation, if any, you wish, to receive. Your payment of a fee to a broker does not necessarily establish that the broker represents you. If you have any questions regarding the duties and responsibilities of the broker, you should resolve those questions before proceeding. OWNER: Date: EXCLUSIVE LISTING AGREEMENT @Copyright 2014 NTCAR Form No. 4 (7- 22 -14) Axis Realty Group, 1517 Centre Place Drive Denton, TX 76205 Phone: 940 8912947 Fax: 940,891 2948 City of Denton Alex Payne Produced with zlpForm® by zlpLogix 18070 Fifteen Mlle Road, Fraser, Michigan 48026 www zWLoalx sINo sAlegal\Mjr documents\contracts\15\dec management agreement.doex Exhibit 2 ENTREPRENEUR CENTER MANAGEMENT AGREEMENT BETWEEN THE CITY OF DENTON AND THE DALLAS ENTREPRENEUR CENTER THIS AGREEMENT is made between the City of Denton, Texas, a municipal corporation formed under the laws of the State of Texas and located at 215 E. McKinney Street, Denton, Texas 76201 (the "City"), and The Dallas Entrepreneur Center, a Texas based 501(c)3 nonprofit corporation whose principal place of business is located at 311 North Market Street, Dallas, Texas 75202 ("Manager") for the management of an entrepreneurial space located at 608 East Hickory, Suite 128, Denton, Texas, 76201. (The City and the Manager are collectively referred to as "the Parties"). WHEREAS, the Economic Development Partnership Board and the City Council have established target industries for economic development recruitment, including a focused initiative on entrepreneurship and teclmology-based companies; and WHEREAS, on the 15"' day of September, 2015, the City of Denton, Texas approved a Grant Agreement with Rail Yard Partners, Ltd. to utilize 'Fax Increment Reinvestment Zone Number One Funds to stimulate a catalyst transit-oriented redevelopment project located at 608 East Hickory, Denton, "I'exas 76201; and WHEREAS, on the 15"' day of September, 2015, the City of Denton, Texas approved a Commercial Lease Agreement with Rail Yard Partners, Ltd. to lease 9,216 square feet of office space located at 608 East Hickory, Suite 128, Denton, Texas 76201 to operate an entrepreneurial space for a technology recruitment initiative; and WHEREAS, the Parties desire that the Manager operate and manage the entrepreneurial space and related programs; NOW, THEREFORE, for the Mutual promises and consideration as described herein, the Parties agree as follows: I. TERMS A. Program Management. The City hereby authorizes and engages the Manager as its agent to manage the daily operations of the Entrepreneur Center and associated programs during the term of this Agreement. The Manager hereby accepts such engagement subject to the terms and conditions expressed in this Agreement. The City shall cooperate with the Manager to the extent necessary for the Manager to fulfill its duties under this Agreement. Without limiting the generality of the foregoing, the City is hereby authorized and shall be obligated to do as follows in its discretion and as is allowed under the City's budget processes: 1. Financial responsibility for the Commercial Lease Agreement and associated operating expenses at 608 East Hickory, Suite 128, Denton, Texas 76201. sAlegakour documents\con tracts\ 15\dec management agreement.docx Exhibit 2 2. Provide entrepreneurial office and co-working space located at 608 East Hickory, Suite 128, Denton, Texas 76201 for the operation of the Entrepreneur Center commencing on or about March 1, 2016. 3. Provide appropriate technology, furniture, fixtures, and equipment for the entrepreneurial office and co-working space. 4. Provide staff support and resources to the Manager to assist in the operations of the Entrepreneur Center. 5. Provide marketing resources and assistance as available and budgeted in the Economic Development Division program funding. 6. License the use of any and all branding, logos, program markers, URL addresses, websites, and other marketing materials to the Manager for the promotion of the program. B. Management of the Entrepreneur Center. The Manager has the responsibility and discretion in the operation, direction, management and supervision of the Entrepreneur Center, subject only to the limitations expressed herein. Commencing with the term of this Agreement, the Manager shall perform the following: 1. Coordinate with the Landlord on the design and layout of the entrepreneurial space, including tenant finish-out selections, interior design, and architectural/construction decisions. The Manager will solicit feedback from the City during this process. 2. Coordinate with the City's marketing/advertising designee to finalize all branding, logos, program markers, and marketing materials for the promotion and launch of the program and entrepreneurial space. 3. Coordinate the selection and procurement of all furniture, fixtures, and equipment for the space; working directly with the City and all applicable purchasing laws. 4. Coordinate with the City to finalize membership eligibility, terms, application requirements, membership fees, operating hours, performance measures, and all other programmatic elements. S. Commencing with the term of the Commercial Lease Agreement, day-to-day management and operations of the Entrepreneur Center and associated programs, including, but not limited to the following: i. Membership recruitment and collection of all membership fees. ii. Coordinate, plan, and host events and training for members. iii. Create a business support hub for tech-based companies and start-ups by offering the knowledge, resources, and support necessary for growth and success. Page 2 sAlegakour documents\contracts\1 5\dec numagement apeernent.doex Exhibit 2 6. Manager will pay a percentage of operating expenses associated with the Commercial Lease Agreement, as follows: Ten percent of all membership fees collected by Manager will be paid quarterly to the I...andlord as a contribution towards associated operating expenses. ii. First payment will be due July 1, 2016 for the period of March 1, 2016 through May 31, 2016 and payments will be due quarterly thereafter. iii. All payments will be made directly to the Landlord and will be credited towards the City's operating expense account. 7. The remaining ninety percent of membership fees will be utilized by the Manager for daily operations of the entrepreneurial space, including but not limited to the following: Programming and event expenses. ii. Snacks, supplies, and other amenities and benefits. iii. Marketing and recruitment expenses. Solicit sponsorships, donations, programming, speakers, and all other support as necessary to successfully operate the entrepreneurial space and associated programs. 9. Provide a quarterly financial report to the City that shows a separate accounting of all revenue and expenses associated with the operation of the entrepreneurial space in Denton, and an accounting of all revenue and expenses associated with the Manager's I-Lill operations. C. Insurance. Manager shall require that proper Certificates of Insurance evidencing general liability, automobile, bodily injury, property damage, death and workers compensation coverage shall be furnished, with copies to the City, and require that all policies be kept in force during the term of the Agreement by all vendors, concessionaires, subcontractors and service providers in the minimum amounts approved by the City. Such policies shall name the City as an additional insured. The Manager further agrees to maintain at all times during the term of this Agreement and the Development Agreement, with responsible insurance companies, insurance as follows: Such worker's compensation, employer's liability or similar insurance as may be required by law, or such greater amounts which Manager shall deem advisable but no less than $1,000,000/$2,000,000; 2. A general liability insurance policy in the amount of at least $1,000,000 per person or $2,000,000 per occurrence for bodily it jury or death; Page 3 sAIegaI\0Ur documents\contracts\1 5\dec management agreenient.docx Exhibit 2 3. An umbrella coverage insurance policy of at least $10,000,000 per occurrence; 4. Such other insurance against such other operation risks as Manager or City deems advisable to insure against, including, without limitation, auto liability insurance, liquor liability insurance and fidelity bonds; Errors & Omissions or Professional Liability Coverage in the amount of at least $ 1,000,00(). 6. Fire insurance and insurance against such other hazards ordinarily included by an all-risk form of extended coverage endorsement on the buildings, operating supplies, furniture, furnishings and equipment in an amount equal to at least one hundred percent (100%) of actual replacement cost (without deduction for depreciation) thereof, and all alterations, substitutions and replacements therefore, and bearing a standard noncontributory mortgagee loss payable endorsement in favor of the holders of any Mortgage on the Entrepreneur Center and providing, if reasonably available, for waiver of subrogation against such holder and the debt and security of such Mortgage in the event that the Entrepreneur Center is restored. This insurance shall include business interruption insurance. The Manager shall add the City as an additional insured on policies required by this Agreement. Moreover, the Manager shall assume all risks in connection with the adequacy of any insurance or self-insurance program and waives any claim against the City for any liability, costs or expenses arising out of any uninsured claim, in part or in full, of any nature whatsoever. Within a reasonable period of time after the effective date of this Agreement, Manager shall provide the City with a Certificate of Insurance showing compliance with this section. Any changes to coverage shall cause Manager to immediately notify the City in writing of such change. D. Compliance. Manager shall make all reasonable efforts to comply with all laws, rules, regulations, requirements, orders, notices, determinations, and ordinances of the City of Denton, including without limitation, the state and local liquor authorities, and the requirements of any insurance companies covering any of the risks against which the Entrepreneur Center is insured. Manager shall indemnify and hold harmless the City from any loss, cost, damage, or expense associated with compliance hereunder. E. Management Term. The term of this Agreement shall commence on the date the Agreement is approved by the City Council and shall continue through March 1, 2017. This Agreement is renewable on an annual basis. F. Termination. The Agreement may be terminated prior to the expiration of the Agreement upon the occurrence of one or more of the following events: 1. Upon any default of the Commercial Lease Agreement between the City and the Landlord following the expiration of applicable cure periods; Page 4 s:Uegakour documents \contracts\1 5 \dec management agreement.docx Exhibit 2 2. Upon at least thirty (30) days prior written notice to the other party, if (i) the Entrepreneur Center is damaged or destroyed by fire or another casualty; or (ii) all or a substantial part of the Entrepreneur Center is taken in a condemnation or eminent domain proceeding; 3. Upon at least thirty (30) days prior written notice if Manager shall apply for or consent to the appointment of a receiver, trustee or liquidator of it or all or a substantial part of its assets; file a voluntary petition for bankruptcy; or, become otherwise insolvent; 4. If Manager permanently ceases operation of the Entrepreneur Center; or 5. If Manager fails to provide or maintain insurance as required under this Agreement. II. MISCELLANEOUS C. Indemnification. MANANGER AGREES TO INDEMNIFY, HOLD HARMLESS, AND DEFEND THE CITY, ITS OFFICERS, OFFICIALS, AGENTS, EMPLOYEES, AND REPRESENTATIVES FROM AND AGAINST ANY AND ALL CLAIMS (ADMINISTRATIVE OR JUDICIAL.) OR SUITS FOR INJURIES, DAMAGE, LOSSES AND EXPENSES (INCLUDING BUT NOT LIMITED TO REASONABLE. ATTORNEYS' FEES FOR PRE- TRIAL, TRIAL AND APPELLATE PROCEEDINGS, ACCOUNTING FEES, APPRAISAL FEES AND CONSULTING AND EXPERT WITNESS FEES), OI2 LIABILITY OF WHATEVER KIND OR CHARACTER, ARISING OUT OF OR IN CONNECTION WITH THE PERFORMANCE BY THE CITY OF THOSE SERVICES CONTEMPLATED BY THIS AGREEMENT, INCLUDING ALL SUCH CLAIMS Oil CAUSES OF ACTION BASED UPON COMMON, CONSTITUTIONAL, OR STATUTORY LAW, OR BASED, IN WHOLE, OR IN PART, UPON ALLEGATIONS OF NEGLIGENT OR INTENTIONAL ACTS OF THE CITY, ITS OFFICERS, EMPLOYEES, AGENTS, SUBCONTRACTORS, LICENSEES, AND INVITEES, OR OF MANAGER, OR CLAIMS OF ANY PAST OR FUTURE LIFE /SAFETY CODE VIOLATIONS, OR ANY REQUIREMENT OR AWARD RELATING TO COURSE OF EMPLOYHMENT, WORKING CONDITIONS, WAGES AND /OR COMPENSATION OF EMPLOYEES OR FORMER EMPLOYEES AT THE ENTREPRENEUR CENTER INCLUDING VIOLATIONS OF ANY STATE, LOCAL, OR FEDERAL EMPLOYMENT LAW WHETHER COMMON LAW OR STATUTORY, AND INJURY TO PERSON(S) ANI) DAMAGE TO PROPERTY OR BUSINESS BY REASON OF ANY CAUSE WHATSOEVER IN AND ABOUT THE ENTREPRENEUR CENTER OR ELSEWHERE, UNLESS SUCH INJURY OR DAMAGE IS CAUSED BY THE CITY'S GROSS NEGLIGENCE AS DETERMINED BY A FINAL NON- APPEALABLE JUDGMENT ISSUED BY A COURT OF COMPETENT JURISDICTION, WILLFUL MISCONDUCT, FRAUD, OR BREACH OF THIS AGREEMENT. ANY INDEMNIFICATION SHALL APPLY REGARDLESS OF WHETHER OR NOT SAID CLAIM, DAMAGE, LOSS, OR EXPENSE IS COVERED BY INSURANCE AS HEREIN PROVIDED. IN THE EVENT THAT A CLAIM IS ASSERTED AGAINST EITHER PARTY OR BOTH, MANAGER SHALL PROVIDE CITY WITH A COPY OF SUCH CLAIM WITHIN A REASONABLE TIME FROM RECEIPT Page 5 sAlegaNur doc uments\con tracts\ 15\dec management agreerrient,docx Exhibit 2 D. Notice. Any notice required to be given under this Agreement or any statute, ordinance, or regulation, shall be effective when given in writing and deposited in the United States mail, certified mail, return receipt requested, or by hand-delivery, addressed to the respective parties as follows: CITY DALLAS ENTREPRENEUR CENTER City Manager Trey Bowles City of Denton 311 Market Street 215 E. McKinney Dallas, Texas, 75202 Denton, TX 76201 E. Inurement. This Agreement and each provision hereof, and each and every right, duty, obligation, and liability set forth herein shall be binding upon and inure to the benefit and obligation of the City and MANAGER and their respective successors and assigns. F. Application of Laws. All terms, conditions, and provisions of this Agreement are subject to the Charter of the City of Denton, all ordinances passed pursuant thereto, and all judicial determinations relative thereto. This Agreement shall be governed by the laws of the State of "Texas and venue shall lie in Denton County, Texas. G. Exclusive Agreement. This Agreement contains the entire understanding and constitutes the entire agreement between the parties hereto concerning the subject matter contained herein. There are no representations, agreements, arrangements, or understandings, oral or written, express or implied, between or among the parties hereto, relating to the subject matter of this Agreement, which are not fully expressed herein. The terms and conditions of the Agreement shall prevail notwithstanding any variance in this Agreement from the terms and conditions of any other document relating this transaction or these transactions. This Agreement may not be modified, amended, surrendered or changed, except by a written instrument executed by both parties. 1-1. Severability. If any section, subsection, paragraph, sentence, clause, phrase, or word in this Agreement, or application thereof to any person or circumstance is held invalid by any court of competent jurisdiction, such holding shall not affect the validity of the remaining portions of this Agreement, and the parties hereby declare they would have enacted such remaining portions despite any such invalidity. 1. No Representation. In entering into this Agreement, the parties acknowledge that the City has made no representation to the Manager regarding Manager's potential earnings, the possibility of future success or any other similar matter respecting the Entrepreneur Center and the City's assistance hereunder, and that the City expressly makes no guarantee as to the success of its assistance as provided hereby. 'This Agreement is effective as of the day of Page 6 , 2015, CITY OF DENTON, TEXAS BY: GEORGE C. CAMPBELL, CITY MANAGER sAlegakour docunients\cc)ntracts\15\dec rn an agement agreement.docx Exhibit 2 ATTEST: JENNIFER WALTERS, ary Sl',"CRI-,, TAI ZY By: APPROVED AS TO FORM: ANITA BURGESS, CITY ATTORNEY BY: ... ....... .. ... DALLAS ENTREPRENEUR CENTER a Texas Nonprofit Company in Its: ACKNOWLEDGMENTS STATE OF TEXAS § COUNTY OF DENTON § The foregoing Management Agreement was executed before me on the day of —1 2015 by George C. Campbell, City Manager of the City of Denton,'I'exas, aTexas municipal corporation, on behalf of said Municipal Corporation. Name: Notary Public in and for the State of 'Texas STATE OF TEXAS § COUNTY OF DENTON § The foregoing Management Agreement was executed before me on the ___ day of , 2015 by of Dallas Entrepreneur Center, on behalf of said corporation. Name: Notary Public in and for the State of Texas Page 7 OlegaRour documents\ordinances\ I 5\dee nimiagement ord for anit.doe Exhibit 3 ORDINANCE NO. AN ORDINANCE OF 'THE CITY COUNCIL OF THE CITY OF DENTON, TEXAS, AUTHORIZING THE CITY MANAGER TO EXECUTE A MANAGEMENT AGREEMENT BETWEEN THl"' CITY OF DENTON AND THE DALLAS ENTREPRENEUR CENTER FOR THE MANAGEMENT OF THE ENTREPRENEUR CENTER LOCATED AT 608 FAST HICKORY, SUITE 128, DENTON, TEXAS, 76201; AND PROVIDING AN EFI, EC'FIVE DATE. WHEREAS, the Dallas Entrepreneur Center was established to provide a central location to serve entrepreneurs by providing education, training, programming, mentorship and access to capital; and WHEREAS, the Economic Development Partnership Board and the City Council have established target industries for economic development recruitment, including a focused initiative on entrepreneurship and technology-based companies; and WHEREAS, on the 15th day of September, 2015, the City of Denton, Texas approved a Grant Agreement with Rail Yard Partners, Ltd. to utilize 'Fax Increment Reinvestment Zone Number One Funds to stimulate a catalyst transit-oriented redevelopment project located at 608 East Hickory, Denton, Texas 76201; and WHEREAS, on the 15t" day of September, 2015, the City of Denton, 'J"exas approved a Commercial Lease Agreement with Rail Yard Partners, Ltd. to lease 9,216 square feet of office space located at 608 East Hickory, Suite 128, Denton, Texas 76201 to operate an entrepreneurial space for a technology recruitment initiative; and WHEREAS, the City of Denton desires to enter into an agreement with the Dallas Entrepreneur Center in order for the Dallas Entrepreneur Center to provide management and operational services for the entrepreneurial space for a technology recruitment initiative; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION I The City Manager, or his designee, is hereby authorized to execute an agreement with the Dallas Entrepreneur Center in substantially the form of the Management Agreement, which is attached hereto and incorporated herein by reference. SECTION 2. This ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the day of ,2015. CHRIS WATTS, MAYOR sAlegakour documents\ordinances\1 5\dcc management ord for aint.doc Exhibit 3 ATTEST: JENNIFF'R WALTERS, CITY SECRE'T'ARY mo APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY ro," BY: Page 2 City Hall City of Denton 215 E. McKinney St. Denton, Texas 76201 www.cityofdenton.com DEN'FON File #: ID 15 -1059, Version: 1 Legislation Text Agenda Information Sheet SUBJECT Deliberations regarding Economic Development Negotiations - Under Texas Government Code Section 551.087. Receive a report and hold a discussion regarding economic development issues regarding a proposed economic development incentive agreement for O'Reilly Hotel Partners Denton and a proposed third amendment to the economic development program grant agreement between the City of Denton and Allegiance Hillview (RED Development). This discussion shall include commercial and financial information the City Council has received from O'Reilly Hotel Partners Denton and Allegiance Hillview (RED Development), business prospects which the City Council seeks to have locate, stay, or expand in or near the territory of the city, and with which the City Council is conducting economic development negotiations; deliberate the offer of a financial or other incentive to O'Reilly Hotel Partners Denton and the amendment of the economic development program grant agreement between the City of Denton and Allegiance Hillview (RED Development). City of Denton Page 1 of 1 Printed on 10/26/2015 City Hall City of Denton 215 E. McKinney St. Denton, Texas 76201 www.cityofdenton.com DEN'FON File #: ID 15 -1078, Version: 1 Legislation Text Agenda Information Sheet SUBJECT Consultation with Attorneys Under Texas Government Code Section 551.071. Consult with the City's attorneys regarding legal issues associated with a proposal for amending the Oak - Hickory Historic District overlay ordinance where a discussion of these legal matters would conflict with the duty of the City's attorneys under the Texas Disciplinary Rules of Professional Conduct of the State Bar of Texas. City of Denton Page 1 of 1 Printed on 10/26/2015 City Hall City of Denton 215 E. McKinney St. Denton, Texas 76201 www.cityofdenton.com DENT' IN File #: ID 15 -1087, Version: 1 Legislation Text Agenda Information Sheet SUBJECT Deliberations regarding Economic Development Negotiations - Under Texas Government Code Section 551.087. Receive a report and hold a discussion regarding economic development issues regarding a proposed economic development incentive agreement for Project Cartoon. This discussion shall include commercial and financial information the City Council has received from Project Cartoon, a business prospect, which the City Council seeks to have locate, stay, or expand in or near the territory of the city, and with which the City Council is conducting economic development negotiations; deliberate the offer of a financial or other incentive to Project Cartoon. City of Denton Page 1 of 1 Printed on 10/26/2015 City Hall City of Denton 215 E. McKinney St. Denton, Texas 76201 www.cityofdenton.com DEN'FON File #: ID 15 -1088, Version: 1 Legislation Text Agenda Information Sheet SUBJECT Deliberations Regarding Real Property Under Texas Government Code Section 551.072; Deliberations Regarding Economic Development Negotiations Under Texas Code Section 551.087; Consultation with Attorneys Under Texas Government Code Section 551.071 Receive information from staff, discuss, deliberate and provide staff with direction regarding the potential acquisition, exchange, lease or sale of real property located generally in the 200 block of N. Cedar and the 200 block of W. McKinney in the City of Denton, Denton County, Texas. Consultation with the City's attorneys regarding legal issues associated with the potential real property matter where a public discussion of these legal matters would conflict with the duty of the City's attorneys to the City of Denton and the Denton City Council under the Texas Disciplinary Rules of Professional Conduct of the State Bar of Texas, or would jeopardize the City's legal position in any administrative proceeding or potential litigation. City of Denton Page 1 of 1 Printed on 10/26/2015 City Hall City of Denton 215 E. McKinney St. Denton, Texas 76201 www.cityofdenton.com D EN'FON File #: ID 15 -1060, Version: 1 Legislation Text Agenda Information Sheet DEPARTMENT: Development Services /Economic Development CM /ACM: Jon Fortune DATE: October 30, 2015 SUBJECT Consider adoption of an ordinance approving an Economic Development Agreement under Chapter 380 of the Local Government Code to promote economic development and to stimulate business activity in the city of Denton and under Chapter 351 to promote travel, tourism, meetings, conventions, and events for the economic growth of the city of Denton, between the City of Denton and O'Reilly Hotel Partners Denton (OHPD), regarding the development of an approximate 12 acre parcel of land generally located on the south side of U.S. Highway 380 (West University Drive) ending at Scripture Road, between I -35 and North Bonnie Brae Street in Denton, Texas; authorizing the expenditure of funds therefor; and providing an effective date. BACKGROUND "Destination Denton" is our City's vision for the future, and the City's Vision Statement reads in part that "Denton is an identifiable and memorable destination." O'Reilly Hotel Partners Denton's (OHPD) proposed convention center and hotel development can help Denton realize that vision by meeting growing demand for significant meeting and hotel space to accommodate visitors to our community. OHPD's plans include the construction of a 285 -318 room Embassy Suites Hotel, an approximately 70,000 - square -foot convention center, and a Houlihan's restaurant. The anticipated convention center meeting space is approximately 37,850 square feet, the same size as was previously planned for their Denton project located at the University of North Texas (UNT). The meeting space would be of sufficient size to accommodate conventions with up to 650 participants with a grand banquet room that will hold up to 1,750 people for banquet -style events. The hotel and convention center would be managed by O'Reilly Hospitality Management (OHM). The current proposal from OHPD varies significantly from the previous project at the UNT location. The following are the major advantages to the City under the new proposal: The convention center and hotel will be located in the Rayzor Ranch Town Center, allowing it to serve as a catalyst project to ensure more timely and quality development. As a major anchor for the Town Center, the convention center and hotel can capitalize on the synergy associated with the planned shopping, entertainment, and restaurants located nearby. The City is not being asked to fund any element of construction, nor will the City own the convention center. As such, the City would not issue any public debt for this project and would have virtually no City of Denton Page 1 of 3 Printed on 10/26/2015 File M ID 15 -1060, Version: 1 financial risk. OHPD will privately finance the construction of the convention center and will be solely responsible for all debt obligations. • This proposal does not require the creation of a Tax Increment Reinvestment Zone as did the prior proposal. Financial participation by DISD or Denton County is not being sought. • Additional sales tax revenues can be captured through OHPD's participation in the Texas Direct Payment Program, under which they coordinate the purchase of construction materials in the city of Denton which will generate sales tax revenue to the City that was not previously possible. • The City's financial contribution is limited only to the actual revenue generated by the project at the Rayzor Ranch site. PRIOR ACTION/REVIEW (Council, Boards, Commissions) October 14, 2015 - The Economic Development Partnership Board recommended approval of the Economic Development Program Grant Agreement (7 -0). FISCAL INFORMATION To facilitate the development of this project, OHPD has approached the City to request a performance -based economic incentives via a Chapter 380 Economic Development Agreement that is based on the amount of revenue that the City previously considered using for the former convention center project. The incentive request is for a 100% rebate of the ad valorem tax, hotel occupancy tax, and sales tax generated by the proposed project for a maximum of 25 years or until the combined principal amount of $28 million and interest payment of $26 million, for a total aggregate amount of $54 million, is reached, whichever comes first. The incentive is capped at $54 million; however, based on the current pro forma that staff prepared the actual incentive is estimated to be between $35 -$40 million. There is an additional incentive request for 100% of the construction sales and use tax up to $850,000, at which time the grant will be reduced to 50 %. OHPD assumes all risk associated with the development of the project and their ability to receive any of these incentives is conditioned on their producing the anticipated project revenue. As a condition of the Chapter 380 Economic Development Grant, the City must have some management responsibility for the facility. As such, the City will assist in the management of certain sales missions and marketing functions for the convention center in order to further the public purpose of promoting economic growth and conventions, and to retain adequate Hotel Occupancy Tax control over the use of public funds to ensure benefits to the City. It is necessary for the City and OHPD to enter into a management agreement to clearly define the parties' roles and responsibilities. The City plans to subcontract these duties to the Denton Convention and Visitors Bureau via an amendment to the existing contract. EXHIBITS 1. Ordinance 2. Chapter 380 Economic Development Program Grant Agreement 3. Incentive Application City of Denton Page 2 of 3 Printed on 10/26/2015 File #: ID 15 -1060, Version: 1 4. Management Agreement Respectfully submitted: Aimee Bissett Director of Development Services Prepared by: Caroline Booth Assistant Director for Economic Development City of Denton Page 3 of 3 Printed on 10/26/2015 ORDINANCE NO. AN ORDINANCE APPROVING AN ECONOMIC DEVELOPMENT AGREEMENT UNDER CHAPTER 380 OF THE LOCAL GOVERNMENT CODE TO PROMOTE ECONOMIC DEVELOPMENT AND TO STIMULATE BUSINESS ACTIVITY IN THE CITY OF DENTON AND UNDER CHAPTER 351 TO PROMOTE TRAVEL, TOURISM, MEETINGS, CONVENTIONS, AND EVENTS FOR THE ECONOMIC GROWTH OF THE CITY OF DENTON, BETWEEN THE CITY OF DENTON AND O'REILLY HOTEL PARTNERS DENTON (OHPD), REGARDING THE DEVELOPMENT OF AN APPROXIMATE 12 ACRE PARCEL OF LAND GENERALLY LOCATED ON THE SOUTH SIDE OF U.S. HIGHWAY 380 (WEST UNIVERSITY DRIVE) ENDING AT SCRIPTURE ROAD, BETWEEN I -35 AND NORTH BONNIE BRAE STREET IN DENTON, TEXAS; AUTHORIZING THE EXPENDITURE OF FUNDS THEREFOR; AND PROVIDING AN EFFECTIVE DATE. WHEREAS, O'Reilly Hotel Partners Denton ( "OHPD ") has an interest in land generally located in the Rayzor Ranch Town Center development, in the City of Denton, Denton County, Texas, which includes property located South of US Route 380 ending at Scripture Road, between IH -35 and North Bonnie Brae Street (the "Property "); and WHEREAS, OHPD has made a request, on or about September 7, 2015, of the City of Denton ( "City ") to establish economic development incentives under Chapter 380 of the Texas Local Government to stimulate the development of commercial property within the City of Denton and under Chapter 351 of the Texas Tax Code to promote travel, tourism, meetings, conventions, and events for the economic development and growth of the City of Denton on the Property ( "Grant Application "); and WHEREAS, the Grant Application was approved by the Economic Development Partnership Board as compliant with the City of Denton's Tax Abatement and Incentive Policy on October 14, 2015; and WHEREAS, City and OHPD have negotiated an Economic Development Agreement to reflect the terms of the incentive, a copy of which is attached hereto and made a part hereof by reference (the "Agreement "), as well as a related Management Agreement; and WHEREAS, the City Council of the City of Denton hereby finds that the contemplated use and development of the Property, the proposed improvements provided for in the Agreement, and the other terms and conditions of the Agreement, will promote economic development, increase employment, and stimulate business and commercial activity within the City of Denton for the benefit of the public and therefore meets the requirements under Chapter 380 of the Texas Local Government Code; and WHEREAS, the City Council of the City of Denton further finds that the proposed Project on the Property will promote tourism and the convention and hotel industry and therefore meets the requirements under Chapter 351 of the Texas Tax Code; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON, TEXAS HEREBY ORDAINS: SECTION 1. The recitals and findings contained in the preamble of this ordinance are incorporated into the body of this ordinance. SECTION 2. The City Manager, or his designee, is hereby authorized to execute the Agreement attached hereto on behalf of the City of Denton and to carry out the City's responsibilities and rights under the Agreement, including without limitation the authorization to make the expenditures set forth in the Agreement. SECTION 3. This ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the day of , 2015. ATTEST: JENNIFER WALTERS, CITY SECRETARY am APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY J-- Page 2 CHRIS WATTS, MAYOR ECONOMIC DEVELOPMENT AGREEMENT WITH O'REILLY HOTEL PARTNERS — DENTON, LLC This Economic Development Agreement ( "Agreement ") is made and entered into as of the effective date provided for below, by O'REILLY HOTEL PARTNERS — DENTON, LLC, a Missouri limited liability company, located at 2808 S. Ingram Mill Road, Building C100, Springfield, Missouri, 65804 ( "Grantee "), and the CITY OF DENTON, a Texas municipal corporation, located at 215 E. McKinney Street, Denton, Texas 76201 (the "City ") for the purposes and considerations stated herein. The City and the Grantee are collectively referred to as the "Parties." WHEREAS, this Agreement is authorized pursuant to Article III, Section 52 -a of the Texas Constitution and Chapter 380 of the Texas Local Government Code (the "Act ") to promote local economic development and to stimulate business and commercial activity in the City of Denton, and pursuant to Chapter 351 of the Texas Tax Code to promote travel, tourism, meetings, conventions, and events for the economic development and growth of the City of Denton and economic benefit of the Parties; and WHEREAS, Grantee owns or is under contract to acquire a tract of land generally located in the Rayzor Ranch Town Center development, Denton, Texas 76201, which is within the city limits of the City of Denton, Denton County, Texas, which includes property located South of US Route 380 ending at Scripture Road, between IH -35 and North Bonnie Brae Street, and more specifically described in Exhibit "A" attached hereto and incorporated by reference as if set forth at length herein (the "Property "); and WHEREAS, the Property is located in the Rayzor Ranch Overlay District which maintains requirements for design and architectural standards that will control when not inconsistent with this Agreement, pursuant to Denton Development Code 35.7.15; and WHEREAS, the Property is also located in the Rayzor Ranch Public Improvement District No. 1 ( "PID"), upon which special assessments have been levied by the City within the PID to cover the issuance of PID Bonds that may be used to fund actual costs of authorized public improvements on the Property, such public improvements to be dedicated to the City in accordance with City of Denton Resolution R2014 -022, and that said PID assessments are not waived by this Agreement; and WHEREAS, Grantee desires to construct a 285 -318 room Embassy Suites hotel "Hotel "), an approximately 70,000- square -foot convention center ( "Convention Center "), and a Houlihan's restaurant ( "Restaurant ") on the Property with an estimated capital investment of approximately $93 million ( "Project "); and WHEREAS, the Grantee, by separate agreement, is delegating to the City certain management functions of a Convention Center, including the visitors' programs and activities in accordance with the terms, provisions, and requirements of the separate agreement; and WHEREAS, on or about September 7, 2015, Grantee submitted a City of Denton Incentive Application ( "Grant Application ") shown in Exhibit "B" concerning the contemplated use and development of the Property in order to request economic development incentives to defray a portion or all of the costs of the development, construction and operation of the Project pursuant to the Act; and WHEREAS, the Grant Application was reviewed by the Economic Development Partnership Board ( "EDP board ") in accordance with the City of Denton's Tax Abatement and Incentive Policy on October 14, 2015 and the EDP board found the Project meets the qualifications for tax incentives and recommended approval of the incentives as outlined herein; and WHEREAS, the City intends to provide Grantee with economic development incentives subject to the terms herein until the earlier of the following: (1) 25 years; or (2) the combined principal amount of $28 million and interest payment of $26 million for a total aggregate amount of $54 million is reached; and WHEREAS, the City Council of the City of Denton hereby finds that the contemplated use and development of the Property, the proposed improvements provided for herein, and the other terms and conditions of this Agreement, will promote economic development, increase employment, and stimulate business and commercial activity within the City of Denton for the benefit of the public and therefore meets the requirements under Chapter 380 of the Texas Local Government Code; and WHEREAS, the City Council of the City of Denton further finds that the proposed Project on the Property will promote tourism and the convention and hotel industry and therefore meets the requirements under Chapter 351 of the Texas Tax Code; and NOW, THEREFORE, the City and Grantee for and in consideration of the Property and the promises contained herein do hereby contract, covenant and agree as follows: I. DEFINITIONS "Approved Franchise" means a franchise agreement approved by the City with an Approved Franchisor whereby O'Reilly Hotel Partners — Denton, LLC is permitted to operate the hotel and restaurant using the name and reservation system of any Approved Franchisor. "Approved Franchisor" means, initially, an Embassy Suites and a Houlihan's Restaurant and Bar; provided that, from and after the date the hotel opens for business to the public throughout the term of the Approved Franchise and in the event, after the expiration of the Approved Franchise, another franchise is entered into, such term after approval by the City within the City's sole discretion, shall also include a national or 2 international hotel franchisor for a Comparable Hotel Property and /or a national or international restaurant franchisor for a specific restaurant product of the same or higher quality than Houlihan's Restaurant and Bar. "Capital Investment" means the total actual capital cost to Grantee for the acquisition of land, development, and construction of the Project, including a reasonable capital operating reserve, and the furniture and equipment installed at the Project. "City HOT Returns" means City of Denton Hotel/Motel Occupancy Tax Reports on which the Grantee or other persons report and remit City of Denton hotel occupancy taxes imposed under Chapter 351 of the Texas Tax Code on amounts paid for hotel rooms in the Proj ect. Such Reports shall be submitted by the Grantee the first week of each month using the prior month's data and shall be in the form attached as Exhibit "C" hereto. "Comparable Convention Center" means the operation and maintenance of the Convention Center in a manner such that its condition shall demonstrate refined, high quality, and fully functional appointments; furniture, fixtures, and equipment; exterior and interior finishes; landscaping; and mechanical, electrical, and structural components consistent with convention centers of comparable size and operation within the State of Texas that are affiliated with Comparable Hotel Properties. For the purposes of this Economic Development Agreement, the term Comparable Convention Center shall include, as of the Effective Date (but which may not be included in the future if such properties no longer meet the definition of "Comparable Convention Centers "), the San Marcos, Texas, convention center and the Frisco, Texas, convention center. The City reserves the right to inspect the Convention Center in the Project from time to time as necessary to maintain compliance herein. "Comparable Hotel Properties" means a hotel that (1) is a full- service, "convention - oriented hotel" (not including so- called "budget" or "limited service" hotels or motels) or, (2) has at least two hundred fifty (250) keys, (3) contains features, finishes, and amenities that are available in hotels of similar age that are at all times during the term of this Economic Development Agreement, maintained so as to be considered an upscale, full- service, "convention- oriented" or full - service hotel, as applicable, that is operated and maintained according to standards similar to those of the Embassy Suites brand as such brand standards exist on the Effective Date of this Agreement, and (4) is located within the State of Texas. For the purposes of this Economic Development Agreement, the term Comparable Hotel Properties shall include, as of the Effective Date (but which may not be included in the future if such properties no longer meet the definition of "Comparable Hotel Properties "), Embassy Suites —San Marcos, Texas and Embassy Suites Frisco, Texas. "Convention Center" means an upscale convention center facility of approximately 70,000 square feet in size under roof, containing meeting space of approximately 37,850 square feet that will accommodate conventions with up to 650 people and a grand banquet room that will accommodate up to 1,750 people for banquet -style events, and related improvements, including landscaping, the required parking spaces as determined by the City's development standards, and required infrastructure. The convention center facility 3 shall be managed in whole or part by the City and shall be primarily used to host conventions and meetings. "Force Majeure" means any contingency or cause beyond the reasonable control of a party including, without limitation, acts of God or the public enemy, acts of terrorism, war, riot, civil commotion, insurrection, government or de -facto governmental action (unless caused by acts or omissions of the party), fires, explosions, rain or other weather delays, floods, strikes, slowdowns or work stoppages. "Full- service Hotel" means mid - price, upscale or luxury hotel with a restaurant, lounge facilities, and meeting space as well as minimum service levels including bell service and room service. "Hotel" means a building in which members of the public obtain sleeping accommodations for consideration. "Improvements" mean the construction and equipping of the Property as set forth in the Grant Application, including but not limited to: (1) costs related to the development and improvement of the real estate, including, without limitation, construction costs and design and engineering costs; and (2) tangible personal property located on or at the Property owned or controlled by Grantee, excluding inventory, supplies, and vehicles. "Management Agreement" means the agreement between the City and O'Reilly Hotel Partners — Denton, LLC setting forth the parties' respective functions in managing the Denton Convention Center in whole or in part and as amended in writing. "Monthly Sales Tax Report" means the monthly report received from the Texas State Comptroller that shows the amount of total taxable sales for a month period. "Restaurant" means a Houlihan's Restaurant and Bar, or another restaurant and bar of similar or higher quality and style, that will be located on the hotel site. "Sales Tax" means the 1% general municipal sales and use taxes imposed by the City of Denton pursuant to Section 321.103(a) of Texas Tax Code and 0.5% additional municipal sales and use tax imposed by the City of Denton from property tax reduction pursuant to Section 321.103(b) of the Texas Tax Code and arising (i) from any person's collection of sales taxes as a result of sales of taxable items consummated at the Project during the term of this Agreement, (ii) from any person's payments to vendors or directly to the Texas Comptroller of Public Accounts of City Sales Taxes on purchases of taxable items consummated at the Project during the term of this Agreement, and (iii) from City Sales Taxes paid by any person in connection with the construction or equipping of the Project. "Texas Comptroller of Public Accounts' Monthly Sales Tax Report" means reports from the Comptroller to the City as provided in Section 321.3022 of the Texas Tax Code that identify amounts paid from the Comptroller to the City, by period, of Sales Taxes. If M during the term of this Agreement, due to a change in law or policy the Comptroller ceases providing such reports with respect to the Sales Taxes, "Texas Comptroller of Public Accounts' Monthly Sales Tax Report" means alternative documentation that the Parties agree establishes the amounts of Sales Taxes received by the City. "Texas Direct Payment Permit" means that permit issued by the State of Texas authorizing Grantee to self - assess and pay applicable state and local use taxes directly to the State of Texas related to selected portions of Grantee's taxable purchases. "Three Diamond Rating" means a Three Diamond Rating under the AAA Diamond Rating Process or if the AAA Diamond Rating Process is not available, a comparable rating under the successor rating process; provided however, that in no event shall the hotel be operated in a manner that falls below the standard or quality of a Comparable Hotel Property. In no circumstance shall the Three Diamond Rating result in a standard with respect to the design, development, construction, furnishing, opening and operation of the hotel which is less than what would be required of by Three Diamond Rating as it exists of the Effective Date. "Upscale Condition" means, with respect to the Hotel, the operation and maintenance of the Hotel in a manner such that their condition shall demonstrate refined, high quality, and fully functional appointments; furniture, fixtures, and equipment; exterior and interior finishes; landscaping; and mechanical, electrical, and structural components consistent with Comparable Hotel Properties, normal wear and tear excepted, that is consistent with the standards of operations and operating plans necessary to obtain a Three Diamond Rating. The City reserves the right to inspect the Project and Property from time to time to determine compliance herein. "Upscale Manner" means the process of developing, designing, constructing, and maintaining the Convention Center, Hotel, and Restaurant as required so they will exist in an Upscale Condition. "Use Tax Certificate" means a certificate or other statement in a form acceptable to the City setting forth the Grantee's collection of use tax imposed by the City and received by the City from the State of Texas, for the use of taxable items (tangible personal property or taxable services) by Grantee at the Property for the applicable grant period which are to be used to determine Grantee's eligibility for a Grant, together with such supporting documentation required herein, and as the City may reasonably request. II. GRANT CONDITIONS A. Grantee covenants and agrees with the City that the City's obligations under this Agreement are subject to the fulfillment of the Grantee's obligations under this Agreement, and Grantee hereby agrees to perform and comply in all material respects to the terms, conditions, and provisions of this Agreement and in all other instruments and agreements between Grantee and the City with respect to the financial or other incentives provided herein. B. Improvements to the Property shall be made in substantial compliance with the description of the Project as set forth in the Grant Application. The City expressly is not obligated in any way to payment of costs and fees for the Improvements, and is only agreeing to the payments as described herein. The kind and location of the Improvements is more particularly described in the Grant Application. For the construction of Improvements and /or remodeling of existing improvements, Grantee shall comply with all City of Denton Code of Ordinances, the regulations of the Rayzor Ranch Overlay District, the City's Tax Abatement and Incentive Policy, Texas Department of Transportation Regulations and any other applicable federal, state, and local law. C. Grantee shall collaborate with the City to jointly select the name of the Convention Center as a whole or for any portion thereof. D. Notwithstanding anything contained in this Agreement to the contrary, no grant or payment shall be made to the Grantee under this Agreement unless and until Grantee has completed the Improvements to the Property no later than 30 months after the start of construction, subject to force inajeure delays as outlined herein, including but not limited to a 285 -318 room Full - Service Hotel with an Approved Franchisor, an approximately 70,000- square -foot Convention Center, and a Restaurant with an Approved Franchisor. As a grant condition, Grantee shall provide a total Capital Investment for the development of the Project of at least $80 million. Grantee is responsible for cooperating in the provision of any receipts or books to determine compliance with this section until Improvements are verified as completed. The Capital Investment shall generate a minimum increase in assessed real estate Improvements and business personal property valuation on the Property over the existing 2015 valuation in the amount of $20 million as a condition of the delivery of the Grant payments. Land and Inventory valuations are not included in the grant incentive calculations. E. Grantee shall continuously operate and maintain the Convention Center, Hotel, and Restaurant in an Upscale Manner for the term of this Agreement. Grantee's obligation to operate and maintain the Convention Center, Hotel, and Restaurant in an Upscale Manner shall survive the expiration of this Agreement and any such assignment of this Agreement authorized by Sec. 6.M. herein shall cause such assignee to be obligated to operate and maintain the Convention Center, Hotel and Restaurant in an Upscale Manner. 0 F. Grantee agrees that any incentive involving the use of Hotel Occupancy Tax funds shall be expended in a manner directly enhancing and promoting tourism and the convention and hotel industry and only as permitted by Chapter 351 of the Texas Tax Code, as amended. Grantee also acknowledges that while not anticipated to occur, if it is found by a court of competent jurisdiction or other official administrative body that the City does not have the legal authority to enter into this Agreement regarding the use of the Hotel Occupancy Tax, then such determination shall cause the incentive involving the use of Hotel Occupancy Tax funds to cease under this Agreement. The termination of this incentive shall not affect the other terms of this Agreement not related to the same. G. Grantee acknowledges and understands that the City shall provide certain management functions of the Convention Center in order for the Grantee to receive the Hotel Occupancy Tax Grant, including visitors' programs and activities pursuant to the terms of this Agreement. In the event that the City ceases to provide certain management functions, any incentive involving the Hotel Occupancy Tax funds shall cease. The City shall continue to provide limited management functions referred to in the Management Agreement for the term of the Management Agreement, unless a default occurs thereunder, with such functions not to be unreasonably withheld. A copy of the Management Agreement between Grantee and the City is attached as Exhibit D to this Agreement for reference. H. Grantee shall use good faith efforts to hire qualified residents of the City of Denton to work at the Project, consistent with business needs and its commitment to equal opportunity and subject to all applicable local, state and federal employment laws. Moreover, Grantee shall use a good faith effort to hire local Denton contractors and suppliers in constructing the Project where qualified and available. L Grantee shall be duly authorized and existing under U.S. law and is in good standing under such laws, and shall be registered to do business in the State of Texas. J. The Project is not exempt from the payment of PID assessments levied on the Property. The City acknowledges that Grantee and the previous owner of the Property, RED Development LLC ( "RED "), have executed an indemnity agreement whereby RED shall indemnify Grantee for any PID assessment due and owing on the Property. Grantee acknowledges that this separate agreement has no binding effect on the City and the City shall not be required to collect PID assessments directly from RED. K. Neither the Property nor any of the Improvements to the Property are owned or leased by any member of the City Council, nor any member of the City Planning and Zoning Commission. L. This Agreement is subject to rights of holders of outstanding bonds of the City, if any. M. In the event of any conflict between the City of Denton Code of Ordinances and federal, state, or other local regulations, and this Agreement, such ordinances and /or 7 regulations shall control; provided that, if there is a subsequent amendment to include any design criteria other than what was in the original Grant Application and to the extent it conflicts with criteria solely involving design in the Rayzor Ranch Overlay, then this Agreement, as amended, shall control. N. In accordance with Chapter 2264 of the Texas Government Code, Grantee shall not knowingly employ any person for or at the Project who is not lawfully admitted for permanent residence to the United States or who is not authorized under law to be employed in the United States ( "Undocumented Worker "). During the term of this Agreement, Grantee shall notify City of any complaint brought against Grantee alleging that Grantee has knowingly employed Undocumented Workers. In the event that Grantee is convicted of a violation under federal law, grant payments shall be terminated. III. TERMS OF GRANT A. Subject to and in exchange for Grantee's compliance with the terms and conditions of this Agreement and any federal, state, or local law, the City hereby agrees to, as an incentive, make the following Grant payments for a maximum of 25 years or until the combined principal amount of $28 million and interest payment of $26 million for a total aggregate amount of $54 million is reached, whichever comes first. The methodology for establishing Grant payments is as follows: 1. An annual grant beginning the first February 1st following the first January lst tax appraisal after receipt by Grantee of the certificate of occupancy for the Convention Center, Hotel, and Restaurant on the Property of lawfully available funds equal to One Hundred Percent (100 %) of ad valorem taxes collected and verified by the City for the prior tax year, exclusive of the taxable value of the underlying land or any increase in taxable value attributable to underlying land (the "City Ad Valorem Tax Grant "). The Ad Valorem Tax Grant shall be paid on or before 60 days after the City's receipt of all ad valorem taxes for the Property for the applicable tax year. The taxable assessed value shall be determined by the Denton County Appraisal District. Such grant shall be subject to annual appropriation by the City Council of the City in the annual budget and the City's obligations under this Agreement shall not constitute a general obligation of the City or indebtedness under the Constitution or laws of the State of Texas. 2. Quarterly grants after the conclusion of each calendar quarter beginning with the calendar quarter that includes the receipt by Grantee of the certificate of occupancy for the Convention Center, Hotel and Restaurant on the Property, of lawfully available funds in an amount equal to One Hundred Percent (100 %) of the City's Hotel Occupancy Tax attributable to amounts paid for hotel rooms on the Property for such calendar quarter, determined with reference to the City HOT Returns (the "Hotel Occupancy Tax Grant "). The Hotel Occupancy Tax Grant shall be paid on or before 60 days after the later of (i) the City's receipt of the City HOT Returns for all periods in a quarter and (ii) the City's receipt of the City HOT Report (in the for attached as Exhibit C hereto) for all periods in a quarter. 3. Quarterly grants after the conclusion of each calendar quarter beginning with the calendar quarter that includes the receipt by Grantee of the certificate of occupancy for the Convention Center, Hotel and Restaurant on the Property, of lawfully available funds in an amount equal to one hundred percent (100 %) of the City's Sales Tax received each quarter from the Project (the "Sales Tax Grant "), as established by the Texas Comptroller of Public Accounts' Monthly Sales Tax Report. The Sales Tax Grant shall be paid on or before 60 days after the later of (i) the City's receipt of the Texas Comptroller of Public Accounts' Monthly Sales Tax Report for all periods in a quarter that identify amount of Sales Taxes for all months of a quarter and (ii) the City's receipt of the Sales Tax for all periods in a quarter. Grantee agrees to provide the City any necessary forms required for release of this information for the verification of grant payments. Such grant shall be subject to annual appropriation by the City Council of the City in the annual budget and the City's obligations under this Agreement shall not constitute a general obligation of the City or indebtedness under the Constitution or laws of the State of Texas. B. A quarterly grant (the "Construction Sales and Use Tax Grant ") during the period of Construction of the Project, from lawfully available funds, in an amount equal to One Hundred Percent (100 %) of Sales Tax receipts, up to a maximum of $850,000.00, collected by the City of Denton on construction materials and furniture, fixtures, and equipment purchased for the development of the Property as set forth in the Texas Direct Payment quarterly sales tax returns submitted by Grantee to the Texas Comptroller of Public Accounts and verified by the City of Denton's Finance Department. Upon reaching a cumulative Construction Sales and Use Tax Grant maximum of $850,000.00, the quarterly grant will be reduced to Fifty Percent (50 %) of the Sales Tax receipts for the same. The Construction Sales and Use Tax Grant shall be paid on or before 60 days after the later of (i) the City's receipt of the Texas Direct Payment Report for all periods in a quarter that identify amount of Sales Taxes for all months of a quarter and (ii) the City's receipt of the Sales Tax for all periods in a quarter. Grantee shall submit the Texas Application for Direct Payment Permit in the form of Exhibit "E" to the Texas Comptroller of Public Accounts. C. The above referenced City Ad Valorem Tax Grant, Hotel Occupancy Tax Grant, Sales Tax Grant, and Construction Sales and Use Tax Grant may be collectively referred to as the "Grants." D. The City's obligation to pay the payments provided in this Agreement is subject to the fulfillment of the General Conditions set forth in Article 11 above. E. Grantee shall have the right to protest and contest any or all appraisals or assessments by the Denton County Appraisal District for the Property, the Improvements or any other tangible personal property owned or controlled by Grantee and located on the Property. The final amount of the Ad Valorem Tax Grant shall be based upon final 0 assessed values after any such protest or contest. The portion of the Ad Valorem Tax Grant corresponding to any taxable assessed values in dispute or under protest with the Denton Central Appraisal District shall be withheld from the annual grant until such protest or dispute has been resolved. Once resolved, the City shall pay any amounts corresponding to the final taxable assessed value as settled, and not previously paid, in the next following annual Ad Valorem Tax Grant. IV. RECORDS, AUDITS, AND EVALUATION OF PROJECT A. The City shall inspect the Convention Center from time to time to determine compliance with the operation of the Convention Center in the manner described herein and consistent with the Property's zoning, overlay, and other City of Denton ordinances. B. The City shall inspect the Hotel property from time to time to determine compliance with the operation of the Hotel in the manner described herein and consistent with the Property's zoning, overlay, and other City of Denton ordinances. C. Grantee shall provide access and authorize inspection of the Property by authorized City employees and allow sufficient inspection of financial information for the limited purpose of insuring that the Improvements are made according to the specifications and conditions of this Agreement. Such inspections shall be in addition to, and not in place of, any inspections required by City ordinance by the City in its governmental capacity for construction of the Improvements. The financial information shall include, without limitation, an inventory listing the kind, number, and location of and the total appraised value of all Improvements to the property, including the appraised value of all buildings and other structures and permanent improvements installed, renovated, repaired or located on the Property. D. Grantee shall deliver to the City no later than January 1 of each year during the term of this Agreement, a Certificate of Compliance utilizing the form attached as Exhibit "F ". The form is subject to revision by the City provided that such revision does not materially change Grantee's rights or obligations under this Agreement. In the Certificate of Compliance, Grantee shall warrant to the City that it is in full compliance with each of its obligations under this Agreement. The City and /or its representative(s), including third- parties contracted by the City, shall have the right to inspect all relevant records of Grantee as are reasonably necessary to verify compliance with all requirements of this Agreement. Such inspections shall be preceded by at least a one (1) week written notice to Grantee and shall not unreasonably interfere with Grantee's business activities. E. Quarterly and Annual Grant payments are predicated on Grantee's submission of and the City's verification of the Certificate of Compliance by January 1 of the applicable grant year. The City is not obligated to make any payments under this Agreement if Grantee fails to timely submit its Certificate of Compliance. If Grantee does not timely submit an annual Certificate of Compliance, within thirty (30) days from the date due after receiving a written notice from the City, the annual Ad Valorem Tax Grant, 10 the quarterly Hotel Occupancy Tax Grant, Sales Tax Grant, and Construction Sales and Use Tax Grant will be forfeited for that year. Upon timely compliance with submission of the Certificate of Compliance the following January 1 of the next year, the annual Ad Valorem Tax Grant, the quarterly Hotel Occupancy Tax Grant, Sales Tax Grant, and Construction Sales and Use Tax Grant shall resume, according to their terms. If Grantee fails to submit a timely Certificate of Compliance for two consecutive years regardless of a cure, this Agreement shall terminate. V. DEFAULT A. Each of the following shall constitute an Event of Default under this Agreement: Failure of the Grantee to continuously maintain and operate the Property to the standard of a Comparable Hotel Property for the term hereof and the Grantee does not cure such failure within one hundred twenty (120) days after written notice from the City to the Grantee describing such failure, or if such failure cannot be cured within such 120 -day period in the exercise of all due diligence, then if the Grantee fails to commence such cure within such 120 -day period or fails to cure such default within a reasonable time after the expiration of the first one hundred twenty (120) -day period, in no event to exceed three hundred sixty five (365) days after the written notice of default. 2. Failure to comply with the terms of the Management Agreement between the City and O'Reilly Hotel Partners — Denton, LLC for the management of the Denton Convention Center. 3. Any warranty, representation or statement made or furnished to the City by or on behalf of Grantee under this Agreement that is false or misleading in any material respect, either now or at the time made or furnished. Provided that, if Grantee learns that any such warranty, representation or statement has become false or misleading since the time that it was made, then Grantee shall provide written notice to the City of the false and misleading nature of such warranty, representation or statement within ten (10) calendar days 4. The dissolution or termination of Grantee's existence as a going business, Grantee's insolvency, appointment of receiver for any part of the Property, any assignment of all or substantially all of the assets of Grantee for the benefit of creditors of Grantee, any type of creditor workout for Grantee, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Grantee. 5. Grantee's failure to fulfill the Grant Conditions set forth in Article 11 herein. 11 6. Grantee allowing property taxes owed to the City, Denton County, or Denton Independent School District to become delinquent and failing to cure the same within thirty (30) days after receipt of written notice thereof from the City and or Denton Central Appraisal District. 7. An expenditure, by the Grantee, of Hotel Occupancy Tax Grant funds for a purpose not authorized by Chapter 351, Texas Tax Code, as amended. In the event the City determines that Grantee has made an improper or illegal expenditure of Hotel Occupancy Tax Grant funds, Grantee must, no later than thirty (30) days after receipt of written notification from the City, reimburse the City in an amount equal to the improper expenditure, plus interest at the rate of 5 %. Grantee's failure to make reimbursement will constitute a default of this agreement. The City shall have no liability in connection thereof. 8. Failure of Grantee to comply with or to perform any other term, obligation, covenant or condition contained in this Agreement or in any documents generated or otherwise created attendant to this Agreement or in any way related to this Agreement ( "Related Documents "), or failure of Grantee to comply with or to perform any other term, obligation, covenant or condition contained in any other agreement between the City and Grantee, fails to cure such failure within thirty (30) days after receipt of written notice from the City describing such failure, or if such failure cannot be cured within such 30 -day period in the exercise of all due diligence, then if Grantee fails to commence such cure within such 30 -day period or fail to continuously thereafter diligently prosecute the cure of such failure. B. Upon the occurrence and continuance of a default of this Agreement, the City may pursue any legal or equitable remedy or remedies, including, without limitation, specific performance or damages, (including reasonable attorneys' fees), and City may terminate this Agreement by giving written notice of such termination to Grantee; and, this Agreement shall terminate as of the date specified in such notice (which date shall be on or after the date of the notice of termination). If any Event of Default shall occur and Grantee fails to cure such default as provided herein, all commitments of the City under this Agreement, including without limitation, all Grant payments shall immediately terminate with respect to the year or quarter in which notice of the Event of Default is given and for all future years or quarters. Additionally, Grantee shall be obligated to repay the City an amount equal to one hundred percent (100 %) of all previous payments made by the City under this Agreement to the Grantee in the preceding compliance year. If Grantee is required to reimburse the City these amounts hereunder, the City shall notify the Grantee in writing of the amount to be repaid, and shall direct them to pay such amount directly to the City. All such amounts due hereunder shall be due upon demand by the City and if not paid within thirty (30) days following written demand hereunder, the unpaid amount due hereunder shall bear interest at the rate of 5% per annum after demand until paid. All remedies of the City under this Agreement shall be cumulative. 12 VI. GENERAL PROVISIONS A. All improvements to the Property shall be consistent with all federal, state and local law including the Denton Code of Ordinances as well as any other regulations or plans relative to the Property. This Agreement does not constitute a waiver by the City of any development ordinances or conditions. Further, Grantee acknowledges that by executing this Agreement, no entitlement or agreements concerning zoning or land use shall arise, either implied or otherwise. B. Grantee shall complete construction of all improvements to the Property within the timeframes provided for in this Agreement. Notwithstanding the foregoing, Grantee shall have such additional time to complete the Improvements as may be required in the event of Force Maj eure if Grantee is diligently and faithfully pursuing completion of the Improvements. In the event that Grantee requires additional time due to an event of Force Majeure, such additional time shall not exceed 180 days, unless otherwise approved by City Council. C. GRANTEE SHALL INDEMNIFY, SAVE, DEFEND AND HOLD HARMLESS THE CITY, ITS ELECTED OFFICIALS, OFFICERS, AGENTS, ATTORNEYS, EMPLOYEES, AND SUBCONTRACTORS (COLLECTIVELY, THE "INDEMNITEES ") FROM AND AGAINST ANY ADMINISTRATIVE OR INVESTIGATIVE PROCEEDING BY ANY GOVERNMENTAL AUTHORITY DIRECTLY OR INDIRECTLY RELATED, TO A CLAIM, DEMAND, ACTION OR CAUSE OF ACTION, ARISING FROM GRANTEE'S PERFORMANCE OF ITS OBLIGATIONS HEREUNDER. GRANTEE FURTHER INDEMNIFIES, SAVES, DEFENDS, AND HOLDS HARMLESS INDEMNITEES FROM ANY AND ALL LIABILITIES, CLAIMS, LOSSES, COSTS OR EXPENSES (INCLUDING ATTORNEY'S FEES, COURT COSTS, EXPERT WITNESS FEES) THAT ANY INDEMNITEES SUFFER OR INCUR AS A RESULT OF ANY OF THE FOREGOING, AS WELL AS ANY AND ALL LIABILITIES, CLAIMS, LOSSES, COSTS, OR DAMAGES ARISING OUT OF (1) ANY NEGLIGENT ACT OR OMISSION, ANY GROSS NEGLIGENCE OR ANY RECKLESS OR WILLFUL MISCONDUCT BY GRANTEE OR ITS OFFICER, DIRECTOR, AGENT, OR EMPLOYEE, AND (2) THE NON - PERFORMANCE OF GRANTEE'S OBLIGATIONS WHETHER NEGLIGENT, GROSSLY NEGLIGENT, RECKLESS OR WILLFUL, AND (3) ANY ACTION TAKEN BY GRANTEE OR ON BEHALF OF GRANTEE THAT IS NOT PERMITTED BY OR PURSUANT TO, THE PROVISIONS OF THIS AGREEMENT OR REASONABLY NECESSARY TO CARRYING OUT LENDER OR GRANTEE DUTIES.S. D. This Agreement, together with any related documents, constitutes the entire understanding and agreement of the parties as to the matters set forth in this Agreement. No alteration of or amendment to this Agreement shall be effective unless given in writing 13 and signed by the party or parties sought to be charged or bound by the alteration or amendment, and in the case of the City, approved by its governing body. E. This Agreement shall be governed by and construed in accordance with the laws of the State of Texas, and all obligations of the parties created hereunder are performable in Denton County, Texas. Venue for any action arising under this Agreement shall lie in Denton County, Texas. F. The signatories hereto shall be subject to all ordinances of the City, whether now existing or in the future arising. This Agreement shall confer no vested rights, as defined and referenced in Chapter 245 of the Texas Local Government Code, as amended, on the Property or Grantee. G. This Agreement shall become a binding obligation on the signatories upon execution by all signatories hereto, including their respective successors and assigns and upon all future owners of the Property. The City warrants and represents that the individual executing this Agreement on behalf of the City has full authority to execute this Agreement and bind the City to the same. Grantee warrants and represents that the individual executing this Agreement on its behalf has full authority to execute this Agreement and bind Grantee to same. H. In the event any provision of this Agreement shall be determined by any court of competent jurisdiction to be invalid or unenforceable, the Agreement shall, to the extent reasonably possible, remain in force as to the balance of its provisions as if such invalid provision were not a part hereof. L All notices required to be given under this Agreement shall be given in writing and shall be effective when actually delivered or when deposited in the United States mail, first class, postage prepaid, addressed to the party to whom the notice is to be given at the addresses shown below. Notices may be given via facsimile at the numbers below. Any party may change its address or fax no. for notices under this Agreement by giving written notice to the other parties, specifying that the purpose of the notice is to change the party's address. For notice purposes, each party agrees to keep the other informed at all times of its current address and fax number. GRANTEE: Tim O'Reilly O'Reilly Hospitality Management, LLC 2808 S. Ingram Mill Road, Building C100 Springfield, MO 65804 CC: David O'Reilly O'Reilly Wooten Offices 2831 S. Ingram Mill Road 14 Springfield, MO 65804 CITY: City Manager City of Denton 215 E. McKinney Denton, Texas 76201 J. Time is of the essence in the performance of this Agreement. K. Grantee represents that this Agreement is entered into by Grantee pursuant to authority granted by its Board of Directors to its Managing Director. A copy of a corporate resolution of Grantee, authorizing this Agreement is attached hereto and made a part hereof as Exhibit "G ". L. This Agreement is authorized by the City Council of the City at its meeting on the 27th day of October, 2015, authorizing the City Manager to execute this Agreement on behalf of the City. A copy of the City Council's ordinance authorizing this Agreement is attached hereto and made a part hereof as Exhibit "H ". M. Except as provided herein, this Agreement may not be assigned or transferred in whole or in part without the prior written approval of the parties, which shall not be unreasonably withheld. This Agreement may be assigned in whole by Grantee, with prior written approval of the City, for the limited purpose of merging or otherwise transferring assets to an entity sharing a degree of ownership or control with Grantee. The assignment, whether in whole or in part, will not take effect until City is provided written notice of such assignment and a copy of same. A permitted assignment by any Party of its interests in this Agreement shall not relieve the assigning Party from its obligations under this Agreement unless the non - assigning Party shall expressly consent in writing to any such release. Any assignee of any Party's rights under this Agreement, as a condition of such assignment, shall execute an assumption of the assigning Party's duties and obligations under this Agreement, including the obligations set forth in Article II herein upon the Grantee's assignment or transfer of this Agreement to any other party, such assumption to be in form reasonably acceptable to the other Parties to this Agreement. N. Grantee hereby agrees construction of the authorized public improvements as set forth in the PID and the dedication of those improvements and any corresponding public access easements to the City is roughly proportional to the need created by the development on the Property within the PID, and Grantee hereby waives any claim therefore that it may have in regards to such improvements. Grantee further acknowledges and agrees that all prerequisites to such a determination of rough proportionality have been met, and that any costs incurred relative to said construction and dedication are related both in nature and extent to the impact of the Project. Grantee further agrees to waive and release all claims it may have related to any and all rough proportionality and individual determination requirements mandated by the United States Supreme Court in Dolan v. City 15 of Tigard, 512 U.S. 374 (1994), and its progeny, and Chapter 212 of the Texas Local Government Code, as well as any other requirements of a nexus between development conditions and the projected impact of this Project. O. It is agreed by the parties to this Agreement that the terms of this Agreement are not intended to and shall not be deemed to create any partnership or j oint venture among parties. The City, its past and future officers, elected officials, employees, and agents expressly do not assume any responsibilities or liabilities to any third party in connection with the Project or the design, construction, or operation of any portion of the Improvements. P. Any party hereto may request an estoppel certificate from another party hereto, but no more frequently than annually, upon written request by the other Party not less than ten (10) business days prior to the need for such certificate, and so long as the certificate is requested in connection with a bona fide business purpose. The requesting Party shall execute, acknowledge and deliver to O'Reilly Hotel Management, LLC, or the City, as the case may be, a statement in writing certifying one or more of the following: (a) the remaining term of this Agreement, (b) that this Agreement is unmodified and in full force and effect (or if there have been any modifications, that the same is in full force and effect as modified and stating the modifications), (c) the number of years remaining for the payment of Grant Payments (d) the Grant Payments remitted to date, and (e) that, to the then current actual knowledge, without independent investigation of Party, no default hereunder on the part of the other Party exists, except that if any such default does exist, the certifying Party shall specify such default. Q. Notwithstanding anything to the contrary herein, Grantee acknowledges and agrees that this Agreement is subject to the provisions of Subchapter I of Chapter 271 of the Texas Local Government Code, as amended, and therefore limits any recovery from suit based on adjudicating claims for breach of this Agreement; however, such acknowledgement does not waive any defenses that the City may bring in the event of suit, including a defense of immunity. R. The City designates this Agreement as a revenue sharing agreement, thereby entitling the City to request sales tax information from the Comptroller pursuant Section 321.3022 of Texas Tax Code. However, Grantee shall cooperate in the provision of any forms necessary for the City to obtain such information, if requested. Grantee acknowledges that this Agreement is subject to the requirements of the Texas Public Information Act, pursuant to Chapter 552, Texas Local Government Code. Should information be requested concerning this Agreement by any person, regardless of whether the City seeks an opinion from the Texas Attorney General to withhold such information, the City may release said information without penalty or liability. This section shall survive termination of this Agreement for any reason whatsoever. This Agreement shall be effective as of the last date of signature of a party hereto as evidenced by the acknowledgment date for such signature (the "Effective Date "). 16 CITY OF DENTON, TEXAS M GEORGE C. CAMPBELL CITY MANAGER ATTEST: JENNIFER WALTERS CITY SECRETARY I:• APPROVED AS TO FORM: ANITA BURGESS CITY ATTORNEY I: O'REILLY HOTEL PARTNERS — DENTON, LLCa Missouri Limited Liability Company LOW Its: 17 ACKNOWLEDGMENTS STATE OF TEXAS COUNTY OF DENTON The foregoing Economic Development Agreement was executed before me on the day of 12015 by George C. Campbell, City Manager of the City of Denton, Texas, a Texas municipal corporation, on behalf of said Municipal Corporation. Name: Notary Public in and for the State of Texas STATE OF TEXAS COUNTY OF DENTON The foregoing Economic Development Program Agreement was executed before me on the day of , 2015 by of O'Reilly Hotel Management, LLC., on behalf of said corporation. Name: Notary Public in and for the State of Texas In EXHIBIT A (PROPERTY LEGAL DESCRIPTION) At the time of the backup deadline on 10/22/15, this information was not finalized. It will be provided as soon as possible. 19 Ile E fl Ll D OD C:51 All� S-A. W O Q. C0 0 U) 0 Co = x ca 9 E C) o C-� N 0 W m cu a) Cl i2 dr- 0 — m EXHIBIT B CITY OF DENTON INCENTIVE APPLICATION 20 Exhibit B OF 1 1 City of Denton Incentive Application City of Denton Department of Economic Development Denton, Texas 76201 (940) 349 -7776 (940) 349 -8596 FAX www.cilyofdenton.com Aimee.BissettLcityofdenton.com 2014 Tax Abatement Policy INCENTIVE APPLICATION CITY OF DENTON, TEXAS 1. Property Owner O'Reilly Hotel Partners- Denton, LLC (OHPD) Company or Project Name Denton Convention Center, Hotel, and Restaurant Mailing Address 2808 South Ingram Mill Road, Building C100 Springfield, MO 65804 Telephone 417 - 851 -8700 Fax No. 417-881-8225 Website www.ohospitalitymanagement.com Contact Name Tim O'Reilly Title CEO /Manager Mailing Address O'Reilly Hospitality Management LLC 2808 South Ingram Mill Road, Bldg. C -100 Springfield, MO 65804 Telephone 417 - 851 -8700 Fax No. 417 - 881 -8225 Email Address tim@ohospitalitymanagement.com 2. Provide a chronology of plant openings, closing and relocations over the past 15 years. OHM has evolved from a small company managing one hotel in 2007, to an organization of over 750 team members managing ten hotels and four restaurants in multiple states. The company has franchises with Hilton, Marriott, Intercontinental Hotel Group, Wyndham Hotel Group, Cambria Suites, Houlihan's and Boston's Restaurants. Currently two more hotels are under construction and several other projects are in development. 3. Provide a record of mergers and financial restructuring during the past 15 years. OHM acquired four hotels and two restaurants and constructed three hotels and one restaurant between 2009 and 2015. 4. Will the occupants of the project be owner or lessee? If lessee, are occupancy commitments already existing? Owners Page 2 of 8 2014 Tax Abatement Policy 5. Is the project a relocation of existing facility or a new facility to expand operations? If relocation, give current location. N/A 6. If an existing Denton business, will project result in abandonment of existing facility? If so, the value of the existing facility will be subtracted from the value of the new facility to arrive at total project value. N/A 7. Property Description. See attached site plan 8. Current Value Unknown — purchase price will be $5.50 per sq. foot and 11 -13 acres to be determined by parking requirements. 9. Increased Value/Estimated Total Cost of Project. $92,713,780 ($25,927,911 for convention center) Structures $68,255,216 Site Development $2,481,000 Personal Property $12,384,602 Other Improvements $9,592,962 10. Indicate percent of tax abatement and number of years requested. Percent Requested Years Requested 25 Performance based economic incentives that include hotel occupancy taxes generated from the convention center hotel, property taxes derived from the taxable assessed value of the facility, and sales taxes generated forth sales and concessions of the hotel and convention center. Additionally, impact of sales taxes that OHPD will have to pay on construction of the convention center. 11. Give a brief description of the activities to be performed at this location, including a description of products to be produced and /or services to be provided. Located in Rayzor Ranch Market Place this project will consist of an 285 -318 room Embassy Suites Hotel, a 70,000 square foot convention center and a Houlihan's Restaurant. As a major anchor of the Market Place, The convention center will be full of activity with anticipated meeting space of approximately 37,850 square feet and a Grand Banquet room that will hold up to 1,700 people, 12. Describe any off -site infrastructure requirements: N/A • Water • Wastewater Page 3 of 8 2014 Tax Abatement Policy • Streets • Drainage • Other 13. Project Operation Phase. Provide employment information for the number of years incentive is requested. F. Types of jobs created. List the job titles and number of positions in each category that will be employed at the facility. Provide average wage for each category. Salaried department heads: 20 -25, $35,000 - $120,000 per year. Hourly full & part time employees: 32 clerical, 25 housekeeping, 16 kitchen, 27 banquets, 3 lounge, 7 administration, 12 sales, 8 maintenance, 12 restaurant. G. Indicate the number of shifts the project will operate Primarily two shift, first and second. Third shift for hotel. H. Estimate annual utility usage for project: Electric kWh Water gpd Wastewater gpd Gas mcf 14. Describe any other direct benefits to the City of Denton as a result of this project (e.g., sales tax revenue or project elements identified in Tax Abatement Policy, Section 111). Page 4 of 8 At Project Existing Start Date At Term of Employment Information Operation (mo /yr) Incentive (if applicable) / A. Total number of permanent, full -time jobs N/A 142 175 -200 B. Employees transferred from outside Denton N/A N/A N/A C. Net permanent full -time jobs (A. minus B.) N/A 142 175 -200 E. Total annual payroll for all permanent, full -time N/A jobs (A.) F. Types of jobs created. List the job titles and number of positions in each category that will be employed at the facility. Provide average wage for each category. Salaried department heads: 20 -25, $35,000 - $120,000 per year. Hourly full & part time employees: 32 clerical, 25 housekeeping, 16 kitchen, 27 banquets, 3 lounge, 7 administration, 12 sales, 8 maintenance, 12 restaurant. G. Indicate the number of shifts the project will operate Primarily two shift, first and second. Third shift for hotel. H. Estimate annual utility usage for project: Electric kWh Water gpd Wastewater gpd Gas mcf 14. Describe any other direct benefits to the City of Denton as a result of this project (e.g., sales tax revenue or project elements identified in Tax Abatement Policy, Section 111). Page 4 of 8 2014 Tax Abatement Policy 15. Is property zoned appropriately? Yes X No Current zoning. Zoning required for proposed project. Anticipated variances. 16. Is property platted? Yes No X Will replatting be necessary Yes X No 17. Discuss any environmental impacts created by the project. N/A A. List any permits for which applicant must apply. Applicant will be required to provide City with copies of all applications for environmental permits upon completion of application(s). N/A B. Provide record of compliance to all environmental regulations for the past five years. N/A 18. Provide specific detail of any businesses /residents that will be displaced and assistance that will be available from the requesting company. N/A 19. Provide description of any historically significant area included within the project's area as determined by the Historic preservation Officer. If any, give detail of how the historically significant area will be preserved. 20. Justification for Incentive Request: Substantiate and more fully describe the justification for this request. Include the amount of the incentive requested and show how it will contribute to the financial viability of the project. Submit attachments if necessary. The project would not be economically viable without the requested incentive, and with the incentive there is great economic vitality and impact to the City of Denton. Page 5 of 8 2014 Tax Abatement Policy 21. List additional abatement factors to be considered for this project as outlined on pages 3 and 4 of the Incentive Policy. 22. Financial Information: Attach a copy of the latest audited financial statement or, in the case of a new project, a business plan. See attached 10 year proforma 23. Does the project have an eligible environmentally sustainable or renewable energy component (if so, please identify type and provide a brief description)? See attached documentation, OHM Sustainability. 24. Applicants seeking LEED certification must complete the Green Building Application for Tax Abatement (Exhibit B of the policy). See attached documentation, OHM Sustainability. Page 6 of 8 Occupies building vacant for at least 2 years Donation of materials to public schools Project creates high - skilled, high - paying jobs Improvements to Downtown Significant relationship with universities Project fortes business park X 25% of new jobs filled by Denton residents International or national headquarters X 25% local contractors to be utilized Medical manufacturing or research facility 25% of jobs are knowledge -based x Environmentally sustainable practices used Donation of significant public art Renewable Energy generated /stored /utilized X Community support and involvement: Attach description of community involvement 22. Financial Information: Attach a copy of the latest audited financial statement or, in the case of a new project, a business plan. See attached 10 year proforma 23. Does the project have an eligible environmentally sustainable or renewable energy component (if so, please identify type and provide a brief description)? See attached documentation, OHM Sustainability. 24. Applicants seeking LEED certification must complete the Green Building Application for Tax Abatement (Exhibit B of the policy). See attached documentation, OHM Sustainability. Page 6 of 8 2014 Tax Abatement Policy COMPLETE THIS SECTION IF REQUESTING ADDITIONAL INCENTIVE BASED ON LEED CERTIFICATION CONSTRUCTION 1. Property Owner O'Reilly Hotel Partners- Denton, LLC Company or Project Name Embassy Suites by Hilton Hotel, Convention Center & Houlihan's Restaurant Mailing Address 2808 South Ingram Mill Road Building C100 Springfield, MO 65804 Telephone 417 - 851 -8700 Fax No. 417 - 881 -8225 Website www. ohospitalitymana- ement. com Contact Name Tim O'Reilly Title Manager /CEO Mailing Address 2808 South Ingram Mill Road Building C100 Springfield, MO 65804 Telephone 417 - 851 -8700 Fax No. 417 - 881 -8225 Email Address tirokohospitalitprianagement.com 2. Project location address: Rayzor Ranch, Denton, TX, no specific address assigned yet 3. Provide documentation that the project has been registered with the U.S. Green Building Council. Please see attached 4. Provide a description of the project (please include the building size, number of occupants and estimated budget). 335,000 square foot project consisting of an 11 story, 318 suite Embassy Suites by Hilton hotel, a 70,000 square foot convention center with a 1,700 seat ballroom and additional meeting space for another 700, and a 250 seat Houlihan's Restaurant. The property will have an indoor pool and spa, CVB office space, and related support spaces. An event lawn and a second floor exterior courtyard are also planned. 6. Attach a preliminary Leadership in Energy and Environmental Design (LEED) Scorecard illustrating how project will achieve the LEED certification. Level of Certification: Silver Number of Points:47 Page 7 of 8 2014 Tax Abatement Policy This Incentive Application is submitted with the acknowledgement that additional information may be required. Authorized Signature Date: Page 8 of 8 U.S, GREEN WILMNIG L '" Dear Christina Parks, Your LEED project has been successfully registered in LEED Online. Project ID Project Title Project Access ID Project Rating System Registration Type Registration Date Project Location 1000061657 Embassy Suites Rayzor Ranch 246344300143911 LEED -NC v2009 Individual Project 09/04/2015 Denton,TX,US,76201 You may now log into LEED Online to manage your project and begin the application process.The first time you log in, you will be presented with a set of 'Getting Started' information that will help you kick off the certification process. Further technical LEED assistance is available through the following resources: The help section of LEED Online LEED Resources & Tools ii 4r 4r i Ci �L4pir. �IC�� I� >.R,iC �aMR`...6CC C4MLAA�Catl��a� LEED Reference Guides : fittp,s �wv� w./y6 (my, ytwc Mcf'u m cc pddc,y - Subscribe to LEED Update, a quarterly e- newsletter from USGBC and GBCI : - LEEDuser, a third -party resource that offers a variety of supplemental LEED advice: If you find an error within the LEED Online system, including any of the forms, please report it using of the feedback button, located in the menu bar. If you have questions about the technical content of LEED or the certification process,please contact the Green Building Certification Institute (GBCI) If you experience any problems, please contact the Green Building Certification Institute(GBCI) at: Phone :1- 800 - 795 -1746 Email P�Ifi] „ /, /v�rv�rv�r �}P]r rr�.1 /flrri�I�Ar III, Please note, only projects registered through LEED Online v3 will be visible in your LEED Online v3 project list.lf you have previously registered a project under LOv2, you will only be able to access those projects in LEED Online v2. Thank you, GBCI "This is an automatically generated email. Please do not reply to this message. ” Z 0 Z w 0 af III Z of of 0 of lu� w D U) U) U) co 7> w C L ,�2 ON 0 1 C:) I r4 IN In' O N O 0 - - - - - - - - - - - - - E 0 m u N 0 2 o 2 u 0 u u C: (U % u om m 0, u gi, 2 E 0 0 U-i -og :3 No. E -0 f u 0 40 Ea= 0 0 E 0 0 E -0 . .7 8o_ =. 2) rof qO Eo _ I - 6 0 Zm E E- Eo ("�La U- u luo Q) :U3 T, Q) :M3 0 0 on on �o m wo 6 ZI) ac): u iii 6 C), Z5 2, .0 'I g g 0 -60- :�E :Z m on �E ::E :�E ::E C' :,o 'o o 'o o o U -0 45 < 'C< 0 u o �o a cln On cln On E E r- 0 0 CX -r- -m m 0 0 on E I , — u . t u u -5 Q� U W m m .. — T- 0 w LU w LU .0 -0 E 2 0 > > E "T Ln E '5: Z= au a a 3: 3: 3: a a 0 0 >, >, on on C: 0 0 0 0 0 0 0 0 0 0 0 Lu -j -j -j -j LID -1 � w w w . . . . . . . . . . . . . . . u u u u u u u u u u u u u u u u u u u u u u u u M fn . ............... .................. 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U L L �J \».� -® \ \� � \ \\ © d ? 2.� \� ±� } \ \: \ \ \ }�� »� \ { \ \ \ \ / \ \ \ \ \ ' . � } \ \ \ \� \ { \ \ \ \ / \ \ \ \ \ 4 11111 , 1 j 1 [ 1 ! f { L1 2 h;h i 11114 1 f { L1 2 h;h i EXHIBIT C CITY OF DENTON HOTEL OCCUPANCY TAX REPORT FORM 21 HOTEL OCCUPANCY TAX REPORT Period Ending: Due Date: Owner's Name & Location Gross Sales: $ Less Tax Exemptions: (See attached report for breakdown) ( ) Less Other Exemptions: (See attached report for breakdown) ( ) Total Taxable Revenues: $ Prepared by: Signature: Total City 7% Tax Collected: Adjustments ( + / -) Form Attached: Total City Tax Submitted hoters ivame, manager & Location Average Daily Room Rate: $ Total # of Rooms Rented: Monthly Occupancy Rate: I declare, under the penalties for filing false reports, that this return (including any accompanying schedules and statements) has been examined by me and to the best of my knowledge and belief is a true, correct, and complete return. Make remittance payable to: Type or print name and title CITY OF DENTON TAX OFFICE 601 E. HICKORY, SUITE F DENTON, TX 76205 Date: To avoid a 5% penalty, reports and payment must be received by the due date indicated above. If the tax is not paid by the due date, a 5% penalty will be assessed during the first 30 days. If the tax remains unpaid for days 31 through 60 an additional 5% penalty will be assessed and due to the City of Denton. THIS FORM MUST BE COMPLETE IN ITS ENTIRETY Furnish details of any changes occurring since last report on page 2. Furnish exemption details taken during this reporting period on page 3. CHANGES OCCURRING SINCE LAST REPORT Effective Date: Type of Change: ( ) Sale ( ) Other: Name of Business: Name of Manger: ( ) Foreclosure ( ) Name Change New Owner's Information Owner's Name: Owner's Address: Mailing Address: City, State, Zip: Phone: "If a person who is liable for the payment of a tax under this chapter is the owner of a hotel and sell the hotel, the successor to the seller or the seller's assignee shall withhold an amount of the purchase price sufficient to pay the amount due until the seller provides a receipt by a person designated by the municipality to provide the receipt showing that the amount has been paid or a certificate showing that no tax is due." "The purchaser of a hotel who fails to withhold an amount of the purchase price as required by this section is liable for the amount required to be withheld to the extent of the value of the purchase price." (351.0041 State Local Taxation Title 3) CITY HOTEL OCCUPANCY TAX EXEMPTIONS Effective June 18, 1996 Those exempt form the 7% City taxes are only: 1. Guests who stay longer than 30 days must notify the hotel upon arrival. (Permanent Resident) 2. An officer, employee, agency, institution (other than an institution of higher education), board, or commission of this state, for whom a special provision or exception to the general rate of reimbursement under the General Appropriations Act applies and who is provided with photo identification verifying the identity and exempt status of the person, is not required to pay the tax. Please note that local government personnel OWE state and local tax. CO Z 0 IL Z x 0 LU Z LU LL L) (D 0 z z IL =) z L) LU Lli 0 L) -i z Lu 0 P 2 LU 0 W H 0 0 LL = 2 Ozz W :3 0 0 z 2) V) ji 0. >- LLI x LLI o L) z LLI z 0 N 01 LLI Z cn LLI LLI z 0 -i 0 LL M 0 L) LLI W M L) z L) LLI L) C14 M zT LO CO r- 00 0) C) N M ,I- LO CO 00 0) C) M "t LO O L. 0 LU 0 z LU CO 0 0 E L. 0 LU > o i-u = CO CL z E 20 x VU 4) X 0 .N 0 0 .2 o E CL lC 0 u rr CL a m .2 E u E m Lu 0 < z -J 2 .0 s w w .co E LU ,v 0 > X 0 0 LLU L (D Lii 0 Z EXHIBIT D MANAGEMENT AGREEMENT 22 CONVENTION CENTER MANAGEMENT AGREEMENT BETWEEN THE CITY OF DENTON AND O'REILLY HOTEL PARTNERS — DENTON,LLC THIS AGREEMENT is made between the City of Denton, Texas, a municipal corporation formed under the laws of the State of Texas and located at 215 E. McKinney Street, Denton, Texas 76201 (the "City "), and O'Reilly Hotel Partners — Denton, LLC, a Missouri Limited Liability Company whose principal place of business is located at 2808 S. Ingram Mill Road, Building C100, Springfield, Missouri, 65804 ( "Owner ") for the limited management of a Convention Center. (The City and the Owner are collectively referred to as "the Parties "). WHEREAS, the Owner owns a tract of land generally located in the Rayzor Ranch Town Center development in the City of Denton, Denton County, Texas, which includes property located South of US Route 380 ending at Scripture Road, between IH -35 and North Bonnie Brae Street, and more specifically described in Exhibit "A" attached hereto and incorporated by reference herein (the "Property "); WHEREAS, the Owner's development of the Property includes an approximately 70,000 square foot convention center ( "Convention Center ") that is the subject of an Economic Development Agreement with the City of Denton executed between the Parties on , 2015 ( "Development Agreement "), which said Development Agreement is attached for reference hereto; WHEREAS, the Convention Center development shall serve to promote travel, tourism, meetings, conventions and events for the economic development and growth of the City of Denton and the economic benefit of the Parties; WHEREAS, the Parties desire that the City assist in the management of certain sales missions and marketing functions for the Convention Center as stated herein in order to further the public purpose of promoting economic growth and conventions, and to retain adequate public control over the use of public funds to ensure benefits to the City. NOW, THEREFORE, for the mutual promises and consideration as described herein, the Parties agree as follows: L TERMS A. Owner Management of the Convention Center. The Owner has the exclusive responsibility and discretion in the operation, direction, management and supervision of the Convention Center, subject only to the limitations expressed herein. In addition to its other duties as a reasonable convention center owner, the Owner, or a third party designated by the Owner, shall perform the following: 1 1. Day -to -day management and operations of the Convention Center, including, but not limited to determining all terms for admittance and charges for rooms, facilities, commercial space, if any, equipment rental, telecommunications services, audiovisual equipment, labor and other amenities and services provided at or with respect to the Convention Center. 2. All repairs, maintenance, upkeep and replacement of furniture, fixtures, and equipment; and, purchase and upkeep of all other inventories necessary to the operation of the Convention Center, as well as the Convention Center structure and accessory structures. 3. Event booking, coordination, and collection of sums due the Owner for rental or use and admissions. 4. Crowd control, security, box office supervision, admission procedures and servicing of users at conventions, trade shows, exhibits and entertainment. 5. Perform obligations of any third -party operations agreements such as reciprocal easements, concessions, parking, and leases. 6. Perform any catering or food- and beverage- related services with respect to the Convention Center. 7. Determine all labor policies, wages and salaries, fringe benefits, and any other personnel benefits with respect to the Convention Center in compliance with local, state, and federal law. 8. Implement all sales, advertising, public relations and promotional policies not covered by this Agreement. 9. Hire or terminate such persons or organizations as employees or manager of any of the functions stated herein that are the responsibility of the Owner. 10. Establish and maintain the master set of all booking records and schedules for the Convention Center (such records and schedules shall be provided to the City and to such third parties as directed by the City, at any time upon reasonable notice of request, and shall remain the property of the City). B. City Management Assistance. The Owner hereby authorizes and engages the City, or its designee as the law permits, to manage the Convention Center during the term of this Agreement as limited and described herein. The City hereby accepts such engagement subject to the terms and conditions expressed in this Agreement. The Owner shall cooperate with the City to the extent necessary for the City to fulfill its duties under this Agreement. The authority of the City to manage shall include the City's use of the Convention Center for public purposes. This Agreement does not change the character of such use and employees of the City using the 2 Convention Center for public purposes shall enjoy invitee status, as any other member of the public. Without limiting the generality of the foregoing, the City is hereby authorized and shall be obligated to do as follows in its discretion and as is allowed under the City's budget processes: 1. Advertise and conduct solicitations and promotional programs to attract tourists and convention delegates or registrants to the Denton Convention Center, including, but not limited to: i. Marketing at the state and local level (including market analysis, campaign development, branding, promotion, etc.); ii. Collecting and reporting metrics on marketing activity; iii. Sales missions developed in conjunction with the Owner's hotel sales team to pre- identify and pre - qualify business - appropriate meetings for the Property; and iv. Partnership development to create collaborative opportunities with local private, public, and non - profit sector entities. 2. Provide meeting, event, and pre- convention services, including, but not limited to: i. Conducting site visits and familiarization tours for potential clients; ii. Customized servicing for groups (registration assistance, delegate name badge preparation, welcome packets, off -site function arrangements, etc.); and iii. Serving as liaison between meeting planner client and hotel, local business, and transportation. 3. Identifying, collecting rate bids from, and securing overflow hotels in Denton for convention delegates. The City's duties described above shall specifically not include event coordinator duties for the Convention Center and those duties shall be the sole responsibility of Owner. C. No Joint Venture /No Joint Employment. This Agreement does not create a joint venture as to the Convention Center development or any separate business enterprise owned by Owner and physically joined to the Convention Center, such as the Hotel and Restaurant; and, the City, or its designee if permitted by law, shall remain independent of the actual operations of the Convention Center and shall only serve in a limited management position for the promotion of tourism and visitors to the City, which duties shall not require oversight or control by the Owner. The City, or its designee, shall not be considered a joint employer in performance under this Agreement and shall have no authority whatsoever over employees of Owner, its representatives, or of any lessee of the Convention Center; and, shall have no control over the terms and conditions 3 of their employment. This Agreement shall not be construed to cause the City, or its designee if permitted by law, to have obligations regarding federal and state employment laws with respect to those employees of Owner, regardless if those employees perform similar duties as the City herein. There shall be no shared employees. D. Expenses. The City shall not receive a management fee. The City shall only be responsible for costs associated with the performance of its duties under Section I.B. herein and shall not be responsible for any other costs incurred by Owner in performing its duties or otherwise operating the Convention Center. From time to time, if the City agrees to additional duties not defined herein, those costs shall be assessed against the Owner and not the City, and such duties shall be included in this Agreement in the form of a written addendum. Any responsibility of the City for costs associated with the management assistance as described in this Agreement shall be subject to annual appropriation by the City Council in the annual budget and the City's obligations under this Agreement shall not constitute a general obligation of the City or indebtedness under the Constitution or laws of the State of Texas. E. Booking Policy. The Owner acknowledges that the interest of the City requires a booking policy that takes into account not only those events which generate substantial direct revenue for the Convention Center, but also takes into account those events which produce less direct revenue, but generate significant peripheral economic benefits in the form of City hotel utilization, increased tourist revenues, and provide a stimulus to the general economy of the City of Denton. Owner agrees to use its commercially reasonable best efforts to accommodate this policy in the operation of the Convention Center. F. Insurance. Owner shall require that proper Certificates of Insurance evidencing general liability, automobile, bodily injury, property damage, death and workers compensation coverage shall be furnished, with copies to the City, and require that all policies be kept in force during the term of the Agreement by all vendors, concessionaires, subcontractors and service providers in the minimum amounts approved by the City. Such policies shall name the City as an additional insured. The Owner further agrees to maintain at all times during the term of this Agreement and the Development Agreement, with responsible insurance companies, insurance as follows: 1. Such worker's compensation, employer's liability or similar insurance as may be required by law, or such greater amounts which Owner shall deem advisable but no less than $1,000,000/$2,000,000; 2. A general liability insurance policy in the amount of at least $1,000,000 per person or $2,000,000 per occurrence for bodily injury or death; 3. An umbrella coverage insurance policy of at least $10,000,000 per occurrence; 4. Such other insurance against such other operation risks as Owner or City deems advisable to insure against, including, without limitation, auto liability insurance, liquor liability insurance and fidelity bonds; 5. Errors & Omissions or Professional Liability Coverage in the amount of at least $1,000,000. 6. Fire insurance and insurance against such other hazards ordinarily included by an all - risk form of extended coverage endorsement on the buildings, operating supplies, M furniture, furnishings and equipment in an amount equal to at least one hundred percent (100 %) of actual replacement cost (without deduction for depreciation) thereof, and all alterations, substitutions and replacements therefore, and bearing a standard noncontributory mortgagee loss payable endorsement in favor of the holders of any Mortgage on the Convention Center and providing, if reasonably available, for waiver of subrogation against such holder and the debt and security of such Mortgage in the event that the Convention Center is restored. This insurance shall include business interruption insurance. The Owner shall add the City as an additional insured on policies required by this Agreement. Moreover, the Owner shall assume all risks in connection with the adequacy of any insurance or self - insurance program and waives any claim against the City for any liability, costs or expenses arising out of any uninsured claim, in part or in full, of any nature whatsoever. Within a reasonable period of time after the effective date of this Agreement, Owner shall provide the City with a Certificate of Insurance showing compliance with this section. Any changes to coverage shall cause Owner to immediately notify the City in writing of such change. G. Compliance. Owner shall make all reasonable efforts to comply with all laws, rules, regulations, requirements, orders, notices, determinations, and ordinances of the City of Denton, including without limitation, the state and local liquor authorities, and the requirements of any insurance companies covering any of the risks against which the Convention Center is insured. Owner shall indemnify and hold harmless the City from any loss, cost, damage, or expense associated with compliance hereunder. H. Management Term. The term of this Agreement shall commence on the date the Agreement is approved by the City Council and shall continue for as long as the term of the Development Agreement, or as otherwise terminated thereby or hereunder. L Termination. The Agreement may be terminated prior to the expiration of the Agreement upon the occurrence of one or more of the following events: 1. Upon any default of the Development Agreement between the City and the Owner dated following the expiration of applicable cure periods; 2. Upon at least thirty (30) days prior written notice to the other party, if (i) the Convention Center is damaged or destroyed by fire or another casualty; (ii) all or a substantial part of the Convention Center is taken in a condemnation or eminent domain proceeding, or (iii) the Owner advises the City in writing prior to the Effective Date that the Owner has abandoned the development of the Convention Center; 3. Upon at least thirty (30) days prior written notice if Owner shall apply for or consent to the appointment of a receiver, trustee or liquidator of it or all or a substantial part of its assets; file a voluntary petition for bankruptcy; or, become otherwise insolvent; 4. If Owner permanently ceases operation of the Convention Center; 5 5. If Owner fails to provide or maintain insurance as required under this Agreement; or 6. If the Development Agreement results in a cessation of the incentive involving Hotel Occupancy Tax, then this Agreement terminates until such time as such incentive is resumed II. MISCELLANEOUS A. Assignability. If the Owner sells the Property, it shall provide the City at least sixty (60) days written notice of such sale identifying the buyer and whether the buyer intends to assume Owner's obligations under this Agreement and the Development Agreement. The City may assign its duties and /or designate a third party non - profit entity to perform the obligations hereunder in its own discretion and without approval of Owner; however, the City shall provide notice of such assignment within fifteen (15) days of the assignment. Failure to provide such notice does not constitute a waiver under this Agreement. B. Subcontract for Performance of Services. Nothing in this agreement shall prohibit, nor be construed to prohibit, the agreement by the City with another entity, person, or organization for the performance of those services described herein. In the event that the City enters into any arrangement, contractual or otherwise, with such other entity, person, or organization, the City shall cause other such entity, person, or organization to adhere to, conform to, and be subject to all provisions, terms, and conditions of this Agreement. C. Indemnification. OWNER AGREES TO INDEMNIFY, HOLD HARMLESS, AND DEFEND THE CITY, ITS OFFICERS, OFFICIALS, AGENTS, EMPLOYEES, AND REPRESENTATIVES FROM AND AGAINST ANY AND ALL CLAIMS (ADMINISTRATIVE OR JUDICIAL) OR SUITS FOR INJURIES, DEATH, DAMAGES, LOSSES AND EXPENSES (INCLUDING BUT NOT LIMITED TO REASONABLE ATTORNEYS' FEES FOR PRE - TRIAL, TRIAL AND APPELLATE PROCEEDINGS, ACCOUNTING FEES, APPRAISAL FEES AND CONSULTING AND EXPERT WITNESS FEES), ARISING OUT OF (1) ANY NEGLIGENT ACT OR OMISSION, ANY GROSS NEGLIGENCE OR ANY RECKLESS OR WILLFUL MISCONDUCT BY OWNER, ITS OFFICERS, DIRECTORS, AGENTS OR EMPLOYEES; (2) OWNER'S NON - PERFORMANCE OF ITS OBLIGATIONS HEREUNDER (WHETHER NEGLIGENT, GROSSLY NEGLIGENT, RECKLESS, OR WILLFUL); OR (3) ANY ACTION TAKEN BY OR ON BEHALF OF OWNER RELATING TO THIS AGREEMENT WHICH IS NOT PERMITTED BY, OR PURSUANT TO THE PROVISIONS OF THIS AGREEMENT OR REASONABLY NECESSARY TO CARRYING OUT LENDER AND /OR OWNER'S DUTIES. ANY INDEMNIFICATION SHALL APPLY REGARDLESS OF WHETHER OR NOT SAID CLAIM, DAMAGE, LOSS, OR EXPENSE IS COVERED BY INSURANCE AS HEREIN PROVIDED. IN THE D EVENT THAT A CLAIM IS ASSERTED AGAINST EITHER PARTY OR BOTH, OWNER SHALL PROVIDE CITY WITH A COPY OF SUCH CLAIM WITHIN A REASONABLE TIME FROM RECEIPT. OWNER FURTHER AGREES TO INDEMNIFY, HOLD HARMLESS, AND DEFEND THE CITY, ITS OFFICERS, OFFICIALS, AGENTS, EMPLOYEES, AND REPRESENTATIVES AGAINST ALL SUCH CLAIMS OR CAUSES OF ACTION RELATING TO COURSE OF EMPLOYMENT, WORKING CONDITIONS, WAGES AND /OR COMPENSATION OF OWNER EMPLOYEES OR FORMER OWNER EMPLOYEES AT THE CONVENTION CENTER AND RELATED HOTEL AND /OR RESTAURANT, INCLUDING VIOLATIONS OF ANY STATE, LOCAL, OR FEDERAL EMPLOYMENT LAW WHETHER COMMON LAW OR STATUTORY, AND AGAINST CLAIMS OF ANY PAST OR FUTURE LIFE /SAFETY CODE VIOLATIONS. D. Notice. Any notice required to be given under this Agreement or any statute, ordinance, or regulation, shall be effective when given in writing and deposited in the United States mail, certified mail, return receipt requested, or by hand - delivery, addressed to the respective parties as follows: CITY O'REILLY HOTEL PARTNERS — DENTON, LLC City Manager Tim O'Reilly City of Denton O'Reilly Hospitality Management, LLC 215 E. McKinney 2808 S. Ingram Mill Road, Building C100 Denton, TX 76201 Springfield, MO 65804 E. Inurement. This Agreement and each provision hereof, and each and every right, duty, obligation, and liability set forth herein shall be binding upon and inure to the benefit and obligation of the City and OWNER and their respective successors and assigns. F. Application of Laws. All terms, conditions, and provisions of this Agreement are subject to the Charter of the City of Denton, all ordinances passed pursuant thereto, and all judicial determinations relative thereto. This Agreement shall be governed by the laws of the State of Texas and venue shall lie in Denton County, Texas. G. Exclusive Agreement. This Agreement contains the entire understanding and constitutes the entire agreement between the parties hereto concerning the subject matter contained herein. There are no representations, agreements, arrangements, or understandings, oral or written, express or implied, between or among the parties hereto, relating to the subject matter of this Agreement, which are not fully expressed herein. The terms and conditions of the Agreement shall prevail notwithstanding any variance in this Agreement from the terms and conditions of any other document relating this transaction or these transactions. This Agreement may not be modified, amended, surrendered or changed, except by a written instrument executed by both parties. 7 H. Severability. If any section, subsection, paragraph, sentence, clause, phrase, or word in this Agreement, or application thereof to any person or circumstance is held invalid by any court of competent jurisdiction, such holding shall not affect the validity of the remaining portions of this Agreement, and the parties hereby declare they would have enacted such remaining portions despite any such invalidity. L No Representation. In entering into this Agreement, the parties acknowledge that the City has made no representation to the Owner regarding Owner's potential earnings, the possibility of future success or any other similar matter respecting the Convention Center and the City's assistance hereunder, and that the City expressly makes no guarantee as to the success of its assistance as provided hereby. This Agreement is effective as of the day of 12015. ATTEST: JENNIFER WALTERS, CITY SECRETARY APPROVED AS TO FORM: ANITA BURGESS, CITY ATTORNEY CITY OF DENTON, TEXAS BY: GEORGE C. CAMPBELL CITY MANAGER O'REILLY HOTEL PARTNERS — DENTON, LLC a Missouri Limited Liability Company ma Its: ACKNOWLEDGMENTS STATE OF TEXAS } COUNTY OF DENTON } The foregoing Management Agreement was executed before me on the day of 12015 by George C. Campbell, City Manager of the City of Denton, Texas, a Texas municipal corporation, on behalf of said Municipal Corporation. Name: Notary Public in and for the State of Texas STATE OF TEXAS } COUNTY OF DENTON } The foregoing Management Agreement was executed before me on the day of , 2015 by of O'Reilly Hotel Partners — Denton, LLC., on behalf of said corporation. Name: Notary Public in and for the State of Texas 0 EXHIBIT E TEXAS APPLICATION FOR DIRECT PAYMENT PERMIT 23 • Exhibit E: Texas Application for Direct Payment Permit ii- XA,s I GLENN HEGAR TEXAS COMPTROLLER OF PUBLIC ACCOUNTS I General Information Under Ch. 559, Government Code, you are entitled to review, request and correct information we have on file about you, with limited exceptions in accordance with Ch. 552, Government Code. To request information for review or to request error correction, contact us at the address or phone numbers listed on this form. Who may submit this application - You may submit this application if you annually purchase at least $800,000 worth of taxable items for your own use and not for resale. • The Comptroller may issue a Direct Payment Permit after receiving this completed application and finding that all the requirements for issuing a Direct Payment Permit stated in Item I of this application, "Taxpayer's Agreement," have been met. For assistance - If you have any questions about this application, filing tax returns or any other tax-related matter, contact your nearest Texas State Comptroller's local office. You may also call 1-800-252-5555 or 512-463-4600. General Instructions • Please do not separate pages. • Write only in white areas. • Fill in all blanks and answer all questions completely and fully. • Do not use dashes when entering Social Security, Federal Employer Identification Number (FEIN), Texas Taxpayer or Texas Vendor Identification numbers. • Federal Privacy Act: Disclosure of your Social Security number is required and authorized under law, for the purpose of tax administration and identification of any individual affected by applicable law. 42 U.S.C. §405(c)(2)(C)(i); Tex. Govt. Code §§403.011 and 403.078. Release of information on this form in response to a public information request will be governed by the Public Information Act, Chapter 552, Government Code, and applicable federal law. NOTE: No purchases may be made tax free until this application has been approved and your Direct Payment Permit has been issued. Specific instructions are on the back of the next page. Complete this application and mail to Comptroller of Public Accounts 111 E. 17th St. Austin, TX 78774-0100 AP-101-1 (Rev.1-15/17) O °^ "" �9'( Rev.1 -1v.1 -12 5/17 Texas Application ° � for Direct Payment Permit Page 1 • Please read instructions. • Type or print. Do not write in shaded areas. 1. Taxpayer's Agreement - The applicant, in consideration of the issuance of a Direct Payment Permit by the State of Texas ac- cording to the provisions of the law, agrees and affirms: a. that applicant is a responsible person annually purchasing at least $800,000 worth of taxable items for use and not for resale (complete Item 19); b. that the accounting method used will clearly distinguish between taxable and nontaxable purchases (complete Item 20); c. that upon the issuance of a Direct Payment Permit to the applicant, the applicant will accrue and pay to the State of Texas all taxes which are or may in the future be due by virtue of the State, Local, Metropolitan Transit Authority, City Transit Department, County and Special Purpose District Sales and Use Tax Acts. The tax is due on all taxable purchases; and, z unless the tax is paid to the seller, it must be reported on the Texas Direct Payment Return. All taxes due will be paid W monthly on or before the 20th day of the month following each monthly reporting period; W W d. that the Direct Payment Exemption Certificate will not be issued for taxable items purchased for resale; CD a e. to report all taxable purchases on the direct payment return and waive any claim for discounts for taxes paid. No taxable W purchases may be reported on a sales and use tax return; W af. upon request, to make available at any time to the Comptroller's office the books, papers, records and equipment of the applicant's business; H g. to cooperate with the Comptroller's office in the examination of the books, papers, records and equipment of the applicant and in the investigation of the applicant's activities, business and accounting methods; and h. to fully disclose to the Comptroller's office in this agreement or upon acquisition, whichever occurs first, the nature and extent of the ownership or control which the applicant has in the business from which the applicant makes purchases pursuant to the Direct Payment Permit. Legal cite: Tex. Tax Code Ann. Sec. 151.419 Type or print name of sole owner, partner or officer Sole owner, partner or officer here 2. Legal name of owner (Sole owner, partnership, corporation or other name) 3. Mailing address (Street and number, P.O. Box or rural route and box number) O z .I Q U City State ZIP code County ■ I I ■ L_I_J ■ L�J I � Z W 0 4. If you are a sole owner, enter your home address IF it is different from the address above. (Street and number, city, state, ZIP code) cc W a 4a. Enter the phone number of the person primarily responsible for filing tax returns (Area code and number). ■ I 5. Enter your Social Security number if you are a sole owner ............................................. ............................... ■ . . .. tttt_J L-1-1 6. Enter your Federal Employer Identification Number (FEIN), if any .......................................... ............................... . 7. Enter your taxpayer number for reporting any Texas tax OR your Texas Vendor Identification Number if you now have or have ever had one ................................. ............................... 8. Indicate how your business is owned. ❑ 1 - Sole owner ❑ 3 - Texas corporation ❑ 7 - Limited partnership ❑ 2 - Partnership ❑ 6 - Foreign corporation ❑ Other (explain) 0 . _ 9. If your business is a Texas corporation, File number Month Day Year = V) enter the file number and date ........................................................ ............................... cc W 10. If your business is a foreign corporation, enter home state, home state registration number, Texas file number and date. �Home state Home state registration number Texas file number Month Day Year I I I I I I I I I , I State Number 11. If the business is a limited partnership, enter the home state I I andidentification number .............................................................................. ............................... W O`oRMa'AP-101-3 Texas Application (Rev.1 -1en7) ■ Page 2 for Direct Payment Permit • Please read instructions. • Type or print. Do not write in shaded areas. 12. Legal name of owner (same as Item 2) I LI I I I I I I I I 1 I 13. List all general partners, officers or managing members of your business. (Attach additional sheets, if necessary) If you are sole owner, skip Item 13. Name Phone (Area code and number) Nome address City State ZIP code IX SSN FEIN County (or country, ifoutside the U.S.) W Percent of I i i ownership i i i i i i i i ■ I� I � W IX a Position held: ❑ General partner ❑ Officer /Director ❑ Managing member ❑ Other 0 IX Name Phone (Area code and number) (L I .. .... , , , . . .J Nome address City State ZIP code SSN FEIN County (or country, ifoutside the U.S.) — I Percent % 01 i i i i i i i ownershi ipf Position held: ❑ General partner ❑ Officer /Director ❑ Managing member ❑ Other 14. Business name Business phone (Area code and number) w a ■I 15. Location of your principal place of business (Use street and number or directions - NOT P.O. Box or rural route number.) Z .I QCity State ZIP code County . I I . L_,_J ■ L�� o J y 16. Is your business located inside the city limits of the city named in Item 15? ................................... ............................... ❑ YES ❑ NO W z 17. Indicate your principal type of business. in ❑ Exploration /Production ❑ Construction ❑ Manufacturer /Processor ❑ Service ❑ Other m 18. Describe your Texas business and the goods or services you sell. (See instructions.) I I 19. Enter the amount of your annual purchases subject to Texas Use Tax ...... ............................... Z WO 12 20. On a separate sheet, describe the accounting method that you will use to differentiate between taxable purchases, exempt purchases, ix tax -paid purchases and items purchased tax free for resale. (See instructions.) UO ,x? 21. List and describe all sites of major fixed assets permanently located within Texas. (Attach additional sheets, if necessary.) The sole owner, all general partners, members, officers or an authorized representative Month Day Year must sign this application. Representative must submit a written power of attorney with this application. (Attach additional sheets, if necessary.) Date of signature I I I 22. I (We) declare, under penalties prescribed by law, that the information in this document and any attachments is true and correct to the best of my (our) knowledge and belief. Legal cite: Tex. Penal Code Ann. Sec. 37.10 N W Type or print name of sole owner, partner or officer Sole owner, partner or officer here ZType or print name of partner or officer Partner or officer here 55 I I I Type or print name of partner or officer Partner or officer I I here I WARNING. You may be required to obtain an additional permit or license from the State of Texas or from a local governmental entity to conduct business. A listing of links relating to acquiring licenses, permits, and registrations from the State of Texas is available online at http: //www.Texas.gov. You may also want to contact the municipality and county in which you will conduct business to determine any local governmental requirements. Field office or section number Employee Name USERID Date Instructions for Completing Texas Application for Direct Payment Permit Item 2-Sole owner - enter first name, middle initial and last name. PaItnershW - enterthe|eQa|nameofthe partnership. Corporation - enter the legal name exactly anit in registered with the Secretary ofState. Other oroanization - enter the title of the organization. Item 3- Enter the complete address where you want to receive mail from the Comptroller of Public Accounts. NOTE: If you want to receive mail for other taxes ntn different address, attach n letter with the other nodreoo(es). Item G- Enter the Federal Employer Identification Number (FBN) assigned to your business by the Internal Revenue Service. Item 7-If you have both a Texas Taxpayer and a Texas Vendor Identification Number, enter only the first eleven digits of the Vendor Identification Number. Item 8-If you check ^Dther,^ identify the type of organization. Examples: Social Club, Independent School District, Family Trust. Item 13- Partnership - enter the information for ALL partners. |fa partner isa corporation, enter the Federal Employer Identification Number (FBN) of the corporation. Corporation or other organization -enterthe information for the principal officers (prenident. secretary, treasurer). Item 18- The description of your business should include the principal types ofbusiness. Examples: highway construction, crude petroleum, natural gas transmission, industrial chemicals. Please bespecific. Item 1S- Enter the total amount of taxable items purchased last year ortobe purchased. This does not include purchases for which aResale Certificate can beor could have been issued. xp-101-4 (Re v.1-15/17) Item 2U-Thbe eligible for a Direct Payment Permit, you must maintain an accounting method that clearly distinguishes between taxable and non- taxable purchases. Describe your accounting method fully. Explain the internal controls and the accounting flow of the data that will be used to prepare your direct payment return. Answer the following questions in your explanation. How will you distinguish between - purchases made under a direct payment exemption certificate; -purnhanenforrena|e; -nontaxab|epurnhanen; -purnhaneninTexanandoutofnbate; -anyotherbax-freepurnhanen;and -tax-paidpunohanen? ~ If you purchase items for resale and for your own use from the same supplier, will you issue separate purchase orders? How will the two types of purchases be accounted for? ~ If you do not issue blanket exemption certificates to your suppliers, how will you indicate on which items the supplier will collect tax? ~ What accounting procedure will you follow to report use tax in the same month that you receive vendor's billings? ~ What procedure will you follow to report use tax tothe correct city, Metropolitan Transit Authority ([WTA) or City Transit Department (CTD). County and/or Special Purpose ~ When you prepare your direct payment return, from what smrce(s) will you get the necessary data? How will this data get tothe ~ Will more than one person review the purchase records and compare them to ~ What procedures will you follow to ensure that tax-free purchases are not reported on the Texas Sales and Use Tax Return? EXHIBIT F CERTIFICATE OF COMPLIANCE FORM 24 CERTIFICATE OF COMPLIANCE -- ANNUAL Company: O'REILLY HOTEL PARTNERS- DENTON, LLC Reporting Year: January 1 — December 31, 20 Contract Year No. L Investment 1.1 The Economic Development Agreement between O'Reilly Hotel Partners- Denton, LLC ( "Grantee ") and the City of Denton, Texas ( "City "), dated (the "Agreement ") states that no grant may be paid to Grantee unless Grantee has completed the Improvements to the Property no later than 30 months after the start of construction. (II.D.) a. As of the date of this Certificate of Compliance, have the Improvements to the Property as described in the Agreement been deemed completed? ❑ YES ❑ NO b. The Improvements to the Property as described in the Agreement were completed on (date): 1.2 As a condition of the grant payments, the Agreement requires Grantee to provide a total Capital Investment for the development of the Project of at least $80 million. Additionally, any grant payments are conditioned upon the Grantee's Capital Investment to generate a minimum increase in assessed real estate Improvements and business personal property valuation on the Property over the existing 2015 valuation in the amount of $20 million. (II.D.) a. The Grantees have invested $ in Capital Investment for the development of the Project on the Property for the reporting year ending December 31, 20 a. The increase in assessed valuation of the real estate Improvements and business personal property for the year ending December 31, 20 over the existing 2015 valuation is: $ 1.3 Have all applicable Certificate of Occupancies been issued for the Property? ❑ YES ❑ NO 1.4 The Agreement states that any grant payments will be paid for a maximum of 25 years or until the combined principal amount of $28 million and interest payment of $26 million for a total aggregate amount of $54 million is reached, whichever comes first. (III.A.) Certificate of Compliance Page 1 of 3 a. Grantee has paid in principal on any debt instruments used for the development of the Project for the year ending December 31, 20 b. Grantee has paid in interest on any debt instruments used for the development of the Project for the year ending December 31, 20 IL Employment 2.1 The Agreement requires the Grantee to use good faith efforts to hire qualified residents of the City of Denton to work at the Project. As part of this requirement, the Grantee must make a good faith effort to offer available.) obs to qualified Denton residents, as well as to hire Denton contractors and suppliers in construction. (ILH.) a. Did the Grantee comply with the recruiting requirements in Section ILH. of the Agreement in regards to offering available jobs to Denton residents during the year ending December 31, 20 ? ❑ YES ❑ NO b. Did the Grantee comply with the recruiting requirements in Section ILH. of the Agreement in regards to hiring Denton contractors and suppliers in construction during the year ending December 31, 20 ? ❑ YES ❑ NO III. Additional Covenants 3.1 The Agreement requires that the Full- Service Hotel and Restaurant be operated by Approved Franchisors. Please indicate the Approved Franchisor for each for the compliance year ending December 31, 20 Full- Service Hotel: Restaurant: 3.2 The Agreement requires the Grantee to keep the Property in a continuous Upscale Manner. (II.E.). Did the Grantee comply with the Upscale Manner requirement of the Agreement during the year ending December 31, 20 ? ❑ YES ❑ NO 3.3 Did the Grantee timely submit this Certificate of Compliance as required under Section IV.D. of the Economic Development Agreement during the year ending December 31, 20 ? ❑ YES ❑ NO Certificate of Compliance Page 2 of 3 3.4 Has Grantee complied with each of its additional obligations in the Agreement for the year ending December 31, 20 ? ❑ YES ❑ NO IV. Payment 4.1 The Economic Development Agreement provides an annual grant of 100% of ad valorem taxes collected and verified by the City for the prior tax year, exclusive of the taxable value of the underlying land or any increase thereof. (III.A.1). 4.2 The City property taxes paid for January 1, 20 valuation are: Real Property Business Personal Property 4.3 The grant payment for ad valorem taxes requested: $ 4.4 Please attach the most recent Property Tax Notice. I, the authorized representative for O'Reilly Hotel Partners — Denton, LLC, hereby certify that the above information is correct and accurate pursuant to the terms of the Agreement. I further certify that the Company has fully complied with the Economic Development Agreement during the year ending December 31, 20 , including compliance with the City of Denton Code of Ordinances, Texas Department of Public Safety Regulations, and other applicable federal, state, or local law. O'REILLY HOTEL PARTNERS— DENTON, LLC Signature: Printed Name: Title: Date: Certificate of Compliance Page 3 of 3 EXHIBIT G (CORPORATE RESOLUTION FOR AUTHORITY) At the time of the backup deadline on 10/22/15, this information was not finalized. It will be provided as soon as possible. 25 EXHIBIT H ORDINANCE AUTHORIZING AGREEMENT 26 City Hall City of Denton 215 E. McKinney St. Denton, Texas 76201 www.cityofdenton.com D EN'FON File #: ID 15 -1061, Version: 1 Legislation Text Agenda Information Sheet DEPARTMENT: Development Services /Economic Development CM/ ACM: Jon Fortune Date: October 30, 2015 SUBJECT Consider adoption of an Ordinance of the City of Denton, Texas approving a third amendment to an Economic Development Program Grant Agreement dated June 15, 2010 between the City of Denton and Allegiance Hillview; and providing an effective date. BACKGROUND The location of the proposed hotel and convention center development by O'Reilly Hotel Partners Denton at Rayzor Ranch Town Center falls within the boundary of the existing Chapter 380 Agreement between the City and Allegiance Hillview, L.P. (RED Development). Should the City Council approve an Economic Development Program Grant Agreement with O'Reilly Hotel Partners Denton, it will be necessary to amend the Chapter 380 Agreement with Allegiance Hillview (RED Development). The amendment will be necessary to exclude the Hotel and Convention Center Project from RED's incentive. The current Agreement with Allegiance Hillview (RED Development) has the following terms: • 50% rebate on sales tax revenue for 20 years for Rayzor Ranch Marketplace (north side of University Drive); this incentive triggered in 2012 • 50% rebate on sales tax revenue for 25 years for Rayzor Ranch Town Center (south side of University Drive); this incentive is tiered and has an initial trigger of 300,000 square feet of retail space • The incentives allow for a $68 million total reimbursement to Allegiance Hillview, (RED Development) for public infrastructure costs. Allegiance Hillview (RED Development) is in favor of the proposed convention center /hotel project at Rayzor Ranch Town Center, it has an impact on the Town Center development in the following ways: O'Reilly Hotel Partners Denton acquired the land for the convention center /hotel project at a "pass through" cost from Allegiance Hillview (RED Development) • The land for the convention center /hotel will no longer be available as retail acreage, which will impact the total sales tax revenue available for the incentive O'Reilly will receive the sales tax rebate on their portion of the project, which was originally allocated to RED City of Denton Page 1 of 2 Printed on 10/26/2015 File #: ID 15 -1061, Version: 1 • $4 -5 million in infrastructure improvements will have to be made to the site earlier than originally planned Allegiance Hillview (RED Development) estimates these changes will lead to a revenue loss of $5 million. The City has proposed an amendment to RED's Chapter 380 Grant Agreement in order to accommodate the Hotel and Convention Center and to mitigate that loss. The Economic Development Partnership (EDP) board recommended a 15% sales tax rebate on the entire Rayzor Ranch project until $5 million is reached. This percentage is in addition to the existing incentive. The thresholds require that 300,000 square foot of retail has been met and the convention center and hotel have a Certificate of Occupancy (8 -0). Staff analysis estimates that the $5 million will be reached in 10 to 11 years. PRIOR ACTION/REVIEW (Council, Boards, Commissions) October 14, 2015 - The Economic Development Partnership Board recommended approval of the third amendment to the economic development program grant agreement (8 -0). May 13, 2014 - Second amendment to the economic development program grant agreement with Allegiance Hillview, is adopted by Council September 14, 2010 - First amendment to the economic development program grant agreement with Allegiance Hillview, is adopted by Council June 15, 2010 - Economic development program grant agreement with Allegiance Hillview, is adopted by Council FISCAL INFORMATION According to sales tax projections, it would take approximately 11 years for Allegiance to be reimbursed $5 million. The City would receive 35% of the sales tax generated resulting in new revenues of approximately $13 million. EXHIBITS 1 - Ordinance 2014 -143 Second Amendment 2 - Ordinance 2010 -142 First Amendment 3 - Ordinance 2010 -210 Grant Agreement 4 - Draft Third Amendment 5 - Draft Ordinance Respectfully submitted: Aimee Bissett Director of Development Services Prepared by: Caroline Booth Assistant Director for Economic Development City of Denton Page 2 of 2 Printed on 10/26/2015 Exhibit 1 •+ • • IMEA AN ORDINANCE OF THE CITY OF DENTON, TEXAS APPROVING A SECON AMENDMENT TO AN ECONOMIC DEVELOPMENT PROGRAM GRANT AGREEMEN DATED JUNE 15, 2010 BETWEEN THE CITY OF DENTON AND ALLEGIANC.11 HILLVIEW; AND PROVIDING AN EFFECTIVE DATE. SECTION 1. The City Manager, or his designee, is hereby authorized to execute a Second Amendment to Economic Development Program Grant Agreement (the "Second Amendment "), in substantially the form of the Second Amendment which is attached hereto and made a part of this ordinance for all purposes. SECTION 2. The City Manager, or his designee, is authorized to exercise the City of Denton's rights and duties as set forth in the Amendment. SECTION 3. This ordinance shall become effective immediately upon its passage and approval. ' q PASSED AND APPROVED this the day of m. 2014. MARK A. BURRO' 1 jil1S vrYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY Exhibit 1 STATE OF TEXAS COUNTY OF DENTON SECOND AMENDMENT TO ECONOMIC DEVELOPMENT PROGRAM GRANT AGREEMENT WITH ALLEGIANCE HILLVIEW, L.P. This Second Amendment to Economic Development Program Grant Agreement ith Allegiaiwe Hillview, L.P. (this "Second Amendment ") is made and entered into as of the �ilay of�la , 2014, by Allegiance Hillview, L.P., a New York limited partnership ("G ratite`e Denton II LLC, a Delaware limited liability company ( "Assignee "), and the City of Denton, Texas, a Texas municipal corporation (the "City "), Grantee, Assignee, and the City are individually referred to as a "Party" and collectively as the "Parties." WHEREAS, on June 15, 2010, Grantee and the City entered into that certain Economic Development Program Grant Agreement with Allegiance Hillview, L.P. (the "Agreement "); WHEREAS, on September 14, 2010, Grantee, Assignee, and the City entered into that certain First Amendment to Economic Development Program Grant Agreement with Allegiance Hillview, L.P., (the "First Amendment "), which First Amendment approved the assignment of certain right, title, and interest of Grantee in and to the Agreement to Assignee; WHEREAS, capitalized terms used but not defined in this Second Amendment shall have the meanings given to them in the Agreement and the First Amendment; and WHEREAS, the Parties desire to further amend the Agreement and the First Amendment to expand the categories of Eligible Improvements, to increase the total cost of the Eligible Improvements, to approve Eligible Phase I Costs and Eligible Phase II Costs, to expand the definition of Total Taxable Sales, to define Retail Improvements in Phase II to include "Initial" and "Additional" improvements, and to extend the Program Grant for Phase II. NOW THEREFORE, for good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the Parties agree to amend the Agreement and First Amendment as follows: 1. Revised Definitions a. Eligible Improvements and Eligible Costs. The term "Eligible Improvements" is revised to mean any improvements included within the Categories of Eligible Improvements identified on Exhibit A to this Second Amendment. The maximum Estimated Cost for the Eligible Improvements shown on said Exhibit A is increased to $68,000,000. Payments of the Program Grant for Phase I monthly installment payments shall be used FIRST to repay Grantee for Eligible Phase I Costs up to a maximum of $20,000,000 and THEN, if Program Grants for Phase Exhibit 1 II have been initiated by the Assignee, to repay Assignee for Eligible Phase II Costs up to a maximum of $21,000,000.00 upon Substantial Completion of the Initial Retail Improvements in Phase II and up to an additional $27,000,000.00 upon Substantial Completion of the Additional Retail Improvements in Phase II. b. Required Infrastructure for Phase Il. The term "Required Infrastructure for Phase 11" is revised in its entirety as follows: "Required Infrastructure for Phase II" means the road and public utility infrastructure required to obtain final certificates of occupancy for the Initial Retail Improvements in Phase II or the Additional Retail Improvements in Phase II, as applicable [ including but not limited to the portion of Heritage Trail located within Phase 1I). C. Substantial Completion. The term "Substantial Completion" is revised in its entirety as follows: "Substantial Completion" means: (i) with respect to the Retail Improvements in Phase 1, when final certificates of occupancy have been issued for the Retail Improvements in Phase I; (ii) with respect to the Required Infrastructure for Phase I, when the Required Infrastructure for Phase I has been constructed and inspected in accordance with City and TxDot standards, as applicable, and as required to obtain final certificates of occupancy for the Retail Improvements or a phased portion of the Retail Improvements in Phase I; (iii) with respect to the Initial Retail Improvements in Phase I1, when final certificates of occupancy have been issued for the Initial Retail Improvements in Phase II; (iv) with respect to the Required Infrastructure for Phase II for the Initial Retail Improvements in Phase II, when such Required Infrastructure for Phase II has been constructed and inspected in accordance with City and TxDot standards, as applicable, and as required to obtain final certificates of occupancy for the Initial Retail Improvements in Phase II; (v) with respect to the Additional Retail Improvements in Phase 1I, when final certificates of occupancy have been issued for the Additional Retail Improvements in Phase II; (vi) with respect to the Required Infrastructure for Phase lI for the Additional Retail Improvements in Phase II, when such Required Infrastructure for Phase II has been constructed and inspected in accordance with City and TxDot standards, as applicable, and as required to obtain final certificates of occupancy for the Additional Retail Improvements in Phase II. d. Program Grant for Phase I1. The reference to "240 consecutive monthly payments" in the definition of "Program Grant for Phase 11" is amended to be "300 consecutive monthly payments ". 2. Approved Eligible Costs. The categories and costs for Eligible Improvements will be reviewed by the City's Engineering, Real Estate, and Economic Development staff based on information provided by Grantee. The Eligible Costs acknowledged by this Second Amendment include, but are not limited to, Eligible Costs in the amount of $24,146,498 for Phase I (north of Highway 380) and $15,930,322 for Phase II (south of Highway 380) for a total of $40,076,820 as approved July 12, 2010, by letter from Linda Ratliff, Director Economic Development, to Allegiance Hillview, L.P., regarding "Rayzor Ranch Chapter 380 Agreement — Eligible Costs Approval," including Attachment "Request #1 Rayzor Ranch Eligible Costs" , attached hereto as Exhibit B. 3. Total Taxable Sales. The term "Total Taxable Sales" is revised in its entirety to read as follows: "Total Taxable Sales means the total amount of all sales (including mixed beverage sales covered by HB 3572 effective January 1, 2014) from which the City receives sales tax with a point of sale in Phase I or Phase II, regardless of whether such sales are retail sales and use occurring at a business located in Phase I or Phase II (excluding sales occurring at Exhibit 1 any Dillard's, J.C. Penney Co., Macy's, Sears Roebuck and Co., Barnes & Noble, DSW (Discount Shoe Warehouse), and Ross Dress for Less that locates within the Property and closes any store located within the retail shopping area commonly known as the 'Golden Triangle Mall'). All references in the Agreement that indicate that the Total Taxable Sales and the information shown on the Monthly Sales Tax Report are limited to sales from businesses located within Phase I or Phase II shall be expanded to include mixed beverage sales and all sales with a point of sale in Phase I or Phase II, regardless of whether such sales are retail sales occurring at a business located in Phase I or Phase II. 4. Retail Improvements in Phase IL The term "Retail Improvements in Phase II" is defined to include the following "Initial" and "Additional" improvements: a. "Initial Retail Improvements in Phase II" means a minimum of 300,000 gross square feet (as measured to the exterior building wall) of retail or commercial shopping center buildings located in Phase II, comprised of the Town Center (as described by the zoning applicable to the Property), and other retail development in Phase II. b. "Additional al Retail 1niL yovenients in Phase 11" means a minimum of 300,000 additional gross square feet (as measured to the exterior building wall) of retail or commercial shopping center buildings located in Phase II, comprised of the Town Center (as described by the zoning applicable to the Property), and other retail development in Phase II, and which, in any case, are not included in the Initial Improvements in Phase II. 5. Program Grant for Phase II. a. Section 3.2 of the Agreement is revised in its entirety to read as follows: "Program Grant for Phase II. This Agreement shall be effective as of the date executed by the City and Grantee. At any time following execution of this Agreement and following Substantial Completion of the Required Infrastructure for Initial Retail Improvements in Phase II (but not later than January 1, 2018), Assignee may designate the first day of any month to be the Program Effective Date for Phase II by providing written notice to the City at least 60 days prior to the designated Program Effective Date for Phase II. The City will begin snaking Program Grant for Phase II monthly installment payments on the designated Program Effective Date for Phase II and shall continue to make such monthly installment payments for 300 consecutive months as provided by this Agreement. This Agreement will terminate with respect to the Program Grant for Phase II upon the earlier to occur of (i) the date Assignee has been paid for the full amount of the Eligible Phase II Costs, or (ii) 300 months after the Program Effective Date for Phase II regardless of whether Assignee has been paid the full amount of the Eligible Phase II Costs." b. Section 4.2 of the Agreement is revised in its entirety to read as follows: "Program Grant for Phase II. For each month during the term of the Program Grant for Phase II, the City agrees, subject to the conditions contained in this Agreement, to make a Program Grant for Phase II installment payment to Assignee on or before thirty days following the City's receipt from the State Comptroller of the Monthly Sales Tax Report indicating Total Taxable Sales from the preceding month that are allocable to Phase II. The Program Grant for Phase II installment payments shall be calculated as provided in Section 5.2 of this Agreement. Issuance of the first certificate of occupancy by the City to any tenant within Phase II shall be a condition precedent Exhibit 1 to the initiation of Program Grant for Phase II installment payments. Program Grant for Phase II installment payments may be temporarily withheld at any time if there are delinquent property taxes or assessments on any property owned by Assignee and located in the City, and such installment payments will not be resumed until such delinquency is cured, at which time withheld payments shall be paid to Assignee. The 300 month term for payment of Program Grant for Phase II shall not be suspended or extended if installment payments are withheld pursuant to prior sentence. Notwithstanding anything contained herein to the contrary, the Program Grant for Phase II installment payments will cease, this Agreement will automatically terminate as to the Program Grant for Phase Il, and Assignee will refund to the City all Program Grant for Phase II installment payments previously made if Substantial Completion of the Initial Retail Improvements in Phase II has not occurred on or before January 1, 2018. In addition, the City, in its sole discretion, may terminate this Agreement as to the Program Grant for Phase II if Substantial Completion of the Required Infrastructure for Phase II for the Initial Retail Improvements in Phase II has not occurred on or before January 1, 2018." C. The first paragraph of Section 5.2 of the Agreement is revised in its entirety to read as follows: "Program Grant for Phase II. Program Grant for Phase II monthly installment payments during the term of the Program Grant for Phase II shall be calculated as 50% of the 1.5% sales tax collected by the City with respect to the Total Taxable Sales allocable to Phase II during the preceding month as established by the most recent State Comptroller's Monthly Sales Tax Report. The City's obligation to make such payments is contingent upon the City's receipt of the sales taxes from the Texas State Comptroller and the Monthly Sales Tax Report; provided, however, if the State Comptroller ceases to issue Monthly Sales Tax Reports, the Parties shall cooperate to arrive at a reasonably equivalent and mutually agreeable alternative method of computing the Program Grant for Phase II monthly installment payments. Payments of the Program Grant for Phase II monthly installment payments will be used to repay Assignee for Eligible Phase II Costs not otherwise paid with Program Grant for Phase I payments (up to a maximum of $21,000,000.00 upon Substantial Completion of the Initial Retail Improvements in Phase II and up to an additional $27,000,000.00 upon Substantial Completion of the Additional Retail Improvements in Phase II)." 6. Default. Section 8 of the Agreement is revised in its entirety to read as follows: "Default. If a party fails to perform any of its obligations under this Agreement and such failure is not cured within 30 days after written notice, the failure of the non - performing party to cure within such 30 day period (or to commence to cure if the nature of the failure cannot reasonably be cured within 30 days) shall constitute a default under this Agreement and shall entitle the non - defaulting party to all remedies available at law or in equity (including injunctive relief, specific performance, and suspending or withholding Program Grant for Phase I or Program Grant for Phase II payments); PROVIDED, HOWEVER, NOTWITHSTANDING THE FOREGOING, (i) MONETARY DAMAGES SHALL BE LIMITED TO THE AMOUNT NECESSARY TO ENFORCE SPECIFIC PERFORMANCE OF THE FAILED OBLIGATION; (ii) THE CITY CANNOT TERMINATE THIS AGREEMENT AS TO PHASE I UNLESS (1) SUBSTANTIAL COMPLETION OF THE RETAIL IMPROVEMENTS IN PHASE I DOES NOT OCCUR ON OR BEFORE JANUARY 1, 2013, AS PROVIDED BY SECTION 4 HEREOF, (2) SUBSTANTIAL COMPLETION OF THE REQUIRED INFRASTRUCTURE FOR PHASE I DOES NOT OCCUR ON OR BEFORE JANUARY 1, 2013, AS PROVIDED BY SECTION 4 HEREOF, OR (3) GRANTEE IS IN DEFAULT OF ITS OBLIGATION TO PROVIDE THE LETTER OF Exhibit I 7. Offer to Sell. Section 6.6 is revised in its entirety to read as follows: "In the event Grantee or any of its affiliates purchases any retail buildings in the retail shopping area commonly known as the "Golden Triangle Mall," Grantee or its affiliate shall offer in writing to sell such buildings to FMP Denton, LLC (or to the then-current owner of the Golden Triangle Mall) for: (i) the then fair market value of such buildings as established by a qualified, independent MAI appraiser, or (ii) the amount of any arms-length offer to purchase such buildings received by Grantee or its affiliate from any third-party retail user unrelated to Grantee or any of its affiliates, whichever is greater." 8. Auditing. The City's right to conduct audits of the sales and use tax records of businesses located within the Property, and Grantee's and Assignee's obligation to use reasonable efforts to assist the City in obtaining such records from tenant taxpayers, shall apply only to the extent the City is unable to obtain from the Texas State Comptroller the "Monthly Sales Tax Reports" showing the amount of Total Taxable Sales for a month period pursuant to Section 321.3022 of the Texas Tax Code. 9. Public Improvement District Financing of Eligible Improvements. If the City levies public improvement district assessments to pay any portion of the Assignee's costs of the Eligible Improvements shown on ' Exhibit A, the amount levied and collected from the Assignee shall be reimbursable costs under this Second Amendment so long as the TOTAL of such assessments and other Eligible Phase 11 Costs does not exceed the Exhibit A maximum amount of $68,000,000. 10. Conflicts; Effect of Second Amendment. To the extent of any inconsistency between the terms and provisions of this Second Amendment and the Agreement and the First Amendment, the terms and provisions of this Second Amendment will control. Except as amended by this Second Amendment, all of the terms, covenants and conditions of the Agreement and the First Amendment are in full force and effect and the Agreement and First Amendment are hereby ratified and confirmed. All references in the Agreement to January 1, 2015, are hereby amended to read January 1, 2018. Exhibit I 11. Binding Effect. This Second Amendment will be binding upon and will inure to the benefit of the Parties and their respective successors and permitted assigns. 12. Counterparts. This Second Amendment may be executed in one or more counterpart copies, all of which will constitute and be deemed an original, but all of which together will constitute one and the same instrument binding on the Parties. Delivery by facsimile or electronic mail of this Second Amendment or an executed counterpart hereof will be deemed a good and valid execution and delivery hereof. Exhibit I Allegiance Hillview, L.P., a New York limited partnership By: TH GP LLC, a Delaware limited liability company, d/b/a TH Denton GP LLC in the State of Texas, its general partner By: Name: ndr, -hnri-ia Title: Authorizod -aijna Qj:v FTQ71401-19"1�� STATE 0F COT JNTY 017t-� Printed Name of Notary Public [SEAL] My Commission Expires: ' HEATHER N, MARTIN V�r% Notary Public, SWO 01 Te'xas My Commission EX085 1 "'X'A . June 06, 2016 lj�"11111" I I s % , * - - -- W-upe Exhibit I DB DENTON H LLC, a Delaware limited liability company By: DB Denton Holdings LLC, a Delaware limited liability company Its: Sole Member By: RED Rayzor Ranch, LLC, a Delaware limited liability company Its: Maiiagirio Member IF By: Michael Ebert Its: Manager STATE OF COUNTY OF This instrument was ACKNOWLEDGED before me on -- 7 4 & by WW Michael Ebert, the manager of RED Rayzor Ranch, LLC, a Delaware limited- liability company, the managing member of DB Denton Holdings LLC, a Delaware limited liability company, the sole member of DB Denton 11 LLC, a Delaware limited liability company, on behalf of such limited liability company. RAMONA ZAPUSTAS Notary Public,StatO of Arizona County mar=pa My commimon Expires February 03, 2017 My Commission Expires: N4 %oj t "ary Public Printed Name of Notary Public Exhibit 1 CITY OF g Iks c Campbell, City Manager . � 1 STATE OF TEXAS ) COUNTY OF DENTON ) This instrument was ACKNOWLEDGED before me on `1' . by of fie City tai` Deiitori Texas, on dehiavof the City of Denton, I'ex-, ts. 4r�l' °r,� (�. J � d° -', o � t I f " y �. JANE E RICHARDSON 1,��Otary pub�IC, State of Texas My co; june 27, 2017 My Commission Expires: 1) m ,. z$ Notary Public cT w Printed Name of Notary Public Exhibit 1 Exhibit A Table A -1 Categories of Eligible Improvements Estimated Costs Hwy 380 Improvements $8,133,150 Site drainage $4,720,750 Regional drainage improvements $2,696,750 Internal commercial roads, including water, sewer, streetscapes, plazas, and amenities $20,004,064 Scripture Road improvements $675,050 Bonnie Brae improvements $1,271,900 Public Parking garage $6,730,375 Major public infrastructure relocation $2,013,650 Miscellaneous fees /services $5,754,311 Interest during construction on non - residential development $10,000,000 SUBTOTAL Table A -1 $62,000,000 The actual cost of any individual category of Eligible Improvements may vary from the Estimated Costs shown on this Table A -1. Grantee and Assignee have the right to adjust individual line items of the Estimated Costs of the individual Categories of Eligible Improvements so long as the SUBTOTAL of $62,000,000 is not exceeded. Table A -2 _ 1 -35 access roads and ramps $3,000,000 Additional Interest during construction on non - residential development after 1/1/15 $3,000,000 SUBTOTAL Table A -2 $6,000,000 The actual cost of Table A -2 individual category of Eligible Improvements may NOT exceed the Estimated Costs shown on this Table A -2. Actual costs up to but NOT exceeding the amounts in Table A -2 are considered Estimated Costs of Eligible Costs. TOTAL Table A -1 and Table A -2 $68,000,000 The amounts levied and collected through PID Assessments by the City for Eligible Improvements defined in Table A -1 and Table A -2 shall be considered reimbursable costs so long as the amounts levied and collected through PID Assessments are deducted from the Category(ies) in Table A -1 or Table A -2 above and so long as the TOTAL of $68,000,000 is not exceeded. Exhibit 1 July 12, 2010 Allegiance Hillview, L.P. 1345 Avenue of the Americas - 46th Floor New York, New York 10105 Attention: Constantine Dakolias, President 215 E. McKinney Denton, Texas 76201 (940) 349 =7776 phone (940) 349 -8596 fax Economic Development Department Re: Rayzor Ranch Chapter 380 Agreement — Eligible Costs Approval Dear Andy: I am in receipt of your Request #1 detailing eligible costs incurred to date for the Rayzor Ranch project. Request #1 reflects a subtotal of $24,146,498 for Phase I (north of Hwy 380) and $15,930,322 for Phase ll (south of Hwy 380), for a combined total of $ 40,076,820. The categories and costs have been reviewed • by our Engineering, Real Estate and Economic Development staff and have been approved as Eligible Costs per the Chapter 380 Agreement dated June 15, 2010. Please let me know if you have any questions. Sincerely, Linda Ratliff, Director Economic Development Attachment: Request #1 Rayzor Ranch Eligible Costs cc: George Campbell, City Manager Andrew Osborne, Allegiance Hillview, L.P. It X W o - � Mu Alf z. 5� .� § '�ejY�xga$�pa�A 4E9� AIIM gg§ 'd n9Aa@$$$s °•fie d aES+g�g���dEg� 11 11 Hia I,J al, 11 11 I,J sAlegal \our documents \urdinances\1 0\380 amended a.r- allegiance hillview doc Exhibit 2 ORDINANCE NO. 2010-142 AN ORDINANCE APPROVING A CHAPTER 380 ECONOMIC DEVELOPMENT GRANT AGREEMENT WITH ALLEGIANCE HILLVIEW, LP; AND PROVIDING AN EFFECTIVE DATE. WHEREAS, Allegiance Hillview, LP ( "Allegiance ") has made a request of the City of Denton ( "City ") to establish an economic development program under Chapter 380 of the Texas Local Government ( "Chapter 380 ") to stimulate the development of commercial property within the City of Denton; and WHEREAS, on May 15, 2007, the City Council adopted Ordinance No. 2007 -113 which included an Economic Development Grant Agreement (the "Original Agreement ") establishing an economic development program under Chapter 380; and WHEREAS, on March 10, 2009, the City Council adopted Ordinance No. 2009 -064 which amended the Original Agreement (the "Amendment "); and WHEREAS, Allegiance has requested that certain terms of the Original Agreement, as amended by the Amendment, be again amended; and WHEREAS, due to the nature of the requested amendments and to clarify the intent of the parties, Allegiance and the City desire to enter into a new agreement ("Agreement ") with regard to the economic development grant described herein; and WHEREAS, it is in the public interest to authorize the approval of the Agreement, which is attached hereto and made a part of; NOW, THEREFORE; THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The recitals and findings contained in the preamble of this Ordinance are incorporated into the body of this Ordinance. SECTION 2. The Mayor, or the Mayor Pro Tem, is hereby authorized to execute the Agreement on behalf of the City of Denton and to exercise all rights and duties of the City of Denton under this Agreement, including without limitation the authorization to make the expenditures set forth in the Agreement. SECTION 3. This Ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the r-M day of Ozw '2010. s. \legal\our documents \ordinances \10\380 amended agr- allegiance hillview.doc Exhibit 2 ATTEST: - JENNIFER WALTERS, CITY SECRETARY BY: Ilk- Odfqn) APPRO ED A TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY BY:. Page 2 Exhibit 2 THE STATE OF TEXAS § COUNTY OF DENTON 5 ECONOMIC DEVELOPMENT PROGRAM GRANT AGREEMENT WITH ALLEGIANCE IIILLVIEW, L.P. This Economic Development Program Grant Agreement (this "Agreement ") is made and entered into by and between ALLEGIANCE HILLVIEW, L.P. ( "Grantee "), a New York Limited Partnership, and the CITY OF DENTON, TEXAS (the "City "), a Texas municipal corporation, for the purposes and considerations stated below. Grantee and the City are individually referred to as a "Party" and collectively as the "Parties." Section 1. Authorization. This Agreement is made pursuant to the Economic Development Program provisions of TEXAS LOCAL GOVERNMENT CODE, Chapter 380 (the "Act ") to promote local economic development and to stimulate business and commercial activity in the City. Section 2. Definitions. "Eligible Improvements" means any improvements included within the categories identified on Exhibit A. "Eligible Phase I Costs" means the actual amounts paid for Eligible Improvements in Phase I, including amounts paid for the Highway 380 Improvements. "lligible Phase lI Costs" means (i) the actual amounts paid for Eligible Improvements in Phase 11 plus (ii) the amount by which the amounts paid for Eligible Improvements in Phase I exceed $20 million. "Grantee" means Allegiance Hillview, L.P., and its successors and assigns as permitted by this Agreement. Page 1 1915\010\9511.2 Exhibit 2 "Highway 380 Improvements" means the reconstruction of US Highway 380 consisting of two additional lanes (one on the north side and one on the south side of the highway) from the intersection of US 380 and Bonnie Brae to the intersection of US 380 and the nearest service road right -of -way for Interstate 35, including utility relocations required by the reconstruction. "Monthly Sales Tax Report" means the monthly report received from the Texas State Comptroller that shows the amount of Total Taxable Sales for a month period. "Phase I" means the portion of the Property located north of US 380, consisting of approximately 153 acres described in Exhibit B. "Phase II" means the portion of the Property located south of US 380, consisting of approximately 257 acres described in Exhibit B "Program Effective Date for Phase I" is defined in Section 3 of this Agreement. "Program Effective Date for Phase II" is defined in Section 3 of this Agreement. "Program Grant for Phase I" means 240 consecutive monthly payments made by the City to Grantee beginning on the Program Effective Date for Phase I and continuing for the term of the Program Grant for Phase I as described in Section 4.1 of this Agreement. Each monthly payment will be calculated as a percentage of the 1.5% sales tax collected by the City with respect to Total Taxable Sales in Phase I as reported in the Monthly Sales Tax Report, all as described in Section 5.1 of this Agreement. "Program Grant for Phase 11" means 240 consecutive monthly payments made by the City to Grantee beginning on the Program Effective Date for Phase Il and continuing for the term of the Program Grant for Phase I1 as described in Section 4.2 of this Agreement. Each monthly payment will be calculated as a percentage of the 1.5% sales tax collected by the City with respect to Total Taxable Sales in Phase 11 as reported in the Monthly Sales Tax Report, all as Page 2 1915101019511.2 Exhibit 2 described in Section 5.2 of this Agreement "Property" means the approximately 410 acres described on Exhibit B. "Required Infrastructure for Phase I" means the road and public utility infrastructure required to obtain final certificates of occupancy for the Retail Improvements or a phased portion of the Retail Improvements in Phase I, including but not limited to, Highway 380 Improvements and the road and utilities in Phase I that will be needed to serve the contemplated residential development at the north of Phase I. "Required Infrastructure for Phase I1" means the road and public utility infrastructure required to obtain final certificates of occupancy for the Retail Improvements or a phased portion of the Retail Improvements in Phase 1I, including but not limited to the portion of Heritage Trail located within Phase 11. 'Retail Improvements in Phase I" means a minimum of 400,000 gross square feet (as measured to the exterior building walls) of retail or commercial shopping center buildings located in Phase 1. "Retail Improvements in Phase 11" means a minimum of 600,000 gross square feet (as measured to the exterior building walls) of retail or commercial shopping center buildings located in Phase 11, comprised of the Town Center (as described by the zoning applicable to the Property), and other retail development in Phase II. "Substantial Completion" means: (i) with respect to the Retail Improvements in Phase 1, when final certificates of occupancy have been issued for the Retail Improvements in Phase I; (ii) with respect to the Required Infrastructure for Phase 1, when the Required Infrastructure for Phase I has been constructed and inspected in accordance with City and TxDot standards, as applicable, and as required to obtain final certificates of occupancy for the Retail Improvements or a phased portion of the Retail Improvements in Phase I; (iii) with respect to the Retail Improvements in Phase II, when final certificates of occupancy have been issued for the Retail Page 3 1915 \010 \9511.2 Exhibit 2 Improvements in Phase 1I; and (iv) with respect to the Required Infrastructure for Phase 11, when the Required Infrastructure for Phase I1 has been constructed and inspected in accordance with City and TxDot standards, as applicable, and as required to obtain final certificates of occupancy for the Retail Improvements or a phased portion of the Retail Improvements in Phase II. "Total Taxable Sales" means the total amount of all sales from which sales and use tax are collected from businesses located in Phase I or Phase II, as applicable, excluding sales occurring at any Dillard's, J.C. Penney Co., Macy's, Sears Roebuck and Co., Barnes & Noble, DSW (Discount Shoe Warehouse), and Ross Dress for Less that locates within the Property and closes any store located within the retail shopping area commonly known as the "Golden Triangle Mall." "TxDot" means the Texas Department of Transportation. "US 380" means U.S. Highway 380. Section 3. Terms of Program Grants for Phase I and Phase II. 3.1. Program Grant for Phase 1. This Agreement shall be effective as of the date executed by both parties. At any time following execution of this Agreement and following Substantial Completion of the Required Infrastructure for Phase I (but not later than January 1, 2013), Grantee may designate the first day of any month to be the Program Effective Date for Phase I by providing written notice to the City at least 60 days prior to the designated Program Effective Date for Phase 1. The City will begin making Program Grant for Phase 1 monthly installment payments on the designated Program Effective Date for Phase I and shall continue to make such monthly installment payments for 240 consecutive months as provided by this Agreement. This Agreement will terminate with respect to the Program Grant for Phase I upon the earlier to occur of (i) the date Grantee has been paid for the full amount of the Eligible Phase I Costs and the Eligible Phase 11 Costs, or (ii) 240 months after the Program Effective Date for Phase I regardless of whether Grantee has been paid the full amount of the Eligible Phase I Costs and Eligible Phase lI Costs. Page 4 1915 \010 \951 1.2 Exhibit 2 3.2 Program Grant for Phase 11. This Agreement shall be effective as of the date executed by both parties. At any time following execution of this Agreement and following Substantial Completion of the Required Infrastructure for Phase 11 (but not later than January 1, 2015), Grantee may designate the first day of any month to be the Program Effective Date for Phase lI by providing written notice to the City at least 60 days prior to the designated Program Effective Date for Phase II. The City will begin making Program Grant for Phase 11 monthly installment payments on the designated Program Effective Date for Phase II and shall continue to make such monthly installment payments for 240 consecutive months as provided by this Agreement. This Agreement will terminate with respect to the Program Grant for Phase II upon the earlier to occur of (i) the date Grantee has been paid for the full amount of the Eligible Phase II Costs, or (ii) 240 months after the Program Effective Date for Phase 11 regardless of whether Grantee has been paid the full amount of the Eligible Phase 11 Costs Section 4. Installment Payments for Program Grants for Phase I and Phase 11. 4.1. Program Grant for Phase I. For each month during the term of the Program Grant for Phase I, the City agrees, subject to the conditions contained in this Agreement, to make a Program Grant for Phase 1 installment payment to Grantee on or before thirty days following the City's receipt from the State Comptroller of the Monthly Sales Tax Report indicating Total Taxable Sales from the businesses located in Phase 1. The Program Grant for Phase I installment payments shall be calculated as provided in Section 5.1 of this Agreement. Issuance of the first certificate of occupancy by the City to any tenant within Phase I shall be a condition precedent to the initiation of Program Grant for Phase I installment payments. Program Grant for Phase I installment payments may be withheld at any time if there are delinquent property taxes on any property owned by Grantee and located in the City, and such installment payments will not be resumed until such delinquency is cured. Notwithstanding anything contained herein to the contrary, if Substantial Completion of the Retail Improvements in Phase I has not occurred on or before January 1, 2013, the City, in its sole discretion, may cease the Program Grant for Phase I installment payments and terminate this Agreement as to the Program Grant for Phase I, and Grantee will refund to the City all Program Grant for Phase I installment payments previously Page 5 1915\0 1 0\9511.2 Exhibit 2 made. In addition, the City, in its sole discretion, may terminate this Agreement as to the Program Grant for Phase I if Substantial Completion of the Required Infrastructure for Phase I has not occurred on or before January 1, 2013. 4.2. Program Grant for Phase I1. For each month during the term of the Program Grant for Phase 1I, the City agrees, subject to the conditions contained in this Agreement, to make a Program Grant for Phase II installment payment to Grantee on or before thirty days following the City's receipt from the State Comptroller of the Monthly Sales Tax Report indicating Total Taxable Sales from businesses located in Phase 11. The Program Grant for Phase II installment payments shall be calculated as provided in Section 5.2 of this Agreement. Issuance of the first certificate of occupancy by the City to any tenant within Phase 11 shall be a condition precedent to the initiation of Program Grant for Phase 11 installment payments. Program Grant for Phase lI installment payments may be withheld at any time if there are delinquent property taxes on any property owned by Grantee and located in the City, and such installment payments will not be resumed until such delinquency is cured. Notwithstanding anything contained herein to the contrary, if Substantial Completion of the Retail improvements in Phase II has not occurred on or before January 1, 2015; the City, in its sole discretion, may cease the Program Grant for Phase II installment payments and terminate this Agreement as to the Program Grant for Phase II, and Grantee will refund to the City all Program Grant for Phase II installment payments previously made. In addition, the City, in its sole discretion, may terminate this Agreement as to the Program Grant for Phase 11 if Substantial Completion of the Required Infrastructure for Phase 11 has not occurred on or before January 1, 2015 Section 5. Calculation of Installment Payments for Phase I and Phase II. 5.1. Program Grant for Phase 1. Program Grant for Phase I monthly installment payments during the term of the Program Grant for Phase I (as set forth in Section 3.1) shall be calculated as 50% of the 1.5% sales tax collected by the City with respect to the Total Taxable Sales from businesses in Phase I as established by the most recent State Comptroller's Monthly Sales Tax Report. The City's obligation to make such payments is contingent upon the City's receipt of the Monthly Sales Tax Report; provided, however, if the State Comptroller ceases to Page 6 19151010\9511.2 Exhibit 2 issue Monthly Sales Tax Reports, the City and Grantee shall cooperate to arrive at a reasonably equivalent and mutually agreeable alternative method of computing the Program Grant for Phase monthly installment payments. Payments of the Program Grant for Phase 1 monthly installment payments will be used FIRST, to repay Grantee for Eligible Phase I Costs up to a maximum of $20 million and THEN to repay Grantee for Eligible Phase lI Costs up to a maximum of $42 million, providing that Phase II installments have been initiated. Any adjustments resulting from overpayment or underpayment of sales tax by a retail business located within Phase I will be reflected in the monthly Program Grant for Phase I installment payment in which such overpayment or underpayment was reported by the State Comptroller. If for any reason the City is required to remit to the State Comptroller sales tax previously collected on reported sales within Phase 1, the next scheduled Program Grant for Phase I installment payment will be adjusted by the amount of overpayment or underpayment. Should the adjustment result in a negative Program Grant for Phase I installment payment due, Grantee will remit the balance to the City within 30 days. 5.2. Program Grant for Phase 11. Program Grant for Phase If monthly installment payments during the term of the Program Grant for Phase II (as set forth in Section 3.2) shall be calculated as 50% of the 1.5% sales tax collected by the City with respect to the Total Taxable Sales from businesses in Phase II as established by the most recent State Comptroller's Monthly Sales Tax Report. The City's obligation to make such payments is contingent upon the City's receipt of the Monthly Sales Tax Report; provided, however, if the State Comptroller ceases to issue Monthly Sales Tax Reports, the City and Grantee shall cooperate to arrive at a reasonably equivalent and mutually agreeable alternative method of computing the Program Grant for Phase 11 monthly installment payments. Payments of the Program Grant for Phase II monthly installment payments will be used to repay Grantee for Eligible Phase 11 Costs up to a maximum of $42 million. Any adjustments resulting from overpayment or underpayment of sales tax by a retail business located within Phase 11 will be reflected in the monthly Program Grant for Phase lI installment payment in which such overpayment or underpayment was reported by the State Page 7 1915 \010\951 1.2 Exhibit 2 Comptroller. If for any reason the City is required to remit to the State Comptroller sales tax previously collected on reported sales within Phase II, the next scheduled Program Grant for Phase II installment payment will be adjusted by the amount of overpayment or underpayment. Should the adjustment result in a negative Program Grant for Phase II installment payment due, Grantee will remit the balance to the City within 30 days. Section 6. Other Grantee Obligations. In consideration of the Program Grant for Phase I and the Program Grant for Phase I1, Grantee agrees as follows: 6.1 The Retail Improvements in Phase I and the Retail Improvements in Phase II shall be designed and constructed in accordance with the Rayzor Ranch Architectural Guidelines. 6.2 In the event of tenant turnover, Grantee shall diligently seek to obtain quality retail tenants that are new to the Denton retail market. However, existing Denton retail businesses shall not be prohibited from leasing retail space at the Property. 6.3 Grantee shall fund the Highway 380 Improvements and shall guarantee funding by providing the City with an irrevocable letter of credit pursuant to the Development Agreement for Rayzor Ranch (US 380). Failure to provide the letter of credit will be a default under this Agreement, and the City may withhold all Program Grant for Phase I and Program Grant for Phase II installment payments until an executed letter of credit is received by the City. Should Grantee receive reimbursement for the Highway 380 Improvements from TxDot, the amount of such reimbursement shall be deducted from the total amount of the Eligible Costs. 6.4 The Property will not be conveyed during the term of this Agreement to any entity whose ownership of the Property would cause the Property to become exempt from ad valorem taxes unless an agreement with the City to ensure a program of payments in lieu of ad valorem taxes has first been agreed upon; provided, however, this Section 6.4 shall not apply to the property designated for the future museum to be located on the Property, or property designated for parks or other public uses, including Cook Children's Hospital and the Denton Municipal Electric substation sites. Page 8 19151010V511.2 Exhibit 2 6.5 Grantee has dedicated within the Property all required right -of -way for the future expansion of Bonnie Brae as a secondary arterial. 6.6 In the event Grantee or any of its affiliates purchases any retail buildings in the retail shopping area commonly known as the "Golden Triangle Mall," Grantee or its affiliate shall offer in writing to sell such buildings to FMP Denton, LLC for: (i) the then fair market value of such buildings as established by a qualified, independent MAI appraiser, or (ii) the amount of any arms - length offer to purchase such buildings received by Grantee or its affiliate from any third -party retail user unrelated to Grantee or any of its affiliates, whichever is greater. Section 7. Audits and Monitoring. From time to time prior to and after the initiation of the Program Grant Installment Payments for Phase I, Grantee will submit statement(s) of Eligible Costs for Phase I expenditures. City will review the statement(s) and within 30 days provide Grantee with a letter, signed by the City Manager or his designee, notifying Grantee that items on the statement(s) are approved or denied as "eligible costs" or requesting additional detail if needed to make the determination of eligibility. From time to time prior to and after the initiation of the Program Grant Installment Payments for Phase II, Grantee will submit statement(s) of Eligible Costs for Phase II expenditures. City will review the statement(s) and within 30 days provide Grantee with a letter, signed by the City Manager or his designee, notifying Grantee that items on the statement(s) are approved or denied as "eligible costs" or requesting additional detail if needed to make the determination of eligibility. During the term of this Agreement, the City reserves the right to conduct audits of the sales and use tax records of businesses located within the Property if, in the sole opinion of the City, such action is determined to be necessary. Grantee agrees upon request to use reasonable efforts to assist the City in obtaining such records from tenant taxpayers. Failure to provide such assistance shall be grounds for default, and City may withhold any Program Grant installment payments until such assistance is provided. During the term of this Agreement, the City will Page 9 1915 \010\951 1.2 Exhibit 2 keep, or cause to be kept, copies of the Monthly Tax Reports and proper and current books and accounts in which complete and accurate entries shall be made of the amount of sales taxes received by the City from the State of Texas attributed to retail sales within both Phase I and Phase II and such other calculations, allocations and payments required by this Agreement. During the term, the City shall prepare within 180 days after the close of each fiscal year of the City, a complete financial statement for such year in reasonable detail covering the above information, and shall furnish a copy of such statement to Grantee. Upon the request of Grantee, and at Grantee's expense, City shall have the annual Program Grant for Phase I and the Program Grant for Phase ii financial statements prepared by an independent certified public accountant. Upon request of Grantee, City shall provide copies of City-records related to the Program Grant for Phase I and /or the Program Grant for Phase II to investors, lenders, or other parties designated by the Grantee. Section 8. Default. If a party fails to perform any of its obligations under this Agreement and such failure is not cured within 30 days after written notice, the failure of the non- performing party to cure within such 30 day period (or to commence to cure if the nature of the failure cannot reasonably be cured within 30 days) shall constitute a default under this Agreement and shall entitle the non - defaulting party to all remedies available at law or in equity (including injunctive relief, specific performance, and suspending or withholding Program Grant for Phase I or Program Grant for Phase II payments); PROVIDED, HOWEVER, NOTWITHSTANDING THE FOREGOING, (i) MONETARY DAMAGES SHALL BE LIMITED TO THE AMOUNT NECESSARY TO ENFORCE SPECIFIC PERFORMANCE OF THE FAILED OBLIGATION; (ii) THE CITY CANNOT TERMINATE THIS AGREEMENT AS TO PHASE I UNLESS (1) SUBSTANTIAL COMPLETION OF THE RETAIL IMPROVEMENTS IN PHASE I DOES NOT OCCUR ON OR BEFORE JANUARY 1, 2013 AS PROVIDED BY SECTION 4 HEREOF, (2) SUBSTANTIAL COMPLETION OF THE REQUIRED INFRASTRUCTURE FOR PHASE DOES NOT OCCUR ON OR BEFORE JANUARY I, 2013 AS PROVIDED BY SECTION 4 HEREOF, OR (3) GRANTEE IS IN DEFAULT OF ITS OBLIGATION TO PROVIDE THE LETTER OF CREDIT AS PROVIDED BY SECTION 6.3 HEREOF; (iii) THE CITY CANNOT TERMINATE THIS AGREEMENT AS TO PHASE II UNLESS (1) SUBSTANTIAL COMPLETION OF THE RETAIL IMPROVEMENTS IN PHASE 11 DOES NOT OCCUR ON OR BEFORE JANUARY 1, 2015 AS PROVIDED BY SECTION 4 HEREOF, (2) SUBSTANTIAL COMPLETION OF THE Page 10 1915101019511.2 Exhibit 2 REQUIRED INFRASTRUCTURE FOR PHASE II DOES NOT OCCUR ON OR BEFORE JANUARY 1, 2015 AS PROVIDED BY SECTION 4 HEREOF, OR (3) GRANTEE IS IN DEFAULT OF ITS OBLIGATION TO PROVIDE THE LETTER OF CREDIT AS PROVIDED BY SECTION 6.3 HEREOF; AND (iv) THE CITY MAY NOT TERMINATE, WITHHOLD OR SUSPEND PAYMENTS, OR TAKE ANY OTHER REMEDY WITH RESPECT TO PROGRAM GRANT FOR PHASE I PAYMENTS OR OTHERWISE RELATED TO PHASE I EXCEPT FOR DEFAULTS RELATED TO PHASE I AND THE CITY MAY NOT TERMINATE, WITHHOLD OR SUSPEND PAYMENTS, OR TAKE ANY OTHER REMEDY WITH RESPECT TO PROGRAM GRANT FOR PHASE II PAYMENTS OR OTHERWISE RELATED TO PHASE II EXCEPT FOR DEFAULTS RELATED TO PHASE II. Section 9. Mutual Assistance. The City and the Grantee shall do all things necessary or appropriate to carry out the terms and provisions of this Agreement and to aid and assist each other in carrying out the terms and provisions of this Agreement Section 10. Indemnity. It is understood and agreed that Grantee in performing its obligations hereunder is acting independently and the City assumes no responsibilities or liabilities in connection therewith to third parties and Grantee agrees to defend; indemnify and hold harmless the City from and against any and all claims, suits, and causes of action of any nature whatsoever arising out of Grantee's obligations hereunder. Grantee's indemnification obligations include the payment of reasonable attorney's fees and expenses incurred by the City in connection with such claims, suits, and causes of action. Section 11. Representations and Warranties by the City. The City represents and warrants that: 11.1 The City is a home rule Texas municipal corporation and has the power to enter into and has taken all actions to date required to authorize this Agreement and to carry out its obligations hereunder; Page 11 191510109511.2 Exhibit 2 1 1.2 The City knows of no litigation, proceedings, initiative, referendum, investigation or threat of any of the same contesting the powers of the City or its officials with respect to this Agreement that has not been disclosed in writing to Grantee; 11.3 The City knows of no law, order, rule or regulation applicable to the City or to the City's governing documents that would be contravened by, or conflict with the execution and delivery of this Agreement; 11.4 This Agreement constitutes a valid and binding obligation of the City, enforceable according to its terms, except to the extent limited by bankruptcy, insolvency and other laws of general application affecting creditors' rights and by equitable principles, whether considered at law or in equity. Subject to the indemnity provided by Section 10 of this Agreement, the City will defend the validity of this Agreement in the event of any litigation arising hereunder that names the City as a party or which challenges the authority of the City to enter into or perform its obligations hereunder. City recognizes that Grantee intends to commence construction and expend substantial monies in reliance upon the accuracy of the representation and warranty of the City as set forth in this Section 11. Section 12. Representations and Warranties by Grantee. Grantee represents and warrants that: 12.1 Grantee is a New York Limited Partnership duly organized and validly existing under the laws of the State of Texas and is, or will prior to the effective date of this Agreement, be qualified to do business in the State of Texas; has the legal capacity and the authority to enter into and perform its obligations under this Agreement; 12.2 The execution and delivery of this Agreement and the performance and observance of its terms, conditions and obligations have been duly and validly authorized by all necessary action on its part to make this Agreement; Page 12 1915\010\951 1.2 Exhibit 2 12.3 Grantee knows of no litigation proceeding, initiative, referendum, or investigation or threat of any the same contesting the powers of the City, Grantee or any of its principals or officials with respect to this Agreement that has not been disclosed in writing to the City; and 12.4 Grantee has the necessary legal ability to perform its obligations under this Agreement and has the necessary financial ability, through borrowing or otherwise, to construct the Improvements. This Agreement constitutes a valid and binding obligation of Grantee, enforceable according to its terms, except to the extent limited by bankruptcy, insolvency and other laws of general application affecting creditors' rights and by equitable principles, whether considered at law or in equity. Section 13. Rights of Lenders and Interested Parties. The City is aware that financing for acquisition, development, and /or construction of the infrastructure and retail improvements required by this Agreement may be provided, in whole or in part, from time to time, by one or more third parties, including, without limitation, lenders, major tenants, equity partners and purchasers or developers of portions of the Property (individually, an "Interested Party," and collectively, "Interested Parties "). In the event Grantee fails to perform any of its obligations under this Agreement, all notices to which Grantee is entitled under Section 8 of this Agreement shall be provided to the Interested Parties at the same time they are provided to Grantee (provided the Interested Parties have previously been identified to the City and provided their notice addresses to the City). If any Interested Party is permitted under the terms of its agreement with Grantee, to cure the event of default and /or to assume Grantee's position with respect to this Agreement, the City agrees to recognize such rights of the Interested Party and to otherwise permit the Interested Party to cure the event of default and to assume all of the rights and obligations of Grantee under this Agreement. The City shall, at any time upon reasonable request by Grantee, provide to any Interested Party an estoppel certificate or other document evidencing that this Agreement is in full force and effect and that no event of default by Grantee exists hereunder (or, if appropriate, specifying the nature and duration of any existing event of default). Upon request by any Interested Party, the City will enter into a separate assumption or similar agreement with such Interested Party, consistent with the provisions of this Section 13. Page 13 1915 \010\951 1.2 Exhibit 2 Section 14. Compliance. This Agreement shall be conditioned upon and subject to compliance with all applicable federal, state and city laws, ordinances, rules and regulations, including, without limitation, all provisions of the Development Code of the City of Denton. Section 15. Limitation. This Agreement shall never be construed as constituting permission or authority for development or construction pursuant to Chapter 245 of the Texas Local Government Code. Section 16. Entire Agreement; Changes and Amendments. This Agreement constitutes the entire agreement of the Parties with regard to the subject matter hereof and supersedes and replaces in their entirety all prior agreements related to the subject matter hereof including, but not limited to, that certain "Economic Development Program Grant Agreement with Allegiance Hillview, LP" executed and effective on or about March 10, 2009, and passed and approved by City Ordinance No. 2009 -064 dated March 10, 2009. Except as specifically provided otherwise in this Agreement, any alterations or deletions to the terms of this Agreement shall be by written amendment executed by both parties to this Agreement. Section 17. Successors and Assigns. This Agreement shall be binding on and inure to the benefit of the Parties, their respective successors and assigns. Grantee may assign all or part of its rights and /or obligations in or to or under this Agreement as related to Phase I and /or Phase II upon written notice to the City of such assignment. If an assignee agrees in writing to be bound by the terms and conditions of this Agreement and executes an amendment to this Agreement, the assignor shall be released as to the obligations assigned but not as to any obligations or liabilities of the assignor to the City that arose prior to the assignment. Section 18. Notice. Any notice and /or statement required or permitted to be delivered shall be deemed delivered five business days after being deposited in the United States mail, certified with return receipt requested, postage prepaid, addressed to the appropriate party at the following addresses, or at such other addresses provided by the parties in writing. Any such notice and /or statement shall also be deemed delivered when delivered by a nationally recognized delivery Page 14 1915101019511.2 Exhibit 2 company (e.g., FedEx or UPS) with evidence of delivery signed by anyone at the delivery address. If to Grantee: Allegiance Hillview, L.P. 1345 Avenue of the Americas - 46`h Floor New York, New York 10105 Attention: Constantine Dakolias, President with a copy to: Allegiance Hillview, L.P. 5221 North O'Connor Boulevard, Suite 700 Irving, Texas 75039 Attention: Andrew Osborne If to the City: City of Denton Attn: City Manager 215 E. McKinney Denton, Texas 76201 Phone: 940.349.8307 Fax: 940.349.8596 With a copy Coto: City of Denton Attn: City Attorney 215 E. McKinney Denton, Texas 76201 Phone: 940.349.8333 Fax: 940.382.7923 Section 19. Venue. The obligations of the Parties are performable in Denton County, Texas, and if legal action is necessary to enforce this Agreement, exclusive venue shall lie in Denton County, Texas. Section 20. Applicable Laws. This Agreement is made subject to the provisions of the Charter and ordinances of City, as amended, and all applicable state and federal laws. Page 15 1915\01019511.2 Exhibit 2 Section 21. Governing Law. This Agreement shall be governed by and construed in accordance with the laws and court decisions of the State of Texas. Section 22. Benefit of Agreement. This Agreement is executed solely for the benefit of the Parties and their successors and assigns, and nothing in this Agreement is intended to create any rights in favor of or for the benefit of any third party. Section 23. Legal Construction/Partial Invalidity of Agreement. In case any one or more of the provisions contained in this Agreement shall for any reason be held to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision thereof and this Agreement shall be considered as if such invalid; illegal, or unenforceable provision had never been contained in this Agreement. EXECUTED and effective as of the day of , 2010, by the City, signing by and through its Mayor, duly authorized to execute same by action of the City Council, and by Grantee, acting through its duly authorized officials. F D ,TEXAS MARK A. RURR OUG , MAYOR 9. 4 wab APP OVCAT 0 LEGAL FORM: e-� ANITA BURGESS, CITY ATTORNEY Page 16 1915\0 1 0\9511.2 Exhibit 2 GRANTEE: ALLEGIANCE HILLVIEW, L.P., a New York limited partnership By: TH GP LLC, a Delaware limited liability company, d /b /a TH Denton GP LLC in the State of Texas, its general partner By:_ Name: !'J,, ✓ d5t 8r^e Title: Jgz�3PiaecQ Si�ka�. ACKNOWLEDGMENTS STATE OF TEXAS § COUNTY OF DENTON 5 4 This instrument was acknowledged before me on the /16 — day of 2010, by Mark A. Burroughs, Mayor of the City of Denton, Texas, on behalf of sai " city. o: *R'POO,, JANE E. RICHARD2Texajs + ;' = Notary Public, State oMy Commission Ex June 27, 2013 STATE OF TEXAS § COUNTY OF D&jA § �� &&dbod tary Public, in and for the State of Texas My Commission expires: m &% This instrument was acknowledged before me on the day of -'Tuv%e , 2010, by A-11jrc, the of TH GP LLC, a Delaware limited liability company, d /b /a TH Denton GP LLC in the State of Texas, the General Partner of Allegiance Hillview, L.P., a New York limited partnership, on behalf of the limited liability company and limited partnership. Page 17 1915\0 1 0\951 1.2 Exhibit 2 Notary Public, in and for the State of Texas My Commission expires: 10-31-.2013 DEBORAH VICK Notary Public, State of Texas My Commission Expires October 31, 2013 Page 18 1915\010 \9511.2 Exhibit 2 EXHIBIT A CATEGORIES OF ELIGIBLE IMPROVEMENTS Categories of Eligible Improvements Estimated Costs Hwy 380 Improvements $ 8,133,150 Site drainage 4,720,750 Regional drainage improvements 2,696,750 Internal commercial roads, including water, sewer, streetscapes, plazas and amenities 20,004,064 Scripture Road improvements 675,050 Bonnie Brae improvements 1,271,900 Public Parking garage 6,730,375 Major public infrastructure relocation 2,013,650 Miscellaneous fees /services 5,754,311 Interest during construction on non - residential development 10,000,000 TOTAL $62,000,000 The actual cost of any individual Categories of Eligible Improvements may vary from the Estimated Costs shown on this Exhibit A. Grantee has the right to adjust individual line items of Estimated Costs of the individual Categories of Eligible Improvements so long as the Total of $62,000,000 is not exceeded. Page 19 1915\010\9511.2 Exhibit 2 WIWI METES AND BOUNDS, PART ONE AND'PART TWO 410.28 ACRES i(TOTAL) FRANCIS BATSON SURVEY, ABSTRACT NO. 43 B.B.B. A C.R.R. COMPANY SURVEY, ABSTRACT NO. 192 CiTY "OFDENTON, DENTON_COUNTY, TEXAS PART ONE BEING a tract of land situated in the Francis Batson Surrey, Abstract No. 43, in the City of Denton. Denton Gouniy, Texas, being nil of a called - 121.4759 acre tract (descrlptlon of Shepherd Hall Tract, Tract 2). described in dead to Donton Hiliviow. L.P., recorded in Denton County Clerk's Fita No! 2005. 127450 of the Real Property Rocord5 or Denton County, Texas, all of a coiled 0.2254 sera tiad:(Traci 1), a cailed-2.1017 acre tract (Tract 2) and a colle&Z2200 acrd tract (Tract 3) described in dead to Cluantum at Denton Self Storage. -L.P.. recorded in Volume 5029; Pape 01847 of the Real Property Records of Denton County, Texas,_ part of a called 18.269 acre tract, described'in dead to Denton Progeny Joint Venture, recorded in Danten County Clark's File No. 00- RO101370 of the Real Property Records of Oanton County, Texas, all of a railed 2.999 acre tract, described in dead to Do Hall Proporties. Ltd., rocordod in Denton County CiarWs File No: 2005.40231 of the Real Property Records or Donlon County, Taxes, being part of a called 8.9217 acre tract of . land described in Deed to Mesquite Croak Development. Inc., recorded in Volume 4562. Page 0683 of the Real Property Records of Denton County, Taxes, and all of Lot 1 of SANDY. ADDITION. an addition to tho City of Denton. Denton County, Texas, according to the plat thereof recorded in Volume 13, Pape 47 and Cabinat J. Slide 348 of the Plat Records of Denton County, Texas, and being more poftularty described by metes and bounds as fcIlaws. BEGINNING at a 112•inch Iron rod round for the north end of a comer Clip at the intersection of the north right -ef -way line of West University Drive (U.S. Highway No: 350, b 100.20 foot wide pubEc right-of-way) and the west right -of -way IUe of Bonnie Brae Sliest (a variable width public tight- of4way) far the most aaslefty southeast comer of the boforementionad Lot- t of SANDY ADDITION: THENCE with the comer clip, South 45'4344' Wast.,a distance of 90.93 feet to a 314 -inch iron rod found for comer, THENCE with the north right -of- -way line of West University Drive, the following courses and distances to wit: -North 69.07'28' West, a distance of 773.40 fast to a 518 -Inch iron rod. with 'KHA" cap set for comer, , -North 66'5626" West, a distance of 1161.77 foes to a1l2 -inch iron rod found for the southeast comer of ` Ow called 8.9217 acre tract: THENCE leaving the north right -of -way line of West University Drive with 1110 east lino of the 8.9217 sera tract. North 00`23'40' East. a distance of 276.40 feel to a point (or comer, THENCE crossing the Gaited 8.9217-acre IratJ, the fotiawing courses and distances to wit. - -North 89't0'62" West, a distance of 227.61 feet to a point for comer. -North 00150135' East. a distance of 80.1119 feet to a point for comer -Worth' 69'0026' West, a distance of 2.00.00-foot to a point iorcorner In the east ilno of Lot i..Slock A of PORTERJANDRUS ADDITION, an addition to the City of DenWn; Denton County, Texas, according to the Plat iheroof recorded in Cabinet O, Slide 45 of the Plat Records of Donton County, Texas; - Pago 1 or 6 Exhibit 2 THENCE whir the east tine of Lot 1, Bieck A and the east fine of Lot 2, Block A of POA1tFVANDRUS ADDITION, an addition to the City of- Denton. Denton County, Taxas, according to the plat thereof recorded In Cabinet V. Slide 1156 of the Plat Records of Denton County, Texas, North 00'59'47' West, a distance of 217.71 foot to a 518 -Inch fron rod with 'KHA' cap set for the raftest comer of Lot 2,' Block A; •THENC£ with the north and wail lines of Lot 2, Block A; lira following eoulmos and distances to cull: –North 88'42'36' West, a distance of 400.01 fool to a 610dnch Fran nod with 'KHA' cap sal for ember, – South 01'Z8'09"•Wast, a dislanea of 28.89 feet to a 518 -Inch Iron rod with 'KW cap sat for the northeast comer of tot 1 R. 81ock 1 of ALVIN AND CHARLOTTE WHALEY ADDITION, an addition to the City of Denton, Donlon County. Texas, according to.ths platthereof retorted In Cabinet I, Saida 148 of the Plat Records of Denton County, Toms; THENCE leaving the west lino of Lot 2, Block A of PORTERJANDRUS ADDITION with the north line of Lot 1R. Block I of ALVIN AND CHARLOTTE WHALEY ADDITION, North 06'31'20' West; e distance of 399.39 feet to a 518 -Inch iron rod with 'KHA' cap eat in the nortiwasiariy dat-d- vtty line Interstate Higinvay No. 35 (a variable width public right- oFway) for the most northerly northwest corner of tot iR, Block / of ALVINAND CHARLOTTE WHALEY ADDITION; .THENCE leaving the north line of Lot iR, Block t of_ALVIN AND CHARLOTTE IiWIALEY ADDITION with the northeasterly right•af -way line interstate HighwayNo. 35, North i6'OT54' Weal, a distance of 632.67 toot to a 518-Inch iron rod with 'KHA' cap sot for the southwest comer of Lot 14 of GREENWAY CLUB ESTATES: an addition to the Cftyof Donlon, Donlon County, Texas. aecordJng to the plat thereof recorded in Volume 4. Page 27 of the Plat Records of Denton Camty, Texas; THENCE leaving the northeasterly right-ot -way fine Interstate Highway Na 35 with the south and east tines of GREENWAY CLUB ESTATES, the following courses and distances to Wt: –North' 73'164* East. a dlsiancb-of 810.79 feet to a_ 5184nch Ion tad wilh'KNA' cap sot for the beginning of a curve to the right; – Easterly, with the curve in the right, through a central angle of 16'47'40', having a radius of 345.00 rant, and chord bearing and distance of Nonh:81'39'03" East, 100.76 teat, an arc distance of 101.13 test to a 516. Inch iron rod with 'KHA" cap set for U* mid of the curve; –Nonh 80'58'43" East, a-distance of 364.46 fool to x518 -Inch iron rod wiih'KHA" cap set for comer; –Nosh 00.57'04" Wait, o disianco of 450.70 foot to a 5t8 -inch iron rod with'KHA' cap set for the southwest comer of Lot 1, Block 10 of WESTGATE HEIGHTS, an add21an to the City of Denton, Denton County, Texas, according to the plat thereof recorded in Cabinet E, Slide 78 of the Plat Records of Denton County, Texas; THENCE faaving tho cast line of GREENWAY CLV0 ESTATES with the south and east lines of WESTGATE 8 HEIGHTS. the following aoursis srnd distances to wit - –North 09'3737' East, a distance of 40.23 feet to a 5t8 -inch iron rod with 'KHA" cop set for comer, –South 87'34'57' East, a distance of 1042.99 foal to a 518•indt Iron rat with 'Kt Ui' qp eel for cornier, d –North 0013757' East, a distance of 310.04 feel to a 5184nch Iron rod with'KHA' cap set foriho most c northerly northwest corner of the b©foramantlorwd 121.4759 scm trod o a° THENCE leaving the oast line of WESTGATE HEIGHTS with the north line of the 121.4759 aae tract. South e 09'13'56' East. o distance of 2067.29 feel to a 5184nch fton rod with 'KHA' cap set in the wrest right•cf -way g lino of Bonnie Bree Street: '§ E uv Page z of 0 ^— R k Exhibit 2 THENCE leaving the north tine of the 121.4759 acre tract with the west right- cf•way Tins of Bonnie Bras Street. the following-courses and't:istartces town; -South 001371101i Wast..e distance of 1485.38 foot to a 610 -Inch Iron rod wtih'f(W cup set for comer, —South 00'26'45' West, a distance of 556.70 feel Who POINT OF BEGINNING and containing 153.37 acres of land. Bearing system based upon Texas State Plane Coordinate System, using momments- R0510166 AND R0610060. PART TWO BEING a tract of land situated in the B.B.B. $ C.R.R. Company Survey, Abstract No. 192. In the City of Denton, Denton County, Togas; being part of a called 265.6365 acre tract of land (dascription of Stiepha.M Hall Tract. Tract 1(, described In deed to Denton Hillview, L.P., recorded In Denton County Cioric's File No. 200x•127450 of the Real Property Records of Denton County, Texas, arxi all of Lot 3 of LOTS 1.2.6,3 PEARCYiCHRISTON ADDITION No. 1. an addition to the City of Denton, Denton County; Texas, accordinp.to the plot thereof recorded in Cabinar B, Slide 34 of the Plat Records of DentonCcunly, To=, and being morn particularty described by metes and bounds as follows. BEGINNING at a 518 -inch Iron rod found In the south-Fight-ol- way line of West University Drive (U.S. Highway No. 380, a 100.20 foot Wide public right -at -way) for ltte.northerty common canner of Lets 2 and 3 of tho beforementionod LOTS 1,2,8,3 PEARCYICHRiSTON ADDITION; THENCE leaving the south right -af -way line of West University Drive with the common fine of Wis 2 and 3, South 01'00'28' Wost, a distance Of 600.00 (e01 to a 5184nch iron rod found for the routtmrly common comer of Lots 2 and 3; THENCE leaving the common lino of Lots 2 and 3 with the south lines of Lot 2 and lot t-C of LOTS 1 -A, 1 -B. 1 -C PEARCYICHRISTON ADDITION No. 1, an addition to the City of Denton, Denton County, Texas, , according to the peal thereol recorded in Cabinet L. Slide 108 of 4io Plat Records of Denton County, Texas. South 89'0e'34' East, passing the southeast comer of Lot 1=C at a distance 017.11.59 feat 2nd continuing for a total distance of 730.60 feet to a 5t8 -Inch iron iod found In the west right -of -way fine of Bonnie Brae Street (a g variable width public right-al-way) for the most easterly norituml comer of the baforemmuioned'265.6365 1 . ouo fracl; THENCE with the west right -of -way lino or Bonnie SM9 street, the following courses and distances to wit_ W " —South 00'58'54 "West, a distance of 1-038.01, feet to a 518 -inch iron tied with 'KW cop set for comer; 00'40'51 West, a distance of 1175.56 feat to a 518 -both iron rod with -KHA' Clip set for the es ' 81 - -South b ©ginning of a, curve to the right;' -- Southwesterly; with the curve to the right, Ououah a control angto of 45'01'58°, having ti radius of 321.07 foot, and chord bearing and distance of -South 23'19'47' Wash. 245.81 foal, an arcdistanco of awe to the left; 252.35 feel; to a 5184nch Iron rod found for the beginning of a reverse —Southwesterly. with the the curve to the left, lhrough o central angle of 57'31'56', towing a radius of g 392:01 teal, and chord boaring and distance of South 17'04.48' West`377.30 foot, an arc dlafance of 393.63 foot to a5/0-Inch lmti rod -found fortho acd ofthe curvo; =South t t'4Y10' East,: a dlstanco:of 10.57 fool lto a 5f0 -Ind, Ircm rod found fa the north and of a Wmar clip at the into section of tho'north right -of -way line of Scripture Street (a variable, width public o tight-of-way) and the wrist right- of- way'lln a of Bonnie amo Stmot; - THENCE with Iho comor clip, South 39'33'50' West, a distanco of 11.48 feet to a FJ8 -inch iron rod found for the south and of the comer dip; Pago3of6 Y�tiL] oil AMMUM I- Exhibit 2 THENCE with the north right -of -way line of Scripture Street, North 08'58'00' Wasi, a distanoo of 1265.16 feet to a 5MInch Iron rod found In the south lino of the 265.8365 acre trod: THENCE leaving the north right -of -way line of Scripture Street; the following cows" and dislanotts towit: —North 01'02.00' East, a distance of 500.06 -teat to a 516-inch Iron rod found for comer, —North 00'50'00` Wost, a distance of 761.56 feel to a 541rch Irrin rod found for comer, —South 01'02100' West, a.drstance or 500.06 feet la a 5f0 -inch iron rod found in the nonh ilghl- or -wa"y line of SCAPIUra Street; THENCE with the north right -of -way line of Scripture Street, the following Nurses and distances to wit: —North 88'58'00' West, a distance of 318A41oof to a 5184nch Iran rod.vrilh "KHA' cap set for corner North 08'48'26' West, a distance of 41.73 foot to a 5184nch iron rod found in tho nonhaaslarly right- of.way line fnterstato Highway No. 35 (a vaiiable width public right - of -►vay) and the north right-of-way Lino of Scripture Street for the most southoriy southwest comer of the 256.6365 acre tract; THENCE with the noNieastarly.right -of uiay line Interstate Highway No. 35. the following courses and distances to wit —North 15150'30• West, a distance. of 38.32 :feet to a 518 -inch Iran rod wtth'KHA' cap set for comer —North 16'24'00• West, a distance o(3494.36 feet to a 518 -Inch Iran red found for comer, —North 14'60'06" East, o distance of 171.01 feet to a 3-Inch i;rass disk in concrele7aund for comer, —North 46'04`12' East, a distance of 303.95 feet to a 5t8 -Inch Imn rod found far ocrrer; —North 60'32'22' East, a distance of 114.22deol to a S /Wrich Yon rod found for comer, =North 00'5875' East; a distanco.of 13.09 fool to a Concrete monument found in the south right- of-way One of West University Drive;_ THENCE leaving the northeasterly right -of- -way line Interstate Highway No. 35 with Uw south right-of-way One OF West University Drive, the fotiowrtg courses and distances towil: —South 00'56.20' East, a distance of 2440.00 foot to a 518•inch Iron nod with "KW cap set for comer, —South 09'01'07' East, a distance of 117.72 fool to the POINT OF BEGINNING and containing 256.91 acres of land. 06arieg system based upon Texas State Plane Cooielinate System, ursing monuments R0610108 AND R0810060. This document was prepared under 22 TAC 5663.21, does not reflect the results of an on the ground survey, and is not to be used to convoy or establish Interests in real property except those rights and Intomsts 6rnpiled or established by the creation or rsconfiguratlon of the boundary of the political strtadivislon far which it was prepared. Page 4 of e I COQ ��W I I y 411 Exhibit 2 PART ONF- 953.37ACRES FRANCIS BATSON SURVEY, ABSTRACT X0.43 CITY OF DENTON, DENTON COUNTY, TEXAS lop d .3 . �. tiBGINMNG (PARroNE) P'OIMOF K sy Q d tl� V� ■ F - 4 T w • � � 153.37 ACRES ,� q • ' Lssoo•no. or oo►�.+rowu s.n ltzrcf s� err�o. attM[x g j; ou►.w. u,aa tnAAC nes _ �� I _ H:1t7 u1N �s r Darr u . iL7A"M.wJ�i rYt - XL iCII4 ►C CN7 . . NQJ77'OTi - - auri ucrv.s C 33 �w..n:•.�i :1.� � tl _ 3T n pF Aia A srr 1.0% 14x91 rr v � _ , uv" M. rw - 1/}..P ✓ri A� sail r b B18 a ° ff Win SCAM �a 1 -inch 500 R p 4. �d Page 5 of 6�� `m" adadtnis V% N211 kh N W. E wee S SCALr-- I Inch 600 IL Exhibit 2 PART -TWO,-256.91 ACRES B.B.B. & C.R.& COMPAWSURVEY, ABSTRACT JV0. 192 CrrY OF DFMTON, DENTON COUNTY, TEXAS pirge 5 of 6 clon mzo=.- I Exhibit 3 \ \codad \departments \legal \our documents \ordinances \lobed- allegiance 380 amendment. docx ORDINANCE NO. 2010 -210 AN ORDINANCE OF THE CITY OF DENTON, TEXAS APPROVING AN AMENDMENT TO AN ECONOMIC DEVELOPMENT PROGRAM GRANT AGREEMENT DATED JUNE 15, 2010 BETWEEN THE CITY OF DENTON AND ALLEGIANCE HILLVIEW, L.P.,WHICH WAS DULY ASSIGNED, IN PART, TO RED RAYZOR RANCH, LLC; AND PROVIDING AN EFFECTIVE DATE, THE COUNCIL OF THE CITY OF DENTON, TEXAS HERBY ORDAINS: SECTION 1. The City Manager, or his designee, is hereby authorized to execute an Amendment to Economic Development Program Grant Agreement (the "Amendment), in substantially the form of the Amendment which is attached hereto and made a part of this ordinance for all purposes. SECTION 2. The City Manager, or his designee, is authorized to exercise the City of Denton's rights and duties as set forth in the Amendment. SECTION 3. This ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the (.ZIA day o 52010. i (MARK AB G , MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY :V APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY MW i Exhibit 3 STATE OF TEXAS COUNTY OF DENTON FIRST AMENDMENT TO ECONOMIC DEVELOPMENT PROGRAM GRANT AGREEMENT WITH ALLEGIANCE HILLVIEW, L.P. THIS FIRST AMENDMENT TO ECONOMIC DEVELOPMENT PROGRAM GRANT AGREEMENT WITH ALLEGIANCE HILLVIEW, L.P. (this "Amendment ") made and entered into as of the vday of September, 2010, but effective as of July 30, 2010, by and among ALLEGIANCE HILLVIEW, L.P., a New York limited partnership ( "Grantee "), DB DENTON II LLC, a Delaware limited liability company ( "Assignee "), and the CITY OF DENTON, TEXAS, a Texas municipal corporation (the "City"), is based upon the following: A. On June 15, 2010, Grantee and the City entered into a certain Economic Development Program Grant Agreement with Allegiance Hillview, L.P. (the "Agreement "). B. Pursuant to the terms of that certain Assignment and Assumption Agreement, dated as of July 30, 2010, between Grantee and Assignee, a fully executed copy of which is attached to and made a part of this Agreement as Exhibit A (the "Assignment and Assumption Agreement "), Grantee assigned to Assignee, and Assignee accepted from Grantee, all of Grantee's right, title and interest in and to the following arising under the Agreement: (i) all obligations of Grantee with respect to Phase II (as defined in the Agreement) as set forth in the Agreement, including, but not limited to, those obligations set forth in Section 6 of the Agreement which are now the sole obligation of Assignee, (ii) the Program Grant for Phase II (as defined in the Agreement) and (iii) the rights of "Grantee" to payments of the Program Grant for Phase I (as defined in the Agreement) monthly installment payments pursuant to, in accordance with and subject to the terms of the last sentence of the first paragraph of Section 5.1 of the Agreement after Grantee has received Twenty Million and no /100ths Dollars ($20,000,000.00) in such payments, provided, that the Phase II monthly installment payments have been initiated (collectively, the "Phase II Rights and Obligations "). In connection therewith and as set forth in the Assignment and Assumption Agreement, Assignee agreed to (1) be bound by the terms and conditions of the Agreement as it relates to the Phase II Rights and Obligations, and (2) timely perform all of the Phase II Rights and Obligations pursuant to and in accordance with the terms, provisions and conditions of the Agreement. C. Pursuant to Section 17 of the Agreement, Grantee has the right to be fully and completely released from all of the Phase II Rights and Obligations as a result of such assignment and Assignee's agreement to (i) be bound by the terms and conditions of the Agreement as it relates to the Phase II Rights and Obligations and (ii) timely perform all of the Phase II Rights and Obligations pursuant to and in accordance with the terms, provisions and conditions of the Agreement. Exhibit 3 D. Grantee and the City desire to amend the Agreement to effectuate the release of Grantee from the Phase II Rights and Obligations as set forth below. NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, Grantee, Assignee and the City agree as follows: 1. Grantee and Assignee represent and warrant to the City that the Assignment and Assumption Agreement has been fully executed and is in full force and effect. 2. Assignee hereby agrees to (i) be bound by the terms and conditions of the Agreement as it relates to the Phase II Rights and Obligations, and (ii) timely perform all of the Phase lI Rights and Obligations pursuant to and in accordance with the terms, provisions and conditions of the Agreement. 3. Grantee is hereby fully and completely released from all of the Phase II Rights and Obligations; provided, however, that Grantee is not released from any obligations or liabilities of Grantee to the City under the Agreement for Phase I (as deemed in the Agreement). Grantee is not released from any obligations or liabilities of Grantee to the City under the Agreement for Phase II based solely upon acts or events which occurred prior to the date of the Assignment and Assumption Agreement. 4. To the extent of any inconsistency between the terms and provisions of this Amendment and the Agreement, the terms and provisions of this Amendment will control. Except as amended by this Amendment, all of the terms, covenants and conditions of the Agreement are in full force and effect and the Agreement is hereby ratified and confirmed. 5. This Amendment will be binding upon and will inure to the benefit of the parties to this Amendment and their respective successors and permitted assigns. 6. This Amendment may be executed in one or more counterpart copies, all of which will constitute and be deemed an original, but all of which together will constitute one and the same instrument binding on Grantee, Assignee and the City. Delivery by facsimile or electronic mail of this Amendment or an executed counterpart hereof will be deemed a good and valid execution and delivery hereof. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURES APPEAR ON NEXT PAGE.] 2 Exhibit 3 Grantee, Assignee and the City have executed this First Amendment to Economic Development Program Grant Agreement with Allegiance Hillview, L.P. on the day and year first above written. GRANTEE: ALLEGIANCE MLLVIEW, L.P., a New York limited partnership TH GP LLC (d/b /a TH Denton GP LLC, in the State of Texas), a Delaware limited liability company Its: By: Nar Its: ACKNOWLEDGMENT STATE COUNTY OFiti ) This instrument was ACKNOWLEDGED before me on � %/ 3p 2010, by Maw4,c19�1 , the C • D- 6 of TH GP LLC (d/b /a TH Denton GP LLC, in the State of Texas), a Delaware limited liability company, the general part r of Allegiance Hillview, L.P., a New York limited partnership, on behalf of such limited partriip, [SEAL] My Corn issi Expires: OAKLAND. 1866310.4 3 Public Printed Name of Notary Public THOMAS SANTORA Notary Public, State of New York No.01SA6191079 Qualified in New York County Commission Expires Aug. 4, 2012 Exhibit 3 [SIGNATURE PAGE TO FIRST AMENDMENT TO ECONOMIC DEVELOPMENT PROGRAM GRANT AGREEMENT WITH ALLEGIANCE HILLVIEW, L.P.] ASSIGNEE: DB DENTON II LLC, a Delaware limited liability company By: DB Denton Holdings LLC, a Delaware limited liability company Its: Sole Member By: RED Rayzor Ranch, LLC, a Delaware limited liability company Its: Managing Member By: 01� Michael Ebert Its: Manager ACKNOWLEDGMENT STATE OF L— ) r COUNTY OF This instrument was ACKNOWLEDGED before me on , 2010, by Michael Ebert, the manager of RED Rayzor Ranch, LLC, a Delaware limited liability company, the managing member of DB Denton Holdings LLC, a Delaware limited liability company, the sole member of DB Denton II LLC, a Delaware limited liability company, on behalf of such limited liability company. W-Notary RAMONA ZAPUSIAS Public state of Arizona Maricopa County My Commission Expires February 03, 2013 [SEAL] My Commission Expires: OAKLAND.] 866310.4 4 ��, I-- Notary Public Printed Name of Notary Public Exhibit 3 [SIGNATURE PAGE TO FIRST AMENDMENT TO ECONOMIC DEVELOPMENT PROGRAM GRANT AGREEMENT WITH ALLEGIANCE HILLVIEW, L.P.] CITY: CITY OF DENTO TE George C. ampbell, City Manager ACKNOWLEDGMENT STATE OF TEXAS ) COUNTY OF DENTON ) This instrument was ACKNOWLEDGED before me oA���e 2010, by George C. Campbell, City Manager of the City of Denton, City of Denton, Texas. Notary Public Printed Name of Notary Public [SEAL] My Commis ion Expires: ��� BY FU %�., JENNIFER K. WALTERS �'= °1* A`'� = Notary Public, State of Texas ' i. = My Commission Expires N'. �4r!,�1f OF S�```�� December 19, 2010 �h4una� APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY z BY: OAKLAND. 1866310.4 Exhibit 3 EXHIBIT A Assignment and Assumption Agreement [See attached.] OAKLAND. 1866310.4 Exhibit 3 ASSIGNMENT AND ASSUMPTION AGREEMENT THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Assignment "), is entered into as of July 9, 2010 by and between Allegiance Hillview, L.P., a New York limited partnership ( "Assignor "), and DB Denton H LLC, a Delaware limited liability company ( "Assignee "). Assignor and Assignee are referred to herein individually as a "Party" and collectively, as the "Parties ". WHEREAS, Assignor has agreed to assign and transfer to Assignee all of Assignor's right, title and interest in and to the following arising under that certain Economic Development Program Grant Agreement with Allegiance Hillview, L.P., dated as of June 15, 2010 (the "380 Grant "), by and between Assignor and the City of Denton, Texas, a Texas municipal corporation (collectively, the "Phase II Rights and Obligations "): (a) all obligations of Assignor with respect to Phase H as defined and set forth in the 380 Grant, including, but not limited to, those obligations set forth in Section 6 of the 380 Grant, which shall be the sole obligation of Assignee, (b) the Program Grant for Phase II as defined and set forth in the 380 Grant and (c) the rights of "Grantee" to payments of the Program Grant for Phase I (as defined and set forth in the 380 Grant) monthly installment payments pursuant to, in accordance with and subject to the terms of the last sentence of the first paragraph of Section 5.1 of the 380 Grant after Assignor has received Twenty Million and no /100ths ($20,000,000.00) in such payments, provided, that the Phase II monthly installment payments have been initiated; and WHEREAS, Assignor desires to assign to Assignee, and Assignee desires to accept from Assignor and assume, all of the Phase II Rights and Obligations upon the terms and conditions set forth in this Assignment and the 380 Grant. NOW, THEREFORE, for valuable consideration, the receipt of which is hereby acknowledged, Assignor and Assignee hereby agree as follows: 1. Assignor hereby conveys, transfers and assigns to Assignee all of the right, title and interest of Assignor in and to the Phase II Rights and Obligations. 2. Assignee hereby accepts the assignment, transfer and conveyance of all the right, title and interest of Assignor in and to the Phase II Rights and Obligations, and Assignee assumes, undertakes and agrees to (a) be bound by the terms and conditions of the 380 Grant as it relates to the Phase II Rights and Obligations, and (b) timely perform all of the Phase H Rights and Obligations pursuant to and in accordance with the terms, provisions and conditions of the 380 Grant. 3. Assignor shall indemnify, defend, and hold Assignee harmless from and against any and all claims, judgments, liabilities, damages, injuries, losses, costs, and expenses whatsoever (including reasonable attorneys' fees and disbursements) which Assignee may incur, or which may be claimed against Assignee, by reason of (a) any breach or alleged breach of any of the Phase II Rights and Obligations occurring prior to the date hereof, and/or (b) any obligation owed by, or any liability incurred by, Assignor with respect to any of the Phase II Rights and Obligations accruing, or arising out of actions which occur, prior to the date hereof. Assignee shall indemnify, defend, and hold Assignor harmless from and against any and all claims, judgments, liabilities, damages, injuries, losses, costs, and expenses whatsoever (including reasonable attorneys' fees and disbursements) which Assignor may incur, or which may be claimed against Assignor, by reason of (i) any breach or alleged breach of any of the Phase II Rights and Obligations occurring from and after the date hereof, and/or (ii) any obligation owed by, or any liability incurred by, Assignee with respect to any of the Phase II Rights and Obligations accruing, or arising out of actions which occur, from and after the date hereof. OAKLAND. 1868952.7 Exhibit 3 4. Nothing in this Assignment, express or implied, is intended or will be construed to expand or defeat, impair or limit in any way the rights, obligations, claims or remedies of the Parties at law or in equity. 5. Nothing in this Assignment, express or implied, is intended or will be construed to confer upon, or give to, any person, other than Assignor and Assignee, any rights, remedies, obligations or liabilities. 6. This Assignment inures to the benefit of and is binding upon Assignor and Assignee and their respective successors and assigns. From and after the date of this Assignment, (a) Assignor agrees that Assignor will not modify or amend, nor take any action to modify or amend, the 380 Grant with respect to any of the Phase II Rights and Obligations and (b) Assignee agrees that Assignee will not modify or amend, nor take any action to modify or amend, the 380 Grant with respect to Phase I (as defined and set forth in the 380 Grant) or the Program Grant for Phase I (as defined and set forth in the 380 Grant). 7. Assignor and Assignee hereby agree to execute any additional documents or instruments as the other may reasonably request to carry out or give effect to this Assignment. In such regard, Assignor and Assignee acknowledge and agree that as soon as reasonably practicable after the date of this Assignment they will submit to the City of Denton, Texas (the "QLty") a signed original First Amendment to Economic Development Program Grant Agreement with Allegiance Hillview, L.P. in form and content attached to and made a part of this Assignment as Exhibit A (the "Amendment ") in order to have Assignor released from all of the Phase II Rights and Obligations under the 380 Grant pursuant to the terms of Section 17 of the 380 Grant. Assignor and Assignee will each use their commercially reasonable efforts to have the City execute the Amendment as soon as reasonably practicable after the date of this Assignment. 8. This Assignment may be executed in one or more counterparts, each of which will be deemed to be an original, but all of which together shall constitute one and the same instrument. 9. A signature to this Assignment delivered by telecopy or other electronic means will be deemed valid and as effective as delivery in person. 10. This Assignment shall be governed by and construed in accordance with the laws of the State of Texas. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURES APPEAR ON NEXT PAGE.] OAKLAND.] 868952.7 2 Exhibit 3 Each of the Parties has caused this Assignment and Assumption Agreement to be duly executed and delivered by its duly authorized representative as of the date first written above. ASSIGNOR: ALLEGIANCE HILLVIEW, L.P., a New York limited partnership By: TH GP LLC (d/b /a TH Denton GP LLC, in the State of Texas), a Delaware limited liability company Its: General Partner By: _ Name: Its: OAKLAND. 1868952.7 OPERATING OFFICER {W0199362.DOC;} OAKLAND. 1868952.7 Exhibit 3 [SIGNATURE PAGE TO ASSIGNMENT AND ASSUMPTION AGREEMENT BY AND BETWEEN ALLEGIANCE HILLVIEW, L.P. AND DB DENTON II LLC] ASSIGNEE: DB DENTON II LLC, a Delaware limited liability company By: DB Denton Holdings LLC, a Delaware limited liability company Its: Sole Member By: RED Rayzor Ranch, LLC, a Delaware limited liability company -2- Its: Managing Member By: Michael Ebert Its: Manager STATE OF TEXAS ) COUNTY OF DENTON ) THIRD AMENDMENT TO ECONOMIC DEVELOPMENT PROGRAM GRANT AGREEMENT WITH ALLEGIANCE HILLVIEW, L.P. This Third Amendment to Economic Development Program Grant Agreement with Allegiance Hillview, L.P. (this "Second Amendment ") is made and entered into as of the day of , 2015, by Allegiance Hillview, L.P., a New York limited partnership ( "Grantee "), DB Denton II LLC, a Delaware limited liability company ( "Assignee "), and the City of Denton, Texas, a Texas municipal corporation (the "City "), Grantee, Assignee, and the City are individually referred to as a "Party" and collectively as the "Parties." WHEREAS, on June 15, 2010, Grantee and the City entered into that certain Economic Development Program Grant Agreement with Allegiance Hillview, L.P. (the "Agreement "); WHEREAS, on September 14, 2010, Grantee, Assignee, and the City entered into that certain First Amendment to Economic Development Program Grant Agreement with Allegiance Hillview, L.P., (the "First Amendment "), which First Amendment approved the assignment of certain right, title, and interest of Grantee in and to the Agreement to Assignee; WHEREAS, on May 13, 2014, Grantee, Assignee, and the City entered into that certain Second Amendment to Economic Development Program Grant Agreement to expand the categories of Eligible Improvements, to increase the total cost of the Eligible Improvements, to approve Phase I Costs and Eligible Phase 11 Costs, to expand the definition of Total Taxable Sales, to define Retail Improvements in Phase II to include "Initial" and "Additional" improvements, and to extend the Program Grant for Phase II; and WHEREAS, the Parties desire to further amend the Agreement to facilitate the development of a Hotel and Convention Center in Phase 11. NOW THEREFORE, for good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the Parties agree to amend the Agreement and First Amendment as follows: 1. Revised Definitions a. Total Taxable Sales. The term "Total Taxable Sales" is revised in its entirety to read as follows: "Total Taxable Sales means the total amount of all sales (including mixed beverage sales covered by HB 3572 effective January 1, 2014) from which the City receives sales tax with a point of sale in Phase I or Phase II, regardless of whether such sales are retail sales and use occurring at a business located in Phase I or Phase II (excluding sales occurring at any Dillard's, J.C. Penney Co., Macy's, Sears Roebuck and Co., Barnes & Noble, DSW (Discount Shoe Warehouse), and Ross Dress for Less that locates within the Property and closes any store located within the retail shopping area commonly known as the 'Golden Triangle Mall'), and excluding all sales occurring at the Hotel, Convention Center, and Restaurant developed by O'Reilly Hotel Partners Denton, as depicted in Exhibit A. All references in the Agreement that indicate that the Total Taxable Sales and the information shown on the Monthly Sales Tax Report are limited to sales from businesses located within Phase I or Phase II shall be expanded to include mixed beverage sales and all sales with a point of sale in Phase I or Phase II, regardless of whether such sales are retail sales occurring at a business located in Phase I or Phase 11. 2. Program Grant for Phase II. a. Section 3.2 of the Agreement is revised in its entirety to read as follows: "Program Grant for Phase IL This Agreement shall be effective as of the date executed by the City and Grantee. At any time following execution of this Agreement and following Substantial Completion of the Required Infrastructure for Initial Retail Improvements in Phase II (but not later than January 1, 2018), Assignee may designate the first day of any month to be the Program Effective Date for Phase II by providing written notice to the City at least 60 days prior to the designated Program Effective Date for Phase IL The City will begin making Program Grant for Phase 11 monthly installment payments on the designated Program Effective Date for Phase II and shall continue to make such monthly installment payments for 300 consecutive months as provided by this Agreement. This Agreement will terminate with respect to the Program Grant for Phase II upon the earlier to occur of (i) the date Assignee has been paid for the full amount of the Eligible Phase II Costs, or (ii) 300 months after the Program Effective Date for Phase II regardless of whether Assignee has been paid the full amount of the Eligible Phase 11 Costs. Additional Program Grant for Hotel and Convention Center Project, as depicted in Exhibit A. The City will begin making Additional Program Grant for Hotel and Convention Center Project monthly installment payments commencing the first year following receipt of the certificate of occupancy of the Hotel and Convention Center and following commencement of Phase II Grant Payments, and paid monthly until Grantee has received full reimbursement of $5,000,000." b. The first paragraph of Section 5.2 of the Agreement is revised in its entirety to read as follows: "Program Grant for Phase IL Program Grant for Phase 11 monthly installment payments during the term of the Program Grant for Phase II shall be calculated as 50% of the 1.5% sales tax collected by the City with respect to the Total Taxable Sales allocable to Phase II during the preceding month as established by the most recent State Comptroller's Monthly Sales Tax Report. The City's obligation to make such payments is contingent upon the City's receipt of the sales taxes from the Texas State Comptroller and the Monthly Sales Tax Report; provided, however, if the State Comptroller ceases to issue Monthly Sales Tax Reports, the Parties shall cooperate to arrive at a reasonably equivalent and mutually agreeable alternative method of computing the Program Grant for Phase II monthly installment payments. Payments of the Program Grant for Phase II monthly installment payments will be used to repay Assignee for Eligible Phase II Costs not otherwise paid with Program Grant for Phase I payments (up to a maximum of $21,000,000.00 upon Substantial Completion of the Initial Retail Improvements in Phase II and up to an additional $27,000,000.00 upon Substantial Completion of the Additional Retail Improvements in Phase II). Additional Program Grant for Hotel and Convention Center Project. Program Grant for Hotel and Convention Center Project shall be calculated as 15% of the 1.5% sales tax collected by the City with respect to the Total Taxable Sales allocable to Phase I and Phase 11 during the preceding month as established by the most recent State Comptroller's Monthly Sales Tax Report. The City's obligation to make such payments is contingent upon the City's receipt of the sales taxes from the Texas State Comptroller and the Monthly Sales Tax Report; provided, however, if the State Comptroller ceases to issue Monthly Sales Tax Reports, the Parties shall cooperate to arrive at a reasonably equivalent and mutually agreeable alternative method of computing the Program Grant for the Hotel and Convention Center Project monthly installment payments. Payments of the Program Grant for the Hotel and Convention Center Project monthly installment payments will be used to repay Assignee lost Phase II revenue and costs associated with the Hotel and Convention Center Project, up to $5,000,000." 3. Conflicts; Effect of Third Amendment. To the extent of any inconsistency between the terms and provisions of this Third Amendment and the Agreement, the First Amendment and the Second Amendment, the terms and provisions of this Third Amendment will control. Except as amended by this Third Amendment, all of the terms, covenants and conditions of the Agreement, the First Amendment, and the Second Amendment are in full force and effect and the Agreement, First Amendment, and Second Amendment are hereby ratified and confirmed. 4. Binding Effect. ffect. This Third Amendment will be binding upon and will inure to the benefit of the Parties and their respective successors and permitted assigns. 5. Counterparts. This Third Amendment may be executed in one or more counterpart copies, all of which will constitute and be deemed an original, but all of which together will constitute one and the same instrument binding on the Parties. Delivery by facsimile or electronic mail of this Third Amendment or an executed counterpart hereof will be deemed a good and valid execution and delivery hereof. CITY CITY OF DENTON, TEXAS A TEXAS MUNICIPAL CORPORATION GEORGE CAMPBELL, CITY MANAGER ATTEST: JENNIFER WALTERS, CITY SECRETARY APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY ALLEGIANCE HILLVIEW, L.P., a New York limited partnership By: TH GP LLC (d/b /a TH Denton GP LLC, in the State of Texas), a Delaware limited liability company Its: General Partner By: Name: Its: ACKNOWLEDGMENT STATE OF ) COUNTY OF ) This instrument was ACKNOWLEDGED before me on by , the of TH GP LLC (d /b /a TH Denton GP LLC, in the State of Texas), a Delaware limited liability company, the general partner of Allegiance Hillview, L.P., a New York limited partnership, on behalf of such limited partnership. Notary Public Printed Name of Notary Public [SEAL] My Commission Expires: DB DENTON II LLC, a Delaware limited liability company By: DB Denton Holdings LLC, a Delaware limited liability company Its: Sole Member By: RED Rayzor Ranch, LLC, a Delaware limited liability company Its: Managing Member By: Michael Ebert Its: Manager ACKNOWLEDGMENT STATE OF ) COUNTY OF ) This instrument was ACKNOWLEDGED before me on 1 , by Michael Ebert, the manager of RED Rayzor Ranch, LLC, a Delaware limited liability company, the managing member of DB Denton Holdings LLC, a Delaware limited liability company, the sole member of DB Denton II LLC, a Delaware limited liability company, on behalf of such limited liability company. Notary Public Printed Name of Notary Public [SEAL] My Commission Expires: CITY OF DENTON, TEXAS George A. Campbell, City Manager ACKNOWLEDGMENT STATE OF TEXAS ) COUNTY OF DENTON 1 This instrument was ACKNOWLEDGED before me on 1 , by Mark A. Burroughs, the Mayor of the City of Denton, Texas, on behalf of the City of Denton, Texas. Notary Public Printed Name of Notary Public [SEAL] My Commission Expires: w f m #< g ¢ LLI L U CID CD G t� Exhibit 5 ORDINANCE NO. AN ORDINANCE OF THE CITY OF DENTON, TEXAS, APPROVING A THIRD AMENDMENT TO AN ECONOMIC DEVELOPMENT PROGRAM GRANT AGREEMENT DATED JUNE 15, 2010 BETWEEN THE CITY OF DENTON AND ALLEGIANCE HILLVIEW; AND PROVIDING AN EFFECTIVE DATE. THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The City Manager, or his designee, is hereby authorized to execute a Third Amendment to Economic Development Program Grant Agreement (the "Third Amendment "), in substantially the form of the Third Amendment which is attached hereto and made a part of this ordinance for all purposes. SECTION 2. The City Manager, or his designee, is authorized to exercise the City of Denton's rights and duties as set forth in the Amendment. SECTION 3. This ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the day of 12015. CHRIS WATTS, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY • APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY BY:1% / f City Hall City of Denton 215 E. McKinney St. Denton, Texas 76201 www.cityofdenton.com D EN'FON File #: ID 15 -1062, Version: 1 Legislation Text Agenda Information Sheet DEPARTMENT: Development Services CM /ACM: Jon Fortune DATE: October 30, 2015 SUBJECT Consider adoption of an ordinance of the City Council of the City of Denton, Texas, authorizing the City Manager to execute a Management Agreement between the City of Denton and O'Reilly Hotel Partners Denton for the management of the Denton Convention Center; and providing an effective date. BACKGROUND As a condition of the Chapter 380 Economic Development Grant Program with O'Reilly Partners of Denton (OHPD), the City must have some management responsibility for the convention center. Though OHPD will have the primary responsibility for the day -to -day management and oversight of the facility, the City will assist in the management of certain sales missions and marketing functions in order to further the public purpose of promoting economic growth and conventions, and to retain adequate public control over the use of Hotel Occupancy Tax funds to ensure benefits to the City. It is necessary for the City and OHPD to enter into a management agreement to clearly define the parties' roles and responsibilities. OHPD has the responsibility and discretion in the operation, direction, management and supervision of the convention center. OHPD, or a third party designated by the OHPD, shall perform the following: 1. Day -to -day management and operations of the Convention Center, including, but not limited to determining all terms for admittance and charges for rooms, facilities, commercial space, if any, equipment rental, telecommunications services, audiovisual equipment, labor and other amenities and services provided 2. Repairs, maintenance, upkeep and replacement of furniture, fixtures, and equipment necessary to the operation of the convention center 3. Event booking and collection of sums due to OHPD for rental or use and admissions 4. Crowd control, security, box office supervision, admission procedures and servicing of users at conventions, trade shows, exhibits and entertainment 5. Obligations of any third -party operations agreements such as reciprocal easements, concessions, parking, and leases City of Denton Page 1 of 3 Printed on 10/26/2015 File #: ID 15 -1062, Version: 1 6. Perform any catering or food- and beverage- related services 7. Determine all labor policies, wages and salaries, fringe benefits, and any other personnel benefits with respect to the Convention Center in compliance with local, state, and federal law 8. Hire or terminate such persons or organizations as manager of any of the functions that are the responsibility of OHPD 9. Establish and maintain the master set of all booking records and schedules for the Convention Center Under the proposed Agreement, the City's management responsibility is limited and is only obligated to do the following: 1. Advertise and conduct solicitations and promotional programs to attract tourists and convention delegates or registrants to the Denton Convention Center, including, but not limited to: a. Marketing at the state and local level (including market analysis, campaign development, branding, promotion, etc.); b. Collecting and reporting metrics on marketing activity; c. Sales missions developed in conjunction with the Owner's hotel sales team to pre - identify and pre - qualify business- appropriate meetings for the Property; and d. Partnership development to create collaborative opportunities with local private, public, and non - profit sector entities. 2. Provide meeting, event, and pre- convention services, including, but not limited to: a. Conducting site visits and familiarization tours for potential clients; b. Customized servicing for groups (registration assistance, delegate name badge preparation, welcome packets, off -site function arrangements, etc.); and c. Serving as liaison between meeting planner client and hotel, local business, and transportation. 3. Identifying, collecting rate bids from, and securing overflow hotels in Denton for convention City of Denton Page 2 of 3 Printed on 10/26/2015 File M ID 15 -1062, Version: 1 delegates. The City plans to subcontract these duties to the Denton Convention and Visitors Bureau via an amendment to the existing contract. In order to help maintain OHPD's desired construction schedule, this item is being placed on the October 27, 2015 agenda for possible action should the City Council feel that they are ready to approve it. The next available action meeting for Council is November 17, 2015. EXHIBITS I - Ordinance 2- Management Agreement 3- Chapter 380 Agreement with O'Reilly Hotel Partners Respectfully submitted: Aimee Bissett Director of Development Services Prepared by: Caroline Booth Assistant Director for Economic Development City of Denton Page 3 of 3 Printed on 10/26/2015 ORDINANCE NO. AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF DENTON, TEXAS, AUTHORIZING THE CITY MANAGER TO EXECUTE A MANAGEMENT AGREEMENT BETWEEN THE CITY OF DENTON AND O'REILLY HOTEL PARTNERS DENTON FOR THE MANAGEMENT OF THE DENTON CONVENTION CENTER; AND PROVIDING AN EFFECTIVE DATE. WHEREAS, O'Reilly Hotel Partners Denton ( "OHPD ") engages in the design; development, and redevelopment of properties in the hospitality industry; and WHEREAS, O'Reilly Hotel Partners Denton ( "OHPD ") has an interest in land generally located in the Rayzor Ranch Town Center development, in the City of Denton, Denton County, Texas, which includes property located South of US Route 380 ending at Scripture Road, between IH -35 and North Bonnie Brae Street (the "Property "); and WHEREAS, OHPD has made a request of the City of Denton to establish economic development incentives for the Property to stimulate the development of commercial property, and promote travel, tourism, meetings, conventions and events for economic growth within the City of Denton; and WHEREAS, the Property will include an approximately 70,000 square foot convention center ( "Convention Center ") that is the subject of an Economic Development Agreement with the City of Denton executed between the Parties on , 2015a copy of which is attached as Exhibit "A" to this Ordinance ( "Development Agreement "); WHEREAS, the City has agreed to partially manage the Convention Center, which shall also provide OHPD a rebate of the hotel occupancy taxes generated by this Convention Center as part of said incentives; and WHEREAS, the City of Denton desires to enter into an agreement with OHPD which outlines the terms between the City and OHPD regarding the management of the Convention Center in order to further the public purpose of promoting travel, tourism, meetings, and conventions for economic growth in the City of Denton, which is in the form of Exhibit "B" attached hereto and incorporated by reference as if set forth at length herein; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The recitals and findings contained in the preamble of this ordinance are incorporated into the body of this ordinance. SECTION 2. The City Manager, or his designee, is hereby authorized to execute an agreement with OHPD in substantially the form of the Convention Center Management Agreement attached as Exhibit "B" on behalf of the City of Denton and to carry out the City's responsibilities and rights under the Agreement, including without limitation the authorization to make the expenditures to do so. 2 2 SECTION 3. This Ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this day of , 2015. ATTEST: JENNIFER WALTERS, CITY SECRETARY IC • APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY Kim CHRIS WATTS, MAYOR CONVENTION CENTER MANAGEMENT AGREEMENT BETWEEN THE CITY OF DENTON AND O'REILLY HOTEL PARTNERS — DENTON,LLC THIS AGREEMENT is made between the City of Denton, Texas, a municipal corporation formed under the laws of the State of Texas and located at 215 E. McKinney Street, Denton, Texas 76201 (the "City "), and O'Reilly Hotel Partners — Denton, LLC, a Missouri Limited Liability Company whose principal place of business is located at 2808 S. Ingram Mill Road, Building C100, Springfield, Missouri, 65804 ( "Owner ") for the limited management of a Convention Center. (The City and the Owner are collectively referred to as "the Parties "). WHEREAS, the Owner owns a tract of land generally located in the Rayzor Ranch Town Center development in the City of Denton, Denton County, Texas, which includes property located South of US Route 380 ending at Scripture Road, between IH -35 and North Bonnie Brae Street, and more specifically described in Exhibit "A" attached hereto and incorporated by reference herein (the "Property "); WHEREAS, the Owner's development of the Property includes an approximately 70,000 square foot convention center ( "Convention Center ") that is the subject of an Economic Development Agreement with the City of Denton executed between the Parties on , 2015 ( "Development Agreement "), which said Development Agreement is attached for reference hereto; WHEREAS, the Convention Center development shall serve to promote travel, tourism, meetings, conventions and events for the economic development and growth of the City of Denton and the economic benefit of the Parties; WHEREAS, the Parties desire that the City assist in the management of certain sales missions and marketing functions for the Convention Center as stated herein in order to further the public purpose of promoting economic growth and conventions, and to retain adequate public control over the use of public funds to ensure benefits to the City. NOW, THEREFORE, for the mutual promises and consideration as described herein, the Parties agree as follows: L TERMS A. Owner Management of the Convention Center. The Owner has the exclusive responsibility and discretion in the operation, direction, management and supervision of the Convention Center, subject only to the limitations expressed herein. In addition to its other duties as a reasonable convention center owner, the Owner, or a third party designated by the Owner, shall perform the following: 1 1. Day -to -day management and operations of the Convention Center, including, but not limited to determining all terms for admittance and charges for rooms, facilities, commercial space, if any, equipment rental, telecommunications services, audiovisual equipment, labor and other amenities and services provided at or with respect to the Convention Center. 2. All repairs, maintenance, upkeep and replacement of furniture, fixtures, and equipment; and, purchase and upkeep of all other inventories necessary to the operation of the Convention Center, as well as the Convention Center structure and accessory structures. 3. Event booking, coordination, and collection of sums due the Owner for rental or use and admissions. 4. Crowd control, security, box office supervision, admission procedures and servicing of users at conventions, trade shows, exhibits and entertainment. 5. Perform obligations of any third -party operations agreements such as reciprocal easements, concessions, parking, and leases. 6. Perform any catering or food- and beverage- related services with respect to the Convention Center. 7. Determine all labor policies, wages and salaries, fringe benefits, and any other personnel benefits with respect to the Convention Center in compliance with local, state, and federal law. 8. Implement all sales, advertising, public relations and promotional policies not covered by this Agreement. 9. Hire or terminate such persons or organizations as employees or manager of any of the functions stated herein that are the responsibility of the Owner. 10. Establish and maintain the master set of all booking records and schedules for the Convention Center (such records and schedules shall be provided to the City and to such third parties as directed by the City, at any time upon reasonable notice of request, and shall remain the property of the City). B. City Management Assistance. The Owner hereby authorizes and engages the City, or its designee as the law permits, to manage the Convention Center during the term of this Agreement as limited and described herein. The City hereby accepts such engagement subject to the terms and conditions expressed in this Agreement. The Owner shall cooperate with the City to the extent necessary for the City to fulfill its duties under this Agreement. The authority of the City to manage shall include the City's use of the Convention Center for public purposes. This Agreement does not change the character of such use and employees of the City using the 2 Convention Center for public purposes shall enjoy invitee status, as any other member of the public. Without limiting the generality of the foregoing, the City is hereby authorized and shall be obligated to do as follows in its discretion and as is allowed under the City's budget processes: 1. Advertise and conduct solicitations and promotional programs to attract tourists and convention delegates or registrants to the Denton Convention Center, including, but not limited to: i. Marketing at the state and local level (including market analysis, campaign development, branding, promotion, etc.); ii. Collecting and reporting metrics on marketing activity; iii. Sales missions developed in conjunction with the Owner's hotel sales team to pre- identify and pre - qualify business - appropriate meetings for the Property; and iv. Partnership development to create collaborative opportunities with local private, public, and non - profit sector entities. 2. Provide meeting, event, and pre- convention services, including, but not limited to: i. Conducting site visits and familiarization tours for potential clients; ii. Customized servicing for groups (registration assistance, delegate name badge preparation, welcome packets, off -site function arrangements, etc.); and iii. Serving as liaison between meeting planner client and hotel, local business, and transportation. 3. Identifying, collecting rate bids from, and securing overflow hotels in Denton for convention delegates. The City's duties described above shall specifically not include event coordinator duties for the Convention Center and those duties shall be the sole responsibility of Owner. C. No Joint Venture /No Joint Employment. This Agreement does not create a joint venture as to the Convention Center development or any separate business enterprise owned by Owner and physically joined to the Convention Center, such as the Hotel and Restaurant; and, the City, or its designee if permitted by law, shall remain independent of the actual operations of the Convention Center and shall only serve in a limited management position for the promotion of tourism and visitors to the City, which duties shall not require oversight or control by the Owner. The City, or its designee, shall not be considered a joint employer in performance under this Agreement and shall have no authority whatsoever over employees of Owner, its representatives, or of any lessee of the Convention Center; and, shall have no control over the terms and conditions 3 of their employment. This Agreement shall not be construed to cause the City, or its designee if permitted by law, to have obligations regarding federal and state employment laws with respect to those employees of Owner, regardless if those employees perform similar duties as the City herein. There shall be no shared employees. D. Expenses. The City shall not receive a management fee. The City shall only be responsible for costs associated with the performance of its duties under Section I.B. herein and shall not be responsible for any other costs incurred by Owner in performing its duties or otherwise operating the Convention Center. From time to time, if the City agrees to additional duties not defined herein, those costs shall be assessed against the Owner and not the City, and such duties shall be included in this Agreement in the form of a written addendum. Any responsibility of the City for costs associated with the management assistance as described in this Agreement shall be subject to annual appropriation by the City Council in the annual budget and the City's obligations under this Agreement shall not constitute a general obligation of the City or indebtedness under the Constitution or laws of the State of Texas. E. Booking Policy. The Owner acknowledges that the interest of the City requires a booking policy that takes into account not only those events which generate substantial direct revenue for the Convention Center, but also takes into account those events which produce less direct revenue, but generate significant peripheral economic benefits in the form of City hotel utilization, increased tourist revenues, and provide a stimulus to the general economy of the City of Denton. Owner agrees to use its commercially reasonable best efforts to accommodate this policy in the operation of the Convention Center. F. Insurance. Owner shall require that proper Certificates of Insurance evidencing general liability, automobile, bodily injury, property damage, death and workers compensation coverage shall be furnished, with copies to the City, and require that all policies be kept in force during the term of the Agreement by all vendors, concessionaires, subcontractors and service providers in the minimum amounts approved by the City. Such policies shall name the City as an additional insured. The Owner further agrees to maintain at all times during the term of this Agreement and the Development Agreement, with responsible insurance companies, insurance as follows: 1. Such worker's compensation, employer's liability or similar insurance as may be required by law, or such greater amounts which Owner shall deem advisable but no less than $1,000,000/$2,000,000; 2. A general liability insurance policy in the amount of at least $1,000,000 per person or $2,000,000 per occurrence for bodily injury or death; 3. An umbrella coverage insurance policy of at least $10,000,000 per occurrence; 4. Such other insurance against such other operation risks as Owner or City deems advisable to insure against, including, without limitation, auto liability insurance, liquor liability insurance and fidelity bonds; 5. Errors & Omissions or Professional Liability Coverage in the amount of at least $1,000,000. 6. Fire insurance and insurance against such other hazards ordinarily included by an all - risk form of extended coverage endorsement on the buildings, operating supplies, M furniture, furnishings and equipment in an amount equal to at least one hundred percent (100 %) of actual replacement cost (without deduction for depreciation) thereof, and all alterations, substitutions and replacements therefore, and bearing a standard noncontributory mortgagee loss payable endorsement in favor of the holders of any Mortgage on the Convention Center and providing, if reasonably available, for waiver of subrogation against such holder and the debt and security of such Mortgage in the event that the Convention Center is restored. This insurance shall include business interruption insurance. The Owner shall add the City as an additional insured on policies required by this Agreement. Moreover, the Owner shall assume all risks in connection with the adequacy of any insurance or self - insurance program and waives any claim against the City for any liability, costs or expenses arising out of any uninsured claim, in part or in full, of any nature whatsoever. Within a reasonable period of time after the effective date of this Agreement, Owner shall provide the City with a Certificate of Insurance showing compliance with this section. Any changes to coverage shall cause Owner to immediately notify the City in writing of such change. G. Compliance. Owner shall make all reasonable efforts to comply with all laws, rules, regulations, requirements, orders, notices, determinations, and ordinances of the City of Denton, including without limitation, the state and local liquor authorities, and the requirements of any insurance companies covering any of the risks against which the Convention Center is insured. Owner shall indemnify and hold harmless the City from any loss, cost, damage, or expense associated with compliance hereunder. H. Management Term. The term of this Agreement shall commence on the date the Agreement is approved by the City Council and shall continue for as long as the term of the Development Agreement, or as otherwise terminated thereby or hereunder. L Termination. The Agreement may be terminated prior to the expiration of the Agreement upon the occurrence of one or more of the following events: 1. Upon any default of the Development Agreement between the City and the Owner dated following the expiration of applicable cure periods; 2. Upon at least thirty (30) days prior written notice to the other party, if (i) the Convention Center is damaged or destroyed by fire or another casualty; (ii) all or a substantial part of the Convention Center is taken in a condemnation or eminent domain proceeding, or (iii) the Owner advises the City in writing prior to the Effective Date that the Owner has abandoned the development of the Convention Center; 3. Upon at least thirty (30) days prior written notice if Owner shall apply for or consent to the appointment of a receiver, trustee or liquidator of it or all or a substantial part of its assets; file a voluntary petition for bankruptcy; or, become otherwise insolvent; 4. If Owner permanently ceases operation of the Convention Center; 5 5. If Owner fails to provide or maintain insurance as required under this Agreement; or 6. If the Development Agreement results in a cessation of the incentive involving Hotel Occupancy Tax, then this Agreement terminates until such time as such incentive is resumed II. MISCELLANEOUS A. Assignability. If the Owner sells the Property, it shall provide the City at least sixty (60) days written notice of such sale identifying the buyer and whether the buyer intends to assume Owner's obligations under this Agreement and the Development Agreement. The City may assign its duties and /or designate a third party non - profit entity to perform the obligations hereunder in its own discretion and without approval of Owner; however, the City shall provide notice of such assignment within fifteen (15) days of the assignment. Failure to provide such notice does not constitute a waiver under this Agreement. B. Subcontract for Performance of Services. Nothing in this agreement shall prohibit, nor be construed to prohibit, the agreement by the City with another entity, person, or organization for the performance of those services described herein. In the event that the City enters into any arrangement, contractual or otherwise, with such other entity, person, or organization, the City shall cause other such entity, person, or organization to adhere to, conform to, and be subject to all provisions, terms, and conditions of this Agreement. C. Indemnification. OWNER AGREES TO INDEMNIFY, HOLD HARMLESS, AND DEFEND THE CITY, ITS OFFICERS, OFFICIALS, AGENTS, EMPLOYEES, AND REPRESENTATIVES FROM AND AGAINST ANY AND ALL CLAIMS (ADMINISTRATIVE OR JUDICIAL) OR SUITS FOR INJURIES, DEATH, DAMAGES, LOSSES AND EXPENSES (INCLUDING BUT NOT LIMITED TO REASONABLE ATTORNEYS' FEES FOR PRE - TRIAL, TRIAL AND APPELLATE PROCEEDINGS, ACCOUNTING FEES, APPRAISAL FEES AND CONSULTING AND EXPERT WITNESS FEES), ARISING OUT OF (1) ANY NEGLIGENT ACT OR OMISSION, ANY GROSS NEGLIGENCE OR ANY RECKLESS OR WILLFUL MISCONDUCT BY OWNER, ITS OFFICERS, DIRECTORS, AGENTS OR EMPLOYEES; (2) OWNER'S NON - PERFORMANCE OF ITS OBLIGATIONS HEREUNDER (WHETHER NEGLIGENT, GROSSLY NEGLIGENT, RECKLESS, OR WILLFUL); OR (3) ANY ACTION TAKEN BY OR ON BEHALF OF OWNER RELATING TO THIS AGREEMENT WHICH IS NOT PERMITTED BY, OR PURSUANT TO THE PROVISIONS OF THIS AGREEMENT OR REASONABLY NECESSARY TO CARRYING OUT LENDER AND /OR OWNER'S DUTIES. ANY INDEMNIFICATION SHALL APPLY REGARDLESS OF WHETHER OR NOT SAID CLAIM, DAMAGE, LOSS, OR EXPENSE IS COVERED BY INSURANCE AS HEREIN PROVIDED. IN THE D EVENT THAT A CLAIM IS ASSERTED AGAINST EITHER PARTY OR BOTH, OWNER SHALL PROVIDE CITY WITH A COPY OF SUCH CLAIM WITHIN A REASONABLE TIME FROM RECEIPT. OWNER FURTHER AGREES TO INDEMNIFY, HOLD HARMLESS, AND DEFEND THE CITY, ITS OFFICERS, OFFICIALS, AGENTS, EMPLOYEES, AND REPRESENTATIVES AGAINST ALL SUCH CLAIMS OR CAUSES OF ACTION RELATING TO COURSE OF EMPLOYMENT, WORKING CONDITIONS, WAGES AND /OR COMPENSATION OF OWNER EMPLOYEES OR FORMER OWNER EMPLOYEES AT THE CONVENTION CENTER AND RELATED HOTEL AND /OR RESTAURANT, INCLUDING VIOLATIONS OF ANY STATE, LOCAL, OR FEDERAL EMPLOYMENT LAW WHETHER COMMON LAW OR STATUTORY, AND AGAINST CLAIMS OF ANY PAST OR FUTURE LIFE /SAFETY CODE VIOLATIONS. D. Notice. Any notice required to be given under this Agreement or any statute, ordinance, or regulation, shall be effective when given in writing and deposited in the United States mail, certified mail, return receipt requested, or by hand - delivery, addressed to the respective parties as follows: CITY O'REILLY HOTEL PARTNERS — DENTON, LLC City Manager Tim O'Reilly City of Denton O'Reilly Hospitality Management, LLC 215 E. McKinney 2808 S. Ingram Mill Road, Building C100 Denton, TX 76201 Springfield, MO 65804 E. Inurement. This Agreement and each provision hereof, and each and every right, duty, obligation, and liability set forth herein shall be binding upon and inure to the benefit and obligation of the City and OWNER and their respective successors and assigns. F. Application of Laws. All terms, conditions, and provisions of this Agreement are subject to the Charter of the City of Denton, all ordinances passed pursuant thereto, and all judicial determinations relative thereto. This Agreement shall be governed by the laws of the State of Texas and venue shall lie in Denton County, Texas. G. Exclusive Agreement. This Agreement contains the entire understanding and constitutes the entire agreement between the parties hereto concerning the subject matter contained herein. There are no representations, agreements, arrangements, or understandings, oral or written, express or implied, between or among the parties hereto, relating to the subject matter of this Agreement, which are not fully expressed herein. The terms and conditions of the Agreement shall prevail notwithstanding any variance in this Agreement from the terms and conditions of any other document relating this transaction or these transactions. This Agreement may not be modified, amended, surrendered or changed, except by a written instrument executed by both parties. 7 H. Severability. If any section, subsection, paragraph, sentence, clause, phrase, or word in this Agreement, or application thereof to any person or circumstance is held invalid by any court of competent jurisdiction, such holding shall not affect the validity of the remaining portions of this Agreement, and the parties hereby declare they would have enacted such remaining portions despite any such invalidity. L No Representation. In entering into this Agreement, the parties acknowledge that the City has made no representation to the Owner regarding Owner's potential earnings, the possibility of future success or any other similar matter respecting the Convention Center and the City's assistance hereunder, and that the City expressly makes no guarantee as to the success of its assistance as provided hereby. This Agreement is effective as of the day of 12015. ATTEST: JENNIFER WALTERS, CITY SECRETARY APPROVED AS TO FORM: ANITA BURGESS, CITY ATTORNEY CITY OF DENTON, TEXAS BY: GEORGE C. CAMPBELL CITY MANAGER O'REILLY HOTEL PARTNERS — DENTON, LLC a Missouri Limited Liability Company ma Its: ACKNOWLEDGMENTS STATE OF TEXAS } COUNTY OF DENTON } The foregoing Management Agreement was executed before me on the day of 12015 by George C. Campbell, City Manager of the City of Denton, Texas, a Texas municipal corporation, on behalf of said Municipal Corporation. Name: Notary Public in and for the State of Texas STATE OF TEXAS } COUNTY OF DENTON } The foregoing Management Agreement was executed before me on the day of , 2015 by of O'Reilly Hotel Partners — Denton, LLC., on behalf of said corporation. Name: Notary Public in and for the State of Texas 0 EXHIBIT A (LEGAL DESCRIPTION OF THE PROPERTY) At the time of the backup deadline on 10/22/15, this information was not finalized. It will be provided as soon as possible. 10 Ile E fl Ll D OD C:51 All� S-A. W O Q. C0 0 U) 0 Co = x ca 9 E C) o C-� N 0 W m cu a) Cl i2 dr- 0 — m ORDINANCE NO. AN ORDINANCE APPROVING AN ECONOMIC DEVELOPMENT AGREEMENT UNDER CHAPTER 380 OF THE LOCAL GOVERNMENT CODE TO PROMOTE ECONOMIC DEVELOPMENT AND TO STIMULATE BUSINESS ACTIVITY IN THE CITY OF DENTON AND UNDER CHAPTER 351 TO PROMOTE TRAVEL, TOURISM, MEETINGS, CONVENTIONS, AND EVENTS FOR THE ECONOMIC GROWTH OF THE CITY OF DENTON, BETWEEN THE CITY OF DENTON AND O'REILLY HOTEL PARTNERS DENTON (OHPD), REGARDING THE DEVELOPMENT OF AN APPROXIMATE 12 ACRE PARCEL OF LAND GENERALLY LOCATED ON THE SOUTH SIDE OF U.S. HIGHWAY 380 (WEST UNIVERSITY DRIVE) ENDING AT SCRIPTURE ROAD, BETWEEN I -35 AND NORTH BONNIE BRAE STREET IN DENTON, TEXAS; AUTHORIZING THE EXPENDITURE OF FUNDS THEREFOR; AND PROVIDING AN EFFECTIVE DATE. WHEREAS, O'Reilly Hotel Partners Denton ( "OHPD ") has an interest in land generally located in the Rayzor Ranch Town Center development, in the City of Denton, Denton County, Texas, which includes property located South of US Route 380 ending at Scripture Road, between IH -35 and North Bonnie Brae Street (the "Property "); and WHEREAS, OHPD has made a request, on or about September 7, 2015, of the City of Denton ( "City ") to establish economic development incentives under Chapter 380 of the Texas Local Government to stimulate the development of commercial property within the City of Denton and under Chapter 351 of the Texas Tax Code to promote travel, tourism, meetings, conventions, and events for the economic development and growth of the City of Denton on the Property ( "Grant Application "); and WHEREAS, the Grant Application was approved by the Economic Development Partnership Board as compliant with the City of Denton's Tax Abatement and Incentive Policy on October 14, 2015; and WHEREAS, City and OHPD have negotiated an Economic Development Agreement to reflect the terms of the incentive, a copy of which is attached hereto and made a part hereof by reference (the "Agreement "), as well as a related Management Agreement; and WHEREAS, the City Council of the City of Denton hereby finds that the contemplated use and development of the Property, the proposed improvements provided for in the Agreement, and the other terms and conditions of the Agreement, will promote economic development, increase employment, and stimulate business and commercial activity within the City of Denton for the benefit of the public and therefore meets the requirements under Chapter 380 of the Texas Local Government Code; and WHEREAS, the City Council of the City of Denton further finds that the proposed Project on the Property will promote tourism and the convention and hotel industry and therefore meets the requirements under Chapter 351 of the Texas Tax Code; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON, TEXAS HEREBY ORDAINS: SECTION 1. The recitals and findings contained in the preamble of this ordinance are incorporated into the body of this ordinance. SECTION 2. The City Manager, or his designee, is hereby authorized to execute the Agreement attached hereto on behalf of the City of Denton and to carry out the City's responsibilities and rights under the Agreement, including without limitation the authorization to make the expenditures set forth in the Agreement. SECTION 3. This ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the day of , 2015. ATTEST: JENNIFER WALTERS, CITY SECRETARY am APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY J-- Page 2 CHRIS WATTS, MAYOR ECONOMIC DEVELOPMENT AGREEMENT WITH O'REILLY HOTEL PARTNERS — DENTON, LLC This Economic Development Agreement ( "Agreement ") is made and entered into as of the effective date provided for below, by O'REILLY HOTEL PARTNERS — DENTON, LLC, a Missouri limited liability company, located at 2808 S. Ingram Mill Road, Building C100, Springfield, Missouri, 65804 ( "Grantee "), and the CITY OF DENTON, a Texas municipal corporation, located at 215 E. McKinney Street, Denton, Texas 76201 (the "City ") for the purposes and considerations stated herein. The City and the Grantee are collectively referred to as the "Parties." WHEREAS, this Agreement is authorized pursuant to Article III, Section 52 -a of the Texas Constitution and Chapter 380 of the Texas Local Government Code (the "Act ") to promote local economic development and to stimulate business and commercial activity in the City of Denton, and pursuant to Chapter 351 of the Texas Tax Code to promote travel, tourism, meetings, conventions, and events for the economic development and growth of the City of Denton and economic benefit of the Parties; and WHEREAS, Grantee owns or is under contract to acquire a tract of land generally located in the Rayzor Ranch Town Center development, Denton, Texas 76201, which is within the city limits of the City of Denton, Denton County, Texas, which includes property located South of US Route 380 ending at Scripture Road, between IH -35 and North Bonnie Brae Street, and more specifically described in Exhibit "A" attached hereto and incorporated by reference as if set forth at length herein (the "Property "); and WHEREAS, the Property is located in the Rayzor Ranch Overlay District which maintains requirements for design and architectural standards that will control when not inconsistent with this Agreement, pursuant to Denton Development Code 35.7.15; and WHEREAS, the Property is also located in the Rayzor Ranch Public Improvement District No. 1 ( "PID"), upon which special assessments have been levied by the City within the PID to cover the issuance of PID Bonds that may be used to fund actual costs of authorized public improvements on the Property, such public improvements to be dedicated to the City in accordance with City of Denton Resolution R2014 -022, and that said PID assessments are not waived by this Agreement; and WHEREAS, Grantee desires to construct a 285 -318 room Embassy Suites hotel "Hotel "), an approximately 70,000- square -foot convention center ( "Convention Center "), and a Houlihan's restaurant ( "Restaurant ") on the Property with an estimated capital investment of approximately $93 million ( "Project "); and WHEREAS, the Grantee, by separate agreement, is delegating to the City certain management functions of a Convention Center, including the visitors' programs and activities in accordance with the terms, provisions, and requirements of the separate agreement; and WHEREAS, on or about September 7, 2015, Grantee submitted a City of Denton Incentive Application ( "Grant Application ") shown in Exhibit "B" concerning the contemplated use and development of the Property in order to request economic development incentives to defray a portion or all of the costs of the development, construction and operation of the Project pursuant to the Act; and WHEREAS, the Grant Application was reviewed by the Economic Development Partnership Board ( "EDP board ") in accordance with the City of Denton's Tax Abatement and Incentive Policy on October 14, 2015 and the EDP board found the Project meets the qualifications for tax incentives and recommended approval of the incentives as outlined herein; and WHEREAS, the City intends to provide Grantee with economic development incentives subject to the terms herein until the earlier of the following: (1) 25 years; or (2) the combined principal amount of $28 million and interest payment of $26 million for a total aggregate amount of $54 million is reached; and WHEREAS, the City Council of the City of Denton hereby finds that the contemplated use and development of the Property, the proposed improvements provided for herein, and the other terms and conditions of this Agreement, will promote economic development, increase employment, and stimulate business and commercial activity within the City of Denton for the benefit of the public and therefore meets the requirements under Chapter 380 of the Texas Local Government Code; and WHEREAS, the City Council of the City of Denton further finds that the proposed Project on the Property will promote tourism and the convention and hotel industry and therefore meets the requirements under Chapter 351 of the Texas Tax Code; and NOW, THEREFORE, the City and Grantee for and in consideration of the Property and the promises contained herein do hereby contract, covenant and agree as follows: I. DEFINITIONS "Approved Franchise" means a franchise agreement approved by the City with an Approved Franchisor whereby O'Reilly Hotel Partners — Denton, LLC is permitted to operate the hotel and restaurant using the name and reservation system of any Approved Franchisor. "Approved Franchisor" means, initially, an Embassy Suites and a Houlihan's Restaurant and Bar; provided that, from and after the date the hotel opens for business to the public throughout the term of the Approved Franchise and in the event, after the expiration of the Approved Franchise, another franchise is entered into, such term after approval by the City within the City's sole discretion, shall also include a national or 2 international hotel franchisor for a Comparable Hotel Property and /or a national or international restaurant franchisor for a specific restaurant product of the same or higher quality than Houlihan's Restaurant and Bar. "Capital Investment" means the total actual capital cost to Grantee for the acquisition of land, development, and construction of the Project, including a reasonable capital operating reserve, and the furniture and equipment installed at the Project. "City HOT Returns" means City of Denton Hotel/Motel Occupancy Tax Reports on which the Grantee or other persons report and remit City of Denton hotel occupancy taxes imposed under Chapter 351 of the Texas Tax Code on amounts paid for hotel rooms in the Proj ect. Such Reports shall be submitted by the Grantee the first week of each month using the prior month's data and shall be in the form attached as Exhibit "C" hereto. "Comparable Convention Center" means the operation and maintenance of the Convention Center in a manner such that its condition shall demonstrate refined, high quality, and fully functional appointments; furniture, fixtures, and equipment; exterior and interior finishes; landscaping; and mechanical, electrical, and structural components consistent with convention centers of comparable size and operation within the State of Texas that are affiliated with Comparable Hotel Properties. For the purposes of this Economic Development Agreement, the term Comparable Convention Center shall include, as of the Effective Date (but which may not be included in the future if such properties no longer meet the definition of "Comparable Convention Centers "), the San Marcos, Texas, convention center and the Frisco, Texas, convention center. The City reserves the right to inspect the Convention Center in the Project from time to time as necessary to maintain compliance herein. "Comparable Hotel Properties" means a hotel that (1) is a full- service, "convention - oriented hotel" (not including so- called "budget" or "limited service" hotels or motels) or, (2) has at least two hundred fifty (250) keys, (3) contains features, finishes, and amenities that are available in hotels of similar age that are at all times during the term of this Economic Development Agreement, maintained so as to be considered an upscale, full- service, "convention- oriented" or full - service hotel, as applicable, that is operated and maintained according to standards similar to those of the Embassy Suites brand as such brand standards exist on the Effective Date of this Agreement, and (4) is located within the State of Texas. For the purposes of this Economic Development Agreement, the term Comparable Hotel Properties shall include, as of the Effective Date (but which may not be included in the future if such properties no longer meet the definition of "Comparable Hotel Properties "), Embassy Suites —San Marcos, Texas and Embassy Suites Frisco, Texas. "Convention Center" means an upscale convention center facility of approximately 70,000 square feet in size under roof, containing meeting space of approximately 37,850 square feet that will accommodate conventions with up to 650 people and a grand banquet room that will accommodate up to 1,750 people for banquet -style events, and related improvements, including landscaping, the required parking spaces as determined by the City's development standards, and required infrastructure. The convention center facility 3 shall be managed in whole or part by the City and shall be primarily used to host conventions and meetings. "Force Majeure" means any contingency or cause beyond the reasonable control of a party including, without limitation, acts of God or the public enemy, acts of terrorism, war, riot, civil commotion, insurrection, government or de -facto governmental action (unless caused by acts or omissions of the party), fires, explosions, rain or other weather delays, floods, strikes, slowdowns or work stoppages. "Full- service Hotel" means mid - price, upscale or luxury hotel with a restaurant, lounge facilities, and meeting space as well as minimum service levels including bell service and room service. "Hotel" means a building in which members of the public obtain sleeping accommodations for consideration. "Improvements" mean the construction and equipping of the Property as set forth in the Grant Application, including but not limited to: (1) costs related to the development and improvement of the real estate, including, without limitation, construction costs and design and engineering costs; and (2) tangible personal property located on or at the Property owned or controlled by Grantee, excluding inventory, supplies, and vehicles. "Management Agreement" means the agreement between the City and O'Reilly Hotel Partners — Denton, LLC setting forth the parties' respective functions in managing the Denton Convention Center in whole or in part and as amended in writing. "Monthly Sales Tax Report" means the monthly report received from the Texas State Comptroller that shows the amount of total taxable sales for a month period. "Restaurant" means a Houlihan's Restaurant and Bar, or another restaurant and bar of similar or higher quality and style, that will be located on the hotel site. "Sales Tax" means the 1% general municipal sales and use taxes imposed by the City of Denton pursuant to Section 321.103(a) of Texas Tax Code and 0.5% additional municipal sales and use tax imposed by the City of Denton from property tax reduction pursuant to Section 321.103(b) of the Texas Tax Code and arising (i) from any person's collection of sales taxes as a result of sales of taxable items consummated at the Project during the term of this Agreement, (ii) from any person's payments to vendors or directly to the Texas Comptroller of Public Accounts of City Sales Taxes on purchases of taxable items consummated at the Project during the term of this Agreement, and (iii) from City Sales Taxes paid by any person in connection with the construction or equipping of the Project. "Texas Comptroller of Public Accounts' Monthly Sales Tax Report" means reports from the Comptroller to the City as provided in Section 321.3022 of the Texas Tax Code that identify amounts paid from the Comptroller to the City, by period, of Sales Taxes. If M during the term of this Agreement, due to a change in law or policy the Comptroller ceases providing such reports with respect to the Sales Taxes, "Texas Comptroller of Public Accounts' Monthly Sales Tax Report" means alternative documentation that the Parties agree establishes the amounts of Sales Taxes received by the City. "Texas Direct Payment Permit" means that permit issued by the State of Texas authorizing Grantee to self - assess and pay applicable state and local use taxes directly to the State of Texas related to selected portions of Grantee's taxable purchases. "Three Diamond Rating" means a Three Diamond Rating under the AAA Diamond Rating Process or if the AAA Diamond Rating Process is not available, a comparable rating under the successor rating process; provided however, that in no event shall the hotel be operated in a manner that falls below the standard or quality of a Comparable Hotel Property. In no circumstance shall the Three Diamond Rating result in a standard with respect to the design, development, construction, furnishing, opening and operation of the hotel which is less than what would be required of by Three Diamond Rating as it exists of the Effective Date. "Upscale Condition" means, with respect to the Hotel, the operation and maintenance of the Hotel in a manner such that their condition shall demonstrate refined, high quality, and fully functional appointments; furniture, fixtures, and equipment; exterior and interior finishes; landscaping; and mechanical, electrical, and structural components consistent with Comparable Hotel Properties, normal wear and tear excepted, that is consistent with the standards of operations and operating plans necessary to obtain a Three Diamond Rating. The City reserves the right to inspect the Project and Property from time to time to determine compliance herein. "Upscale Manner" means the process of developing, designing, constructing, and maintaining the Convention Center, Hotel, and Restaurant as required so they will exist in an Upscale Condition. "Use Tax Certificate" means a certificate or other statement in a form acceptable to the City setting forth the Grantee's collection of use tax imposed by the City and received by the City from the State of Texas, for the use of taxable items (tangible personal property or taxable services) by Grantee at the Property for the applicable grant period which are to be used to determine Grantee's eligibility for a Grant, together with such supporting documentation required herein, and as the City may reasonably request. II. GRANT CONDITIONS A. Grantee covenants and agrees with the City that the City's obligations under this Agreement are subject to the fulfillment of the Grantee's obligations under this Agreement, and Grantee hereby agrees to perform and comply in all material respects to the terms, conditions, and provisions of this Agreement and in all other instruments and agreements between Grantee and the City with respect to the financial or other incentives provided herein. B. Improvements to the Property shall be made in substantial compliance with the description of the Project as set forth in the Grant Application. The City expressly is not obligated in any way to payment of costs and fees for the Improvements, and is only agreeing to the payments as described herein. The kind and location of the Improvements is more particularly described in the Grant Application. For the construction of Improvements and /or remodeling of existing improvements, Grantee shall comply with all City of Denton Code of Ordinances, the regulations of the Rayzor Ranch Overlay District, the City's Tax Abatement and Incentive Policy, Texas Department of Transportation Regulations and any other applicable federal, state, and local law. C. Grantee shall collaborate with the City to jointly select the name of the Convention Center as a whole or for any portion thereof. D. Notwithstanding anything contained in this Agreement to the contrary, no grant or payment shall be made to the Grantee under this Agreement unless and until Grantee has completed the Improvements to the Property no later than 30 months after the start of construction, subject to force inajeure delays as outlined herein, including but not limited to a 285 -318 room Full - Service Hotel with an Approved Franchisor, an approximately 70,000- square -foot Convention Center, and a Restaurant with an Approved Franchisor. As a grant condition, Grantee shall provide a total Capital Investment for the development of the Project of at least $80 million. Grantee is responsible for cooperating in the provision of any receipts or books to determine compliance with this section until Improvements are verified as completed. The Capital Investment shall generate a minimum increase in assessed real estate Improvements and business personal property valuation on the Property over the existing 2015 valuation in the amount of $20 million as a condition of the delivery of the Grant payments. Land and Inventory valuations are not included in the grant incentive calculations. E. Grantee shall continuously operate and maintain the Convention Center, Hotel, and Restaurant in an Upscale Manner for the term of this Agreement. Grantee's obligation to operate and maintain the Convention Center, Hotel, and Restaurant in an Upscale Manner shall survive the expiration of this Agreement and any such assignment of this Agreement authorized by Sec. 6.M. herein shall cause such assignee to be obligated to operate and maintain the Convention Center, Hotel and Restaurant in an Upscale Manner. 0 F. Grantee agrees that any incentive involving the use of Hotel Occupancy Tax funds shall be expended in a manner directly enhancing and promoting tourism and the convention and hotel industry and only as permitted by Chapter 351 of the Texas Tax Code, as amended. Grantee also acknowledges that while not anticipated to occur, if it is found by a court of competent jurisdiction or other official administrative body that the City does not have the legal authority to enter into this Agreement regarding the use of the Hotel Occupancy Tax, then such determination shall cause the incentive involving the use of Hotel Occupancy Tax funds to cease under this Agreement. The termination of this incentive shall not affect the other terms of this Agreement not related to the same. G. Grantee acknowledges and understands that the City shall provide certain management functions of the Convention Center in order for the Grantee to receive the Hotel Occupancy Tax Grant, including visitors' programs and activities pursuant to the terms of this Agreement. In the event that the City ceases to provide certain management functions, any incentive involving the Hotel Occupancy Tax funds shall cease. The City shall continue to provide limited management functions referred to in the Management Agreement for the term of the Management Agreement, unless a default occurs thereunder, with such functions not to be unreasonably withheld. A copy of the Management Agreement between Grantee and the City is attached as Exhibit D to this Agreement for reference. H. Grantee shall use good faith efforts to hire qualified residents of the City of Denton to work at the Project, consistent with business needs and its commitment to equal opportunity and subject to all applicable local, state and federal employment laws. Moreover, Grantee shall use a good faith effort to hire local Denton contractors and suppliers in constructing the Project where qualified and available. L Grantee shall be duly authorized and existing under U.S. law and is in good standing under such laws, and shall be registered to do business in the State of Texas. J. The Project is not exempt from the payment of PID assessments levied on the Property. The City acknowledges that Grantee and the previous owner of the Property, RED Development LLC ( "RED "), have executed an indemnity agreement whereby RED shall indemnify Grantee for any PID assessment due and owing on the Property. Grantee acknowledges that this separate agreement has no binding effect on the City and the City shall not be required to collect PID assessments directly from RED. K. Neither the Property nor any of the Improvements to the Property are owned or leased by any member of the City Council, nor any member of the City Planning and Zoning Commission. L. This Agreement is subject to rights of holders of outstanding bonds of the City, if any. M. In the event of any conflict between the City of Denton Code of Ordinances and federal, state, or other local regulations, and this Agreement, such ordinances and /or 7 regulations shall control; provided that, if there is a subsequent amendment to include any design criteria other than what was in the original Grant Application and to the extent it conflicts with criteria solely involving design in the Rayzor Ranch Overlay, then this Agreement, as amended, shall control. N. In accordance with Chapter 2264 of the Texas Government Code, Grantee shall not knowingly employ any person for or at the Project who is not lawfully admitted for permanent residence to the United States or who is not authorized under law to be employed in the United States ( "Undocumented Worker "). During the term of this Agreement, Grantee shall notify City of any complaint brought against Grantee alleging that Grantee has knowingly employed Undocumented Workers. In the event that Grantee is convicted of a violation under federal law, grant payments shall be terminated. III. TERMS OF GRANT A. Subject to and in exchange for Grantee's compliance with the terms and conditions of this Agreement and any federal, state, or local law, the City hereby agrees to, as an incentive, make the following Grant payments for a maximum of 25 years or until the combined principal amount of $28 million and interest payment of $26 million for a total aggregate amount of $54 million is reached, whichever comes first. The methodology for establishing Grant payments is as follows: 1. An annual grant beginning the first February 1st following the first January lst tax appraisal after receipt by Grantee of the certificate of occupancy for the Convention Center, Hotel, and Restaurant on the Property of lawfully available funds equal to One Hundred Percent (100 %) of ad valorem taxes collected and verified by the City for the prior tax year, exclusive of the taxable value of the underlying land or any increase in taxable value attributable to underlying land (the "City Ad Valorem Tax Grant "). The Ad Valorem Tax Grant shall be paid on or before 60 days after the City's receipt of all ad valorem taxes for the Property for the applicable tax year. The taxable assessed value shall be determined by the Denton County Appraisal District. Such grant shall be subject to annual appropriation by the City Council of the City in the annual budget and the City's obligations under this Agreement shall not constitute a general obligation of the City or indebtedness under the Constitution or laws of the State of Texas. 2. Quarterly grants after the conclusion of each calendar quarter beginning with the calendar quarter that includes the receipt by Grantee of the certificate of occupancy for the Convention Center, Hotel and Restaurant on the Property, of lawfully available funds in an amount equal to One Hundred Percent (100 %) of the City's Hotel Occupancy Tax attributable to amounts paid for hotel rooms on the Property for such calendar quarter, determined with reference to the City HOT Returns (the "Hotel Occupancy Tax Grant "). The Hotel Occupancy Tax Grant shall be paid on or before 60 days after the later of (i) the City's receipt of the City HOT Returns for all periods in a quarter and (ii) the City's receipt of the City HOT Report (in the for attached as Exhibit C hereto) for all periods in a quarter. 3. Quarterly grants after the conclusion of each calendar quarter beginning with the calendar quarter that includes the receipt by Grantee of the certificate of occupancy for the Convention Center, Hotel and Restaurant on the Property, of lawfully available funds in an amount equal to one hundred percent (100 %) of the City's Sales Tax received each quarter from the Project (the "Sales Tax Grant "), as established by the Texas Comptroller of Public Accounts' Monthly Sales Tax Report. The Sales Tax Grant shall be paid on or before 60 days after the later of (i) the City's receipt of the Texas Comptroller of Public Accounts' Monthly Sales Tax Report for all periods in a quarter that identify amount of Sales Taxes for all months of a quarter and (ii) the City's receipt of the Sales Tax for all periods in a quarter. Grantee agrees to provide the City any necessary forms required for release of this information for the verification of grant payments. Such grant shall be subject to annual appropriation by the City Council of the City in the annual budget and the City's obligations under this Agreement shall not constitute a general obligation of the City or indebtedness under the Constitution or laws of the State of Texas. B. A quarterly grant (the "Construction Sales and Use Tax Grant ") during the period of Construction of the Project, from lawfully available funds, in an amount equal to One Hundred Percent (100 %) of Sales Tax receipts, up to a maximum of $850,000.00, collected by the City of Denton on construction materials and furniture, fixtures, and equipment purchased for the development of the Property as set forth in the Texas Direct Payment quarterly sales tax returns submitted by Grantee to the Texas Comptroller of Public Accounts and verified by the City of Denton's Finance Department. Upon reaching a cumulative Construction Sales and Use Tax Grant maximum of $850,000.00, the quarterly grant will be reduced to Fifty Percent (50 %) of the Sales Tax receipts for the same. The Construction Sales and Use Tax Grant shall be paid on or before 60 days after the later of (i) the City's receipt of the Texas Direct Payment Report for all periods in a quarter that identify amount of Sales Taxes for all months of a quarter and (ii) the City's receipt of the Sales Tax for all periods in a quarter. Grantee shall submit the Texas Application for Direct Payment Permit in the form of Exhibit "E" to the Texas Comptroller of Public Accounts. C. The above referenced City Ad Valorem Tax Grant, Hotel Occupancy Tax Grant, Sales Tax Grant, and Construction Sales and Use Tax Grant may be collectively referred to as the "Grants." D. The City's obligation to pay the payments provided in this Agreement is subject to the fulfillment of the General Conditions set forth in Article 11 above. E. Grantee shall have the right to protest and contest any or all appraisals or assessments by the Denton County Appraisal District for the Property, the Improvements or any other tangible personal property owned or controlled by Grantee and located on the Property. The final amount of the Ad Valorem Tax Grant shall be based upon final 0 assessed values after any such protest or contest. The portion of the Ad Valorem Tax Grant corresponding to any taxable assessed values in dispute or under protest with the Denton Central Appraisal District shall be withheld from the annual grant until such protest or dispute has been resolved. Once resolved, the City shall pay any amounts corresponding to the final taxable assessed value as settled, and not previously paid, in the next following annual Ad Valorem Tax Grant. IV. RECORDS, AUDITS, AND EVALUATION OF PROJECT A. The City shall inspect the Convention Center from time to time to determine compliance with the operation of the Convention Center in the manner described herein and consistent with the Property's zoning, overlay, and other City of Denton ordinances. B. The City shall inspect the Hotel property from time to time to determine compliance with the operation of the Hotel in the manner described herein and consistent with the Property's zoning, overlay, and other City of Denton ordinances. C. Grantee shall provide access and authorize inspection of the Property by authorized City employees and allow sufficient inspection of financial information for the limited purpose of insuring that the Improvements are made according to the specifications and conditions of this Agreement. Such inspections shall be in addition to, and not in place of, any inspections required by City ordinance by the City in its governmental capacity for construction of the Improvements. The financial information shall include, without limitation, an inventory listing the kind, number, and location of and the total appraised value of all Improvements to the property, including the appraised value of all buildings and other structures and permanent improvements installed, renovated, repaired or located on the Property. D. Grantee shall deliver to the City no later than January 1 of each year during the term of this Agreement, a Certificate of Compliance utilizing the form attached as Exhibit "F ". The form is subject to revision by the City provided that such revision does not materially change Grantee's rights or obligations under this Agreement. In the Certificate of Compliance, Grantee shall warrant to the City that it is in full compliance with each of its obligations under this Agreement. The City and /or its representative(s), including third- parties contracted by the City, shall have the right to inspect all relevant records of Grantee as are reasonably necessary to verify compliance with all requirements of this Agreement. Such inspections shall be preceded by at least a one (1) week written notice to Grantee and shall not unreasonably interfere with Grantee's business activities. E. Quarterly and Annual Grant payments are predicated on Grantee's submission of and the City's verification of the Certificate of Compliance by January 1 of the applicable grant year. The City is not obligated to make any payments under this Agreement if Grantee fails to timely submit its Certificate of Compliance. If Grantee does not timely submit an annual Certificate of Compliance, within thirty (30) days from the date due after receiving a written notice from the City, the annual Ad Valorem Tax Grant, 10 the quarterly Hotel Occupancy Tax Grant, Sales Tax Grant, and Construction Sales and Use Tax Grant will be forfeited for that year. Upon timely compliance with submission of the Certificate of Compliance the following January 1 of the next year, the annual Ad Valorem Tax Grant, the quarterly Hotel Occupancy Tax Grant, Sales Tax Grant, and Construction Sales and Use Tax Grant shall resume, according to their terms. If Grantee fails to submit a timely Certificate of Compliance for two consecutive years regardless of a cure, this Agreement shall terminate. V. DEFAULT A. Each of the following shall constitute an Event of Default under this Agreement: Failure of the Grantee to continuously maintain and operate the Property to the standard of a Comparable Hotel Property for the term hereof and the Grantee does not cure such failure within one hundred twenty (120) days after written notice from the City to the Grantee describing such failure, or if such failure cannot be cured within such 120 -day period in the exercise of all due diligence, then if the Grantee fails to commence such cure within such 120 -day period or fails to cure such default within a reasonable time after the expiration of the first one hundred twenty (120) -day period, in no event to exceed three hundred sixty five (365) days after the written notice of default. 2. Failure to comply with the terms of the Management Agreement between the City and O'Reilly Hotel Partners — Denton, LLC for the management of the Denton Convention Center. 3. Any warranty, representation or statement made or furnished to the City by or on behalf of Grantee under this Agreement that is false or misleading in any material respect, either now or at the time made or furnished. Provided that, if Grantee learns that any such warranty, representation or statement has become false or misleading since the time that it was made, then Grantee shall provide written notice to the City of the false and misleading nature of such warranty, representation or statement within ten (10) calendar days 4. The dissolution or termination of Grantee's existence as a going business, Grantee's insolvency, appointment of receiver for any part of the Property, any assignment of all or substantially all of the assets of Grantee for the benefit of creditors of Grantee, any type of creditor workout for Grantee, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Grantee. 5. Grantee's failure to fulfill the Grant Conditions set forth in Article 11 herein. 11 6. Grantee allowing property taxes owed to the City, Denton County, or Denton Independent School District to become delinquent and failing to cure the same within thirty (30) days after receipt of written notice thereof from the City and or Denton Central Appraisal District. 7. An expenditure, by the Grantee, of Hotel Occupancy Tax Grant funds for a purpose not authorized by Chapter 351, Texas Tax Code, as amended. In the event the City determines that Grantee has made an improper or illegal expenditure of Hotel Occupancy Tax Grant funds, Grantee must, no later than thirty (30) days after receipt of written notification from the City, reimburse the City in an amount equal to the improper expenditure, plus interest at the rate of 5 %. Grantee's failure to make reimbursement will constitute a default of this agreement. The City shall have no liability in connection thereof. 8. Failure of Grantee to comply with or to perform any other term, obligation, covenant or condition contained in this Agreement or in any documents generated or otherwise created attendant to this Agreement or in any way related to this Agreement ( "Related Documents "), or failure of Grantee to comply with or to perform any other term, obligation, covenant or condition contained in any other agreement between the City and Grantee, fails to cure such failure within thirty (30) days after receipt of written notice from the City describing such failure, or if such failure cannot be cured within such 30 -day period in the exercise of all due diligence, then if Grantee fails to commence such cure within such 30 -day period or fail to continuously thereafter diligently prosecute the cure of such failure. B. Upon the occurrence and continuance of a default of this Agreement, the City may pursue any legal or equitable remedy or remedies, including, without limitation, specific performance or damages, (including reasonable attorneys' fees), and City may terminate this Agreement by giving written notice of such termination to Grantee; and, this Agreement shall terminate as of the date specified in such notice (which date shall be on or after the date of the notice of termination). If any Event of Default shall occur and Grantee fails to cure such default as provided herein, all commitments of the City under this Agreement, including without limitation, all Grant payments shall immediately terminate with respect to the year or quarter in which notice of the Event of Default is given and for all future years or quarters. Additionally, Grantee shall be obligated to repay the City an amount equal to one hundred percent (100 %) of all previous payments made by the City under this Agreement to the Grantee in the preceding compliance year. If Grantee is required to reimburse the City these amounts hereunder, the City shall notify the Grantee in writing of the amount to be repaid, and shall direct them to pay such amount directly to the City. All such amounts due hereunder shall be due upon demand by the City and if not paid within thirty (30) days following written demand hereunder, the unpaid amount due hereunder shall bear interest at the rate of 5% per annum after demand until paid. All remedies of the City under this Agreement shall be cumulative. 12 VI. GENERAL PROVISIONS A. All improvements to the Property shall be consistent with all federal, state and local law including the Denton Code of Ordinances as well as any other regulations or plans relative to the Property. This Agreement does not constitute a waiver by the City of any development ordinances or conditions. Further, Grantee acknowledges that by executing this Agreement, no entitlement or agreements concerning zoning or land use shall arise, either implied or otherwise. B. Grantee shall complete construction of all improvements to the Property within the timeframes provided for in this Agreement. Notwithstanding the foregoing, Grantee shall have such additional time to complete the Improvements as may be required in the event of Force Maj eure if Grantee is diligently and faithfully pursuing completion of the Improvements. In the event that Grantee requires additional time due to an event of Force Majeure, such additional time shall not exceed 180 days, unless otherwise approved by City Council. C. GRANTEE SHALL INDEMNIFY, SAVE, DEFEND AND HOLD HARMLESS THE CITY, ITS ELECTED OFFICIALS, OFFICERS, AGENTS, ATTORNEYS, EMPLOYEES, AND SUBCONTRACTORS (COLLECTIVELY, THE "INDEMNITEES ") FROM AND AGAINST ANY ADMINISTRATIVE OR INVESTIGATIVE PROCEEDING BY ANY GOVERNMENTAL AUTHORITY DIRECTLY OR INDIRECTLY RELATED, TO A CLAIM, DEMAND, ACTION OR CAUSE OF ACTION, ARISING FROM GRANTEE'S PERFORMANCE OF ITS OBLIGATIONS HEREUNDER. GRANTEE FURTHER INDEMNIFIES, SAVES, DEFENDS, AND HOLDS HARMLESS INDEMNITEES FROM ANY AND ALL LIABILITIES, CLAIMS, LOSSES, COSTS OR EXPENSES (INCLUDING ATTORNEY'S FEES, COURT COSTS, EXPERT WITNESS FEES) THAT ANY INDEMNITEES SUFFER OR INCUR AS A RESULT OF ANY OF THE FOREGOING, AS WELL AS ANY AND ALL LIABILITIES, CLAIMS, LOSSES, COSTS, OR DAMAGES ARISING OUT OF (1) ANY NEGLIGENT ACT OR OMISSION, ANY GROSS NEGLIGENCE OR ANY RECKLESS OR WILLFUL MISCONDUCT BY GRANTEE OR ITS OFFICER, DIRECTOR, AGENT, OR EMPLOYEE, AND (2) THE NON - PERFORMANCE OF GRANTEE'S OBLIGATIONS WHETHER NEGLIGENT, GROSSLY NEGLIGENT, RECKLESS OR WILLFUL, AND (3) ANY ACTION TAKEN BY GRANTEE OR ON BEHALF OF GRANTEE THAT IS NOT PERMITTED BY OR PURSUANT TO, THE PROVISIONS OF THIS AGREEMENT OR REASONABLY NECESSARY TO CARRYING OUT LENDER OR GRANTEE DUTIES.S. D. This Agreement, together with any related documents, constitutes the entire understanding and agreement of the parties as to the matters set forth in this Agreement. No alteration of or amendment to this Agreement shall be effective unless given in writing 13 and signed by the party or parties sought to be charged or bound by the alteration or amendment, and in the case of the City, approved by its governing body. E. This Agreement shall be governed by and construed in accordance with the laws of the State of Texas, and all obligations of the parties created hereunder are performable in Denton County, Texas. Venue for any action arising under this Agreement shall lie in Denton County, Texas. F. The signatories hereto shall be subject to all ordinances of the City, whether now existing or in the future arising. This Agreement shall confer no vested rights, as defined and referenced in Chapter 245 of the Texas Local Government Code, as amended, on the Property or Grantee. G. This Agreement shall become a binding obligation on the signatories upon execution by all signatories hereto, including their respective successors and assigns and upon all future owners of the Property. The City warrants and represents that the individual executing this Agreement on behalf of the City has full authority to execute this Agreement and bind the City to the same. Grantee warrants and represents that the individual executing this Agreement on its behalf has full authority to execute this Agreement and bind Grantee to same. H. In the event any provision of this Agreement shall be determined by any court of competent jurisdiction to be invalid or unenforceable, the Agreement shall, to the extent reasonably possible, remain in force as to the balance of its provisions as if such invalid provision were not a part hereof. L All notices required to be given under this Agreement shall be given in writing and shall be effective when actually delivered or when deposited in the United States mail, first class, postage prepaid, addressed to the party to whom the notice is to be given at the addresses shown below. Notices may be given via facsimile at the numbers below. Any party may change its address or fax no. for notices under this Agreement by giving written notice to the other parties, specifying that the purpose of the notice is to change the party's address. For notice purposes, each party agrees to keep the other informed at all times of its current address and fax number. GRANTEE: Tim O'Reilly O'Reilly Hospitality Management, LLC 2808 S. Ingram Mill Road, Building C100 Springfield, MO 65804 CC: David O'Reilly O'Reilly Wooten Offices 2831 S. Ingram Mill Road 14 Springfield, MO 65804 CITY: City Manager City of Denton 215 E. McKinney Denton, Texas 76201 J. Time is of the essence in the performance of this Agreement. K. Grantee represents that this Agreement is entered into by Grantee pursuant to authority granted by its Board of Directors to its Managing Director. A copy of a corporate resolution of Grantee, authorizing this Agreement is attached hereto and made a part hereof as Exhibit "G ". L. This Agreement is authorized by the City Council of the City at its meeting on the 27th day of October, 2015, authorizing the City Manager to execute this Agreement on behalf of the City. A copy of the City Council's ordinance authorizing this Agreement is attached hereto and made a part hereof as Exhibit "H ". M. Except as provided herein, this Agreement may not be assigned or transferred in whole or in part without the prior written approval of the parties, which shall not be unreasonably withheld. This Agreement may be assigned in whole by Grantee, with prior written approval of the City, for the limited purpose of merging or otherwise transferring assets to an entity sharing a degree of ownership or control with Grantee. The assignment, whether in whole or in part, will not take effect until City is provided written notice of such assignment and a copy of same. A permitted assignment by any Party of its interests in this Agreement shall not relieve the assigning Party from its obligations under this Agreement unless the non - assigning Party shall expressly consent in writing to any such release. Any assignee of any Party's rights under this Agreement, as a condition of such assignment, shall execute an assumption of the assigning Party's duties and obligations under this Agreement, including the obligations set forth in Article II herein upon the Grantee's assignment or transfer of this Agreement to any other party, such assumption to be in form reasonably acceptable to the other Parties to this Agreement. N. Grantee hereby agrees construction of the authorized public improvements as set forth in the PID and the dedication of those improvements and any corresponding public access easements to the City is roughly proportional to the need created by the development on the Property within the PID, and Grantee hereby waives any claim therefore that it may have in regards to such improvements. Grantee further acknowledges and agrees that all prerequisites to such a determination of rough proportionality have been met, and that any costs incurred relative to said construction and dedication are related both in nature and extent to the impact of the Project. Grantee further agrees to waive and release all claims it may have related to any and all rough proportionality and individual determination requirements mandated by the United States Supreme Court in Dolan v. City 15 of Tigard, 512 U.S. 374 (1994), and its progeny, and Chapter 212 of the Texas Local Government Code, as well as any other requirements of a nexus between development conditions and the projected impact of this Project. O. It is agreed by the parties to this Agreement that the terms of this Agreement are not intended to and shall not be deemed to create any partnership or j oint venture among parties. The City, its past and future officers, elected officials, employees, and agents expressly do not assume any responsibilities or liabilities to any third party in connection with the Project or the design, construction, or operation of any portion of the Improvements. P. Any party hereto may request an estoppel certificate from another party hereto, but no more frequently than annually, upon written request by the other Party not less than ten (10) business days prior to the need for such certificate, and so long as the certificate is requested in connection with a bona fide business purpose. The requesting Party shall execute, acknowledge and deliver to O'Reilly Hotel Management, LLC, or the City, as the case may be, a statement in writing certifying one or more of the following: (a) the remaining term of this Agreement, (b) that this Agreement is unmodified and in full force and effect (or if there have been any modifications, that the same is in full force and effect as modified and stating the modifications), (c) the number of years remaining for the payment of Grant Payments (d) the Grant Payments remitted to date, and (e) that, to the then current actual knowledge, without independent investigation of Party, no default hereunder on the part of the other Party exists, except that if any such default does exist, the certifying Party shall specify such default. Q. Notwithstanding anything to the contrary herein, Grantee acknowledges and agrees that this Agreement is subject to the provisions of Subchapter I of Chapter 271 of the Texas Local Government Code, as amended, and therefore limits any recovery from suit based on adjudicating claims for breach of this Agreement; however, such acknowledgement does not waive any defenses that the City may bring in the event of suit, including a defense of immunity. R. The City designates this Agreement as a revenue sharing agreement, thereby entitling the City to request sales tax information from the Comptroller pursuant Section 321.3022 of Texas Tax Code. However, Grantee shall cooperate in the provision of any forms necessary for the City to obtain such information, if requested. Grantee acknowledges that this Agreement is subject to the requirements of the Texas Public Information Act, pursuant to Chapter 552, Texas Local Government Code. Should information be requested concerning this Agreement by any person, regardless of whether the City seeks an opinion from the Texas Attorney General to withhold such information, the City may release said information without penalty or liability. This section shall survive termination of this Agreement for any reason whatsoever. This Agreement shall be effective as of the last date of signature of a party hereto as evidenced by the acknowledgment date for such signature (the "Effective Date "). 16 CITY OF DENTON, TEXAS M GEORGE C. CAMPBELL CITY MANAGER ATTEST: JENNIFER WALTERS CITY SECRETARY I:• APPROVED AS TO FORM: ANITA BURGESS CITY ATTORNEY I: O'REILLY HOTEL PARTNERS — DENTON, LLCa Missouri Limited Liability Company LOW Its: 17 ACKNOWLEDGMENTS STATE OF TEXAS COUNTY OF DENTON The foregoing Economic Development Agreement was executed before me on the day of 12015 by George C. Campbell, City Manager of the City of Denton, Texas, a Texas municipal corporation, on behalf of said Municipal Corporation. Name: Notary Public in and for the State of Texas STATE OF TEXAS COUNTY OF DENTON The foregoing Economic Development Program Agreement was executed before me on the day of , 2015 by of O'Reilly Hotel Management, LLC., on behalf of said corporation. Name: Notary Public in and for the State of Texas In EXHIBIT A (PROPERTY LEGAL DESCRIPTION) At the time of the backup deadline on 10/22/15, this information was not finalized. It will be provided as soon as possible. 19 Ile E fl Ll D OD C:51 All� S-A. W O Q. C0 0 U) 0 Co = x ca 9 E C) o C-� N 0 W m cu a) Cl i2 dr- 0 — m EXHIBIT B CITY OF DENTON INCENTIVE APPLICATION 20 Exhibit B OF 1 1 City of Denton Incentive Application City of Denton Department of Economic Development Denton, Texas 76201 (940) 349 -7776 (940) 349 -8596 FAX www.cilyofdenton.com Aimee.BissettLcityofdenton.com 2014 Tax Abatement Policy INCENTIVE APPLICATION CITY OF DENTON, TEXAS 1. Property Owner O'Reilly Hotel Partners- Denton, LLC (OHPD) Company or Project Name Denton Convention Center, Hotel, and Restaurant Mailing Address 2808 South Ingram Mill Road, Building C100 Springfield, MO 65804 Telephone 417 - 851 -8700 Fax No. 417-881-8225 Website www.ohospitalitymanagement.com Contact Name Tim O'Reilly Title CEO /Manager Mailing Address O'Reilly Hospitality Management LLC 2808 South Ingram Mill Road, Bldg. C -100 Springfield, MO 65804 Telephone 417 - 851 -8700 Fax No. 417 - 881 -8225 Email Address tim@ohospitalitymanagement.com 2. Provide a chronology of plant openings, closing and relocations over the past 15 years. OHM has evolved from a small company managing one hotel in 2007, to an organization of over 750 team members managing ten hotels and four restaurants in multiple states. The company has franchises with Hilton, Marriott, Intercontinental Hotel Group, Wyndham Hotel Group, Cambria Suites, Houlihan's and Boston's Restaurants. Currently two more hotels are under construction and several other projects are in development. 3. Provide a record of mergers and financial restructuring during the past 15 years. OHM acquired four hotels and two restaurants and constructed three hotels and one restaurant between 2009 and 2015. 4. Will the occupants of the project be owner or lessee? If lessee, are occupancy commitments already existing? Owners Page 2 of 8 2014 Tax Abatement Policy 5. Is the project a relocation of existing facility or a new facility to expand operations? If relocation, give current location. N/A 6. If an existing Denton business, will project result in abandonment of existing facility? If so, the value of the existing facility will be subtracted from the value of the new facility to arrive at total project value. N/A 7. Property Description. See attached site plan 8. Current Value Unknown — purchase price will be $5.50 per sq. foot and 11 -13 acres to be determined by parking requirements. 9. Increased Value/Estimated Total Cost of Project. $92,713,780 ($25,927,911 for convention center) Structures $68,255,216 Site Development $2,481,000 Personal Property $12,384,602 Other Improvements $9,592,962 10. Indicate percent of tax abatement and number of years requested. Percent Requested Years Requested 25 Performance based economic incentives that include hotel occupancy taxes generated from the convention center hotel, property taxes derived from the taxable assessed value of the facility, and sales taxes generated forth sales and concessions of the hotel and convention center. Additionally, impact of sales taxes that OHPD will have to pay on construction of the convention center. 11. Give a brief description of the activities to be performed at this location, including a description of products to be produced and /or services to be provided. Located in Rayzor Ranch Market Place this project will consist of an 285 -318 room Embassy Suites Hotel, a 70,000 square foot convention center and a Houlihan's Restaurant. As a major anchor of the Market Place, The convention center will be full of activity with anticipated meeting space of approximately 37,850 square feet and a Grand Banquet room that will hold up to 1,700 people, 12. Describe any off -site infrastructure requirements: N/A • Water • Wastewater Page 3 of 8 2014 Tax Abatement Policy • Streets • Drainage • Other 13. Project Operation Phase. Provide employment information for the number of years incentive is requested. F. Types of jobs created. List the job titles and number of positions in each category that will be employed at the facility. Provide average wage for each category. Salaried department heads: 20 -25, $35,000 - $120,000 per year. Hourly full & part time employees: 32 clerical, 25 housekeeping, 16 kitchen, 27 banquets, 3 lounge, 7 administration, 12 sales, 8 maintenance, 12 restaurant. G. Indicate the number of shifts the project will operate Primarily two shift, first and second. Third shift for hotel. H. Estimate annual utility usage for project: Electric kWh Water gpd Wastewater gpd Gas mcf 14. Describe any other direct benefits to the City of Denton as a result of this project (e.g., sales tax revenue or project elements identified in Tax Abatement Policy, Section 111). Page 4 of 8 At Project Existing Start Date At Term of Employment Information Operation (mo /yr) Incentive (if applicable) / A. Total number of permanent, full -time jobs N/A 142 175 -200 B. Employees transferred from outside Denton N/A N/A N/A C. Net permanent full -time jobs (A. minus B.) N/A 142 175 -200 E. Total annual payroll for all permanent, full -time N/A jobs (A.) F. Types of jobs created. List the job titles and number of positions in each category that will be employed at the facility. Provide average wage for each category. Salaried department heads: 20 -25, $35,000 - $120,000 per year. Hourly full & part time employees: 32 clerical, 25 housekeeping, 16 kitchen, 27 banquets, 3 lounge, 7 administration, 12 sales, 8 maintenance, 12 restaurant. G. Indicate the number of shifts the project will operate Primarily two shift, first and second. Third shift for hotel. H. Estimate annual utility usage for project: Electric kWh Water gpd Wastewater gpd Gas mcf 14. Describe any other direct benefits to the City of Denton as a result of this project (e.g., sales tax revenue or project elements identified in Tax Abatement Policy, Section 111). Page 4 of 8 2014 Tax Abatement Policy 15. Is property zoned appropriately? Yes X No Current zoning. Zoning required for proposed project. Anticipated variances. 16. Is property platted? Yes No X Will replatting be necessary Yes X No 17. Discuss any environmental impacts created by the project. N/A A. List any permits for which applicant must apply. Applicant will be required to provide City with copies of all applications for environmental permits upon completion of application(s). N/A B. Provide record of compliance to all environmental regulations for the past five years. N/A 18. Provide specific detail of any businesses /residents that will be displaced and assistance that will be available from the requesting company. N/A 19. Provide description of any historically significant area included within the project's area as determined by the Historic preservation Officer. If any, give detail of how the historically significant area will be preserved. 20. Justification for Incentive Request: Substantiate and more fully describe the justification for this request. Include the amount of the incentive requested and show how it will contribute to the financial viability of the project. Submit attachments if necessary. The project would not be economically viable without the requested incentive, and with the incentive there is great economic vitality and impact to the City of Denton. Page 5 of 8 2014 Tax Abatement Policy 21. List additional abatement factors to be considered for this project as outlined on pages 3 and 4 of the Incentive Policy. 22. Financial Information: Attach a copy of the latest audited financial statement or, in the case of a new project, a business plan. See attached 10 year proforma 23. Does the project have an eligible environmentally sustainable or renewable energy component (if so, please identify type and provide a brief description)? See attached documentation, OHM Sustainability. 24. Applicants seeking LEED certification must complete the Green Building Application for Tax Abatement (Exhibit B of the policy). See attached documentation, OHM Sustainability. Page 6 of 8 Occupies building vacant for at least 2 years Donation of materials to public schools Project creates high - skilled, high - paying jobs Improvements to Downtown Significant relationship with universities Project fortes business park X 25% of new jobs filled by Denton residents International or national headquarters X 25% local contractors to be utilized Medical manufacturing or research facility 25% of jobs are knowledge -based x Environmentally sustainable practices used Donation of significant public art Renewable Energy generated /stored /utilized X Community support and involvement: Attach description of community involvement 22. Financial Information: Attach a copy of the latest audited financial statement or, in the case of a new project, a business plan. See attached 10 year proforma 23. Does the project have an eligible environmentally sustainable or renewable energy component (if so, please identify type and provide a brief description)? See attached documentation, OHM Sustainability. 24. Applicants seeking LEED certification must complete the Green Building Application for Tax Abatement (Exhibit B of the policy). See attached documentation, OHM Sustainability. Page 6 of 8 2014 Tax Abatement Policy COMPLETE THIS SECTION IF REQUESTING ADDITIONAL INCENTIVE BASED ON LEED CERTIFICATION CONSTRUCTION 1. Property Owner O'Reilly Hotel Partners- Denton, LLC Company or Project Name Embassy Suites by Hilton Hotel, Convention Center & Houlihan's Restaurant Mailing Address 2808 South Ingram Mill Road Building C100 Springfield, MO 65804 Telephone 417 - 851 -8700 Fax No. 417 - 881 -8225 Website www. ohospitalitymana- ement. com Contact Name Tim O'Reilly Title Manager /CEO Mailing Address 2808 South Ingram Mill Road Building C100 Springfield, MO 65804 Telephone 417 - 851 -8700 Fax No. 417 - 881 -8225 Email Address tirokohospitalitprianagement.com 2. Project location address: Rayzor Ranch, Denton, TX, no specific address assigned yet 3. Provide documentation that the project has been registered with the U.S. Green Building Council. Please see attached 4. Provide a description of the project (please include the building size, number of occupants and estimated budget). 335,000 square foot project consisting of an 11 story, 318 suite Embassy Suites by Hilton hotel, a 70,000 square foot convention center with a 1,700 seat ballroom and additional meeting space for another 700, and a 250 seat Houlihan's Restaurant. The property will have an indoor pool and spa, CVB office space, and related support spaces. An event lawn and a second floor exterior courtyard are also planned. 6. Attach a preliminary Leadership in Energy and Environmental Design (LEED) Scorecard illustrating how project will achieve the LEED certification. Level of Certification: Silver Number of Points:47 Page 7 of 8 2014 Tax Abatement Policy This Incentive Application is submitted with the acknowledgement that additional information may be required. Authorized Signature Date: Page 8 of 8 U.S, GREEN WILMNIG L '" Dear Christina Parks, Your LEED project has been successfully registered in LEED Online. Project ID Project Title Project Access ID Project Rating System Registration Type Registration Date Project Location 1000061657 Embassy Suites Rayzor Ranch 246344300143911 LEED -NC v2009 Individual Project 09/04/2015 Denton,TX,US,76201 You may now log into LEED Online to manage your project and begin the application process.The first time you log in, you will be presented with a set of 'Getting Started' information that will help you kick off the certification process. Further technical LEED assistance is available through the following resources: The help section of LEED Online LEED Resources & Tools ii 4r 4r i Ci �L4pir. �IC�� I� >.R,iC �aMR`...6CC C4MLAA�Catl��a� LEED Reference Guides : fittp,s �wv� w./y6 (my, ytwc Mcf'u m cc pddc,y - Subscribe to LEED Update, a quarterly e- newsletter from USGBC and GBCI : - LEEDuser, a third -party resource that offers a variety of supplemental LEED advice: If you find an error within the LEED Online system, including any of the forms, please report it using of the feedback button, located in the menu bar. If you have questions about the technical content of LEED or the certification process,please contact the Green Building Certification Institute (GBCI) If you experience any problems, please contact the Green Building Certification Institute(GBCI) at: Phone :1- 800 - 795 -1746 Email P�Ifi] „ /, /v�rv�rv�r �}P]r rr�.1 /flrri�I�Ar III, Please note, only projects registered through LEED Online v3 will be visible in your LEED Online v3 project list.lf you have previously registered a project under LOv2, you will only be able to access those projects in LEED Online v2. Thank you, GBCI "This is an automatically generated email. Please do not reply to this message. ” Z 0 Z w 0 af III Z of of 0 of lu� w D U) U) U) co 7> w C L ,�2 ON 0 1 C:) I r4 IN In' O N O 0 - - - - - - - - - - - - - E 0 m u N 0 2 o 2 u 0 u u C: (U % u om m 0, u gi, 2 E 0 0 U-i -og :3 No. E -0 f u 0 40 Ea= 0 0 E 0 0 E -0 . .7 8o_ =. 2) rof qO Eo _ I - 6 0 Zm E E- Eo ("�La U- u luo Q) :U3 T, Q) :M3 0 0 on on �o m wo 6 ZI) ac): u iii 6 C), Z5 2, .0 'I g g 0 -60- :�E :Z m on �E ::E :�E ::E C' :,o 'o o 'o o o U -0 45 < 'C< 0 u o �o a cln On cln On E E r- 0 0 CX -r- -m m 0 0 on E I , — u . t u u -5 Q� U W m m .. — T- 0 w LU w LU .0 -0 E 2 0 > > E "T Ln E '5: Z= au a a 3: 3: 3: a a 0 0 >, >, on on C: 0 0 0 0 0 0 0 0 0 0 0 Lu -j -j -j -j LID -1 � w w w . . . . . . . . . . . . . . . u u u u u u u u u u u u u u u u u u u u u u u u M fn . ............... .................. 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U L L �J \».� -® \ \� � \ \\ © d ? 2.� \� ±� } \ \: \ \ \ }�� »� \ { \ \ \ \ / \ \ \ \ \ ' . � } \ \ \ \� \ { \ \ \ \ / \ \ \ \ \ 4 11111 , 1 j 1 [ 1 ! f { L1 2 h;h i 11114 1 f { L1 2 h;h i EXHIBIT C CITY OF DENTON HOTEL OCCUPANCY TAX REPORT FORM 21 HOTEL OCCUPANCY TAX REPORT Period Ending: Due Date: Owner's Name & Location Gross Sales: $ Less Tax Exemptions: (See attached report for breakdown) ( ) Less Other Exemptions: (See attached report for breakdown) ( ) Total Taxable Revenues: $ Prepared by: Signature: Total City 7% Tax Collected: Adjustments ( + / -) Form Attached: Total City Tax Submitted hoters ivame, manager & Location Average Daily Room Rate: $ Total # of Rooms Rented: Monthly Occupancy Rate: I declare, under the penalties for filing false reports, that this return (including any accompanying schedules and statements) has been examined by me and to the best of my knowledge and belief is a true, correct, and complete return. Make remittance payable to: Type or print name and title CITY OF DENTON TAX OFFICE 601 E. HICKORY, SUITE F DENTON, TX 76205 Date: To avoid a 5% penalty, reports and payment must be received by the due date indicated above. If the tax is not paid by the due date, a 5% penalty will be assessed during the first 30 days. If the tax remains unpaid for days 31 through 60 an additional 5% penalty will be assessed and due to the City of Denton. THIS FORM MUST BE COMPLETE IN ITS ENTIRETY Furnish details of any changes occurring since last report on page 2. Furnish exemption details taken during this reporting period on page 3. CHANGES OCCURRING SINCE LAST REPORT Effective Date: Type of Change: ( ) Sale ( ) Other: Name of Business: Name of Manger: ( ) Foreclosure ( ) Name Change New Owner's Information Owner's Name: Owner's Address: Mailing Address: City, State, Zip: Phone: "If a person who is liable for the payment of a tax under this chapter is the owner of a hotel and sell the hotel, the successor to the seller or the seller's assignee shall withhold an amount of the purchase price sufficient to pay the amount due until the seller provides a receipt by a person designated by the municipality to provide the receipt showing that the amount has been paid or a certificate showing that no tax is due." "The purchaser of a hotel who fails to withhold an amount of the purchase price as required by this section is liable for the amount required to be withheld to the extent of the value of the purchase price." (351.0041 State Local Taxation Title 3) CITY HOTEL OCCUPANCY TAX EXEMPTIONS Effective June 18, 1996 Those exempt form the 7% City taxes are only: 1. Guests who stay longer than 30 days must notify the hotel upon arrival. (Permanent Resident) 2. An officer, employee, agency, institution (other than an institution of higher education), board, or commission of this state, for whom a special provision or exception to the general rate of reimbursement under the General Appropriations Act applies and who is provided with photo identification verifying the identity and exempt status of the person, is not required to pay the tax. Please note that local government personnel OWE state and local tax. CO Z 0 IL Z x 0 LU Z LU LL L) (D 0 z z IL =) z L) LU Lli 0 L) -i z Lu 0 P 2 LU 0 W H 0 0 LL = 2 Ozz W :3 0 0 z 2) V) ji 0. >- LLI x LLI o L) z LLI z 0 N 01 LLI Z cn LLI LLI z 0 -i 0 LL M 0 L) LLI W M L) z L) LLI L) C14 M zT LO CO r- 00 0) C) N M ,I- LO CO 00 0) C) M "t LO O L. 0 LU 0 z LU CO 0 0 E L. 0 LU > o i-u = CO CL z E 20 x VU 4) X 0 .N 0 0 .2 o E CL lC 0 u rr CL a m .2 E u E m Lu 0 < z -J 2 .0 s w w .co E LU ,v 0 > X 0 0 LLU L (D Lii 0 Z EXHIBIT D MANAGEMENT AGREEMENT 22 CONVENTION CENTER MANAGEMENT AGREEMENT BETWEEN THE CITY OF DENTON AND O'REILLY HOTEL PARTNERS — DENTON,LLC THIS AGREEMENT is made between the City of Denton, Texas, a municipal corporation formed under the laws of the State of Texas and located at 215 E. McKinney Street, Denton, Texas 76201 (the "City "), and O'Reilly Hotel Partners — Denton, LLC, a Missouri Limited Liability Company whose principal place of business is located at 2808 S. Ingram Mill Road, Building C100, Springfield, Missouri, 65804 ( "Owner ") for the limited management of a Convention Center. (The City and the Owner are collectively referred to as "the Parties "). WHEREAS, the Owner owns a tract of land generally located in the Rayzor Ranch Town Center development in the City of Denton, Denton County, Texas, which includes property located South of US Route 380 ending at Scripture Road, between IH -35 and North Bonnie Brae Street, and more specifically described in Exhibit "A" attached hereto and incorporated by reference herein (the "Property "); WHEREAS, the Owner's development of the Property includes an approximately 70,000 square foot convention center ( "Convention Center ") that is the subject of an Economic Development Agreement with the City of Denton executed between the Parties on , 2015 ( "Development Agreement "), which said Development Agreement is attached for reference hereto; WHEREAS, the Convention Center development shall serve to promote travel, tourism, meetings, conventions and events for the economic development and growth of the City of Denton and the economic benefit of the Parties; WHEREAS, the Parties desire that the City assist in the management of certain sales missions and marketing functions for the Convention Center as stated herein in order to further the public purpose of promoting economic growth and conventions, and to retain adequate public control over the use of public funds to ensure benefits to the City. NOW, THEREFORE, for the mutual promises and consideration as described herein, the Parties agree as follows: L TERMS A. Owner Management of the Convention Center. The Owner has the exclusive responsibility and discretion in the operation, direction, management and supervision of the Convention Center, subject only to the limitations expressed herein. In addition to its other duties as a reasonable convention center owner, the Owner, or a third party designated by the Owner, shall perform the following: 1 1. Day -to -day management and operations of the Convention Center, including, but not limited to determining all terms for admittance and charges for rooms, facilities, commercial space, if any, equipment rental, telecommunications services, audiovisual equipment, labor and other amenities and services provided at or with respect to the Convention Center. 2. All repairs, maintenance, upkeep and replacement of furniture, fixtures, and equipment; and, purchase and upkeep of all other inventories necessary to the operation of the Convention Center, as well as the Convention Center structure and accessory structures. 3. Event booking, coordination, and collection of sums due the Owner for rental or use and admissions. 4. Crowd control, security, box office supervision, admission procedures and servicing of users at conventions, trade shows, exhibits and entertainment. 5. Perform obligations of any third -party operations agreements such as reciprocal easements, concessions, parking, and leases. 6. Perform any catering or food- and beverage- related services with respect to the Convention Center. 7. Determine all labor policies, wages and salaries, fringe benefits, and any other personnel benefits with respect to the Convention Center in compliance with local, state, and federal law. 8. Implement all sales, advertising, public relations and promotional policies not covered by this Agreement. 9. Hire or terminate such persons or organizations as employees or manager of any of the functions stated herein that are the responsibility of the Owner. 10. Establish and maintain the master set of all booking records and schedules for the Convention Center (such records and schedules shall be provided to the City and to such third parties as directed by the City, at any time upon reasonable notice of request, and shall remain the property of the City). B. City Management Assistance. The Owner hereby authorizes and engages the City, or its designee as the law permits, to manage the Convention Center during the term of this Agreement as limited and described herein. The City hereby accepts such engagement subject to the terms and conditions expressed in this Agreement. The Owner shall cooperate with the City to the extent necessary for the City to fulfill its duties under this Agreement. The authority of the City to manage shall include the City's use of the Convention Center for public purposes. This Agreement does not change the character of such use and employees of the City using the 2 Convention Center for public purposes shall enjoy invitee status, as any other member of the public. Without limiting the generality of the foregoing, the City is hereby authorized and shall be obligated to do as follows in its discretion and as is allowed under the City's budget processes: 1. Advertise and conduct solicitations and promotional programs to attract tourists and convention delegates or registrants to the Denton Convention Center, including, but not limited to: i. Marketing at the state and local level (including market analysis, campaign development, branding, promotion, etc.); ii. Collecting and reporting metrics on marketing activity; iii. Sales missions developed in conjunction with the Owner's hotel sales team to pre- identify and pre - qualify business - appropriate meetings for the Property; and iv. Partnership development to create collaborative opportunities with local private, public, and non - profit sector entities. 2. Provide meeting, event, and pre- convention services, including, but not limited to: i. Conducting site visits and familiarization tours for potential clients; ii. Customized servicing for groups (registration assistance, delegate name badge preparation, welcome packets, off -site function arrangements, etc.); and iii. Serving as liaison between meeting planner client and hotel, local business, and transportation. 3. Identifying, collecting rate bids from, and securing overflow hotels in Denton for convention delegates. The City's duties described above shall specifically not include event coordinator duties for the Convention Center and those duties shall be the sole responsibility of Owner. C. No Joint Venture /No Joint Employment. This Agreement does not create a joint venture as to the Convention Center development or any separate business enterprise owned by Owner and physically joined to the Convention Center, such as the Hotel and Restaurant; and, the City, or its designee if permitted by law, shall remain independent of the actual operations of the Convention Center and shall only serve in a limited management position for the promotion of tourism and visitors to the City, which duties shall not require oversight or control by the Owner. The City, or its designee, shall not be considered a joint employer in performance under this Agreement and shall have no authority whatsoever over employees of Owner, its representatives, or of any lessee of the Convention Center; and, shall have no control over the terms and conditions 3 of their employment. This Agreement shall not be construed to cause the City, or its designee if permitted by law, to have obligations regarding federal and state employment laws with respect to those employees of Owner, regardless if those employees perform similar duties as the City herein. There shall be no shared employees. D. Expenses. The City shall not receive a management fee. The City shall only be responsible for costs associated with the performance of its duties under Section I.B. herein and shall not be responsible for any other costs incurred by Owner in performing its duties or otherwise operating the Convention Center. From time to time, if the City agrees to additional duties not defined herein, those costs shall be assessed against the Owner and not the City, and such duties shall be included in this Agreement in the form of a written addendum. Any responsibility of the City for costs associated with the management assistance as described in this Agreement shall be subject to annual appropriation by the City Council in the annual budget and the City's obligations under this Agreement shall not constitute a general obligation of the City or indebtedness under the Constitution or laws of the State of Texas. E. Booking Policy. The Owner acknowledges that the interest of the City requires a booking policy that takes into account not only those events which generate substantial direct revenue for the Convention Center, but also takes into account those events which produce less direct revenue, but generate significant peripheral economic benefits in the form of City hotel utilization, increased tourist revenues, and provide a stimulus to the general economy of the City of Denton. Owner agrees to use its commercially reasonable best efforts to accommodate this policy in the operation of the Convention Center. F. Insurance. Owner shall require that proper Certificates of Insurance evidencing general liability, automobile, bodily injury, property damage, death and workers compensation coverage shall be furnished, with copies to the City, and require that all policies be kept in force during the term of the Agreement by all vendors, concessionaires, subcontractors and service providers in the minimum amounts approved by the City. Such policies shall name the City as an additional insured. The Owner further agrees to maintain at all times during the term of this Agreement and the Development Agreement, with responsible insurance companies, insurance as follows: 1. Such worker's compensation, employer's liability or similar insurance as may be required by law, or such greater amounts which Owner shall deem advisable but no less than $1,000,000/$2,000,000; 2. A general liability insurance policy in the amount of at least $1,000,000 per person or $2,000,000 per occurrence for bodily injury or death; 3. An umbrella coverage insurance policy of at least $10,000,000 per occurrence; 4. Such other insurance against such other operation risks as Owner or City deems advisable to insure against, including, without limitation, auto liability insurance, liquor liability insurance and fidelity bonds; 5. Errors & Omissions or Professional Liability Coverage in the amount of at least $1,000,000. 6. Fire insurance and insurance against such other hazards ordinarily included by an all - risk form of extended coverage endorsement on the buildings, operating supplies, M furniture, furnishings and equipment in an amount equal to at least one hundred percent (100 %) of actual replacement cost (without deduction for depreciation) thereof, and all alterations, substitutions and replacements therefore, and bearing a standard noncontributory mortgagee loss payable endorsement in favor of the holders of any Mortgage on the Convention Center and providing, if reasonably available, for waiver of subrogation against such holder and the debt and security of such Mortgage in the event that the Convention Center is restored. This insurance shall include business interruption insurance. The Owner shall add the City as an additional insured on policies required by this Agreement. Moreover, the Owner shall assume all risks in connection with the adequacy of any insurance or self - insurance program and waives any claim against the City for any liability, costs or expenses arising out of any uninsured claim, in part or in full, of any nature whatsoever. Within a reasonable period of time after the effective date of this Agreement, Owner shall provide the City with a Certificate of Insurance showing compliance with this section. Any changes to coverage shall cause Owner to immediately notify the City in writing of such change. G. Compliance. Owner shall make all reasonable efforts to comply with all laws, rules, regulations, requirements, orders, notices, determinations, and ordinances of the City of Denton, including without limitation, the state and local liquor authorities, and the requirements of any insurance companies covering any of the risks against which the Convention Center is insured. Owner shall indemnify and hold harmless the City from any loss, cost, damage, or expense associated with compliance hereunder. H. Management Term. The term of this Agreement shall commence on the date the Agreement is approved by the City Council and shall continue for as long as the term of the Development Agreement, or as otherwise terminated thereby or hereunder. L Termination. The Agreement may be terminated prior to the expiration of the Agreement upon the occurrence of one or more of the following events: 1. Upon any default of the Development Agreement between the City and the Owner dated following the expiration of applicable cure periods; 2. Upon at least thirty (30) days prior written notice to the other party, if (i) the Convention Center is damaged or destroyed by fire or another casualty; (ii) all or a substantial part of the Convention Center is taken in a condemnation or eminent domain proceeding, or (iii) the Owner advises the City in writing prior to the Effective Date that the Owner has abandoned the development of the Convention Center; 3. Upon at least thirty (30) days prior written notice if Owner shall apply for or consent to the appointment of a receiver, trustee or liquidator of it or all or a substantial part of its assets; file a voluntary petition for bankruptcy; or, become otherwise insolvent; 4. If Owner permanently ceases operation of the Convention Center; 5 5. If Owner fails to provide or maintain insurance as required under this Agreement; or 6. If the Development Agreement results in a cessation of the incentive involving Hotel Occupancy Tax, then this Agreement terminates until such time as such incentive is resumed II. MISCELLANEOUS A. Assignability. If the Owner sells the Property, it shall provide the City at least sixty (60) days written notice of such sale identifying the buyer and whether the buyer intends to assume Owner's obligations under this Agreement and the Development Agreement. The City may assign its duties and /or designate a third party non - profit entity to perform the obligations hereunder in its own discretion and without approval of Owner; however, the City shall provide notice of such assignment within fifteen (15) days of the assignment. Failure to provide such notice does not constitute a waiver under this Agreement. B. Subcontract for Performance of Services. Nothing in this agreement shall prohibit, nor be construed to prohibit, the agreement by the City with another entity, person, or organization for the performance of those services described herein. In the event that the City enters into any arrangement, contractual or otherwise, with such other entity, person, or organization, the City shall cause other such entity, person, or organization to adhere to, conform to, and be subject to all provisions, terms, and conditions of this Agreement. C. Indemnification. OWNER AGREES TO INDEMNIFY, HOLD HARMLESS, AND DEFEND THE CITY, ITS OFFICERS, OFFICIALS, AGENTS, EMPLOYEES, AND REPRESENTATIVES FROM AND AGAINST ANY AND ALL CLAIMS (ADMINISTRATIVE OR JUDICIAL) OR SUITS FOR INJURIES, DEATH, DAMAGES, LOSSES AND EXPENSES (INCLUDING BUT NOT LIMITED TO REASONABLE ATTORNEYS' FEES FOR PRE - TRIAL, TRIAL AND APPELLATE PROCEEDINGS, ACCOUNTING FEES, APPRAISAL FEES AND CONSULTING AND EXPERT WITNESS FEES), ARISING OUT OF (1) ANY NEGLIGENT ACT OR OMISSION, ANY GROSS NEGLIGENCE OR ANY RECKLESS OR WILLFUL MISCONDUCT BY OWNER, ITS OFFICERS, DIRECTORS, AGENTS OR EMPLOYEES; (2) OWNER'S NON - PERFORMANCE OF ITS OBLIGATIONS HEREUNDER (WHETHER NEGLIGENT, GROSSLY NEGLIGENT, RECKLESS, OR WILLFUL); OR (3) ANY ACTION TAKEN BY OR ON BEHALF OF OWNER RELATING TO THIS AGREEMENT WHICH IS NOT PERMITTED BY, OR PURSUANT TO THE PROVISIONS OF THIS AGREEMENT OR REASONABLY NECESSARY TO CARRYING OUT LENDER AND /OR OWNER'S DUTIES. ANY INDEMNIFICATION SHALL APPLY REGARDLESS OF WHETHER OR NOT SAID CLAIM, DAMAGE, LOSS, OR EXPENSE IS COVERED BY INSURANCE AS HEREIN PROVIDED. IN THE D EVENT THAT A CLAIM IS ASSERTED AGAINST EITHER PARTY OR BOTH, OWNER SHALL PROVIDE CITY WITH A COPY OF SUCH CLAIM WITHIN A REASONABLE TIME FROM RECEIPT. OWNER FURTHER AGREES TO INDEMNIFY, HOLD HARMLESS, AND DEFEND THE CITY, ITS OFFICERS, OFFICIALS, AGENTS, EMPLOYEES, AND REPRESENTATIVES AGAINST ALL SUCH CLAIMS OR CAUSES OF ACTION RELATING TO COURSE OF EMPLOYMENT, WORKING CONDITIONS, WAGES AND /OR COMPENSATION OF OWNER EMPLOYEES OR FORMER OWNER EMPLOYEES AT THE CONVENTION CENTER AND RELATED HOTEL AND /OR RESTAURANT, INCLUDING VIOLATIONS OF ANY STATE, LOCAL, OR FEDERAL EMPLOYMENT LAW WHETHER COMMON LAW OR STATUTORY, AND AGAINST CLAIMS OF ANY PAST OR FUTURE LIFE /SAFETY CODE VIOLATIONS. D. Notice. Any notice required to be given under this Agreement or any statute, ordinance, or regulation, shall be effective when given in writing and deposited in the United States mail, certified mail, return receipt requested, or by hand - delivery, addressed to the respective parties as follows: CITY O'REILLY HOTEL PARTNERS — DENTON, LLC City Manager Tim O'Reilly City of Denton O'Reilly Hospitality Management, LLC 215 E. McKinney 2808 S. Ingram Mill Road, Building C100 Denton, TX 76201 Springfield, MO 65804 E. Inurement. This Agreement and each provision hereof, and each and every right, duty, obligation, and liability set forth herein shall be binding upon and inure to the benefit and obligation of the City and OWNER and their respective successors and assigns. F. Application of Laws. All terms, conditions, and provisions of this Agreement are subject to the Charter of the City of Denton, all ordinances passed pursuant thereto, and all judicial determinations relative thereto. This Agreement shall be governed by the laws of the State of Texas and venue shall lie in Denton County, Texas. G. Exclusive Agreement. This Agreement contains the entire understanding and constitutes the entire agreement between the parties hereto concerning the subject matter contained herein. There are no representations, agreements, arrangements, or understandings, oral or written, express or implied, between or among the parties hereto, relating to the subject matter of this Agreement, which are not fully expressed herein. The terms and conditions of the Agreement shall prevail notwithstanding any variance in this Agreement from the terms and conditions of any other document relating this transaction or these transactions. This Agreement may not be modified, amended, surrendered or changed, except by a written instrument executed by both parties. 7 H. Severability. If any section, subsection, paragraph, sentence, clause, phrase, or word in this Agreement, or application thereof to any person or circumstance is held invalid by any court of competent jurisdiction, such holding shall not affect the validity of the remaining portions of this Agreement, and the parties hereby declare they would have enacted such remaining portions despite any such invalidity. L No Representation. In entering into this Agreement, the parties acknowledge that the City has made no representation to the Owner regarding Owner's potential earnings, the possibility of future success or any other similar matter respecting the Convention Center and the City's assistance hereunder, and that the City expressly makes no guarantee as to the success of its assistance as provided hereby. This Agreement is effective as of the day of 12015. ATTEST: JENNIFER WALTERS, CITY SECRETARY APPROVED AS TO FORM: ANITA BURGESS, CITY ATTORNEY CITY OF DENTON, TEXAS BY: GEORGE C. CAMPBELL CITY MANAGER O'REILLY HOTEL PARTNERS — DENTON, LLC a Missouri Limited Liability Company ma Its: ACKNOWLEDGMENTS STATE OF TEXAS } COUNTY OF DENTON } The foregoing Management Agreement was executed before me on the day of 12015 by George C. Campbell, City Manager of the City of Denton, Texas, a Texas municipal corporation, on behalf of said Municipal Corporation. Name: Notary Public in and for the State of Texas STATE OF TEXAS } COUNTY OF DENTON } The foregoing Management Agreement was executed before me on the day of , 2015 by of O'Reilly Hotel Partners — Denton, LLC., on behalf of said corporation. Name: Notary Public in and for the State of Texas 0 EXHIBIT E TEXAS APPLICATION FOR DIRECT PAYMENT PERMIT 23 • Exhibit E: Texas Application for Direct Payment Permit ii- XA,s I GLENN HEGAR TEXAS COMPTROLLER OF PUBLIC ACCOUNTS I General Information Under Ch. 559, Government Code, you are entitled to review, request and correct information we have on file about you, with limited exceptions in accordance with Ch. 552, Government Code. To request information for review or to request error correction, contact us at the address or phone numbers listed on this form. Who may submit this application - You may submit this application if you annually purchase at least $800,000 worth of taxable items for your own use and not for resale. • The Comptroller may issue a Direct Payment Permit after receiving this completed application and finding that all the requirements for issuing a Direct Payment Permit stated in Item I of this application, "Taxpayer's Agreement," have been met. For assistance - If you have any questions about this application, filing tax returns or any other tax-related matter, contact your nearest Texas State Comptroller's local office. You may also call 1-800-252-5555 or 512-463-4600. General Instructions • Please do not separate pages. • Write only in white areas. • Fill in all blanks and answer all questions completely and fully. • Do not use dashes when entering Social Security, Federal Employer Identification Number (FEIN), Texas Taxpayer or Texas Vendor Identification numbers. • Federal Privacy Act: Disclosure of your Social Security number is required and authorized under law, for the purpose of tax administration and identification of any individual affected by applicable law. 42 U.S.C. §405(c)(2)(C)(i); Tex. Govt. Code §§403.011 and 403.078. Release of information on this form in response to a public information request will be governed by the Public Information Act, Chapter 552, Government Code, and applicable federal law. NOTE: No purchases may be made tax free until this application has been approved and your Direct Payment Permit has been issued. Specific instructions are on the back of the next page. Complete this application and mail to Comptroller of Public Accounts 111 E. 17th St. Austin, TX 78774-0100 AP-101-1 (Rev.1-15/17) O °^ "" �9'( Rev.1 -1v.1 -12 5/17 Texas Application ° � for Direct Payment Permit Page 1 • Please read instructions. • Type or print. Do not write in shaded areas. 1. Taxpayer's Agreement - The applicant, in consideration of the issuance of a Direct Payment Permit by the State of Texas ac- cording to the provisions of the law, agrees and affirms: a. that applicant is a responsible person annually purchasing at least $800,000 worth of taxable items for use and not for resale (complete Item 19); b. that the accounting method used will clearly distinguish between taxable and nontaxable purchases (complete Item 20); c. that upon the issuance of a Direct Payment Permit to the applicant, the applicant will accrue and pay to the State of Texas all taxes which are or may in the future be due by virtue of the State, Local, Metropolitan Transit Authority, City Transit Department, County and Special Purpose District Sales and Use Tax Acts. The tax is due on all taxable purchases; and, z unless the tax is paid to the seller, it must be reported on the Texas Direct Payment Return. All taxes due will be paid W monthly on or before the 20th day of the month following each monthly reporting period; W W d. that the Direct Payment Exemption Certificate will not be issued for taxable items purchased for resale; CD a e. to report all taxable purchases on the direct payment return and waive any claim for discounts for taxes paid. No taxable W purchases may be reported on a sales and use tax return; W af. upon request, to make available at any time to the Comptroller's office the books, papers, records and equipment of the applicant's business; H g. to cooperate with the Comptroller's office in the examination of the books, papers, records and equipment of the applicant and in the investigation of the applicant's activities, business and accounting methods; and h. to fully disclose to the Comptroller's office in this agreement or upon acquisition, whichever occurs first, the nature and extent of the ownership or control which the applicant has in the business from which the applicant makes purchases pursuant to the Direct Payment Permit. Legal cite: Tex. Tax Code Ann. Sec. 151.419 Type or print name of sole owner, partner or officer Sole owner, partner or officer here 2. Legal name of owner (Sole owner, partnership, corporation or other name) 3. Mailing address (Street and number, P.O. Box or rural route and box number) O z .I Q U City State ZIP code County ■ I I ■ L_I_J ■ L�J I � Z W 0 4. If you are a sole owner, enter your home address IF it is different from the address above. (Street and number, city, state, ZIP code) cc W a 4a. Enter the phone number of the person primarily responsible for filing tax returns (Area code and number). ■ I 5. Enter your Social Security number if you are a sole owner ............................................. ............................... ■ . . .. tttt_J L-1-1 6. Enter your Federal Employer Identification Number (FEIN), if any .......................................... ............................... . 7. Enter your taxpayer number for reporting any Texas tax OR your Texas Vendor Identification Number if you now have or have ever had one ................................. ............................... 8. Indicate how your business is owned. ❑ 1 - Sole owner ❑ 3 - Texas corporation ❑ 7 - Limited partnership ❑ 2 - Partnership ❑ 6 - Foreign corporation ❑ Other (explain) 0 . _ 9. If your business is a Texas corporation, File number Month Day Year = V) enter the file number and date ........................................................ ............................... cc W 10. If your business is a foreign corporation, enter home state, home state registration number, Texas file number and date. �Home state Home state registration number Texas file number Month Day Year I I I I I I I I I , I State Number 11. If the business is a limited partnership, enter the home state I I andidentification number .............................................................................. ............................... W O`oRMa'AP-101-3 Texas Application (Rev.1 -1en7) ■ Page 2 for Direct Payment Permit • Please read instructions. • Type or print. Do not write in shaded areas. 12. Legal name of owner (same as Item 2) I LI I I I I I I I I 1 I 13. List all general partners, officers or managing members of your business. (Attach additional sheets, if necessary) If you are sole owner, skip Item 13. Name Phone (Area code and number) Nome address City State ZIP code IX SSN FEIN County (or country, ifoutside the U.S.) W Percent of I i i ownership i i i i i i i i ■ I� I � W IX a Position held: ❑ General partner ❑ Officer /Director ❑ Managing member ❑ Other 0 IX Name Phone (Area code and number) (L I .. .... , , , . . .J Nome address City State ZIP code SSN FEIN County (or country, ifoutside the U.S.) — I Percent % 01 i i i i i i i ownershi ipf Position held: ❑ General partner ❑ Officer /Director ❑ Managing member ❑ Other 14. Business name Business phone (Area code and number) w a ■I 15. Location of your principal place of business (Use street and number or directions - NOT P.O. Box or rural route number.) Z .I QCity State ZIP code County . I I . L_,_J ■ L�� o J y 16. Is your business located inside the city limits of the city named in Item 15? ................................... ............................... ❑ YES ❑ NO W z 17. Indicate your principal type of business. in ❑ Exploration /Production ❑ Construction ❑ Manufacturer /Processor ❑ Service ❑ Other m 18. Describe your Texas business and the goods or services you sell. (See instructions.) I I 19. Enter the amount of your annual purchases subject to Texas Use Tax ...... ............................... Z WO 12 20. On a separate sheet, describe the accounting method that you will use to differentiate between taxable purchases, exempt purchases, ix tax -paid purchases and items purchased tax free for resale. (See instructions.) UO ,x? 21. List and describe all sites of major fixed assets permanently located within Texas. (Attach additional sheets, if necessary.) The sole owner, all general partners, members, officers or an authorized representative Month Day Year must sign this application. Representative must submit a written power of attorney with this application. (Attach additional sheets, if necessary.) Date of signature I I I 22. I (We) declare, under penalties prescribed by law, that the information in this document and any attachments is true and correct to the best of my (our) knowledge and belief. Legal cite: Tex. Penal Code Ann. Sec. 37.10 N W Type or print name of sole owner, partner or officer Sole owner, partner or officer here ZType or print name of partner or officer Partner or officer here 55 I I I Type or print name of partner or officer Partner or officer I I here I WARNING. You may be required to obtain an additional permit or license from the State of Texas or from a local governmental entity to conduct business. A listing of links relating to acquiring licenses, permits, and registrations from the State of Texas is available online at http: //www.Texas.gov. You may also want to contact the municipality and county in which you will conduct business to determine any local governmental requirements. Field office or section number Employee Name USERID Date Instructions for Completing Texas Application for Direct Payment Permit Item 2-Sole owner - enter first name, middle initial and last name. PaItnershW - enterthe|eQa|nameofthe partnership. Corporation - enter the legal name exactly anit in registered with the Secretary ofState. Other oroanization - enter the title of the organization. Item 3- Enter the complete address where you want to receive mail from the Comptroller of Public Accounts. NOTE: If you want to receive mail for other taxes ntn different address, attach n letter with the other nodreoo(es). Item G- Enter the Federal Employer Identification Number (FBN) assigned to your business by the Internal Revenue Service. Item 7-If you have both a Texas Taxpayer and a Texas Vendor Identification Number, enter only the first eleven digits of the Vendor Identification Number. Item 8-If you check ^Dther,^ identify the type of organization. Examples: Social Club, Independent School District, Family Trust. Item 13- Partnership - enter the information for ALL partners. |fa partner isa corporation, enter the Federal Employer Identification Number (FBN) of the corporation. Corporation or other organization -enterthe information for the principal officers (prenident. secretary, treasurer). Item 18- The description of your business should include the principal types ofbusiness. Examples: highway construction, crude petroleum, natural gas transmission, industrial chemicals. Please bespecific. Item 1S- Enter the total amount of taxable items purchased last year ortobe purchased. This does not include purchases for which aResale Certificate can beor could have been issued. xp-101-4 (Re v.1-15/17) Item 2U-Thbe eligible for a Direct Payment Permit, you must maintain an accounting method that clearly distinguishes between taxable and non- taxable purchases. Describe your accounting method fully. Explain the internal controls and the accounting flow of the data that will be used to prepare your direct payment return. Answer the following questions in your explanation. How will you distinguish between - purchases made under a direct payment exemption certificate; -purnhanenforrena|e; -nontaxab|epurnhanen; -purnhaneninTexanandoutofnbate; -anyotherbax-freepurnhanen;and -tax-paidpunohanen? ~ If you purchase items for resale and for your own use from the same supplier, will you issue separate purchase orders? How will the two types of purchases be accounted for? ~ If you do not issue blanket exemption certificates to your suppliers, how will you indicate on which items the supplier will collect tax? ~ What accounting procedure will you follow to report use tax in the same month that you receive vendor's billings? ~ What procedure will you follow to report use tax tothe correct city, Metropolitan Transit Authority ([WTA) or City Transit Department (CTD). County and/or Special Purpose ~ When you prepare your direct payment return, from what smrce(s) will you get the necessary data? How will this data get tothe ~ Will more than one person review the purchase records and compare them to ~ What procedures will you follow to ensure that tax-free purchases are not reported on the Texas Sales and Use Tax Return? EXHIBIT F CERTIFICATE OF COMPLIANCE FORM 24 CERTIFICATE OF COMPLIANCE -- ANNUAL Company: O'REILLY HOTEL PARTNERS- DENTON, LLC Reporting Year: January 1 — December 31, 20 Contract Year No. L Investment 1.1 The Economic Development Agreement between O'Reilly Hotel Partners- Denton, LLC ( "Grantee ") and the City of Denton, Texas ( "City "), dated (the "Agreement ") states that no grant may be paid to Grantee unless Grantee has completed the Improvements to the Property no later than 30 months after the start of construction. (II.D.) a. As of the date of this Certificate of Compliance, have the Improvements to the Property as described in the Agreement been deemed completed? ❑ YES ❑ NO b. The Improvements to the Property as described in the Agreement were completed on (date): 1.2 As a condition of the grant payments, the Agreement requires Grantee to provide a total Capital Investment for the development of the Project of at least $80 million. Additionally, any grant payments are conditioned upon the Grantee's Capital Investment to generate a minimum increase in assessed real estate Improvements and business personal property valuation on the Property over the existing 2015 valuation in the amount of $20 million. (II.D.) a. The Grantees have invested $ in Capital Investment for the development of the Project on the Property for the reporting year ending December 31, 20 a. The increase in assessed valuation of the real estate Improvements and business personal property for the year ending December 31, 20 over the existing 2015 valuation is: $ 1.3 Have all applicable Certificate of Occupancies been issued for the Property? ❑ YES ❑ NO 1.4 The Agreement states that any grant payments will be paid for a maximum of 25 years or until the combined principal amount of $28 million and interest payment of $26 million for a total aggregate amount of $54 million is reached, whichever comes first. (III.A.) Certificate of Compliance Page 1 of 3 a. Grantee has paid in principal on any debt instruments used for the development of the Project for the year ending December 31, 20 b. Grantee has paid in interest on any debt instruments used for the development of the Project for the year ending December 31, 20 IL Employment 2.1 The Agreement requires the Grantee to use good faith efforts to hire qualified residents of the City of Denton to work at the Project. As part of this requirement, the Grantee must make a good faith effort to offer available.) obs to qualified Denton residents, as well as to hire Denton contractors and suppliers in construction. (ILH.) a. Did the Grantee comply with the recruiting requirements in Section ILH. of the Agreement in regards to offering available jobs to Denton residents during the year ending December 31, 20 ? ❑ YES ❑ NO b. Did the Grantee comply with the recruiting requirements in Section ILH. of the Agreement in regards to hiring Denton contractors and suppliers in construction during the year ending December 31, 20 ? ❑ YES ❑ NO III. Additional Covenants 3.1 The Agreement requires that the Full- Service Hotel and Restaurant be operated by Approved Franchisors. Please indicate the Approved Franchisor for each for the compliance year ending December 31, 20 Full- Service Hotel: Restaurant: 3.2 The Agreement requires the Grantee to keep the Property in a continuous Upscale Manner. (II.E.). Did the Grantee comply with the Upscale Manner requirement of the Agreement during the year ending December 31, 20 ? ❑ YES ❑ NO 3.3 Did the Grantee timely submit this Certificate of Compliance as required under Section IV.D. of the Economic Development Agreement during the year ending December 31, 20 ? ❑ YES ❑ NO Certificate of Compliance Page 2 of 3 3.4 Has Grantee complied with each of its additional obligations in the Agreement for the year ending December 31, 20 ? ❑ YES ❑ NO IV. Payment 4.1 The Economic Development Agreement provides an annual grant of 100% of ad valorem taxes collected and verified by the City for the prior tax year, exclusive of the taxable value of the underlying land or any increase thereof. (III.A.1). 4.2 The City property taxes paid for January 1, 20 valuation are: Real Property Business Personal Property 4.3 The grant payment for ad valorem taxes requested: $ 4.4 Please attach the most recent Property Tax Notice. I, the authorized representative for O'Reilly Hotel Partners — Denton, LLC, hereby certify that the above information is correct and accurate pursuant to the terms of the Agreement. I further certify that the Company has fully complied with the Economic Development Agreement during the year ending December 31, 20 , including compliance with the City of Denton Code of Ordinances, Texas Department of Public Safety Regulations, and other applicable federal, state, or local law. O'REILLY HOTEL PARTNERS— DENTON, LLC Signature: Printed Name: Title: Date: Certificate of Compliance Page 3 of 3 EXHIBIT G (CORPORATE RESOLUTION FOR AUTHORITY) At the time of the backup deadline on 10/22/15, this information was not finalized. It will be provided as soon as possible. 25 EXHIBIT H ORDINANCE AUTHORIZING AGREEMENT 26 City Hall City of Denton 215 E. McKinney St. Denton, Texas 76201 www.cityofdenton.com D EN'FON File #: ID 15 -1026, Version: 1 Legislation Text Agenda Information Sheet DEPARTMENT: Development Services CM/ ACM: Jon Fortune Date: October 30, 2015 SUBJECT Consider adoption of an ordinance of the City Council of the City of Denton, Texas, authorizing the City Manager to execute a Management Agreement between the City of Denton and the Dallas Entrepreneur Center for the management of the entrepreneur center located at 608 East Hickory, Suite 128, Denton, Texas, 76201; and providing an effective date. BACKGROUND The Dallas Entrepreneur Center (DEC) was established to provide a central location to serve entrepreneurs by providing education, training, programming, mentorship and access to capital. The DEC is a 501(c)3 nonprofit organization governed by a volunteer Board of Directors. The DEC's vision can be summarized within the following bullet points: • The DEC is a business support hub. It generates economic growth by offering startups the knowledge and resources necessary for success. • The DEC believes that investment into up- and - coming entrepreneurs is an investment in the future of the community and economy. • The DEC removes many of the challenges faced by entrepreneurs and startup companies by providing them with a physical location that has direct access to resources, education and guidance to achieve success. • The DEC serves as a collaborative space where everyone has something to offer the startup ecosystem. • The DEC aims to make North Texas a bigger known presence amongst the entrepreneurial and business scene across the United States. The DEC successfully hosts over one hundred events per year, and has brought in over 10,000 people into their space in Dallas for events, tours, and potential members. The DEC houses more than fifty companies, roughly 120 people, in their Dallas space full time and another 10 companies that co -work or drop -in regularly to work from their space. The DEC has launched many highly recognized programs such as DEC Education (classes to train entrepreneurs), DEC Incubation (hands -on mentoring and resources to coach companies through growing a business, and DEC White Board Sessions (investors spend half of a day each month at the DEC meeting with members to advise and coach towards fundraising). Additionally, the DEC has been partly or directly responsible for bringing a growing number of national programs into North Texas, including the Startup Next Program, the CoFounder's Lab, 1 Million Cups, and TechCocktail. The DEC currently contracts with the City of Addison to manage and operate the Addison Treehouse, a co- City of Denton Page 1 of 3 Printed on 10/26/2015 File #: ID 15 -1026, Version: 1 working space and entrepreneur center. The City of Denton has invested in the launch of a co- working space and entrepreneur center which will be focused on growing and supporting technology -based companies in Denton. The center is scheduled to open on March 1, 2016. Due to the DEC's success in North Texas, their ability to replicate their operating model in multiple cities within North Texas, and the growing network of entrepreneurship across the area, the City is proposing to enter into a management agreement for the DEC to manage and operate the new co- working space and entrepreneur center to be located at 608 East Hickory in Denton. Membership in the Denton program will include satellite membership in Addison and Dallas as a member benefit. This network affords more opportunities for collaboration and the attraction of national entrepreneur programs and investors. As the manager of the program and the co- working space, the DEC will have the following responsibilities: • Coordinate with the Rail Yard developer on the design and layout of the space, including tenant finish- out selections, interior design, and architectural/construction decisions. The Manager will solicit feedback from the City during this process but will serve as the primary point of contact during construction. • Coordinate with the City's marketing /advertising designee to finalize all branding, logos, program markers, and marketing materials for the promotion and launch of the entrepreneur center. • Coordinate the selection and procurement of all furniture, fixtures, and equipment for the space while working directly with the City and all applicable purchasing laws. • Coordinate with the City to finalize membership eligibility, terms, application requirements, selection process, operating hours, performance measures and all other programmatic elements. • Commencing with the term of the Commercial Lease Agreement, day -to -day management and operations of the entrepreneur center and all associated programs, including but not limited to the following: • Membership recruitment and collection of all membership fees • Coordinate, plan and host events and training for members • Coordinate all programming for the space • Create a business - support hub for tech -based companies and start -ups The DEC will pay a percentage of operating expenses associated with the Commercial Lease Agreement as follows: • Ten percent of all membership fees collected by Manager will be paid quarterly to the Landlord (Rail Yard Partners, Ltd) as a contribution towards associated operating expenses • All payments will be made directly to the Landlord and will be credited towards the City's operating expense account The DEC will solicit sponsorships, donations, programming, speakers and all other support as necessary to successfully operate the entrepreneurial space and associated programs. The DEC will provide a quarterly financial report to the City that shows a separate accounting of all revenue and expenses associated with the operation of the space in Denton, and an accounting of all revenue and expenses associated with the DEC's full operations. The City will provide the space located at 608 East Hickory for the operation of the entrepreneur center. The City will provide appropriate technology, furniture, fixtures, and equipment for the space, and will provide staff support and resources to the DEC to assist in operations. The City will also provide marketing resources and assistance as available and budgeted, and will license the use of any and all branding, logos, program markers, websites and other materials to the DEC for the promotion of the program. City of Denton Page 2 of 3 Printed on 10/26/2015 File #: ID 15 -1026, Version: 1 OPTIONS The City Council may approve the proposed Management Agreement with the DEC, may request changes to the Agreement or request more information, or may deny the proposal. RECOMMENDATION Staff recommends approval of the Management Agreement with the DEC. ESTIMATED SCHEDULE OF PROJECT Upon execution of the Agreement, the DEC will immediately begin working to fulfill its responsibilities prior to the launch of the program scheduled for March 1, 2016. PRIOR ACTION/REVIEW (Council, Boards, Commissions) On September 15, 2015 the City Council approved the Commercial Lease Agreement and the Grant Agreement with Rail Yard Partners, Ltd. On January 16, 2015 the Tax Increment Reinvestment Zone Number One (Downtown TIF) received a report regarding an innovation and technology recruitment initiative and potential partnership opportunities, and recommended approval of an incentive 5 -0. On October 14, 2014 the EDP received a report regarding an innovation and technology recruitment initiative and potential partnership opportunities and recommended that staff proceed with a vote by the Downtown TIF Board. In a Budget Workshop on July 31, 2014, and in a Budget Work Session on August 19, 2014, the City Council heard a budget request for $220,000 for the formation of this program. This program has been funded for the 2014 -15 Fiscal Year and is included in the City Manager's Proposed Budget for Fiscal Year 2015 -16. In a joint meeting between EDP and the City Council on April 7, 2014, program components were presented and discussed. EDP and the City Council gave staff direction to consider pursuing the initiative and developing the program. FISCAL INFORMATION The Management Agreement requires the DEC to contribute ten percent of membership income towards the operating expenses associated with the Commercial Lease Agreement between the City of Denton and Rail Yard Partners, Ltd. EXHIBITS Exhibit 1 - Ordinance 2015 -300 - Rail Yard Lease and Grant Agreement Exhibit 2 - Draft Management Agreement Exhibit 3 - Draft Ordinance Respectfully submitted: Aimee Bissett Director of Development Services City of Denton Page 3 of 3 Printed on 10/26/2015 s: \legal \our documents \ordinances \15 \ordinance approving rail yard lease and incentive agreements updated 9- 9- 15.docx Exhibit 1 ORDINANCE NO. 2015 -300 AN ORDINANCE OF THE CITY OF DENTON, TEXAS APPROVING AN ECONOMIC DEVELOPMENT AGREEMENT FOR AN INCENTIVE GRANT BETWEEN THE CITY OF DENTON AND RAIL YARD PARTNERS, LTD; AND A COMMERCIAL LEASE AGREEMENT BETWEEN THE CITY OF DENTON AND RAIL YARD PARTNERS, LTD. INVOLVING DEVELOPMENT AT THE PROPERTY LOCATED AT 608 EAST HICKORY STREET, DENTON, TEXAS, 76201; PROVIDING AUTHORITY FOR THE CITY MANAGER TO EXECUTE THE AGREEMENTS SUBJECT TO FINAL LANGUAGE APPROVAL BY THE CITY ATTORNEY; AND PROVIDING AN EFFECTIVE DATE. WHEREAS, on September 16, 2014, the City of Denton adopted the 2014/15 Program of Services and Budget, including a line item for a technology recruitment initiative; and WHEREAS, on the 7th day of December, 2010, the City of Denton, Texas (the "City ") established Tax Increment Reinvestment Zone (TIRZ) Number One (Downtown TIF) (Ordinance 2010 -316) as authorized by Chapter 311 of the Texas Code (the "Act "); and WHEREAS, on the 5th day of August, 2014, the City of Denton, Texas amended the Tax Increment Reinvestment Zone Number One Project Plan to allow the City of Denton to utilize City -owned property located in a reinvestment zone to facilitate economic projects which the City and TIF Board deem appropriate and desirable. The City may acquire, lease, sell or otherwise transfer property to accomplish the public purpose of economic development that is consistent with the Project Plan; and WHEREAS, the City Council by this ordinance is establishing an economic development program under Chapter 380 which will stimulate business activity in the City and promote the public interest (the "Program "); and WHEREAS, to effectuate the Program, the City and Grantee have negotiated an Economic Development Agreement for an incentive grant (the "Grant Agreement "), a copy of which is attached hereto and made a part hereof by reference; and WHEREAS, to effectuate the Program, the City and Grantee have negotiated a Commercial Lease Agreement (the "Lease Agreement "), a copy of which is attached hereto and made a part hereof by reference; and WHEREAS, the City Council finds that the Program, the Grant Agreement, and the Lease Agreement promote economic development and will stimulate commercial activity within the City of Denton for the benefit of the public; NOW, THEREFORE; THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The recitals and findings contained in the preamble of this ordinance are incorporated into the body of this ordinance. sAlegal \our documents \ordinances \15 \ordinance approving rail yard lease and incentive agreements updated 9- 9- 15.docx Exhibit 1 SECTION 2. The City Manager, or his designee, is hereby authorized to execute the Grant Agreement on behalf of the City of Denton and to carry out the City's responsibilities and rights under the Grant Agreement, including without limitation the authorization to make the expenditures set forth in the Grant Agreement. SECTION 3. The City Manager, or his designee, is hereby authorized to execute the Lease Agreement on behalf of the City of Denton and to carry out the City's responsibilities and rights under the Lease Agreement, including without limitation the authorization to make the expenditures set forth in the Lease Agreement. SECTION 4. The City Manager, or his designee, is authorized to exercise the City of Denton's rights and duties as set forth in the Grant Agreement and the Lease Agreement. SECTION 5. This ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the CS day of , 2015. ,mv 'III: WATTS, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY I:• APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY BY. .... Page 2 Exhibit 1 ECONOMIC DEVELOPMENT PROGRAM GRANT AGREEMENT WITH RAIL YARD PARTNERS, LTD. This Economic Development Program Grant Agreement ( "Agreement ") is made and entered into as of the effective date provided for below, by RAIL YARD PARTNERS, LTD. (the "Grantee "), a Texas limited partnership, and the CITY OF DENTON (the "City "), a Texas municipal corporation, for the purposes and considerations stated below: WHEREAS, this Agreement is authorized by and made pursuant to the economic development program provisions of Chapter 380 of the Texas Local Government Code (the "Act ") to promote local economic development and to stimulate business and commercial activity in the City of Denton; and WHEREAS, Grantee is contemplating a catalyst transit - oriented development of that certain real property located at 608 East Hickory, Denton Texas, 76201, within the city limits of the City of Denton as more particularly described in Exhibit "A" attached hereto and made a part hereof by reference (the "Property "); and WHEREAS, the project will involve Grantee investing approximately $12 million in Denton, and is expected to provide co- working and incubator space for an economic development program focused on the creation of high -tech companies and jobs; and WHEREAS, on the 22 t of January 2015, Grantee submitted an application for economic development incentives to the City concerning the contemplated use and development of the Property, which is on file in the City's Office of Economic Development, a copy of which is attached hereto and made a part hereof by reference as Exhibit `B ", and WHEREAS, on the 14th of October 2014, the Economic Development Partnership Board considered and recommended a local incentive for Rail Yard Partners, Ltd., and on the 16th of January 2015, the Tax Increment Reinvestment Zone Number One ( "TIRZ 1") Board of Directors recommended a local incentive for Rail Yard Partners, Ltd. in order to accomplish certain objectives stated within the Downtown TIF (TIRZ 1) Project Plan, a copy of which is attached hereto and made a part hereof by reference as Exhibit "C "; and WHEREAS, the City Council finds that the contemplated use and development of the Property, the proposed improvements provided for herein and the other terms and conditions of this Agreement will promote economic development and will stimulate development activity within the City of Denton for the benefit of the public. NOW, THEREFORE, the City and Grantee for and in consideration of the Property and the promises contained herein do hereby contract, covenant and agree as follows: 1 Exhibit 1 I. CONDITIONS OF THE GRANT A. Grantee covenants and agrees with the City that the City's obligations under this Agreement are subject to the fulfillment of the Grantees' obligations under this Agreement, and Grantee (or through Related Parties) hereby agrees to perform and comply in all material respects to the terms, conditions, and provisions of this Agreement and in all other instruments and agreements between Grantee, Related Parties, and the City with respect to the financial or other incentives provided herein. In consideration of a Grant Agreement and subject to the Grantee meeting all the terms and conditions of the Grant as set forth herein, the City hereby grants the following: A grant (the "TIRZ Grant ") equal to $76,000 annually, from the Tax Increment Reinvestment Zone Number One Fund, commencing on March 1, 2016 and paid annually on March 1St for five years, terminating on March 1, 2 02 1. B. A condition of the TIRZ Grant is that the Commercial Lease Agreement between the City of Denton and Rail Yard Partners, LTD remains in effect for the term of the grants, a copy of which is attached hereto and made a part hereof by reference as Exhibit "D ". C. The terms "Improvements" or "Contemplated Improvements" are defined as the construction, renovation and equipping of the Property including but not limited to (1) costs related to the development and improvement of the real estate, including, without limitation, construction costs and design and engineering costs; (2) tangible personal property located on or at the Property owned or controlled by Grantee, The kind and location of the Contemplated Improvements is more particularly described in the Incentive Application (the "Incentive Application ") submitted by Grantee to the City on January 22, 2015. D. Upon approval by the City Council, the Grantee and the City shall have the right to renew or extend the term of the TIRZ Grant in the event that the Commercial Lease Agreement between the City and Rail Yard Partners, LTD is renewed or extended. II. GENERAL PROVISION In the event of any conflict between the City zoning ordinances, or other City ordinances or regulations, and this Agreement, such ordinances or regulations shall control, provided however the City shall not diminish the benefits to the Grantee under this Agreement through ordinances or regulations (whether now or hereafter in effect). 2 Exhibit 1 III. TERMS AND CONDITIONS OF GRANT A. Subject to the terms and conditions of this Agreement, the City hereby agrees to pay to Grantee: 1. Upon execution of Commercial Lease Agreement and occupancy of property by City of Denton, a grant totaling $76,000 annually for five years commencing March 1, 2016. B. Grantee shall have the right to protest and contest any or all appraisals or assessments by the Denton County Appraisal District for the Property, the Improvements or any other tangible personal property owned or controlled by Grantee and located on the Property. IV. RECORDS, AUDITS, AND EVALUATION OF PROJECT Grantee shall provide access and authorize inspection of the Property by authorized City employees and allow sufficient inspection of financial information to insure that the Improvements are made according to the specifications and conditions of this Agreement. Such inspections shall be done in a way that will not interfere with Grantee's business operations or reveal confidential or proprietary information. The City shall, on an annual basis, evaluate the Project to ensure compliance with this Agreement. Grantee shall provide information to the City on a form provided by the City for the evaluation. The information shall include, without limitation, an inventory listing the kind, number, and location of and the total investment value of all Improvements to the Property, including those Improvements installed, renovated, repaired or located on the Property. V. FAILURE TO MEET CONDITIONS In the event (i) Grantee or the Owner of the Property allow their ad valorem real property taxes owed to the City with respect to the Property, or ad valorem taxes owed to the City with respect to any tangible personal property owned or controlled by the Grantee and which is located on the Property to become delinquent and fails to timely and properly follow the legal procedures for protest and /or contest of any such ad valorem real property or tangible personal property taxes; or, (ii) any other material conditions of this Agreement are not substantially met by Grantee, then a "Condition Failure" shall be deemed to have occurred. It is understood that a Condition Failure shall not be deemed to occur merely because at a particular time it cannot be determined whether such condition has been or will be met, but shall occur only if at a particular time it can be determined that such condition will not be met after notice and reasonable Exhibit 1 opportunity for Grantee to cure such failure. In the event that a Condition Failure occurs, the City shall give Grantee written notice of such Condition Failure and if the Condition Failure has not been cured or satisfied within ninety (90) days of said written notice, this Agreement may be terminated by the City; provided, however, that if such Condition Failure is not reasonably susceptible of cure or satisfaction within such ninety (90) day period and Grantee has commenced and is pursuing the cure or satisfaction of same, then after first advising the City of efforts to cure or satisfy same, Grantee may utilize such additional time as may be reasonably required to cure such Condition Failure, but not more than one hundred eighty (180) days, provided, however that the City may, in its discretion, authorize additional time in order to facilitate a cure of such Condition Failure. If a Condition Failure is not cured or satisfied after the expiration of the applicable notice and cure or satisfaction periods ( "Condition Failure Default "), the City may, as the City's sole and exclusive remedies, (a) terminate any payment(s) due pursuant to Section A.1. or A.2. above, and (b) require that Grantee repay to the City an amount equal to fifty percent (50 %) of such payments made in year of termination. Notwithstanding the foregoing, in no event shall Grantee be required to repay all or any portion of any payments made to Grantee pursuant to Section III A.1, or Section III A.2, above. VI. ASSIGNMENT Without the prior consent of the City, this Agreement and Grantee's rights and obligations hereunder may only be assigned to an affiliate of Grantee, and such assignment shall only be effective upon delivery of written notice of same to the City. Upon any assignment permitted in accordance with the terms of this Section VI, the assignee will be deemed the "Grantee" hereunder, such that any reference in this Agreement to "Grantee" or to "Rail Yard Partners, Ltd." shall be deemed to refer to such assignee. Consent of the City will not be unreasonably withheld. In the event that Grantee ceases to operate on the Property, this Agreement shall terminate and all obligations of the City, as set forth herein, shall terminate and be of no further force and effect. VII. NOTICE All notices called for or required by this Agreement shall be addressed to the following, or such other party or address as either party designated in writing, by certified mail postage prepaid or by hand delivery: COMPANY: Rail Yard Partners, Ltd. Orison Holdings, LLC, General Partner ATTN: Brandon Martino 525 S. Loop 288, Suite 105 Denton, TX 76205 4 Exhibit 1 CITY: City Manager City of Denton 215 E. McKinney Denton, Texas 76201 BOARD: Board of Directors of Reinvestment Zone Number One c/o City of Denton 215 E. McKinney Street Denton, Texas 76201 VIII. CITY COUNCIL AUTHORIZATION This Agreement is authorized by the City Council at its meeting on the day ol-���, 2015, authorizing the City Manager to execute this Agreement on behalf of the City. IX. INTENTIONALLY OMITTED X. SEVERABIILTY In the event any section, subsection, paragraph, sentence, or phrase is held invalid, illegal or unconstitutional, the balance of this Agreement shall stand, shall be enforceable and shall be read as if the parties intended at all times to delete said invalid, illegal or unconstitutional provision. XI. ESTOPPEL CERTIFICATE Any party hereto may request an estoppel certificate from another party hereto so long as the certificate is requested in connection with a bona fide business purpose. The certificate, which if requested will be addressed to Rail Yard Partners, Ltd. shall include, but not necessarily be limited to, statements that this Agreement is in full force and effect without default (or if default exists the nature of default and curative action, which should be undertaken to cure same), the remaining Term of this Agreement, the levels and remaining Term of the Annual Payments in effect, and such other matters reasonably requested by the party(ies) to receive the certificates. XII. RAIL YARD PARTNERS, LTD. STANDING Grantee, as a party to this Agreement, shall be deemed a proper and necessary party in any litigation questioning or challenging the validity of this Agreement or any of Exhibit I the underlying ordinances, resolutions, or City Council actions authorizing same and Grantee shall be entitled to intervene in said litigation. XIII. APPLICABLE LAW This Agreement shall be construed under the laws of the State of Texas. Venue for any action under this Agreement shall be the appropriate court serving Denton County, Texas. This Agreement is fully performable in Denton County, Texas. XIV. FORCE MAJEURE If, because of flood, fire, explosions, civil disturbances, strikes, war, acts of God, or other causes beyond the control of either Party, either Party is not able to perform any or all of its obligations under this Agreement, then the respective Party's obligations hereunder shall be suspended during such period but for no longer than such period of time when the party is unable to perform. XV. AMENDMENT This Agreement is the entire agreement of the parties and may only be modified by a written instrument executed by both parties. XVI. EFFECTIVE DATE This Agreement is effective as of the ' day alp.w . , 2015. CITY OF DENTON, TEXAS ... y� BY: GEl'6lwl� C. CAM PBI�i Exhibit 1 APPROVED AS TO FORM: ANITA BURGESS, CITY ATTORNEY RAIL YARD PARTNERS, LTD. ORISON HOLDINGS, LLC, GENERAL PARTNER BY 13randori Marti._ ,...,�..m ...�.�.. � ._�..._ no ITS: A� Managing Partner ACKNOWLEDGMENTS STATE OF TEXAS COUNTY OF DENTON The foregoing Economic Development Program Agreement was executed before me on the _ day of y , 2015 by George C. Campbell, City Manager of the City of Denton, Texas, a Texas municipal corporation, on behalf of said municipal corporation. Name: Notary Public in and for the State of Texas 7 Exhibit 1 STATE OF TEXAS COUNTY OF DENTON The foregoing Economic Development Prograrti greci eiit was executed before me on the day of :. __ . 2015 by � t� �n behalf of said corporation. 8 n_ Name Notary Public in and for the Y „ State of Texas < 8 Exhibit l Axis Realty Group � °�NTC'mR ftM,km1wC*ffl11W%kd NORTH TEXAS COMMERCIAL ASSOCIATION OF REALTORS0 COMMERCIAL LEASE AGREEMENT between Rail Yard Partners, LTD and City of Denton TABLE OF CONTENTS Article i. Defined Terms 2. Lease and Term 3. Rent and Security Deposit 4. Taxes 5. Insurance and Indemnity 6. Use ofPremises 7. Property Condition, Maintenance, Repairs and Alterations 8. Damage or Destruction S. Condemnation 10. Assignment and Subletting 11. Default and Remedies 12. Landlord's Contractual Lien 13. Protection of Lenders 14. Environmental Representations and Indemnity 15. Professional Service Fees 18. Miscellaneous and Additional Provisions Axis Realty Group, 1517 Centre Place Drive TX 76205 Phone: 940.891.2947 Fax: 940.891.2948 Alex Payne City of Denton Produced with zipFormO by zipLoglx 18070 Fifteen Mile Road, Fraser, Michigan 48026 jMWZlQL9,g-1&9RM Exhibit 1 COMMERCIAL LEASE AGREEMENT [Throughout this Lease, complete all blanks and check all boxes that apply. Blanks not completed and boxes not checked do not apply.] For good and valuable consideration, the parties to this Commercial Lease Agreement (the "Lease ") agree as follows: ARTICLE ONE DEFINED TERMS As used in this Lease, the terms set forth in this Article One have the following meanings: 1.01 Effective Date: The last date beneath the signatures of Landlord and Tenant on this Lease. 1.02 Landlord: Rail Yard Par tners, LTD -.. IT m Address: 525 mS Loop 288, Suite 105 Denton TX 76205 Telephone: (940)3.82-5000 -� Fax: Email: 1.03 Tenant: City of Denton Address: 215 E . McKinney .._5treet �.. .........._ ....��...�. ...._._�_...... Denton TX 76201 ..... ..... Telephone: ... _ Fax: . ... .. -..mm _ ...... Email: -. i 1.04 Premises include Suite or Unit No., if applicable]: 608 E E Hickory St, Ste 128 _... ......�,_ Denton TX 76201 A. Building Name: The Rail B. Street address: 608 E. Hickory- St., Ste 128 .... IT Denton, TX 76201 in Denton County, Texas. C. Legal description: The property on which the Premises are situated is described as:East Hickory Addition, Block A, Lots 1 and 2 and may be more particularly described on the attached Exhibit "A ", Survey or Legal Description (the "Property "). The term "Property" includes the land described on Exhibit "A ", and any improvements on the land (including the Premises). D. Floor Plan or Site Plan: Being a floor area of approximately .,. 9216 square feet, or a land area of approximately square feet or approximately acres, and being more particularly shown in outline form on the attached Exhibit "B ", Floor Plan or Site Plan. COMMERCIAL LEASE AGREEMENT - Page 2 ©NTCAR 2014 - Form No. 2 (3/2014) Produced with zlpForm® by zlpLoglx 18070 Fifteen Mile Road, Fraser, Michigan 48026 www.zlpLoglx.com City of Denton Exhibit 1 E. Tenant's Pro Rata Share: _.........32.532 %, 1.05 Term: 5 years and _,.....� months beginning on March 1 , 2016 (the "Commencement Date ") and ending on February 28 _- , 2021 (the "Expiration Date "). Unless the context requires otherwise, references in this Lease to the "Term" include any renewal or extension of this Lease. [See Addendum "A ", Renewal Options, if applicable]. 1.06 Base Rent: Base Rent is due and payable in monthly installments during the Term of this Lease as set forth in this Section. Base Rent and all other sums due or payable by Tenant to Landlord under this Lease are collectively referred to in this Lease as the "Rent." Base Rent Payment Schedule On or before the first day of each month during the Term of this Lease, Tenant shall pay monthly installments of Base Rent as follows: Dates Monthly Base Rent From March 1, 2016 to February 28, 2017 $ 7,490.67; From March 1, 2017 to _........ 02/28/2018 $ 7,767.15 ; From March ITIT1,ITm 2018 to 02/28/2019 8m,049.16 From 03/01/2019 to 02/28/2020 $ 8 r 33681 From 03/01/20 20 to Februa IT rlr 28 , 2021 $ _ 8 , 630 .21 ; From to [Rent for any Renewal Term is determined pursuant to a separate Addendum, if applicable, and should not be set forth here.] 1.07 Percentage Rental Rate:.... ................. %. [See Addendum "D ", Percentage Rental and Gross Sales Reports, if applicable] 1.08 Security Deposit: $ 17,280. 00 _ (due upon execution of this Lease). [See Section 3.04] 1.09 Expense Reimbursements: A. Tenant shall pay Landlord as additional Rent (or pay the charges directly to the service provider, if applicable) the following expenses (or a portion of the expenses, if applicable) (each an "Expense Reimbursement" and collectively the "Expense Reimbursements ") that are incurred by or assessed against the Premises (as each of these terms is defined in this Lease) [check all boxes that apply]: ❑ Real Estate Taxes; ❑ Insurance Premiums; ❑ Common Area Maintenance (CAM) Expenses; ® Operating Expenses; ❑ Roof and Structural Maintenance Expenses; ❑ Electricity; ❑ Cable; ❑ Gas; ❑ Internet Access; COMMERCIAL LEASE AGREEMENT - Page 3 ©NTCAR 2014 - Form No. 2 (3/2014) Produced with zipForm® by zipLogix 18070 Fifteen Mlle Road, Fraser, Michigan 48026 www.zlr)Loalx.com City of Denton Exhibit 1 ® Water; ® Sewer; ❑ Telephone; ❑ Trash Removal; and ❑ All other Utilities. B. Expense Definitions. 1. Real Estate Taxes. "Real Estate Taxes" means all general real estate taxes, ad valorem taxes, general and special assessments, parking surcharges, rent taxes, and other similar governmental charges levied against or applicable to the Property for each calendar year. 2. Insurance Premiums. "Insurance Premiums" means all Landlord's insurance premiums attributable to the Property, including but not limited to insurance for fire, casualty, general liability, property damage, medical expenses, extended coverage, and loss of rents coverage for up to 12 months' Rent. 3. Common Area Maintenance Expenses. "Common Area Maintenance Expenses" or "CAM Expenses" means all costs of maintenance, inspection and repairs of the Common Areas of the Property, including, but not limited to, those costs for security, lighting, painting, cleaning, decorations and fixtures, Utilities, ice and snow removal, trash disposal, project signs, roof repairs, pest control, project promotional expenses, property owners' association dues, wages and salary costs of maintenance personnel, and other expenses benefiting all the Property that may be incurred by Landlord, in its discretion, including sales taxes and a reasonable service charge for the administration thereof. The term "Common Areas" is defined as that part of the Property intended for the collective use of all tenants including, but not limited to, the parking areas, driveways, loading areas, landscaping, gutters and downspouts, plumbing, electrical systems, HVAC systems, roof, exterior walls, sidewalks, malls, promenades (enclosed or otherwise), meeting rooms, doors, windows, corridors and public rest rooms. CAM Expenses do not include the cost of capital improvements, the cost of management office equipment and furnishings, depreciation on Landlord's original investment, the cost of tenant improvements, real estate brokers' fees, advertising of space for lease, or interest or depreciation on capital investments. 4. Operating Expenses. "Operating Expenses" means all costs of ownership, building management, maintenance, repairs and operation of the Property, including but not limited to Real Estate Taxes, Insurance Premiums, CAM Expenses, reasonable management fees, wages and salary costs of building management personnel, overhead and operational costs of a management office, janitorial, Utilities, and professional services such as accounting and legal fees. Operating Expenses do not include the cost of capital improvements, the cost of management office equipment and furnishings, depreciation on Landlord's original investment, the cost of tenant improvements, real estate brokers' fees, advertising of space for lease, or interest or depreciation on capital investments. 5. Roof and Structural Maintenance Expenses. "Roof and Structural Maintenance Expenses means all costs of maintenance, repair and replacement of the roof, roof deck, flashings, skylights, foundation, floor slabs, structural components and the structural soundness of the building in general. 6. Utilities. "Utilities" means charges for electricity, cable, gas, Internet access, water, sewer, telephone, trash removal, and any other services that are commonly understood to be utilities, including connection charges. 7. Other Terms. Other terms that are not expressly defined are intended to have the meanings given those terms in common usage. COMMERCIAL LEASE AGREEMENT - Page 4 ©NTCAR 2014 — Form No. 2 (3/2014) Produced wlth zlpForm® by zlpLoglx 18070 Fifteen Mile Road, Fraser, Mlchlgan 48026 www.zlpLoalx.com City of Denton Exhibit 1 C. Expense Reimbursement Limitations. The amount of Tenant's Expense Reimbursement will be determined by one of the following methods as described and defined below [check only one]: ❑ Base Year Adjustment; ❑ Expense Stop Adjustment; ® Pro Rata Adjustment; ❑ Fixed Amounts; or ❑ Net Lease. D. Expense Reimbursement Limitation Definitions. 1. Base Year Adjustment. If "Base Year Adjustment" has been checked above, Tenant shall pay to Landlord as additional Rent Tenant's Pro Rata Share of increases in the applicable expenses (those checked in Section 1.09.A. above) for the Property for any calendar year during the Term or during any Extension of this Lease, over such amounts p y (the "Base Year "). aid b Landlord for the Base Year 2. Expense Stop Adjustment. If "Expense Stop Adjustment" has been checked above, Tenant shall pay to Landlord as additional Rent Tenant's Pro Rata Share of increases in the applicable expenses (those checked in Section 1.09.A. above), for the Property for any calendar year during the Term or during any Extension of this Lease, over $ � ...µµµµµµw per square foot of floor area (as set forth in Section 1.04D) per year. 3. Pro Rata Adjustment. If "Pro Rata Adjustment" has been checked above, Tenant shall pay to Landlord as additional Rent Tenant's Pro Rata Share of the total amount of the applicable expenses (those checked in Section 1.09.A. above) for every calendar year during the Term and during any extension of this Lease. 4. Fixed Amounts. If "Fixed Amounts" has been checked above, Tenant shall pay to Landlord as additional Rent the following monthly amounts (regardless of whether they have been checked in Section 1.09.A. above) as Tenant's Expense Reimbursements to Landlord for the following expenses that are incurred by or assessed against the Property: Real Estate Taxes per month. Insurance Premiums per month. CAM Expenses $ ,,,,,_ per month. Operating Expenses $ ...._ -.. per month. Roof & Structural Maintenance Expenses $ _p per month. Electricity $ _ . per month. Cable $ _,. -. per month. Gas $ per month. Internet Access $ per month. Water per month. Sewer $ per month. Telephone $...... �.. .. per month. Trash Removal $ ........ _-._ per month. All Other Utilities $ _.. .. ....... ...,._ per month. 5. Net Lease. If "Net Lease" has been checked above, then notwithstanding anything contained in this Lease to the contrary in Section 6.02, Article Seven or otherwise, Tenant shall be responsible for paying Tenant's Pro Rata Share of all costs of compliance with laws, ownership, maintenance, repairs, replacements, operation of the Premises, and operation of the Property, including but not limited to all costs of Real Estate Taxes, Insurance Premiums, Common Area Maintenance Expenses, Operating Expenses, Roof and Structural Maintenance Expenses, and all Utilities (regardless of whether they have been checked in Section 1.09.A. above). COMMERCIAL LEASE AGREEMENT - Page ONTCAR 2014 — Form No. 2 (3/2014) Produced with zlpForm® by zipLoglx 18070 Fifteen Mlle Road, Fraser, Michigan 48026 www.zleLOalx.com City of Benton Exhibit 1 E. First Payment. The sum of the Monthly Base Rent for the first month of the Term for which Base Rent is due (which may be later than the first month of the Term, if there is a free rent period), and the initial estimated monthly Expense Reimbursement payments (before adjustments) is set forth below. Upon the execution of this Lease, in addition to the Security Deposit, Tenant shall pay the first monthly payment in the sum of the amounts set forth below. Initial Monthly Base Rent $ _490.67 Real Estate Taxes $ —... -- Insurance Premiums $_ _ -- CAM Expenses $ .. .... - Operating Expenses $ 3,456.00 Roof & Structural Maintenance Expenses $ -- ...... Electricity $ _ ...._ Cable_W Gas Internet Access $. - .. - . Water $ ...... ................ Sewer $. __ Telephone $. ...... ........... Trash Removal $._...._ All Other Utilities $ - -mm- Total $ 10 946.67 [Complete the amount of the first Base Rent payment to be due, as well as estimated amounts of any other monthly payments that start at the beginning of the Term of this Lease. Put N/A or strike through the rest. Any estimated amounts are subject to adjustment pursuant to other provisions of this Lease. If any expense payments are not due at the beginning of the Term, they may begin later in the Term pursuant to other provisions of this Lease.] F. Expense Reimbursement Payments. Tenant agrees to pay any end -of -year lurnp SUrn Expense Reimbursement within 30 days after receiving an invoice from Landlord. Any time during the Term, Landlord may direct Tenant to pay monthly an estimated portion of the projected future Expense Reimbursement arnount. Any such payment directed by Landlord will be due and payable monthly on the same day that the Base Bent is due. Landlord may, at Landlord's option and to the extent allowed by applicable law, impose a. Late Charge oil. any Expense Reimbursement payments that are not actually received by Landlord oil or before the due date, in the amount and manner set forth in Section 3.03 of this Lease. Any Expense Reimbursements relating to partial calendar years will be prorated accordingly. If Tenant's Pro Rata Share is not expressed in Section 1.04.E of this Lease, then Tenant's Pro Rata Share of such Expense Reimbursements will be based on the square footage of useable area contained in the Premises in proportion to the square footage of useable building area of the Property. Tenant may audit or examine those items of expense in Landlord's records that relate to Tenant's obligations under this Lease. Landlord shall promptly refund to Tenant any overpayment that is established by an audit or examination. If the audit or examination reveals an error of more than 5% over the figures billed to Tenant, Landlord shall pay the reasonable cost of the audit or examination. G. ❑ Gross -Up Provisions. [Check this only if applicable.] If the Property is a multi- tenant building and is not fully occupied during the Base Year or any portion of the Term, an adjustment will be made in computing the variable costs for the Base Year and each applicable calendar year of the Term. Variable costs will include only those items of expense that vary directly proportionately to the occupancy of the Property. Variable costs that are included in the CAM Expenses, Operating Expenses and Utilities will be increased proportionately to the amounts that, in Landlord's reasonable judgment, would have been incurred had 95% of the useable area of the Property been occupied during those years. COMMERCIAL LEASE AGREEMENT - Page 6 ONTCAR 2014 — Form No. 2 (3/2014) Produced with zlpForm® by zlpLoglx 1 8070 Fifteen Mlle Road, Fraser, Michigan 40026 www.zloLcclx.com City of Denton Exhibit 1 1.10 Permitted Use: office [See Section 6.011 1.11 Party to whom Tenant is to deliver payments under this Lease is the Landlord, unless one of the following boxes is checked, in which case Tenant shall deliver payments to: ❑ Principal Broker, or ❑ Other [Set forth name and address, if other than Landlord or Principal Broker]: 1.12 Principal Broker: Axis Realty Group , is acting as the agent for Landlord exclusively, unless one of the following boxes is checked, in which case Principal Broker is acting as: ❑ the agent for Tenant exclusively, or ❑ an intermediary. 1.13 Principal Broker's Address: 1,517 Centre Place Denton TX 76205 Telephone: (940) 8_91 -2947 Email: alex @axisrealwty.biz Cooperating Broker: is acting as the agent for Tenant exclusively, which case Cooperating Broker is acting as: intermediary. Fax: (940) 891 -2948 unless one of the following boxes is checked, in ❑ the agent for Landlord exclusively, or ❑ an Cooperating Broker's Address: - Telephone: ... ........ Fax: Email 1.14 The Professional Service Fee (the "Fee "): A. The percentages applicable in Section 15.01 and Section 15.02 to leases will be -% of the Base Rent to Principal Broker and % of the Base Rent to Cooperating Broker. If the Fee is based on an amount per square foot, that amount is $ per square foot to Principal Broker and $ _...._. _ per square foot to Cooperating Broker. The Fee will be paid in the manner described in Subsection 15.01A (half on execution and half on the Commencement Date), unless this box ❑ is checked, in which case the Fee will be paid in the manner described in Subsection 15.01 B (monthly). B. The percentages applicable in Section 15.03 in the event of a sale will be m % to Principal Broker and .,,.- % to Cooperating Broker, 1.15 Disclosure of Dual Capacity as Broker and Principal. [Complete if applicable] A. is a licensed Texas real estate broker and is acting in a dual capacity as broker for Landlord and as a principal in this transaction, as he or she may be Landlord (or one of the owners of Landlord). B. _IT _ is a licensed Texas real estate broker and is acting in a dual capacity as broker for Tenant and as a principal in this transaction, as he or she may be Tenant (or one of the owners of Tenant). 1.16 Exhibits and Addenda. Any exhibit or addendum attached to this Lease (as indicated by the boxes checked below) is incorporated as a part of this Lease. Any term not specifically defined in an Addendum will have the same meaning given to it in the body of this Lease. ® Exhibit "A" Survey and /or Legal Description of the Property ® Exhibit "B" Floor Plan and /or Site Plan ® Exhibit "C" Information About Brokerage Services ® Exhibit "D" Other Grant Agreement COMMERCIAL LEASE AGREEMENT - Page 7 ONTCAR 2014 - Form No. 2 (3/2014) Produced with zlpForm® by zlpLoglx 18070 Fifteen Mlle Road, Fraser, Michigan 48026 www.zloLoglx.com City of Denton ® Addendum "A" ® Addendum "B" ❑ Addendum "C" ❑ Addendum "D" ❑ Addendum "E" ❑ Addendum "F" ® Addendum "G" ❑ Addendum "H" ❑ Addendum "I" ❑ Addendum "J" ® Addendum "K" Exhibit 1 Renewal Options Construction of Improvements by Landlord Construction of Improvements by Tenant Percentage Rental and Gross Sales Reports Right of First Refusal for Additional Space Guaranty Rules and Regulations Rooftop Lease Parking Additional Provisions Addendum Other work Letter ARTICLE TWO LEASE AND TERM 2.01 Lease of Premises for Term. Landlord leases the Premises to Tenant and Tenant leases the Premises from Landlord for the Term stated in Section 1.05. The Commencement Date is the date specified in Section 1.05, unless advanced or delayed under any provision of this Lease. 2.02 Delays in Commencement. Landlord will not be liable to Tenant if Landlord does not deliver possession of the Premises to Tenant on the Commencement Date specified in Section 1.05 above. Landlord's non - delivery of possession of the Premises to Tenant on the Commencement Date will not affect this Lease or the obligations of Tenant under this Lease. However, the Commencement Date will be delayed until possession of the Premises is delivered to Tenant. The Term will be extended for a period equal to the delay in delivery of possession of the Premises to Tenant, plus the number of days necessary for the Term to expire on the last day of a month. If Landlord does not deliver possession of the Premises to Tenant within 60 days after the Commencement Date specified in Section 1.05, Tenant may cancel this Lease by giving a written notice to Landlord at any time after the 60 -day period ends, but before Landlord actually delivers possession of the Premises to Tenant. If Tenant gives such notice, this Lease will be canceled effective as of the date of its execution, any prepaid amounts will be reimbursed to Tenant, and no party will have any rights or obligations under this Lease. If Tenant does not give such notice within the time specified, Tenant will have no right to cancel this Lease, and the Term will commence upon the delivery of possession of the Premises to Tenant. If delivery of possession of the Premises to Tenant is delayed, Landlord and Tenant shall, upon such delivery, execute an amendment to this Lease setting forth the revised Commencement Date and Expiration Date of the Term. 2.03 Early Occupancy. If Tenant occupies the Premises before the Commencement Date, Tenant's occupancy of the Premises will be subject to all of the provisions of this Lease. Early occupancy of the Premises will not advance the Expiration Date. Unless otherwise provided in this Lease, Tenant shall pay Base Rent and all other charges specified in this Lease for the period of occupancy. 2.04 Holding Over. Tenant shall vacate the Premises immediately upon the expiration of the Term or earlier termination of this Lease. Tenant shall reimburse Landlord for and indemnify Landlord against all damages incurred by Landlord as a result of any delay by Tenant in vacating the Premises. If Tenant does not vacate the Premises upon the expiration of the Term or earlier termination of this Lease, Tenant's occupancy of the Premises will be a day -to -day tenancy, subject to all of the terms of this Lease, except that the Base Rent during the holdover period will be increased to an amount that is one - and - one -half (11/2) times the Base Rent in effect on the expiration or termination of this Lease, computed on a daily basis for each day of the holdover period, plus all additional sums due under this Lease. This Section will not be construed as Landlord's consent for Tenant to hold over or to extend this Lease. COMMERCIAL LEASE AGREEMENT - Page ONTCAR 2014 - Form No. 2 (3/2014) Produced with zlpForm® by zlpLoglx 18070 Fltteen Mlle Road, Fraser, Michigan 48026 www.zlpLgglx.com City of Denton Exhibit 1 ARTICLE THREE RENT AND SECURITY DEPOSIT 3.01 Manner of Payment. Tenant shall pay the Rent to Landlord at the address set forth in Section 1.02, unless another person is designated in Section 1.11, or to any other party or address Landlord may designate in any written notice delivered to Tenant. Landlord may designate, in a written notice delivered to Tenant, the party authorized to receive Rent and act on behalf of Landlord to enforce this Lease. Any such authorization will remain in effect until it is revoked by Landlord in a subsequent written notice delivered to Tenant. Any payments made to a third party designated by Landlord will be deemed made to Landlord when received by the designated third party. All sums payable by Tenant under this Lease, whether or not expressly denominated as Rent, will constitute rent for the purposes of Section 502(b)(6) of the Bankruptcy Code and for all other purposes. 3.02 Time of Payment. Upon execution of this Lease, Tenant shall pay the installment of Base Rent for the first month of the Term for which Base Rent is due (which may be later than the first month of the Term, if there is a free rent period). On or before the first day of the next month and each month thereafter, the installment of Base Rent and other sums due under this Lease will be due and payable, in advance, without off -set, deduction or prior demand. Tenant shall cause payments to be properly mailed or otherwise delivered so as to be actually received (and not merely deposited in the mail) by Landlord (or the party identified in Section 1.11, or any other third party designated by Landlord) on or before the due date. If the Term commences or ends on a day other than the first or last day of a calendar month, the rent for any partial calendar month following the Commencement Date or preceding the end of the Term will be prorated. Tenant shall pay any such prorated portion for a partial calendar month at the beginning of the Term on the Commencement Date. Tenant shall pay any such prorated portion for a partial calendar month at the end of the Term on the first day of that calendar month. 3.03 Late Charges. Tenant's failure to promptly pay sums due under this Lease may cause Landlord to incur unanticipated costs. The exact amount of those costs is impractical or extremely difficult to ascertain. The costs may include, but are not limited to, processing and accounting charges and late charges that may be imposed on Landlord by any ground lease or deed of trust encumbering the Premises. Payments due to Landlord under this Lease are not an extension of credit. Therefore, if any payment under this Lease is not actually received on or before the due date (and not merely deposited in the mail), Landlord may, at Landlord's option and to the extent allowed by applicable law, impose a Late Charge on any late payments in an amount equal to 10% of the amount of the past due payment (the "Late Charge ") after the payment is more than five days past due. A Late Charge may be imposed only once on each past due payment. Any Late Charge will be in addition to Landlord's other remedies for nonpayment of Rent. If any check tendered by Tenant under this Lease is dishonored for any reason, Tenant shall pay to Landlord a dishonored check fee of $30.00, plus (at Landlord's option) a Late Charge as provided above until Good Funds (defined below) are received by Landlord. The parties agree that any Late Charge and dishonored check fee represent a fair and reasonable estimate of the costs Landlord will incur by reason of the late payment or dishonored check. If there are any Late Charges, dishonored check fees, installments of Base Rent, and any other unpaid charges or reimbursements due to Landlord, then Landlord may apply any payments received from Tenant to any amounts due in any order Landlord may choose. Notwithstanding the foregoing, Landlord will not impose a Late Charge as to the first late payment in any calendar year, unless Tenant fails to pay the late payment to Landlord within three business days after the delivery of a written notice from Landlord to Tenant demanding the late payment be paid. However, Landlord may impose a Late Charge without advance notice to Tenant on any subsequent late payment in the same calendar year. 3.04 Security Deposit. Upon execution of this Lease, in addition to the installment of Base Rent due under Section 3.02, and in addition to any other amounts that are due from Tenant upon the execution of this Lease, Tenant shall deliver to Landlord a Security Deposit in the amount stated in Section 1.08. Landlord may apply all or part of the Security Deposit to any unpaid Rent, and damages and charges for which Tenant is legally liable under this Lease, and damages and charges that result from a breach of this Lease, including but not limited to, the cost to cure Tenant's failure to comply with Section 7.05 and any other provision that requires Tenant to leave the Premises in a certain condition upon the expiration or termination of this Lease. If Landlord uses any part of the Security Deposit, Tenant shall COMMERCIAL LEASE AGREEMENT - Page 9 ©NTCAR 2014 — Form No. 2 (3/2014) Produced with zlpForm® by zlpLoglx 18070 Fllteen Mlle Road, Fraser, Michigan 48026 www.ZIDLoalx.com City of Denton Exhibit 1 restore the Security Deposit to its full amount within 10 days after Landlord's written demand. Tenant's failure to restore the full amount of the Security Deposit within the time specified will be a default under this Lease. No interest will be paid on the Security Deposit. Landlord will not be required to keep the Security Deposit separate from its other accounts, and no trust relationship is created with respect to the Security Deposit. After the expiration of this Lease, Landlord shall refund the unused) portion of the Security Deposit, if any„ to Tenant within 60 days after the date Tenant surrenders possession of the Premises and provides a written notice to Landlord of Tenant's forwarding address for the purpose of refunding the Security Deposit. The provisions of this Section will survive the expiration of, termination of this Lease. 3.05 Good Funds Payments. If any two or more payments by check from Tenant to Landlord for Rent are dishonored and returned unpaid, thereafter Landlord may, at Landlord's option„ by the delivery of a written notice to Tenant, require that all future payments of Rent for the remaining Term of this Lease must be made by cash, certified check, cashier's check, official bank check, money order, wire transfer or automatic electronic funds transfer ("Good Funds "), and that the delivery of Tenant's personal or corporate check will no longer constitute payment of Rent under this Lease. Any acceptance by Landlord of a payment for Rent by Tenant's personal or corporate check thereafter will not be construed as a waiver of Landlord's right to insist upon payrnent by Good Funds as set forth in this Section. ARTICLE FOUR TAXES 4.01 Payment by Landlord. Landlord shall pay the real estate taxes on the Premises during the Term, subject to reimbursement by Tenant pursuant to any other provision in this Lease. 4.02 Improvements by Tenant. If the real estate taxes levied against the Premises for the year in which the Term commences are increased as a result of any additions or improvements rnade by Tenant, or by Landlord at Tenant's request, Tenant shall pay to Landlord Upon demand the amount of the increase and continue to pay the increase during the Term. Landlord shell use reasonable efforts to obtain from the tax assessor a written statement of the amount of the increase due to such additions or improvements. 4.03 Joint Assessment. If the real estate taxes are assessed against the Premises jointly with other property that is not part of the Premises, the real estate taxes applicable to the Premises will be equal to the amount bearing the same proportion to the aggregate assessment that the total square feet of building area in the Premises bears to the total square feet, of building area included in the joint assessment. If there are no improvements on the Property or the other property, then nand area will be used instead of building area for the calculation of the proportional assessment, if there are improvements on one of the jointly assessed properties but not on the other property, then the calculation of the proportional assessment must be done in a reasonable manner. 4.04 Personal Property Taxes. Tenant shall pay all taxes assessed against trade fixtures, furnishings, equipment, inventory„ products, or any other personal property belonging to Tenant. Tenant shall use reasonable efforts to have Tenant's property taxed separately from the Premises. If any of Tenant's property is taxed with the Premises, Tenant shall pay the taxes for Tenant's property to Landlord within 16 days after Tenant receives a written statement from Landlord for the property taxes. 4.05 Waiver of Right to Protest Taxes. Unless otherwise provided in this Lease: (i) Landlord retains the right to protest the tax assessment of the Property, and Tenant waives the right to protest; and (ii) Tenant waives Landlord's obligation to provide Tenant with a notice of the tax valuation of the Property. ARTICLE FIVE INSURANCE AND INDEMNITY 5.01 Property Insurance. During the Term, Landlord shall maintain insurance policies covering damage to the Premises in an amount or percentage of replacement value as Landlord deems reasonable in relation to the age, location, type of construction and physical condition of the Premises COMMERCIAL LEASE AGREEMENT - Page 10 ONTCAR 2014 — Form No. 2 (3/2014) Produced with zipForm® by zlpLoglx 18070 Fifteen Mlle Road, Fraser, Michlgan 48026 www.zlpLoalx.com City of Denton Exhibit 1 and the availability of insurance at reasonable rates. The policies will provide protection against risks and causes of loss that Landlord reasonably deems necessary. Landlord may, at Landlord's option, obtain insurance coverage for Tenant's fixtures, equipment and improvements in or on the Premises. Promptly after the receipt of a written request from Tenant, Landlord shall provide a certificate of insurance showing the insurance coverage then in effect. Tenant shall, at Tenant's expense, obtain and maintain insurance on Tenant's fixtures, equipment and improvements in or on the Premises as Tenant reasonably deems necessary to protect Tenant's interest. Any property insurance carried by Landlord or Tenant will be for the sole benefit of the party carrying the insurance and under its sole control. 5.02 Increases in Premiums. Tenant shall not conduct or permit any operation or activity, or store or use any materials, in or around the Premises that would cause suspension or cancellation of any insurance policy carried by Landlord. If Tenant's use or occupancy of the Premises causes Landlord's insurance premiums to increase, then Tenant shall pay to Landlord, as additional Rent, the amount of the increase within 10 days after Landlord delivers written evidence of the increase to Tenant. 5.03 Liability Insurance. During the Term, Tenant shall maintain a commercial general liability insurance policy, at Tenant's expense, insuring Tenant against liability arising out of the use or occupancy of the Premises, and naming Landlord as an additional insured. The initial amounts of the insurance must be at least $1,000,000 or, if the following blank is completed $ for Each Occurrence, $2,000,000 or, if the following blank is completed $ General Aggregate per policy year, and $10,000 for Medical Expense. If Tenant's liability insurance coverage is less than $5,000,000, and if this box ❑ is checked, then Tenant must also maintain a commercial liability umbrella policy in amount to provide a combination of liability insurance coverage to equal a $5,000,000 total limit. The coverage amounts will be subject to periodic increases as Landlord may reasonably determine from time to time. The amounts of the insurance will not limit Tenant's liability or relieve Tenant of any obligation under this Lease. The policies must contain cross - liability endorsements and must insure Tenant's performance of the indemnity provisions of Section 5.04. The policies must contain a provision that prohibits cancellation or modification of the policy except upon 30 days' prior written notice to Landlord. Tenant shall deliver a copy of the policy or certificate of insurance to Landlord before the Commencement Date and before the expiration of the policy during the Term. If Tenant fails to maintain the policy, Landlord may elect to maintain the insurance at Tenant's expense. 5.04 Indemnity. Landlord will not be liable to Tenant or to Tenant's employees, agents, invitees or visitors, or to any other person, for any injury to persons or damage to property on or about the Premises or any adjacent area owned by Landlord caused by the negligence or misconduct of Tenant, Tenant's employees, subtenants, agents, licensees or concessionaires or any other person entering the Premises under express or implied invitation of Tenant, or arising out of the use of the Premises by Tenant and the conduct of Tenant's business, or arising out of any breach or default by Tenant in the performance of Tenant's obligations under this Lease. TeiqaRt heFeby affees te defeRd, 0W4AV "d kW effl_`a" f a@ a-i t y° Tenant will not be liable for any injury or damage caused by the negligence or misconduct of Landlord, or Landlord's employees or agents, and Landlord agrees to indemnify and hold Tenant harmless from any loss, expense or damage arising out of such damage or injury. 5.05 Waiver of Subrogation. Each party to this Lease waives any and every claim that arises or may arise in its favor against the other party during the Term of this Lease for any and all loss of, or damage to, any of its property located within or upon, or constituting a part of, the Premises, to the extent the loss or damage is covered by and recoverable under valid and collectible insurance policies. These mutual waivers are in addition to, and not in limitation or derogation of, any other waiver or release contained in this Lease with respect to any loss of, or damage to, property of the parties. Inasmuch as these mutual waivers will preclude the assignment of any such claim by way of subrogation to an insurance company (or any other person), each party agrees to immediately give to each insurance company that has issued an insurance policy to such party written notice of the terms of such mutual waivers, and to cause the policies to be endorsed to prevent the invalidation of the insurance coverage by reason of these waivers. COMMERCIAL LEASE AGREEMENT - Page 11 ©NTCAR 2014 — Form No. 2 (3/2014) Produced with zlpForm® by zlpLoglx 18070 Fifteen We Road, Fraser, Michigan 48026 www zioLo,�lx.com City of Denton Exhibit 1 ARTICLE SIX USE OF PREMISES 6.01 Permitted Use, Tenant may use tine Promises only for the Permitted Use stated in Section 1.10. Tenant acknowledges that (I) the current use of the Premises or the improvements located on the Prer°nises, or both, may not conform to city ordinances or restrictive covenants with respect to the porrritted use, zoning, height limitations, setback requirements„ minirrrurn parking requirements, coverage ratio of Improvements to land area., and other matters that may have a significant impact upon the Tenant's Intended use of the Premises; (li) Tenant has independently investigated and verilled to Tenant's satisfaction the extent of any limitations or non - conforming uses of the Premises; and (iii) Tenant is not relying upon any representations of Landlord or the Brokers with respect to any such matters. L"tor A &Jcr1O W ` -ed jt S +Wd1 5- 1 VO- e -vt,A' 'b WxVei 0. `Wi rd 6.02 Compliance with Laws. Tenant shall comply with all governmental laws, ordinances and regulations applicable to the use of the Premises, and will promptly comply with all governmental orders and directives for the correction, prevention and abatement of nuisances and other activities in or upon„ or connected with the Premises, all at "Tenant "s sole expense, including any expense or cost resulting front the construction or installation of fixtures arid improvements or other rwccomrnodations L r,�tr" MpXA.0 for handic ""apped or disabled persons required for compliance with governmental laws and regulations, CLv��GC Including but not limited to the Texas Architectural Barriers Act (the "'TABA " ") and the Arnorioans with Disabilities Act (the' "AUA " "), To the extent any alterations to the Premises are required by the TABA, r ate the ACA or other applicable taws or regulations, Tenant shall bear the expense of the alterations. To the alterations to areas of the Property outside the Premises are required by the TABA, the Fr q �� extent any AIWA or other applicable taws or regulations (for "path of travel" requirements or otherwise), Landlord .D shalt bear the expense of the alterations, 6.03 Certificate of Occupancy. Il required, Tenant shall apply for Certificate of Occupancy fronn the municipality in which the Property Is located before the Coi "nrrrencement Bate, and obtain a Certificate of Occupancy betore Tenant occupies the Premises. If Tenant is unable to obtain a Certificate of Occupancy after making an application and diligently pursuing it, then 'Tenant may, terminate this Lease by delivering a written notice to Landlord, unless either Landlord or Tenant 1s willing and able to cure Vie defects that prevented the issuance of the Certificate of Occupancy. Either landlord or Tenant may cure any such defects, at their own expense, Including any repairs, replacernents, or installations of any items that are not presently existing on the Premises, but noilher of them have any obligation to do so (unless another provision of this Lease states otherwise), It Tenant defivers a written termination notice to Landlord under this Section, and then any defects are cured and a Certificate of Occupancy is, issued within 15 days rafter Tenant delivered The notice, then this (..ease will remain In force, if this Lease Is lerrninated because Landlord and Tenant cannot gel a Certificarle of Occupancy, then Landlord will return to Tenant any prepaid rent and any Security Deposit, and the�� parties will have no further obligations under this Lease. References in this Lease to a "Certificate of Occupancy " rnean a Cerlitfcate of Occupancy sLatlicient to allow the Tenant to occupy the Promises for the Permitted Use. 6.04 Signs. Without the prior written consent of Landlord, "tenant may not place any signs, ornaments or other objects on the Premises or the Property, including but not lirrrited to the roof or exterior of the building or other improvements on ilia Property, or paint or otherwise decorate or deface the exterior of the building or other improvements on the Property, Any signs installed by Tenant must conform to applicable laws, deed restrictions, and other applicable requirements. Tenant must remove all signs, decorations and ornaments at the expiration or termination of this Lease„ and must repair any damage and close any holes caused by installation or removal. 6.05 Utility Services. Unless otherwise provided in this Lease, Tenant shall pay the cost of all Utilities used for the Premises, and the cost of replacing light bulbs and tubes, Unless otherwise required by law„ Landlord Is the party enfdiled to designate utility and telecornmunicaatioo) service providers to the Property and the Premises. Landlord rrray, at Landlord's option, allow Tenant to select the provider., If Tenant selects the provider any access or alterations to the Property or the Premises necessary for the! Utilities may be made only with Landlord's prior consent, which Landlord will not unreasonably withhold or defray, if Landlord incurs any utility or connection charges that COMMERCIAL LEASE AGREEMENT ® Page 12 TCAR 2014 m Form No. 2 (3/2014) Produced with z1grFaffnO by aipLo ®Ix 18070 Flltaen FARO Road, Fraser, Michigan 40026 Zffl5LZJ2LQ9J&MM City of Denton Exhibit 1 Tenant is responsible to pay and Landlord pays the charges, Tenant shall reimburse Landlord immediately upon receipt of a written notice from Landlord stating the amount of the charges. 6.06 Landlord's Access. Landlord and Landlord's agents will have the right to, upon reasonable advance notice, and without unreasonably interfering with Tenant's business, enter the Premises: (a) to inspect the general condition and state of repair of the Premises, (b) to make repairs required or permitted under this Lease, (c) to show the Premises or the Property to any prospective tenant or purchaser, and (d) for any other reasonable purpose. If Tenant changes the locks on the Premises, Tenant must provide Landlord with a copy of each separate key upon Landlord's request. During the last 150 days of the Term, Landlord and Landlord's agents may erect signs on or about the Premises advertising the Premises for lease or for sale. 6.07 Possession. If Tenant pays the Rent, properly maintains the Premises, and complies with all other terms of this Lease, Tenant may occupy and enjoy the Premises for the full Term, subject to the provisions of this Lease. 6.08 Exemptions from Liability. Landlord will not be liable for any damage to the business (including any loss of income), goods, inventory, furnishings, fixtures, equipment, merchandise or other property of Tenant, Tenant's employees, invitees or customers, or for any injury to Tenant or Tenant's employees, invitees, customers or any other person in or about the Premises, whether the damage or injury is caused by or results from: (a) fire, steam, electricity, water, gas or wind; (b) the breakage, leakage, obstruction or other defects of pipes, sprinklers, wires, appliances, plumbing, air conditioning or lighting fixtures or any other cause; (c) conditions arising on or about the Premises or other portions of the Property, or from other sources or places; or (d) any act or omission of any other occupant of the Property. The provisions of this Section will not, however, exempt Landlord from liability for Landlord's gross negligence or willful misconduct. ARTICLE SEVEN PROPERTY CONDITION, MAINTENANCE, REPAIRS AND ALTERATIONS 7.01 Property Condition. Except as disclosed in writing by Landlord to Tenant before the execution of this Lease, to the best of Landlord's actual knowledge: (i) the Premises have no known latent structural or construction defects of a material nature; and (ii) none of the improvements to the Premises have been constructed with materials known to be a potential health hazard to occupants of the Premises. Unless otherwise expressly set forth in this Lease, Landlord represents that on the Commencement Date (and for a period of 30 days thereafter): (a) the fixtures and equipment serving the Premises are in good operating condition, including the plumbing, electrical and lighting systems, any fire protection sprinkler system, the HVAC (defined below) systems and equipment, the roof, skylights, doors, overhead doors, windows, dock levelers and elevators; and (b) the interior of the Premises is in good condition. Tenant will have a period of 30 days after the Commencement Date to inspect the Premises and notify Landlord in writing of any defects and maintenance, repairs or replacements required to the above named fixtures, equipment and interior. Within a reasonable period of time after the timely receipt of any such written notice from Tenant, Landlord shall, at Landlord's expense, correct the defects and perform the maintenance, repairs and replacements. 7.02 Acceptance of Premises. Tenant has inspected, or has had an opportunity to inspect, the Premises, before the execution of this Lease. Tenant has determined that the Premises may be used for the Permitted Use. Subject to the provisions in Section 7.01, and any other express obligations of Landlord in this Lease to construct any improvements, make repairs, or correct defects, Tenant agrees to accept the Premises in "AS IS" condition and with all faults (other than latent defects). To the extent permitted by applicable law, Tenant waives any implied warranties of Landlord as to the quality or condition of the Premises or the Property, or as to the fitness or suitability of the Premises or the Property for any particular use. 7.03 Maintenance and Repairs. Landlord will not be required to perform any maintenance or repairs, or management services, in the Premises, except as otherwise provided in this Lease. Tenant will be fully responsible, at Tenant's expense, for all maintenance and repairs, and management services, other than those that are expressly set forth in this Lease as Landlord's responsibility. COMMERCIAL LEASE AGREEMENT - Page 13 ©NTCAR 2014 — Form No, 2 (3/2014) Produced with zlpForm® by zlpLoglx 1 8070 Fifteen Mlle Road, Fraser, Michigan 48026 www.zlgLoalx.com City of Denton Exhibit 1 A. Landlord's Obligations. (1) Subject to the provisions of article flit, (Damage or Destruction) and Article Ninq (Condemnation) and except for damage caused by any act or omission of Tenant, Landlord shall keep the roof, skylights, foundation, structural components and the structural portions of exterior walls of the Premises in good order, condition and repair. Landlord will not be obligated to maintain or repair windows, doors, overhead doors, plate glass or the surfaces of walls. In addition, Landlord will not be obligated to make any repairs under this Section until a reasonable time after receipt of written notice from Tenant of the need for repairs. If any repairs are required to be made by Landlord, Tenant shall, at Tenant's sole cost and expense, promptly remove Tenant's furnishings, fixtures, inventory, equipment and other property, to the extent required to enable Landlord to make repairs. Landlord's liability under this Section will be limited to the cost of those repairs or corrections. Tenant waives the benefit of any present or future law that might give Tenant the right to repair the Premises at Landlord's expense or to terminate this Lease because of the condition. (2) All repairs, maintenance, management and other services to be performed by Landlord or Landlord's agents involve the exercise of professional judgment by service providers, and Tenant expressly waives any claims against Landlord for breach of warranty arising from the performance of those services. B. Tenant's Obligations. Subject to the provisions of Section 7.01, Section 7.03, Article_f4toht (Damage or Destruction) and Article Nine (Condemnation)„ Tenant ,hall„ at all times, keep all other portions of the Premises in good order, condition and repair (except for normal weal" and tear), including, but not limited to, maintenance, repairs and all necessary replacements of the windows, plate glass, doors, overhead doors, HVAC equipment, electrical and lighting systems, fire protection sprinkler system, dock levelers, elevators, interior and exterior plumbing, the interior and exterior of the Premises in general, pest control and extermination, down spouts, gutters, paving, railroad siding, care of landscaping and regular rnowung of grass. ]in addition, Tenant shall, at Tenant's expense, repair any damage to any portion of the Property, including the roof, skylights, foundation, or structural components and exterior walls of the Premises, caused by Tenant's acts or omissions. If Tenant fails to maintain and repair the Property as required by this Section, Landlord may, on 10 days' prior written notice, enter the Premises and perform the maintenance or repair on behalf of Tenant, except that no notice is required in case of emergency, and Tenant shall reimburse Landlord immediately upon demand for all costs incurred in performing the maintenance or repair, plus a reasonable service charge. C. HVAC Service. This Section pertains to the heating, ventilation and air - conditioning ( "HVAC ") systems and equipment that service the Premises. [Check one box only.] ❑ (1) Landlord is obligated to provide the HVAC services to the Premises only during the operating hours of the Property (as described below). ❑ (2) Landlord will provide the HVAC services to the Premises during the operating hours of the Property (as described below) for no additional charge and will, at Tenant's request, provide HVAC services to the Premises during other hours for an additional charge of $ ..... per hour. Tenant will pay Landlord the charges under this paragraph promptly after receipt of Landlord's invoice. Hourly charges are charged oil a half -hour basis. Any partial hour will be rounded rap to the next half hour. Tenant will comply wlth Landlord's procedures to make a request to provide the additional HVAC services in advance. ® (3) Tenant will pay for the HVAC services under this Lease. For any HVAC system that services only the Premises, Tenant shall, at Tenant's own cost and expense, enter into a regularly scheduled preventative maintenance and service contract for all such HVAC systems and equipment during the Term. If Tenant fails to enter into such a service contract acceptable to Landlord, Landlord may do so on Tenant's behalf and Tenant agrees to pay Landlord the cost and expense thereof, plus a reasonable service charge, periodically upon demand. COMMERCIAL LEASE AGREEMENT - Page 1 @NTCAR 2014 — Form No. 2 (3/2014) Produced with zlpForm® by zlpLoglx 18070 Fllteen Mile Road, Fraser, Mlchlgan 48026 www zleLcalx.com City of Denton Exhibit 1 D. Operating Hours of the Property. The operating hours of the Property are the times reasonably determined by Landlord unless they are specified here. [specify the operating hours of the Property including the days of the week, and whether Saturdays, Sundays and holidays are included]: 24 hours per day, 7 days per week are permitted._ E. Cleaning. Tenant must keep the Premises clean and sanitary and promptly dispose of all trash in appropriate receptacles. Tenant will provide, at Tenant's expense, janitorial services to the Premises, unless this box ❑ is checked, in which case Landlord will provide janitorial services to the Premises that are customary for the property type. Tenant will maintain, at Tenant's expense, any grease trap on the Property that Tenant uses, including but not limited to periodic emptying and cleaning, as well as making any modification to the grease trap that may be necessary to comply with any applicable law. 7.04 Alterations, Additions and Improvements. Tenant may not create any openings in the roof or exterior walls without the prior written consent of Landlord. Tenant may not make any alterations, additions or improvements to the Premises ( "Alterations ") without the prior written consent of Landlord. However, Tenant is not required to obtain the Landlord's prior written consent for non - structural Alterations that do not cost more than $5,000 and that do not modify or affect the roof, plumbing, HVAC systems or electrical systems. Consent for non - structural Alterations in excess of $5,000 or that modify or affect plumbing, HVAC systems or electrical systems will not be unreasonably withheld, conditioned or delayed by Landlord. Tenant may erect or install trade fixtures, shelves, bins, machinery, HVAC systems, and refrigeration equipment, provided that Tenant complies with all applicable governmental laws, ordinances, codes, and regulations. At the expiration or termination of this Lease, Tenant may, subject to the restrictions of Section 7.05, remove items installed by Tenant, provided Tenant is not in default at the time of the removal and Tenant repairs, in a good and workmanlike manner, any damage caused by the installation or removal. Tenant shall pay for all costs incurred or arising out of Alterations and will not permit any mechanic's or materialman's lien to be filed against the Premises or the Property. Upon request by Landlord, Tenant shall deliver to Landlord proof of payment, reasonably satisfactory to Landlord, of all costs incurred in connection with any Alterations. 7.05 Condition upon Termination. Upon the expiration or termination of this Lease, Tenant shall surrender the Premises to Landlord broom clean and in the same condition as received, except for normal wear and tear and any damage caused by a casualty that Tenant is not otherwise obligated to repair under any provision of this Lease. Tenant will not be obligated to repair any damage that Landlord is required to repair under Article Seven (Property Condition) or Article Eight (Damage or Destruction). In addition, Landlord may require Tenant to remove any Alterations before the expiration or termination of this Lease and to restore the Premises to their prior condition, all at Tenant's expense. However, Tenant will not be required to remove any Alterations that were made with Landlord's consent or that were otherwise permitted under the terms of this Lease. All Alterations that Tenant does not remove will become Landlord's property upon the expiration or termination of this Lease. In no event may Tenant remove any of the following items without Landlord's prior written consent: (i) electrical wiring or power panels; (ii) lighting or lighting fixtures; (iii) wall coverings, drapes, blinds or other window coverings; (iv) carpets or other floor coverings; (v) HVAC equipment; (vi) plumbing equipment; (vii) fencing or gates; or (viii) any fixtures, equipment or other items that, if removed, would affect the operation or the appearance of the Property. However, Tenant may remove Tenant's trade fixtures, equipment used in Tenant's business, and personal property. The provisions of this Section will survive the expiration or termination of this Lease. COMMERCIAL LEASE AGREEMENT - Page 15 ONTCAR 2014 - Form No. 2 (3/2014) Produced with zlpForm® by zlpLoglx 18070 Fifteen Mlle Road, Fraser, Michigan 4B026 www,zloLoalx.c M City of Denton Exhibit 1 ARTICLE EIGHT DAMAGE OR DESTRUCTION 8.01 Notice. If any buildings or other improvements situated on the Property are damaged or destroyed by fire, flood, windstorm, tornado or other casualty, Tenant shall immediately give written notice of the damage or destruction to Landlord. 8.02 Partial Damage. If the Premises are damaged by fire, tornado or other casualty, and rebuilding and repairs can be completed within 120 days after the date Landlord receives written notification from Tenant of the occurrence of the damage, then this Lease will not terminate, but Landlord shall proceed with reasonable diligence to rebuild and repair the Premises (other than leasehold improvements made by Tenant or any assignee, subtenant or other occupant of the Premises) to substantially the condition they were in before the damage. To the extent the Premises cannot be occupied (in whole or in part) after the casualty, the Rent payable under this Lease during the period the Premises cannot be fully occupied will be adjusted equitably. If the casualty occurs during the last 18 months of the Term, Landlord will not be required to rebuild or repair the damage unless Tenant exercises Tenant's renewal option (if any) within 15 days after the date Landlord receives written notification of the occurrence of the damage. If the casualty occurs during the last 18 months of the Term and Tenant does not so exercise Tenant's renewal option, or if there is no renewal option in this Lease, Landlord may, at Landlord's option, terminate this Lease by delivering a written termination notice to Tenant, in which case the Rent will be abated for the unexpired portion of the Term, effective on the date Landlord received written notification of the damage. 8.03 Substantial or Total Destruction. If the Premises are substantially or totally destroyed by fire, tornado, or other casualty, or so damaged that rebuilding and repairs cannot reasonably be completed within 120 days after the date Landlord receives written notification from Tenant of the occurrence of the damage, either Landlord or Tenant may terminate this Lease by promptly delivering a written termination notice to the other party, in which event the monthly installments of Rent will be abated for the unexpired portion of the Term, effective on the date of the damage or destruction. If neither party promptly terminates this Lease, Landlord shall proceed with reasonable diligence to rebuild and repair the Premises (except that Tenant shall rebuild and repair Tenant's fixtures and improvements in the Premises). To the extent the Premises cannot be occupied (ins whole or in part) after the casualty, the Rent payable under this Lease during the period the Premises cannot be fully occupied will be adjusted equitably. ARTICLE NINE CONDEMNATION If, during the Term, all or a substantial part of the Premises are taken for any public or quasi - public use under any governmental law, ordinance or regulation or by right of eminent domain, or are conveyed to the condemning authority under threat of condemnation, this Lease will terminate and the monthly installments of Rent will be abated during the unexpired portion of the Term, effective on the date of the taking. If less than a substantial part of the Premises is taken for public or quasi - public use under any governmental law, ordinance or regulation, or by right of eminent domain, or is conveyed to the condemning authority under threat of condemnation, Landlord shall promptly, at Landlord's expense, restore and reconstruct the Premises (other than leasehold improvements made by Tenant or any assignee, subtenant or other occupant of the Premises) in order to make the Premises reasonably suitable for the Permitted Use. The Rent payable under this Lease during the unexpired portion of the Term will be adjusted equitably. If there is a taking of the Property that has a material, adverse effect on the operation of Tenant's business in the Premises, then the Rent will be adjusted equitably. Landlord and Tenant will each be entitled to receive and retain such separate awards and portions of lump sum awards as may be allocated to their respective interests in any condemnation proceeding. The termination of this Lease will not affect the rights of the parties to those awards. COMMERCIAL LEASE AGREEMENT - Page 16 ©NTCAR 2014 — Form No. 2 (3/2014) Produced with zlpForm@ by zlpLoglx 18070 Fllteen We Road, Fraser, Michigan 48026 www.zlpLouix.com City of Denton Exhibit 1 ARTICLE TEN ASSIGNMENT AND SUBLETTING Tenant may not assign this Lease or sublet the Premises or any portion thereof, without the prior written consent of Landlord, which consent will not be unreasonably withheld or delayed. Any assignment or subletting will be expressly subject to all terms and provisions of this Lease, including the provisions of Section 6.01 pertaining to the use of the Premises. In the event of any assignment or subletting, Tenant will remain fully liable for the full performance of all of Tenant's obligations under this Lease. Tenant may not assign Tenant's rights under this Lease or sublet the Premises without first obtaining a written agreement from the assignee or sublessee whereby the assignee or sublessee agrees to assume the obligations of Tenant under this Lease and to be bound by the terms of this Lease. If a Default occurs while the Premises is assigned or sublet, Landlord may, at Landlord's option, in addition to any other remedies provided in this Lease or by law, collect directly from the assignee or subtenant all rents becoming due under the terms of the assignment or subletting and apply the rents against any sums due to Landlord under this Lease. No direct collection by Landlord from any assignee or subtenant will release Tenant from Tenant's obligations under this Lease. ARTICLE ELEVEN DEFAULT AND REMEDIES 11.01 Default. Each of the following events is a default under this Lease (a "Default "): A. Failure of Tenant to pay any installment of the Rent or other sum payable to Landlord under this Lease on the date that it is due, and the continuance of that failure for a period of five days after Landlord delivers written notice of the failure to Tenant. This clause will not be construed to permit or allow a delay in paying Rent beyond the due date and will not affect Landlord's right to impose a Late Charge as permitted in Section 3.03; B. Failure of Tenant to comply with any term, condition or covenant of this Lease, other than the payment of Rent or other sum of money, and the continuance of that failure for a period of 30 days after Landlord delivers written notice of the failure to Tenant; C. Failure of Tenant or any guarantor of Tenant's obligations under this Lease to pay its debts as they become due or an admission in writing of inability to pay its debts, or the making of a general assignment for the benefit of creditors; D. The commencement by Tenant or any guarantor of Tenant's obligations under this Lease of any case, proceeding or other action seeking reorganization, arrangement, adjustment, liquidation, dissolution or composition of it or its debts under any law relating to bankruptcy, insolvency, reorganization or relief of debtors, or seeking appointment of a receiver, trustee, custodian or other similar official for it or for all or any substantial part of its property; E. The commencement of any case, proceeding or other action against Tenant or any guarantor of Tenant's obligations under this Lease seeking to have an order for relief entered against it as debtor, or seeking reorganization, arrangement, adjustment, liquidation, dissolution or composition of it or its debts under any law relating to bankruptcy, insolvency, reorganization or relief of debtors, or seeking appointment of a receiver, trustee, custodian or other similar official for it or for all or any substantial part of its property, and Tenant or any guarantor: (i) fails to obtain a dismissal of such case, proceeding, or other action within 60 days of its commencement; or (ii) converts the case from one chapter of the Federal Bankruptcy Code to another chapter; or (iii) is the subject of an order of relief that is not fully stayed within seven business days after the entry thereof; and F. Vacancy or abandonment by Tenant of any substantial portion of the Premises or cessation of the use of the Premises for the purpose leased, and the continuance of that vacancy, COMMERCIAL LEASE AGREEMENT - Page 17 ©NTCAR 2014 — Form No. 2 (3/2014) Produced with zlpFormO by zlpLoglx 18070 Fifteen We Road, Fraser, Mlchigan 46026 wwlry zlpLoalx.com City of Denton Exhibit 1 abandonment or cessation for a period of 30 days after Landlord delivers a written notice to Tenant. 11.02 Remedies. Upon the occurrence of any Default listed in Section 11.01, Landlord may pursue any one or more of the following remedies without any prior notice or demand. A. Landlord may terminate this Lease, in which event Tenant shall immediately surrender the Premises to Landlord. If Tenant fails to surrender the Premises, Landlord may, without prejudice to any other remedy that Landlord may have for possession of the Premises or Rent in arrears, enter upon and take possession of the Premises and expel Tenant and any other person who may be occupying the Premises or any part thereof, without being liable for any claim for damages due to the termination of this Lease or termination of possession. Tenant shall pay to Landlord on demand the amount of all Rent and loss and damage Landlord may suffer by reason of the termination or inablllly to relet the Premises up to the date of termination, in addition to any other liabilities that survive the termination of this Lease. B. Landlord may enter upon and take possession of the Premises, without terminating this Lease and without being liable for any claim for damages due to termination of possession, and expel Tenant and any other person who may be occupying the Premises or any part thereof. Landlord may relet the Premises and receive runt from the new occupant. Tenant agrees to pay to Landlord monthly, or on demand from time to time„ any deficiency that may arise by reason of any such reletting. In determining the amount of the deficiency, professional service fees, reasonable attorneys' fees, court costs, remodeling expenses and other costs of reletting will be subtracted from the amount of rent received from the new occupant. C. Landlord may enter upon the Premises, without terminating this Lease and without being liable for any claim for damages due to such entry, and do whatever " Fenant is obligated to do under the terms of this Lease. Tenant agrees to pay Landlord on demand for expenses that Landlord incurs in performing Tenant's obligations under this Lease, together with interest thereon at the rate of 12% per annum from the date spent until paid. D. Landlord may sue Tenant for damages for breach of this Lease after Tenant's Default and abandonment of the Premises, or after Landlord terminates Tenant's possession and Tenant vacates the Premises, in which case the measure of damages is the sum of: (i) the unpaid Rent up to the date of the abandonment or vacancy, plus (ii) the difference between the Rent for the remainder of the Term after abandonment or vacancy, and the fair market rental value of this Lease for the remainder of the Term after abandonment or vacancy, such difference to be discounted to present value at a rate equal to the rate of interest that is allowed by law in the State of Texas when the parties to a contract have not agreed on any particular rate of interest (or, in the absence of such law, at the rate of 6% per annum). Neither the enforcement or collection by Landlord of those amounts nor the payment by Tenant of those amounts will constitute a waiver by Landlord of any breach, existing or in the future, of any of the terms or provisions of this Lease by Tenant or a waiver of any rights or remedies that the Landlord may have with respect to any breach. E. In addition to the foregoing remedies, Landlord may change or modify the locks on the Premises if Tenant fails to pay the Rent when due. Landlord will not be obligated to provide another key to Tenant or allow Tenant to regain entry to the Premises unless and until Tenant pays Landlord all Rent that is delinquent. Tenant agrees that Landlord will not be liable for any damages resulting to the Tenant from the lockout. When Landlord changes or modifies the locks, Landlord or Landlord's agent shall post a written notice in accordance with Section 93.002 of the Texas Property Code, or its successor statute. Tenant may be subject to legal liability if Tenant or Tenant's representative tampers with any lock after the locks have been changed or modified. F. No re -entry or taking possession of the Premises by Landlord will be construed as an election to terminate this Lease, unless a written notice of that intention is given to Tenant. Notwithstanding any re- entry, taking possession or reletting, Landlord may, at any time COMMERCIAL LEASE AGREEMENT - Page 18 ©NTCAR 2014 — Form No. 2 (3/2014) Produced with zlpForm® by zipLoglx 18070 Fifteen Mlle Road, Fraser, Michigan 48026 www.zloLoalx.com City of Denton Exhibit 1 thereafter, elect to terminate this Lease for a previous Default. Pursuit of any of the foregoing remedies will not preclude pursuit of any other remedies provided by law, nor will pursuit of any remedy provided in this Lease constitute a forfeiture or waiver of any Rent due to Landlord under this Lease or of any damages accruing to Landlord by reason of the violation of any of the provisions in this Lease. Failure of Landlord to declare any Default immediately upon its occurrence, or failure to enforce one or more of Landlord's remedies, or forbearance by Landlord to enforce one or more of Landlord's remedies upon a Default, will not be deemed to constitute a waiver of any of Landlord's remedies for any Default. Pursuit of any one of the remedies will not preclude pursuit by Landlord of any of the other remedies provided in this Lease. The loss or damage that Landlord may suffer by reason of a Default by Tenant under this Lease, or the deficiency from any reletting, will include the expense of taking possession and any repairs performed by Landlord after a Default by Tenant. If Landlord terminates this Lease at any time for any Default, in addition to other Landlord's remedies, Landlord may recover from Tenant all damages Landlord may incur by reason of the Default, including the cost of recovering the Premises and the Rent then remaining unpaid. G. Nothing in this Lease will be construed as imposing any duty upon Landlord to relet the Premises. Landlord will have no duty to mitigate Landlord's damages except as required by applicable law. Any duty imposed by law on Landlord to mitigate damages after a Default by Tenant will be satisfied if Landlord undertakes to lease the Premises to another tenant (a "Substitute Tenant ") in accordance with the following criteria: (1) Landlord will have no obligation to solicit or entertain negotiations with any other prospective tenant for the Premises until Landlord obtains full possession of the Premises including, without limitation, the final and unappealable legal right to relet the Premises free of any claim of Tenant; (2) Landlord will not be obligated to lease or show the Premises on a priority basis, or offer the Premises to a prospective tenant when other space in the Property suitable for the prospective tenant's use is (or soon will be) available; (3) Landlord will not be obligated to lease the Premises to a Substitute Tenant for an amount less than the current fair market rent then prevailing for similar uses in comparable buildings in the same market area as the Property, nor will Landlord be obligated to enter into a new lease under other terms and conditions that are unacceptable to Landlord under Landlord's then current leasing policies for comparable space in the Property; (4) Landlord will not be obligated to enter into a lease with a Substitute Tenant whose use would: (i) violate any restriction, covenant, or requirement contained in the lease of another tenant of the Property; (ii) adversely affect the reputation of the Property; or (iii) be incompatible with other uses of the Property. (5) Landlord will not be obligated to enter into a lease with a Substitute Tenant that does not have, in Landlord's reasonable opinion, sufficient financial resources to pay the Rent under the new lease and operate the Premises in a first class manner; and (6) Landlord will not be required to spend any amount of money to alter, remodel, or otherwise make the Premises suitable for use by a proposed Substitute Tenant unless: (i) Tenant pays any such sum to Landlord in advance of Landlord's execution of a lease with the Substitute Tenant (which payment will not be in lieu of any damages or other sums to which Landlord may be entitled as a result of Tenant's Default under this Lease); or COMMERCIAL LEASE AGREEMENT - Page 19 ONTCAR 2014 — Form No. 2 (3/2014) Produced wllh zlpFornnG by zlpLoglx 18070 Fifteen Mlle Road, Fraser, Michigan 48026 WM- zl®Loalx.com City of Denton Exhibit 1 (ii) Landlord, in Landlord's reasonable discretion, determines that any such expenditure is financially justified in connection with entering into a lease with the Substitute Tenant. H. No right or remedy of Landlord is intended to be exclusive of any other right or remedy, and each and every right and remedy will be cumulative and in addition to any other right or remedy now or hereafter existing under this Lease, at law, in equity or by statute. Landlord will not be liable for any damages resulting to Tenant from any right or remedy exercised by Landlord, regardless of the cause, even if it is caused by the sole, joint or concurrent negligence of Landlord. 11.03 Notice of Default. Tenant shall give written notice of any failure by Landlord to perform any of Landlord's obligations under this Lease to Landlord and to any ground lessor, mortgagee or beneficiary under any deed of trust encumbering the Premises whose name and address have been furnished to Tenant in writing. Landlord will not be in default under this Lease unless Landlord (or the ground lessor, mortgagee or beneficiary) fails to cure the nonperformance within 30 days after receipt of Tenant's notice. However, if the nonperformance reasonably requires more than 30 days to cure, Landlord will not be in default if the cure is commenced within the 30 -day period and is thereafter diligently pursued to completion. 11.04 Limitation of Landlord's Liability. As used in this Lease, the term "Landlord" means only the current owner or owners of the fee title to the Premises, or the leasehold estate under a ground lease of the Premises, at the time in question. Each Landlord is obligated to perform the obligations of Landlord under this Lease only during the time such Landlord owns such title or estate. Any Landlord who transfers its title, estate or other interest is relieved of all liability with respect to the obligations of Landlord under this Lease accruing on or after the date of the transfer, and Tenant agrees to recognize the transferee as Landlord under this Lease. However, each Landlord shall deliver to its transferee the Security Deposit held by Landlord, to the extent the Security Deposit has not then been applied under the terms of this Lease. ARTICLE TWELVE LANDLORD'S CONTRACTUAL LIEN In addition to the statutory Landlord's lien, Tenant hereby grants to Landlord a security interest to secure payment of all Rent and other sums of money becoming due under this Lease from Tenant, upon all inventory, goods, wares, equipment, fixtures, furniture and all other personal property of Tenant situated in or on the Premises, together with the proceeds from the sale thereof. Tenant may not remove such property without the consent of Landlord until all Rent in arrears and other sums then due to Landlord under this Lease have been paid. Upon the occurrence of a Default, Landlord may, in addition to any other remedies provided in this Lease or by law, enter upon the Premises and take possession of any and all goods, wares, equipment, fixtures, furniture and other personal property of Tenant situated in or on the Premises without liability for trespass or conversion, and sell the property at public or private sales, with or without having the property at the sale, after giving Tenant reasonable notice of the time and place of any such sale. Unless otherwise required by law, notice to Tenant of the sale will be deemed sufficient if given in the manner prescribed in this Lease at least 10 days before the time of the sale. Any public sale made under this Article will be deemed to have been conducted in a commercially reasonable manner if held on the Premises or where the property is located, after the time, place and method of sale and a general description of the types of property to be sold have been advertised in a daily newspaper published in the county where the Premises is located for five consecutive days before the date of the sale. Landlord or its assigns may purchase at a public sale and, unless prohibited by law, at a private sale. The proceeds from any disposition pursuant to this Article, less any and all expenses connected with the taking of possession, holding and selling of the property (including reasonable attorneys' fees and expenses), will be applied as a credit against the indebtedness secured by the security interest granted in this Article. Any surplus will be paid to Tenant or as otherwise required by law, and Tenant shall promptly pay any deficiencies. Landlord is authorized to file a financing statement to perfect the security interest of Landlord in the aforementioned property and proceeds thereof under the provisions of the Texas Business and Commerce Code in effect in the State of Texas. Provided Tenant is not in default under any of the COMMERCIAL LEASE AGREEMENT - Page 20 ONTCAR 2014 — Form No. 2 (3/2014) Produced with zlpForm® by zlpLoglx 18070 Fifteen Mlle Road, Fraser, Mlchigan 48026 www.zioLoalx.com City of Denton Exhibit 1 terms of this Lease, upon written request by Tenant, Landlord shall deliver a written subordination of Landlord's statutory and contractual liens to any liens and security interests securing any institutional third party financing of Tenant. Landlord shall not unreasonably withhold or delay the delivery of Landlord's written subordination. ARTICLE THIRTEEN PROTECTION OF LENDERS 13.01 Subordination and Attornment. Landlord may subordinate this Lease to any future ground Lease, deed of trust or mortgage encumbering the Premises, and advances made on the security thereof and any renewals, modifications, consolidations, replacements or extensions thereof, whenever made or recorded. Landlord's right to subordinate is subject to Landlord providing Tenant with a written Subordination, Non - disturbance and Attornment Agreement from the ground lessor, beneficiary or mortgagee wherein Tenant's right to peaceable possession of the Premises during the Term will not be disturbed if Tenant pays the Rent and performs all of Tenant's obligations under this Lease and is not otherwise in default, in which case Tenant shall attorn to the transferee of or successor to Landlord's interest in the Premises and recognize the transferee or successor as Landlord under this Lease. Tenant's rights under this Lease are subordinate to any existing ground lease, deed of trust or mortgage encumbering the Premises. However, if any ground lessor, beneficiary or mortgagee elects to have this Lease be superior to its ground lease, deed of trust or mortgage and gives Tenant written notice thereof, then this Lease will be deemed superior to the ground lease, deed of trust or mortgage whether this Lease is dated prior or subsequent to the date of the ground lease, deed of trust or mortgage or the date of recording thereof. 13.02 Signing of Documents. Tenant shall sign and deliver any document that may be requested to evidence any attornment or subordination, or any agreement to attorn or subordinate, as long as the document is consistent with the provisions of Section 13.01. If Tenant fails to do so within 10 days after a written request, Tenant hereby irrevocably appoints Landlord as Tenant's attorney -in -fact to execute and deliver the attornment or subordination document. 13.03 Estoppel Certificates. A. Upon Landlord's written request, Tenant shall execute and deliver to Landlord a written statement (an "Estoppel Certificate ") certifying: (1) whether Tenant is an assignee or subtenant; (2) the Expiration Date of this Lease; (3) the number of renewal options under this Lease, if any, and the total period of time covered by the renewal options; (4) that none of the terms or provisions of this Lease have been changed since the original execution of this Lease, except as shown on any attached amendments or modifications; (5) that no default exists under the terms of this Lease by either Landlord or Tenant; (6) that Tenant has no claim against Landlord under this Lease and has no defense or right of offset against collection of Rent or other charges accruing under this Lease; (7) the amount and payment date of the last payment of Rent, the period of time covered by that payment, and the amount of any rental payments made in advance; (8) the amount of any Security Deposit and other deposits, if any; and (9) the identity and address of any guarantor of this Lease. Tenant shall deliver the statement to Landlord within 10 days after Landlord's request. Landlord may forward any such statement to any prospective purchaser or lender of the Premises. The purchaser or lender may rely conclusively upon the statement as true and correct. B. If Tenant does not deliver the Estoppel Certificate to Landlord within the 10 -day period, Landlord, and any prospective purchaser or lender, may conclusively presume and rely upon the following facts: (1) that the terms and provisions of this Lease have not been COMMERCIAL LEASE AGREEMENT - Page 21 ONTCAR 2014 — Form No. 2 (3/2014) Produced with zipForm@ by zipLoglx 18070 Fifteen We Road, Fraser, Michigan 48026 www.zlQLoaix.cam City of Denton Exhibit l changed except as otherwise represented by Landlord that this Lnuoa has not been terminated except as otherwise represented by &endford: (3) that not more than one installment of Base Rent d other �a u been paid � dinadvan���uh�e o/- �nz'olo�ns against Landlord nor any defenses or rights of offset against collection of Rent; and )�a Landlord is not In default under this, Lem$e . In such event, Tenant will be outoppod from denying the truth of the presumed facts. O. Also, W Tenant dues, not deliver the Estoppel Certificate to Landlord within the 10-doy period, Landlord moay deliver owritten notice to Tenant stating that Tenant must deliver on Estoppel Certificate under this Section wn|th\n M*edays �horTenant nuua|veu the notice. If Tenant mmtdm4��rmn E�o��� ��d�|uahoho Landlord within five days after Tenant receives the notice, then Tenant's failure to deliver Estoppel Certificate will constitute a Default under this Lease, notwithstanding any longer period of time under Section 11.01 that Tenant would otherwise be allowed to cure a failure before the failure would become a QVIEW 299; ARTICLE FOURTEEN ENVIRONMENTAL REPRESENTATIONS AND INDEMNITY 14,01 Tenant's Compliance with Environmental Laws. Tenant, at Tenant's expense, shall comply with, all Iaws, rules, orders, ordinances, directions, regulations and requirements of Federal, State, county and municipal authorities pertaining to Tenjant,s rise of the Property and with Ole recorded covenant,.;,, conditions and restric0ons, regardless of when they become effective, including,, wilhOL11 fimitalinn, all applicable Federal, State and local laws, regulations oir ordinances pertaining to, air and water quality, Hazardous Materials (as defined in a2gtgLi _14,05), waste disposal, air emissions and other environmental matters, all zoning and other land use matters, and willij any direction of' any public officer or officers, pursuant to law, which impose any duty upon Landlord or Tenant with respect to the use or occupancy of the Property. 14.02 Tenant's Indemnification. Tenant shall not cause or pomnh any Hazardous Materials to be brought — upon, kept d in or about the Property by Tenant, or Tenmnt's*@eetS employees, without the prior written consent of Landlord. If the presence of Hazardous Materials on the Property caused or permitted by Tenant results in contamination of the Property eF then LZOLA mtess, from any and all claims, judgments, luding, without lirnItation, diminution in value U sie of rentable or unusable space or of any rig frorn any adverse lrnpact on marketing of iv-, vr ing, space or land area, surns paid In settlement of claims, reasonable attorneys'fees, court cosits, 4A&Z consultant fees and expert feesi) that arise during or alter the Term as a result of the coritarninalion, This Indern0lication of Landlord by, Tenant friCkides, wtthottf lirvitallon, costs Incurred In connection e/(A,.,,? will, any Investigatiort of site conditions or any clean-Lip, rernedial work, removal or restoration work required by any Federal, State or local government agency because oil Hazardous, Materials present In the soil or ground water on or under ti,le property. Without limiting tlTe foregoing, if lhe presence of any lals�jj_7 �-results In fly on m 1101 -Page 22 QNTCAR 2014 — Form No. 2 (3/2014) Produced with mffoffnG byupt.ogt"`80mnNeen W" Flood. Fraser, Michigan 40026 MUaLKLgj&gjLoo City mDenton Exhibit 1 14.03 Landlord's Representations. Landlord represents, to the best of Landlord's actual knowledge, that: (i) any handling, transportation, storage, treatment or usage of Hazardous Materials that has occurred on the Property to date has been in compliance with all applicable Federal, State, and local laws, regulations and ordinances; and (ii) no leak, spill, release, discharge, emission or disposal of Hazardous Materials has occurred on the Property to date and that the soil or groundwater on or under the Property is free of Hazardous Materials as of the Commencement Date, unless expressly disclosed by Landlord to Tenant in writing. 14.04 Landlord's Indemnification. Landlord hereby indemnifies, defends and holds Tenant harmless from any claims, judgments, damages, penalties, fines, costs, liabilities, (including sums paid in settlements of claims) or loss, including, without limitation, reasonable attorneys' fees, court costs, consultant fees, and expert fees, which arise during or after the Term of this Lease from or in connection with the presence or suspected presence of Hazardous Materials in the soil or groundwater on or under the Property, unless the Hazardous Material is released by Tenant or is present as a result of the negligence or willful conduct of Tenant. Without limiting the generality of the foregoing, the indemnification provided by this Section will specifically cover costs incurred in connection with any investigation of site conditions or any clean -up, remedial work, removal or restoration work required by any Federal, State or local governmental authority. 14.05 Definition. For purposes of this Lease, the term "Hazardous Materials" means any one or more pollutant, toxic substance, hazardous waste, hazardous material, hazardous substance, solvent or oil as defined in or pursuant to the Comprehensive Environmental Response, Compensation and Liability Act, as amended, the Clean Water Act, as amended, the Water Pollution Control Act, as amended, the Solid Waste Disposal Act, as amended, or any other Federal, State or local environmental law, regulation, ordinance, or rule, whether existing as of the date of this Lease or subsequently enacted. 14.06 Survival. The representations and indemnities contained in this Article Fourteen will survive the expiration or termination of this Lease. ARTICLE FIFTEEN PROFESSIONAL SERVICE FEES 15.01 Amount and Manner of Payment. Professional service Fees due to the Principal Broker and Cooperating Broker (together, the "Brokers ") will be calculated and paid as follows: A. Lump Sum. Unless the box for Section 15.01 B is checked in Section 1.14A, then Landlord agrees to pay to each of the Brokers a lump sum professional service Fee for negotiating this Lease, plus any applicable sales taxes, equal to: (i) the percentages stated in Section 1.14A of the total Base Rent to become due to Landlord during the Term, if the blanks for percentages are completed; or (ii) the amounts per square foot in the Premises stated in Section 1.14A, if the blanks for amounts per square foot are completed. The Fees will be paid to the Brokers (i) one -half on the date of final execution of this Lease, and (ii) the balance on the Commencement Date of this Lease. B. Monthly. If the box for this Section 15.01B is checked in Section 1.14A, then Landlord agrees to pay to each of the Brokers a monthly professional service Fee for negotiating this Lease, plus any applicable sales taxes, equal to the percentages stated in Section 1.14A of each monthly Base Rent payment at the time the payment is due. 15.02 Payments on Renewal, Expansion or New Lease. Subject to the termination date stated in this Section below, if Tenant or Tenant's successors or assigns: (a) exercises any right or option to renew or extend the Term (whether contained in this Lease or in any amendment to this Lease) or enters into a new lease covering the Premises, a portion of the Premises, or the Premises and additional space; or (b) enters into any new lease, expansion or other rental agreement as to any premises located on or constituting all or part of any real property owned by Landlord adjacent to the Property, then Landlord shall pay to each of the Brokers an additional Fee covering the full period of COMMERCIAL LEASE AGREEMENT - Page 23 ©NTCAR 2014 — Form No. 2 (3/2014) Produced with zlpForm® by zlpLoglx 18070 Fifteen We Road, Fraser, Michigan 48026 www.zloLoolx.com City of Denton Exhibit 1 the renewal, extension, new lease, expansion or other rental agreement. The additional Fees will be due on the date of exercise of a renewal option, or the date of execution in the case of a new lease, expansion or other agreement. The additional Fees will be computed and paid under Section 15.01 A or Section 15.01 B above (whichever has been made applicable under Section 1.14), as if a new lease had been made for such period of time. The Brokers' right to receive these additional Fees will terminate on the date that is 10 years after the expiration of the Term of this Lease, as amended or extended. 15.03 Payments on Sale. Subject to the termination date stated in this Section below, if Tenant or Tenant's successors or assigns, purchases the Premises pursuant to a purchase option contained in this Lease (or in any amendment to this Lease or any other agreement) or otherwise purchases the Premises, the Property or any portion of either the Premises or the Property, then Landlord shall pay to each of the Brokers a Fee equal to the percentages stated in Section 1.1413 of the purchase price, payable in Good Funds at the closing. Upon the closing of a sale to Tenant, any monthly lease Fees will terminate upon payment of the Fee on the sale. The Brokers' right to receive the Fees set forth in this Section 15.03 will terminate on the date that is 10 years after the expiration of the Term of this Lease, as amended or extended. 15.04 Other Brokers. Both Landlord and Tenant represent to the other party that they have had no dealings with any person, firm or agent in the negotiation of this Lease other than the Broker(s) named in this Lease, and no other broker, agent, person, firm or entity other than the Broker(s) is entitled to any commission or fee in connection with this Lease. 15.05 Landlord's Liability. Landlord will be liable for payment of all Fees solely to the Brokers, and Landlord will not be obligated to pay any claims by any undisclosed broker. The Principal Broker may pay a portion of the Fee to any Cooperating Broker pursuant to a separate agreement between the Brokers. 15.06 Joint Liability of Tenant. If Tenant enters into any new lease, extension, renewal, expansion, or other agreement to rent, occupy, or purchase any property described in Section 15.02 or Section 15.03 within the time specified in those Sections, the negotiations must be communicated through the Principal Broker (which may be done through the Cooperating Broker), otherwise Tenant will be jointly and severally liable with Landlord for any payments due or to become due to the Principal Broker. 15.07 Assumption on Sale. In the event of a sale or other transfer of the Premises by Landlord, Landlord shall assign this Lease to the purchaser or other transferee, and obtain from the purchaser or other transferee an Assumption Agreement in recordable form whereby the purchaser or other transferee agrees to pay the Brokers all Fees payable under this Lease. Landlord shall deliver a fully executed original counterpart of the Assumption Agreement to each of the Brokers upon the closing of the sale or other transfer of the Premises. Landlord will be released from personal liability for subsequent payments of Fees payable under this Lease only upon the delivery of the Assumption Agreement to the Brokers. 15.08 Termination. Landlord and Tenant agree that the Brokers are third party beneficiaries of this Lease with respect to the Fees, and that no change may be made by Landlord or Tenant as to the time of payment, amount of payment or the conditions for payment of the Fees without the written consent of the Brokers. The termination of this Lease by the mutual agreement of Landlord and Tenant will not affect the right of the Brokers to continue to receive the Fees agreed to be paid under this Lease, just as if Tenant had continued to occupy the Premises and had paid the Rent during the entire Term. Amendment or termination of this Lease under Article Eiaht (Damage or Destruction) and Article Nine (Condemnation) will not amend or terminate the Brokers' right to collect the Fees. 15.09 Intermediary Relationship. A. If either of the Brokers has indicated in Section 1.12 or Section 1.13 or otherwise that they are acting as an intermediary, then Landlord and Tenant consent to the intermediary relationship, authorize such Broker or Brokers to act as an intermediary between Landlord and Tenant in connection with this Lease, and acknowledge that the source of any expected compensation to the Brokers will be Landlord, and the Brokers may also be paid a fee by Tenant. A broker, and any broker or salesperson appointed to communicate COMMERCIAL LEASE AGREEMENT - Page 24 ONTCAR 2014 — Form No. 2 (3/2014) Produced with zlpForm® by zlpLogix 18070 Fifteen Mile Road, Fraser, Michigan 48026 www.zloLoclx.com City of Denton Exhibit 1 with and carry out instructions of one party, who acts as an intermediary is required to act fairly and impartially, and may not: (1) disclose to Tenant that Landlord will accept a rent less than the asking rent, unless otherwise instructed in a separate writing by Landlord; (2) disclose to Landlord that Tenant will pay a rent greater than the rental submitted in a written offer to Landlord, unless otherwise instructed in a separate writing by Tenant; (3) disclose any confidential information, or any information a party specifically instructs the real estate broker or salesperson in writing not to disclose, unless: (a) the broker or salesperson is otherwise instructed in a separate writing by the respective party; (b) the broker or salesperson is required to disclose the information by the Texas Real Estate License Act or a court order; or (c) the information materially relates to the condition of the property; (4) treat a party to the transaction dishonestly; or (5) violate the Texas Real Estate License Act. B. Appointments. Each Broker is authorized to appoint, by providing written notice to the parties, one or more license holders associated with the Broker to communicate with and carry out instructions of one party, and one or more other license holders associated with the Broker to communicate with and carry out instructions of the other party. An appointed license holder may provide opinions and advice during negotiations to the party to whom the license holder is appointed. ARTICLE SIXTEEN MISCELLANEOUS AND ADDITIONAL PROVISIONS 16.01 Disclosure. Landlord and Tenant understand that a real estate broker is not an expert in matters of law, tax, financing, surveying, hazardous materials, engineering, construction, safety, zoning, land planning, architecture, the TABA, or the ADA. The Brokers hereby advise Tenant to seek expert assistance on such matters. Brokers do not investigate a property's compliance with building codes, governmental ordinances, statutes and laws that relate to the use or condition of a property and its construction, or that relate to its acquisition. If the Brokers provide names of consultants or sources for advice or assistance, Tenant acknowledges that the Brokers do not warrant the services of the advisors or their products and cannot warrant the suitability of property to be acquired or leased. Furthermore, the Brokers do not warrant that the Landlord will disclose any or all property defects, although the Brokers will disclose to Tenant any actual knowledge possessed by Brokers regarding defects of the Premises and the Property. In this regard, Tenant agrees to make all necessary and appropriate inquiries and to use diligence in investigating the Premises and the Property before signing this Lease. Tenant acknowledges and agrees that neither the Principal Broker nor any Cooperating Broker has made any representation to Tenant with respect to the condition of the Premises, and that Tenant is relying exclusively upon Tenant's own investigations and the representations of Landlord, if any, with respect to the condition of the Premises. Landlord and Tenant agree to hold the Brokers harmless from any and all damages, claims, costs and expenses resulting from or related to Landlord's furnishing to the Brokers any inaccurate information with respect to the Premises, or Landlord's concealing any material information with respect to the Premises. Landlord and Tenant hereby agree to indemnify and defend the Brokers against any and all liabilities, claims, debts, damages, costs, or expenses, including but not limited to reasonable attorneys' fees and court costs, related to or arising out of or in any way connected to (a) representations concerning matters properly the subject of advice by experts; or (b) any dispute directly between Landlord and Tenant regarding this Lease. In addition, to the extent permitted by applicable law, the Brokers' COMMERCIAL LEASE AGREEMENT - Page 25 ©NTCAR 2014 — Form No. 2 (3/2014) Produced wllh zlpForm® by zlpLogix 18070 Fllteen Mlle Road, Fraser, Mlchlgan 48026 wwsv.zloLoalx.00m City of Denton Exhibit 1 liability for errors, omissions, or negligence is limited to the return of the Fee, if any, paid to the Brokers pursuant to this Lease. 16.02 Force Majeure. If performance by Landlord of any term, condition or covenant in this Lease is delayed or prevented by any Act of God, strike, lockout, shortage of material or labor, restriction by any governmental authority, civil riot, flood, or any other cause not within the control of Landlord, the period for performance of the term, condition or covenant will be extended for a period equal to the period Landlord is so delayed or prevented. 16.03 Interpretation. The captions of the Articles or Sections of this Lease are to assist the parties in reading this Lease and are not part of the terms or provisions of this Lease. Whenever required by the context of this Lease, the singular will include the plural and the plural will include the singular, and the masculine, feminine and neuter genders will each include the other. 16.04 Waivers. Any waivers of any provisions of this Lease must be in writing and signed by the waiving party. Landlord's delay or failure to enforce any provisions of this Lease or Landlord's acceptance of late installments of Rent will not be a waiver and will not prevent Landlord from enforcing that provision or any other provision of this Lease in the future. No statement on a check from Tenant or in a letter accompanying a check will be binding on Landlord. Landlord may, with or without notice to Tenant, negotiate, cash, or endorse the check without being bound to the conditions of any such statement. 16.05 Severability. A determination by a court of competent jurisdiction that any provision of this Lease is invalid or unenforceable will not invalidate the remainder of that provision or any other provision of this Lease, which will remain in full force and effect. 16.06 Joint and Several i Liability. All parties signing this Lease as Tenant will be jointly and severally liable for all obligations of Tenant. Tenant will be responsible for the conduct, acts and omissions of Tenant's agents, employees, customers, contractors, invitees, agents, successors or others using the Premises with 'tenant 's express or implied permission. 16.07 Amendments or Modifications. This Lease is the only agreement between the parties pertaining to the lease of the Premises and no other agreements are effective unless made a part of this Lease. All amendments to this Lease must be in writing and signed by all parties. 16.08 Notices. All notices and other communications required or permitted under this Lease must be in writing and will be deemed delivered, whether actually received or not, on the earlier of: (i) actual receipt if delivered in person or by messenger with evidence of delivery; or (ii) receipt of an electronic facsimile transmission ( "Fax ") with confirmation of delivery„ or (iii) upon deposit in the United States Mail as required below. Notices may be transmitted by Fax to the Fax telephone numbers specified in Article One of this Lease, if any. Notices delivered by mail must be deposited in the U.S. Postal Service, certified mail, return receipt requested, postage prepaid, and properly addressed to the intended recipient as set forth in Article One. Notices sent by any other means will be deemed delivered when actually received, with proof of delivery. After possession of the Premises by Tenant, Tenant's address for notice purposes will be the address of the Premises unless Tenant notifies Landlord in writing of a different address to be used for that purpose. Any party may change its address for notice by delivering written notice of its new address to all other parties in the manner set forth above. Copies of all notices should also be delivered to the Brokers, but failure to notify the Brokers will not cause an otherwise properly delivered notice to be ineffective. Also, copies of all notices must also be delivered to the following persons [if the blanks have been completed]: Copies of notices to Landlord are to be delivered to: Rail Yard Partners, LTD Address: 525 S. Loop 288, Suite J05 Denton TX 76205 Telephone: Email: COMMERCIAL LEASE AGREEMENT - Page 26 ©NTCAR 2014 - Form No. 2 (3/2014) Produced with zlpForm® by zlpLoglx 18070 Fifteen We Road, Fraser, Michigan 48026 www.zloLoalx.com City of Denton Exhibit 1 Copies of notices to Tenant are to be delivered to: Citv of Denton Address: 215 E. MoKinnev Street Denton TX 76201 Telephone: J940)349-8200 wwM Fax: Email:. - _..._... ❑ Landlord also consents to receive any notices by e-mail. [Check the box, if applicable.] ❑ Tenant also consents to receive any notices by e-mail. [Check the box, if applicable.] 16.09 Attorneys' Fees. If, on account of any breach or default by any party to this Lease in its obligations to any other party to this Lease (including, but not limited to, the Brokers), it becomes necessary for a party to employ an attorney to enforce or defend any of its rights or remedies under this Lease, the non - prevailing party agrees to pay the prevailing party its reasonable attorneys' fees and court costs, if any, whether or not suit is instituted in connection with the enforcement or defense. 16.10 Venue. All obligations under this Lease, including, but not limited to, the payment of Fees to the Brokers, will be performed and payable in the county in which the Property is located. The laws of the State of Texas will govern this Lease. 16.11 Survival. All obligations of any party to this Lease that are not fulfilled at the expiration or the termination of this Lease will survive such expiration or termination as continuing obligations of the party. 16.12 Binding Effect. This Lease will inure to the benefit of, and be binding upon, each of the parties to this Lease and their respective heirs, representatives, successors and assigns. However, Landlord will not have any obligation to Tenant's successors or assigns unless the rights or interests of the successors or assigns are acquired in accordance with the terms of this Lease. 16.13 Right to Claim a Lien. If a commission agreement or other agreement to pay Fees to the Brokers is not included in this Lease, then be advised that pursuant to Chapter 62 of the Texas Property Code, each Broker hereby discloses the Broker's right to claim a lien based on a separate written commission agreement or other agreement to pay Fees to the Broker, and this disclosure is incorporated in the commission agreement or other agreement to pay Fees. 16.14 Patriot Act Representation. Landlord and Tenant each represent to the other that: (1) its property interests are not blocked by Executive Order No. 13224, 66 Fed. Reg. 49079; (2) it is not a person listed on the Specially Designated Nationals and Blocked Persons list of the Office of Foreign Assets Control of the United States Department of the Treasury; and (3) it is not acting for or on behalf of any person on that list. 16.15 Counterparts. This Lease may be executed in a number of identical counterparts, and all counterparts will be construed together as one agreement. 16.16 Offer. The execution of this Lease by the first party to do so constitutes an offer to lease the Premises. Unless this Lease is signed by the other party and a fully executed copy is delivered to the first party by the earlier of this date or the date that is 10 days after the date of execution by the first party, such offer to lease will be deemed automatically withdrawn. Any acceptance of an offer that has been withdrawn will only be effective if the party that withdrew the offer subsequently agrees to the acceptance either in writing or by course of conduct. COMMERCIAL LEASE AGREEMENT - Page 27 ©NTCAR 2014 - Form No. 2 (3/2014) Produced with z1pForrn8 by zlpLogix 18070 Fifteen Mlle Road, Fraser, Michigan 48026 www.zloLoaix.com City of Denton Exhibit 1 16.17 Additional Provisions. Landlord and Tenant agree to any provisions set forth on the attached Addenda (if any) and the following additional provisions (if any): 1. In addition to the rent stated in Section 1.06, the City of Denton has entered into an Economic Development Program Grant Agreement under which the City will grant $76,000 per year for the term of this lease, subject to compliance with the Terms and Conditions of the Grant Agreement (Exhibit D) . 2. Landlord acknowledges that the programming use for the premises will involve a 3rd party organization that will manage the facility and sublease the space to other office tenants in a co- working environment. This use or agreement with a managing entity will not be considered a sublease that will require Landlord approval as stated in Article 10. COMMERCIAL LEASE AGREEMENT - Page 28 ©NTCAR 2014 - Form No. 2 (3/2014) Produced with zlpForm® by zlpLoglx 18070 Flfteen Mlle Road, Fraser, Mlchlgan 48026 www.zloLoalx.com City of Denton Exhibit 1 16.18 Consult an Attorney. This Lease Is an enforceable, legally binding agreement. Read it carefully. The Brokers involved in the negotiation of this Lease cannot give you legal advice. Landlord and Tenant acknowledge that they have been advised by the Brokers to have this Lease reviewed by competent legal counsel of their choice before signing this Lease. By executing this Lease, Landlord and Tenant each agree to the provisions contained in this Lease. This Lease has been executed as of the Effective Date (as defined in Section 1.01). LANDLORD: Rail Yard Partners, LTD LANDLORD: By [Sign ture] : X_-> BY [Signature]:_ Name: Name: .......� Titl a of . - ., � Date of Execution: f, f Title: ��� " TENANT: TENANT: City of Derat�can ��. ?pKgygcd_as to farm: _..._W. t �'� i B [Signature]: By [Signature].' .�..� Y � Name: George C " mpbcall Name: Anita 3txr e1 s Title' �_�....._��� .,�-- Cit��ratey Date of Executions _ Date of Execution._" _.. . PRINCIPAL BROKER: COOPERATING BROKER: Axis Realty Groff B Si nature : —., ._...... BY [Signature]: _W_... Name: Alex t�ne... . Name: . Title: _,.,, Title:. Address: _ _ _ Address: Broker's License No.: __ __�� Broker's License No.:. Tax ID No. __.._.._�... .. ®WWW_. .......... Tax ID No.: _ __ PERMISSION TO USE: This form is 1»-ovided for the use of members of the North Texas Commercial Association of REALTORS ©, Inc. ( "NTCAR "), members of the Non h Texas Commercial Association of Real Estate Professionals, Inc. and other licensed users of an NTCAR electronic fans system. Permission is given to make limited copies of the ctu•rent version of This faun for use in a particular Texas real estate tainsaction. Please contact the NTCAR office to confirm that you are using the current version of this form. Mass production, or reproduction for- resale, is not allowed without express permission. Any changes to this form ,nest be made in a nhanner that is obvious. If any words a•e deleted, they must be left in the form with a line drawn turough them. If changes are made that are not obvious, the person who made the change could be subject to a claim of fraud a• misrepresentation fop- passing off an altered form as if it were the genuine NTCAR form. COMMERCIAL LEASE AGREEMENT - Page 29 ONTCAR 2014 — Form No. 2 (3/2014) Produced with zipForm® by zlpLoglx 18070 Fifteen Mlle Road, Fraser, Michigan 48026 W- WADLoolx.com City of Denton Exhibit 1 Axis Realty Group NORTH TEXAS COMMERCIAL ASSOCIATION OF REALTORSO ADDENDUM "A" TO LEASE RENEWAL OPTIONS Address of the Premises: 6 „08 E . ofcorSt, Ste 128 , Denton Tx_ 76201 1. Option to Extend the Term. Landlord grants to Tenant _ 2 option(s) (each an "Option ") to extend the Term for an additional term of 60 months each (the "Extension "), on the same terms, conditions and covenants set forth in this Lease, except as provided below. Each Option may be exercised only by written notice delivered to the Landlord no earlier than One Hundred Eichtv 180 ) days before, and no later than One �mmITmne Hundred Twenty ( 120 ) days before, the expiration of the Term or the preceding Extension of the Term, whichever is applicable. If Tenant fails to deliver to Landlord a written notice of the exercise of an Option within the prescribed time period, such Option and any succeeding Options will lapse, and there will be no further right to extend the Term. Each Option may only be exercised by Tenant on the express condition that, at the time of the exercise, Tenant is not in default under any of the provisions of this Lease. The Options are personal to Tenant and may not be exercised by an assignee or subtenant without Landlord's written consent. 2. Calculation of Rent. The Base Rent during the Extension(s) will be determined by one of the following methods [check one]: 0 A. Fair Market Rental. The Base Rent during the Extension will be the Fair Market Rental determined as follows: a. The "Fair Market Rental" of the Premises means the price that a ready and willing tenant would pay as of the commencement of the Extension as monthly rent to a ready and willing landlord of Premises comparable to the Premises if the property were exposed for lease on the open market for a reasonable period of time, and taking into account the term of the Extension, the amount of improvements made by Tenant at its expense, the creditworthiness of the Tenant, and all of the purposes for which the property may be used and not just the use proposed to be made of the Premises by Tenant. Upon proper written notice by Tenant to Landlord of Tenant's intention to elect to exercise the renewal Option, Landlord shall, within 180 days thereafter, notify Tenant in writing of Landlord's proposed Fair Market Rental amount, and Tenant shall thereupon notify Landlord of Tenant's acceptance or rejection of Landlord's proposed amount. Failure of Tenant to reject Landlord's Fair Market Rental amount within 120 days after receipt of Landlord's notice will be deemed Tenant's acceptance of Landlord's proposed Fair Market Rental amount. b. If Landlord and Tenant have not been able to agree on the Fair Market Rental amount within 40 days following the exercise of the Option, the Fair Market Rental for the Extension will be determined by the following appraisal process. Landlord and Tenant shall endeavor in good faith to select a single Appraiser. The term "Appraiser" means a State Certified Real Estate Appraiser licensed by the State of Texas to value commercial property. If Landlord and Tenant are able to agree upon and select a single Appraiser, that Appraiser will determine the Fair Market Rental for the Extension. If Landlord and Tenant are unable to agree upon a single Appraiser within __IT.__ days after the end of the 40 -day period, each will then appoint one Appraiser by written notice to the other, given within days after the end of the 40 -day period. Within five business days after the two Appraisers are appointed, the two Appraisers will appoint a third Appraiser. If either Landlord or Tenant fails to appoint its Appraiser within the prescribed time period, the single Appraiser appointed will determine the Fair Market Rental amount of the Premises. Each party will bear the cost of the appraiser appointed by it and the parties will share equally the cost of the third appraiser. The Fair Market Rental of the Premises will be the average of two of the three appraisals that are closest in amount, and the third appraisal will be disregarded. ADDENDUM "A” TO LEASE — Page 1 ONTCAR 2014 - Form No. 2 (3/2014) Axis Realty Group, 1517 Centre Place Drive Denton, TX 76205 Phone: 940.891.2947 Fax: 940.891.2948 Alex Payne City of Denton Produced with zipFormO by zipLogix 18070 Fifteen Mile Road, Fraser, Michigan 48026 www.zioLoaix.com Exhibit 1 c. In no event will the Base Rent be reduced for any Extension, regardless of the Fair Market Rental determined by any appraisal. If the Fair Market Rental is not determined before the commencement of the Extension, then Tenant shall continue to pay to Landlord the Base Rent applicable to the Premises immediately before the Extension until the Fair Market Rental amount is determined, and when it is determined, Tenant shall pay to Landlord the difference between the Base Rent actually paid by Tenant to Landlord and the new Base Rent. ❑ B. Consumer Price Index Adjustment. The monthly Base Rent during the Extension will be determined by multiplying the monthly installment of Base Rent during the last month of the Term by a fraction determined as follows: a. The numerator will be the Latest Index that means either [check one]: ❑ (1) the Index published for the nearest calendar month preceding the first day of the Extension, or ❑ (2) the Index for the month of Extension. preceding the first day of the b. The denominator will be the Initial Index that means either [check one]: ❑ (1) the Index published for the nearest calendar month preceding the Commencement Date, or ❑ (2) the Index for the month of Date. preceding the Commencement [If no blanks are filled in above, the choice (1) including the phrase "the nearest calendar month preceding" will apply. If the Index is not yet published for the nearest calendar month preceding the applicable date, then "the nearest calendar month" means the first month preceding the applicable date for which the Index is published]. c. The Index means the Consumer Price Index (CPI) for All Urban Consumers (All Items) U.S. City Average (unless this box is checked ❑ in which case the CPI for the Dallas /Fort Worth Consolidated Metropolitan Statistical Area will be used) published by the U. S. Department of Labor, Bureau of Labor Statistics (Base Index of 1982 -84 =100). If the Index is discontinued or revised, the new index or computation that replaces the Index will be used in order to obtain substantially the same result as would have been obtained if it had not been discontinued or revised. If such computation would reduce the Rent for the particular Extension, it will be disregarded, and the Rent during the immediately preceding period will apply instead. ❑ C. Fixed Rental Adjustments. The monthly installments of Base Rent during the Extension(s) will be increased beginning on the following dates to these amounts: Date: .. IT Amount: $ Date: . Amount: $ Date: — — ._ Amount: $ Date: ........._ .............._. Amount: $ ADDENDUM "A" TO LEASE — Page 2 ONTCAR 2014 — Form No. 2 (3/14) Produced with zipFormG by zipLoglx 18070 Fifteen Mile Road, Fraser, Michigan 48026 www.zioLoa ..com City of Denton Exhibit 1 Axis Realty Group NORTH TEXAS COMMERCIAL ASSOCIATION OF REALTORS® ADDENDUM "B" TO LEASE CONSTRUCTION OF IMPROVEMENTS BY LANDLORD Y , Dentonw, ITTX 76201 Address of the Premises: 608 E. Hickor St Ste 128,... _. 1. Plans. Landlord agrees to construct (or complete) improverrients to the Premises in accordance with plans and specifications (the "Plans ") to be promptly prepared by Landlord and delivered to Tenant. If Tenant does not respond to the request for approval of the Plaits within five days after Tenant's receipt of the Plans, Tenant will be deemed to have approved the Plans. Upon approval by Tenant, two or more sets of the Plans will be signed by troth parties, with one signed set retained by each party. Changes to the Plans may be made only by written amendments signed by both parties. 2. Construction of Improvements. Upon approval of the Plans and the cost of construction, Landlord shall promptly begin construction and pursue the construction to its completion with reasonable diligence and in a good and workmanlike manner. 3. Estimated Completion Date. It is estimated by Landlord that the improvements specified in the Plans will be completed by March, 1. 2016 (the "Estimated Completion Date"), 4. Notice of Completion. Landlord shall deliver a written notice to Tenant that the improvements have been completed in accordance with the Plans, specifying the date (the "Date of Completion ") tine improvements were completed, within two days after the Date of Completion. Tenant shall then prorptly inspect the irrlprovements and if they have in fact been completed in accordance with the Plans„ then the Term will begin upon the Date of Completion or on the Commencement Date, whichever is later. 5. Objections. If Tenant reasonably determines that the improvements have not been completed in accordance with the Plans, Tenant may deliver a written notice to Landlord specifying the incomplete items. If Tenant does not, within 10 days after Landlord's notice of completion, deliver such a written notice to Landlord, then Tenant will be deemed to have approved the Improvements as constructed, and the Date of Completion stated in Landlord's notice will be the Date of Completion. If the improvements have not in fact been completed in accordance with the Plans, and Tenant has delivered to Landlord a written notice specifying the incomplete items, then Landlord shall promptly proceed to finish the incomplete items, and the Term will begin upon the date the items are In fact complete. 6. Substantial Completion. Completion, as used in this Addendum, means Substantial Completion. "Substantial Completion " will be deemed to have occurred when (i) a Certificate of Occupancy is issued by the local municipal authorities that have jurisdiction over the Premises, and (ii) the construction is sufficiently complete in accordance with the Plans so that Tenant is able to occupy the Premises for the Penititted Use, except for minor "punch list" items remaining to be completed. 7, Letter of Acceptance. Upon Substantial Completion of the improvements to the Premises, Tenant agrees to execute and deliver to Landlord, with a copy to tine Princi al Broker, a letter (tire " "Letter of Acceptance ") addressed to Landlord and signed by Imenant or Tenant's authorized representative) acknowledging: (I) that construction has been completed in accordance with the Plans; (ii) acceptance of the improvements (subject to "punch list " Items to be completed); (iii) the Date of Completion, and (iv) the Commencement Date of the Term. 8. Taking of Possession. The taking of possession of the Premises by Tenant will be deemed to be acknowledgment by Tenant that construction has been completed in accordance with Plans (except for any latent defects and "punch fist " items) and that the Term has begun as of the Date of Completion, regardless of whether a Certificate of Occupancy has been issued or Tenant has delivered a Letter of Acceptance. Axis Realty Group, 1517 Centre Place Drive Denton, TX 76205 Phone: 940.891.2947 Fax: 940.891 2948 Alex Payne City of Denton Produced with zipForm® by zipLogix 18070 Fifteen Mile Road, Fraser, Michigan 48026 www.zioLoaix.com Exhibit 1 9. Failure to Complete. If the Improvements have not been completed in accordance with the Plans by the Estimated Coniptetion Date, or by such date as extended by application of Section 16,0 force Maieure , Tenant, riray give Landlord a written notice of Tenant's intention to terminate as of a certain date specified by Tenant in the notice (the "Termination Date") if such improvements have not been c rnpleted by the Termination Date. The notice must be given to Landlord not less than 20 days before the Termination Date. If the improvements have riot been completed by the Termination Date, then this Lease will terminate, with no further liability of one party to the other, unless the Termination Date is extended by Tenant in writing. If Landlord Is able to cause Substantial Completion of the improvements to occur before the Termination Date, then this Lease will not terminate. 10. Finish -Out Allowance. Landlord shall pay the cost of construction under this Addendum in an amount not to exceed $ 552 , 960.00 (the "Landlord's Cost "). If an Addendum for Construction of Improvements by Tenant is also attached to this Lease, then Landlord may also provide an Allowance (as defined in that Addendum) to be applied to the cost of construction in that Addendum. Tenant shall pay any costs of construction in excess of the Landlord's Cost and any Allowance. ADDENDUM "B" TO LEASE — Page 2 ©NTCAR 2014 — Form No. 2 (3/2014) Produced with zipFormG by zipLogix 18070 Fifteen Mile Road, Fraser, Michigan 48026 www.2j Loalx.com City of Denton Exhibit 1 Axis Realty Group NORTH TEXAS COMMERCIAL ASSOCIATION OF REALTORS® ADDENDUM "G" TO LEASE RULES AND REGULATIONS c .. S ..._...� r TX 76201 Address of the Premises: 608 E . Hickory St Ste 128 Denton, 1. Application. Tenant, and Tenant's employees and invitees, shall abide by the following standards for the mutual safety, cleanliness, care, protection, comfort and convenience of all tenants and occupants of the Property. These Rules and Regulations apply to all of the Property as defined in this Lease including, but not limited to, the Premises, the building(s), the parking garages, if any, the common areas, driveways, and parking lots. 2. Consent Required. Any exception to these Rules and Regulations must first be approved in writing by Landlord. For purposes of these Rules and Regulations, the term "Landlord" includes the building manager, the building manager's employees, and any other agent or designee authorized by Landlord to manage or operate the Property. 3. Rules and Regulations: a. Tenant may not conduct any auction, "flea market" or "garage sale" on the Premises nor store any goods or merchandise on the Property except for Tenant's own business use. Food may not be prepared in the Premises except in small amounts for consumption by Tenant and Tenant's officers and employees. Vending machines or dispensing machines may not be placed in the Premises without Landlord's written approval. The Premises may not be used or occupied as sleeping quarters or for lodging purposes. Animals may not be kept in or about the Property. b. Tenant shall not obstruct sidewalks, driveways, loading areas, parking areas, corridors, hallways, vestibules, stairs and other similar areas designated for the collective use of tenants, or use such areas for Tenant's storage, temporary or otherwise, or for any purpose other than going to and from the Premises. Tenant shall comply with parking rules and guidelines as may be posted on the Property from time to time. c. Tenant shall not make any loud noises, unusual vibrations, unpleasant odors, objectionable or illegal activities on the Property. Tenant shall not permit the operation of any equipment in the Premises that annoys other occupants of the Property. Tenant shall not interfere with the possession of other tenants of the Property. d. Tenant may not bring any flammable, explosive, toxic, noxious, dangerous or hazardous materials onto the Property, except in small quantities as needed in Tenant's business and used, stored, and disposed of in accordance with applicable laws. e. Installation of security systems, telephone, television and other communication cables, fixtures and equipment must comply with Section 7.04 of the Lease, except that routine installation and construction of normal communication devices that do not require any holes in the roof or exterior walls of the Property do not require the written approval of Landlord. f. Movement into or out of the building through public entrances, lobbies or corridors that requires use of a hand truck, dolly or pallet jack to carry freight, furniture, office equipment, supplies and other large or heavy material, must be limited to the service entrances and freight elevators only and must be done at times and in a manner so as not to unduly inconvenience other occupants of the Property. All wheels for such use must have rubber tires and edge guards to prevent damage to the building. Tenant shall be responsible for and shall pay all costs to repair damages to the building caused by the movement of materials by Tenant. WO ` - ti . I Axis Realty Group, 1517 Centre Place Drive Denton, TX 76205 Phone: 940.891.2947 Fax: 940.891.2948 Alex Payne City of Denton Produced with zipForm® by zipLogix 18070 Fifteen Mile Road, Fraser, Michigan 48026 www.zioLoaix.cam Exhibit 1 g. Requests by Tenant for building services, maintenance and repair must be made in writing to the office of the building manager designated by Landlord and must be dated. Tenant shall give prompt written notice to Landlord of any significant damage to or defects in the Premises or the Property, including plumbing, electrical and mechanical systems, heating, ventilating and air conditioning systems, roofs, windows, doors, foundation and structural components, regardless of whose responsibility it is to repair such damage or defects. h. Tenant shall not change locks or install additional locks on doors without the prior written consent of Landlord. If Tenant changes locks or installs additional locks on the Property, Tenant shall provide Landlord with a copy of each separate key to each lock upon Landlord's request. Upon termination of Tenant's occupancy of the Premises, Tenant must surrender all keys to the Premises and the Property to Landlord. I. Harmful liquids, toxic wastes, bulky objects, insoluble substances and other materials that may cause clogging, stains or damage to plumbing fixtures or systems must not be placed in the lavatories, water closets, sinks, or drains. Tenant must pay the costs to repair and replace drains, plumbing fixtures and piping that is required because of damage caused by Tenant. j. Tenant shall cooperate with Landlord and other occupants of the Property in keeping the Property and the Premises neat and clean. Nothing may be swept, thrown or left in the corridors, stairways, elevator shafts, lobbies, loading areas, parking lots or any other common areas on the Property. All trash and debris must be properly placed in receptacles provided therefor. k. Landlord may regulate the weight and position of heavy furnishings and equipment on the floor of the Premises, including safes, groups of filing cabinets, machines, and any other item that may overload the floor. Tenant shall notify Landlord when heavy items are to be taken into or out of the building, and the placement and transportation of heavy items may be done only with the prior written approval of Landlord. I. No window screens, blinds, draperies, awnings, solar screen films, window ventilators or other materials visible from the exterior of the Premises may be placed in the Premises without Landlord's approval. Landlord is entitled to control all lighting that may be visible from the exterior of the building. m. No advertisement, sign, notice, handbill, poster or banner may be exhibited, distributed, painted or affixed on the Property. No directory of tenants is allowed on the Property other than that provided by Landlord. n. Tenant agrees to cooperate with and assist Landlord in the prevention of peddling, canvassing and soliciting on the Property. o. Tenant accepts any and all liability for damages and injuries to persons and property resulting from the serving or sales of alcoholic beverages by or on behalf of Tenant on or from the Property. p. Any person entering and leaving the building before and after normal working hours, or building hours if posted by Landlord, whichever applies, may be required to identify himself to security personnel by signing a list and giving the time of day and destination or location of the applicable Premises. Normal building business hours are established by Landlord from time to time. 4. Revisions. Landlord reserves the right to revise or rescind any of these Rules and Regulations and to make additional rules that Landlord may determine are necessary from time to time for the safety, protection, comfort and convenience of the tenants and visitors of the Property and for the care, protection and cleanliness of the Property. Revisions and additions will be binding upon the Tenant as if they had been originally prescribed herein when furnished in writing by Landlord to Tenant, provided the additions and revisions apply equally to all tenants occupying the Property and do not impose any substantial cost to Tenant. 5. Enforcement. Any failure or delay by Landlord in enforcing these Rules and Regulations will not prevent Landlord from enforcing these Rules and Regulations in the future. If any of these Rules and Regulations is determined to be unenforceable, it will be severed from this Lease without affecting the remainder of these Rules and Regulations. ADDENDUM "G" TO LEASE — Page 2 ©NTCAR 2014 — Form No. 2 (3/2014) Produced with zipForm® by zipLogix 18070 Fifteen Mile Road, Fraser, Michigan 48026 www.zlpLooix.com City of Benton Exhibit I Axis Realty Group EXHIBIT "A" SURVEY AND/OR LEGAL DESCRIPTION 608 E. Hickory St, Ste 128, Denton, TX 76201 East Hickory Addition, Lots 1 & 2, Block A EXCL LISTING AGREEMENT GCopyright 2014 NTCAR Form No. 4 (7-22-14) Axis Realty Group, 1517 Centre Place Drive Denton, TX 76205 Phone: 940.891.2947 Fax: 940.891.2948 Alex Payne City of Denton Produced with zlpForraG by zipLoglx 16070 Fitteen Mile Road, Fraser, Michigan 49026 MU8LKWLUgjj= Exhibit 1 Axis Realty Group EXHIBIT "C" INFORMATION ABOUT BROKERAGE SERVICES Texas law requires all real estate licensees to give the following information about brokerage services to prospective buyers, tenants, sellers and landlords. Before working with a real estate broker, you should know that the duties of a broker depend on whom the broker represents. If you are a prospective seller or landlord (owner) or a prospective buyer or tenant (buyer), you should know that the broker who lists the property for sale or lease is the owner's agent. A broker who acts as a subagent represents the owner in cooperation with the listing broker. A broker who acts as a buyer's agent represents the buyer. A broker may act as an intermediary between the parties if the parties consent in writing. A broker can assist you in locating a property, preparing a contract or lease, or obtaining financing without representing you. A broker is obligated by law to treat you honestly. IF THE BROKER REPRESENTS THE OWNER: The broker becomes the owner's agent by entering into an agreement with the owner, usually through a written listing agreement, or by agreeing to act as a subagent by accepting an offer of subagency from the listing broker. A subagent may work in a different real estate office. A listing broker or subagent can assist the buyer but does not represent the buyer and must place the interests of the owner first. The buyer should not tell the owner's agent anything the buyer would not want the owner to know because an owner's agent must disclose to the owner any material information known to the agent. IF THE BROKER REPRESENTS THE BUYER: The broker becomes the buyer's agent by entering into an agreement to represent the buyer, usually through a written buyer representation agreement. A buyer's agent can assist the owner but does not represent the owner and must place the interests of the buyer first. The owner should not tell a buyer's agent anything the owner would not want the buyer to know because a buyer's agent must disclose to the buyer any material information known to the agent. IF THE BROKER ACTS AS AN INTERMEDIARY: A broker may act as an intermediary between the parties if the broker complies with The Texas Real Estate License Act. The broker must obtain the written consent of each party to the transaction to act as an intermediary. The written consent must state who will pay the broker and, in conspicuous bold or underlined print, set forth the broker's obligations as an intermediary. The broker is required to treat each party honestly and fairly and to comply with The Texas Real Estate License Act. A broker who acts as an intermediary in a transaction: (1) shall treat all parties honestly; (2) may not disclose that the owner will accept a price less than the asking price unless authorized in writing to do so by the owner; (3) may not disclose that the buyer will pay a price greater than the price submitted in a written offer unless authorized in writing to do so by the buyer; and (4) may not disclose any confidential information or any information that a party specifically instructs the broker in writing not to disclose unless authorized in writing to disclose the information or required to do so by The Texas Real Estate License Act or a court order or if the information materially relates to the condition of the property. With the parties' consent, a broker acting as an intermediary between the parties may appoint a person who is licensed under The Texas Real Estate License Act and associated with the broker to communicate with and carry out instructions of one party and another person who is licensed under that Act and associated with the broker to communicate with and carry out instructions of the other party. If you choose to have a broker represent you, you should enter into a written agreement with the broker that clearly establishes the broker's obligations and your obligations. The agreement should state how and by whom the broker will be paid. You have the right to choose the type of representation, if any, you wish, to receive. Your payment of a fee to a broker does not necessarily establish that the broker represents you. If you have any questions regarding the duties and responsibilities of the broker, you should resolve those questions before proceeding. OWNER: Date: EXCLUSIVE LISTING AGREEMENT @Copyright 2014 NTCAR Form No. 4 (7- 22 -14) Axis Realty Group, 1517 Centre Place Drive Denton, TX 76205 Phone: 940 8912947 Fax: 940,891 2948 City of Denton Alex Payne Produced with zlpForm® by zlpLogix 18070 Fifteen Mlle Road, Fraser, Michigan 48026 www zWLoalx sINo sAlegal\Mjr documents\contracts\15\dec management agreement.doex Exhibit 2 ENTREPRENEUR CENTER MANAGEMENT AGREEMENT BETWEEN THE CITY OF DENTON AND THE DALLAS ENTREPRENEUR CENTER THIS AGREEMENT is made between the City of Denton, Texas, a municipal corporation formed under the laws of the State of Texas and located at 215 E. McKinney Street, Denton, Texas 76201 (the "City"), and The Dallas Entrepreneur Center, a Texas based 501(c)3 nonprofit corporation whose principal place of business is located at 311 North Market Street, Dallas, Texas 75202 ("Manager") for the management of an entrepreneurial space located at 608 East Hickory, Suite 128, Denton, Texas, 76201. (The City and the Manager are collectively referred to as "the Parties"). WHEREAS, the Economic Development Partnership Board and the City Council have established target industries for economic development recruitment, including a focused initiative on entrepreneurship and technology-based companies; and WHEREAS, on the 15"' day of September, 2015, the City of Denton, Texas approved a Grant Agreement with Rail Yard Partners, Ltd. to utilize 'Fax Increment Reinvestment Zone Number One Funds to stimulate a catalyst transit-oriented redevelopment project located at 608 East Hickory, Denton, "I'exas 76201; and WHEREAS, on the 15"' day of September, 2015, the City of Denton, Texas approved a Commercial Lease Agreement with Rail Yard Partners, Ltd. to lease 9,216 square feet of office space located at 608 East Hickory, Suite 128, Denton, Texas 76201 to operate an entrepreneurial space for a technology recruitment initiative; and WHEREAS, the Parties desire that the Manager operate and manage the entrepreneurial space and related programs; NOW, THEREFORE, for the Mutual promises and consideration as described herein, the Parties agree as follows: I. TERMS A. Program Management. The City hereby authorizes and engages the Manager as its agent to manage the daily operations of the Entrepreneur Center and associated programs during the term of this Agreement. The Manager hereby accepts such engagement subject to the terms and conditions expressed in this Agreement. The City shall cooperate with the Manager to the extent necessary for the Manager to fulfill its duties under this Agreement. Without limiting the generality of the foregoing, the City is hereby authorized and shall be obligated to do as follows in its discretion and as is allowed under the City's budget processes: 1. Financial responsibility for the Commercial Lease Agreement and associated operating expenses at 608 East Hickory, Suite 128, Denton, Texas 76201. sAlegakour documents\con tracts\ 15\dec management agreement.docx Exhibit 2 2. Provide entrepreneurial office and co-working space located at 608 East Hickory, Suite 128, Denton, Texas 76201 for the operation of the Entrepreneur Center commencing on or about March 1, 2016. 3. Provide appropriate technology, furniture, fixtures, and equipment for the entrepreneurial office and co-working space. 4. Provide staff support and resources to the Manager to assist in the operations of the Entrepreneur Center. 5. Provide marketing resources and assistance as available and budgeted in the Economic Development Division program funding. 6. License the use of any and all branding, logos, program markers, URL addresses, websites, and other marketing materials to the Manager for the promotion of the program. B. Management of the Entrepreneur Center. The Manager has the responsibility and discretion in the operation, direction, management and supervision of the Entrepreneur Center, subject only to the limitations expressed herein. Commencing with the term of this Agreement, the Manager shall perform the following: 1. Coordinate with the Landlord on the design and layout of the entrepreneurial space, including tenant finish-out selections, interior design, and architectural/construction decisions. The Manager will solicit feedback from the City during this process. 2. Coordinate with the City's marketing/advertising designee to finalize all branding, logos, program markers, and marketing materials for the promotion and launch of the program and entrepreneurial space. 3. Coordinate the selection and procurement of all furniture, fixtures, and equipment for the space; working directly with the City and all applicable purchasing laws. 4. Coordinate with the City to finalize membership eligibility, terms, application requirements, membership fees, operating hours, performance measures, and all other programmatic elements. S. Commencing with the term of the Commercial Lease Agreement, day-to-day management and operations of the Entrepreneur Center and associated programs, including, but not limited to the following: i. Membership recruitment and collection of all membership fees. ii. Coordinate, plan, and host events and training for members. iii. Create a business support hub for tech-based companies and start-ups by offering the knowledge, resources, and support necessary for growth and success. Page 2 sAlegakour documents\contracts\1 5\dec numagement apeernent.doex Exhibit 2 6. Manager will pay a percentage of operating expenses associated with the Commercial Lease Agreement, as follows: Ten percent of all membership fees collected by Manager will be paid quarterly to the I...andlord as a contribution towards associated operating expenses. ii. First payment will be due July 1, 2016 for the period of March 1, 2016 through May 31, 2016 and payments will be due quarterly thereafter. iii. All payments will be made directly to the Landlord and will be credited towards the City's operating expense account. 7. The remaining ninety percent of membership fees will be utilized by the Manager for daily operations of the entrepreneurial space, including but not limited to the following: Programming and event expenses. ii. Snacks, supplies, and other amenities and benefits. iii. Marketing and recruitment expenses. Solicit sponsorships, donations, programming, speakers, and all other support as necessary to successfully operate the entrepreneurial space and associated programs. 9. Provide a quarterly financial report to the City that shows a separate accounting of all revenue and expenses associated with the operation of the entrepreneurial space in Denton, and an accounting of all revenue and expenses associated with the Manager's I-Lill operations. C. Insurance. Manager shall require that proper Certificates of Insurance evidencing general liability, automobile, bodily injury, property damage, death and workers compensation coverage shall be furnished, with copies to the City, and require that all policies be kept in force during the term of the Agreement by all vendors, concessionaires, subcontractors and service providers in the minimum amounts approved by the City. Such policies shall name the City as an additional insured. The Manager further agrees to maintain at all times during the term of this Agreement and the Development Agreement, with responsible insurance companies, insurance as follows: Such worker's compensation, employer's liability or similar insurance as may be required by law, or such greater amounts which Manager shall deem advisable but no less than $1,000,000/$2,000,000; 2. A general liability insurance policy in the amount of at least $1,000,000 per person or $2,000,000 per occurrence for bodily it jury or death; Page 3 sAIegaI\0Ur documents\contracts\1 5\dec management agreenient.docx Exhibit 2 3. An umbrella coverage insurance policy of at least $10,000,000 per occurrence; 4. Such other insurance against such other operation risks as Manager or City deems advisable to insure against, including, without limitation, auto liability insurance, liquor liability insurance and fidelity bonds; Errors & Omissions or Professional Liability Coverage in the amount of at least $ 1,000,00(). 6. Fire insurance and insurance against such other hazards ordinarily included by an all-risk form of extended coverage endorsement on the buildings, operating supplies, furniture, furnishings and equipment in an amount equal to at least one hundred percent (100%) of actual replacement cost (without deduction for depreciation) thereof, and all alterations, substitutions and replacements therefore, and bearing a standard noncontributory mortgagee loss payable endorsement in favor of the holders of any Mortgage on the Entrepreneur Center and providing, if reasonably available, for waiver of subrogation against such holder and the debt and security of such Mortgage in the event that the Entrepreneur Center is restored. This insurance shall include business interruption insurance. The Manager shall add the City as an additional insured on policies required by this Agreement. Moreover, the Manager shall assume all risks in connection with the adequacy of any insurance or self-insurance program and waives any claim against the City for any liability, costs or expenses arising out of any uninsured claim, in part or in full, of any nature whatsoever. Within a reasonable period of time after the effective date of this Agreement, Manager shall provide the City with a Certificate of Insurance showing compliance with this section. Any changes to coverage shall cause Manager to immediately notify the City in writing of such change. D. Compliance. Manager shall make all reasonable efforts to comply with all laws, rules, regulations, requirements, orders, notices, determinations, and ordinances of the City of Denton, including without limitation, the state and local liquor authorities, and the requirements of any insurance companies covering any of the risks against which the Entrepreneur Center is insured. Manager shall indemnify and hold harmless the City from any loss, cost, damage, or expense associated with compliance hereunder. E. Management Term. The term of this Agreement shall commence on the date the Agreement is approved by the City Council and shall continue through March 1, 2017. This Agreement is renewable on an annual basis. F. Termination. The Agreement may be terminated prior to the expiration of the Agreement upon the occurrence of one or more of the following events: 1. Upon any default of the Commercial Lease Agreement between the City and the Landlord following the expiration of applicable cure periods; Page 4 s:Uegakour documents \contracts\1 5 \dec management agreement.docx Exhibit 2 2. Upon at least thirty (30) days prior written notice to the other party, if (i) the Entrepreneur Center is damaged or destroyed by fire or another casualty; or (ii) all or a substantial part of the Entrepreneur Center is taken in a condemnation or eminent domain proceeding; 3. Upon at least thirty (30) days prior written notice if Manager shall apply for or consent to the appointment of a receiver, trustee or liquidator of it or all or a substantial part of its assets; file a voluntary petition for bankruptcy; or, become otherwise insolvent; 4. If Manager permanently ceases operation of the Entrepreneur Center; or 5. If Manager fails to provide or maintain insurance as required under this Agreement. II. MISCELLANEOUS C. Indemnification. MANANGER AGREES TO INDEMNIFY, HOLD HARMLESS, AND DEFEND THE CITY, ITS OFFICERS, OFFICIALS, AGENTS, EMPLOYEES, AND REPRESENTATIVES FROM AND AGAINST ANY AND ALL CLAIMS (ADMINISTRATIVE OR JUDICIAL.) OR SUITS FOR INJURIES, DAMAGE, LOSSES AND EXPENSES (INCLUDING BUT NOT LIMITED TO REASONABLE. ATTORNEYS' FEES FOR PRE- TRIAL, TRIAL AND APPELLATE PROCEEDINGS, ACCOUNTING FEES, APPRAISAL FEES AND CONSULTING AND EXPERT WITNESS FEES), OI2 LIABILITY OF WHATEVER KIND OR CHARACTER, ARISING OUT OF OR IN CONNECTION WITH THE PERFORMANCE BY THE CITY OF THOSE SERVICES CONTEMPLATED BY THIS AGREEMENT, INCLUDING ALL SUCH CLAIMS Oil CAUSES OF ACTION BASED UPON COMMON, CONSTITUTIONAL, OR STATUTORY LAW, OR BASED, IN WHOLE, OR IN PART, UPON ALLEGATIONS OF NEGLIGENT OR INTENTIONAL ACTS OF THE CITY, ITS OFFICERS, EMPLOYEES, AGENTS, SUBCONTRACTORS, LICENSEES, AND INVITEES, OR OF MANAGER, OR CLAIMS OF ANY PAST OR FUTURE LIFE /SAFETY CODE VIOLATIONS, OR ANY REQUIREMENT OR AWARD RELATING TO COURSE OF EMPLOYHMENT, WORKING CONDITIONS, WAGES AND /OR COMPENSATION OF EMPLOYEES OR FORMER EMPLOYEES AT THE ENTREPRENEUR CENTER INCLUDING VIOLATIONS OF ANY STATE, LOCAL, OR FEDERAL EMPLOYMENT LAW WHETHER COMMON LAW OR STATUTORY, AND INJURY TO PERSON(S) ANI) DAMAGE TO PROPERTY OR BUSINESS BY REASON OF ANY CAUSE WHATSOEVER IN AND ABOUT THE ENTREPRENEUR CENTER OR ELSEWHERE, UNLESS SUCH INJURY OR DAMAGE IS CAUSED BY THE CITY'S GROSS NEGLIGENCE AS DETERMINED BY A FINAL NON- APPEALABLE JUDGMENT ISSUED BY A COURT OF COMPETENT JURISDICTION, WILLFUL MISCONDUCT, FRAUD, OR BREACH OF THIS AGREEMENT. ANY INDEMNIFICATION SHALL APPLY REGARDLESS OF WHETHER OR NOT SAID CLAIM, DAMAGE, LOSS, OR EXPENSE IS COVERED BY INSURANCE AS HEREIN PROVIDED. IN THE EVENT THAT A CLAIM IS ASSERTED AGAINST EITHER PARTY OR BOTH, MANAGER SHALL PROVIDE CITY WITH A COPY OF SUCH CLAIM WITHIN A REASONABLE TIME FROM RECEIPT Page 5 sAlegaNur doc uments\con tracts\ 15\dec management agreerrient,docx Exhibit 2 D. Notice. Any notice required to be given under this Agreement or any statute, ordinance, or regulation, shall be effective when given in writing and deposited in the United States mail, certified mail, return receipt requested, or by hand-delivery, addressed to the respective parties as follows: CITY DALLAS ENTREPRENEUR CENTER City Manager Trey Bowles City of Denton 311 Market Street 215 E. McKinney Dallas, Texas, 75202 Denton, TX 76201 E. Inurement. This Agreement and each provision hereof, and each and every right, duty, obligation, and liability set forth herein shall be binding upon and inure to the benefit and obligation of the City and MANAGER and their respective successors and assigns. F. Application of Laws. All terms, conditions, and provisions of this Agreement are subject to the Charter of the City of Denton, all ordinances passed pursuant thereto, and all judicial determinations relative thereto. This Agreement shall be governed by the laws of the State of "Texas and venue shall lie in Denton County, Texas. G. Exclusive Agreement. This Agreement contains the entire understanding and constitutes the entire agreement between the parties hereto concerning the subject matter contained herein. There are no representations, agreements, arrangements, or understandings, oral or written, express or implied, between or among the parties hereto, relating to the subject matter of this Agreement, which are not fully expressed herein. The terms and conditions of the Agreement shall prevail notwithstanding any variance in this Agreement from the terms and conditions of any other document relating this transaction or these transactions. This Agreement may not be modified, amended, surrendered or changed, except by a written instrument executed by both parties. 1-1. Severability. If any section, subsection, paragraph, sentence, clause, phrase, or word in this Agreement, or application thereof to any person or circumstance is held invalid by any court of competent jurisdiction, such holding shall not affect the validity of the remaining portions of this Agreement, and the parties hereby declare they would have enacted such remaining portions despite any such invalidity. 1. No Representation. In entering into this Agreement, the parties acknowledge that the City has made no representation to the Manager regarding Manager's potential earnings, the possibility of future success or any other similar matter respecting the Entrepreneur Center and the City's assistance hereunder, and that the City expressly makes no guarantee as to the success of its assistance as provided hereby. 'This Agreement is effective as of the day of Page 6 , 2015, CITY OF DENTON, TEXAS BY: GEORGE C. CAMPBELL, CITY MANAGER sAlegakour docunients\cc)ntracts\15\dec rn an agement agreement.docx Exhibit 2 ATTEST: JENNIFER WALTERS, ary Sl',"CRI-,, TAI ZY By: APPROVED AS TO FORM: ANITA BURGESS, CITY ATTORNEY BY: ... ....... .. ... DALLAS ENTREPRENEUR CENTER a Texas Nonprofit Company in Its: ACKNOWLEDGMENTS STATE OF TEXAS § COUNTY OF DENTON § The foregoing Management Agreement was executed before me on the day of —1 2015 by George C. Campbell, City Manager of the City of Denton,'I'exas, aTexas municipal corporation, on behalf of said Municipal Corporation. Name: Notary Public in and for the State of 'Texas STATE OF TEXAS § COUNTY OF DENTON § The foregoing Management Agreement was executed before me on the ___ day of , 2015 by of Dallas Entrepreneur Center, on behalf of said corporation. Name: Notary Public in and for the State of Texas Page 7 Exhibit 3 OlegaRour documents\ordinances\ I 5\dee nimiagement ord for anit.doe ORDINANCE NO. AN ORDINANCE OF 'THE CITY COUNCIL OF THE CITY OF DENTON, TEXAS, AUTHORIZING THE CITY MANAGER TO EXECUTE A MANAGEMENT AGREEMENT BETWEEN THl"' CITY OF DENTON AND THE DALLAS ENTREPRENEUR CENTER FOR THE MANAGEMENT OF THE ENTREPRENEUR CENTER LOCATED AT 608 EAST HICKORY, SUITE 128, DENTON, TEXAS, 76201; AND PROVIDING AN EFI, EC'FIVE DATE. WHEREAS, the Dallas Entrepreneur Center was established to provide a central location to serve entrepreneurs by providing education, training, programming, mentorship and access to capital; and WHEREAS, the Economic Development Partnership Board and the City Council have established target industries for economic development recruitment, including a focused initiative on entrepreneurship and technology-based companies; and WHEREAS, on the 15th day of September, 2015, the City of Denton, Texas approved a Grant Agreement with Rail Yard Partners, Ltd. to utilize 'Fax Increment Reinvestment Zone Number One Funds to stimulate a catalyst transit-oriented redevelopment project located at 608 East Hickory, Denton, Texas 76201; and WHEREAS, on the 15t" day of September, 2015, the City of Denton, 'J"exas approved a Commercial Lease Agreement with Rail Yard Partners, Ltd. to lease 9,216 square feet of office space located at 608 East Hickory, Suite 128, Denton, Texas 76201 to operate an entrepreneurial space for a technology recruitment initiative; and WHEREAS, the City of Denton desires to enter into an agreement with the Dallas Entrepreneur Center in order for the Dallas Entrepreneur Center to provide management and operational services for the entrepreneurial space for a technology recruitment initiative; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION I The City Manager, or his designee, is hereby authorized to execute an agreement with the Dallas Entrepreneur Center in substantially the form of the Management Agreement, which is attached hereto and incorporated herein by reference. SECTION 2. This ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the day of ,2015. CHRIS WATTS, MAYOR Exhibit 3 sAlegakour documents\ordinances\1 5\dcc management ord for aint.doc ATTEST: JENNIFF'R WALTERS, CITY SECRE'T'ARY mo APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY ro," BY: Page 2 City Hall City of Denton 215 E. McKinney St. Denton, Texas 76201 www.cityofdenton.com D EN'FON File #: ID 15 -1080, Version: 1 DEPARTMENT: CM/ ACM: Date: Transportation John Cabrales, Jr. October 30, 2015 Legislation Text Agenda Information Sheet SUBJECT Consider adoption of an ordinance of the City of Denton authorizing the City Manager, or his designee, to execute on behalf of the City of Denton a lease of property between the City of Denton, Monsignor King Outreach Center in substantially the same form as attached hereto and incorporated herein by reference, for the operation of a homeless shelter at 300 Woodrow Lane; and providing for an effective date. BACKGROUND As part of the September 1, 2015, City Council Work Session, staff received direction from the Council to develop a 10 year lease agreement between the City of Denton and Monsignor King Outreach Center (MKOC) for the use of City property located at 300 Woodrow Lane as a homeless shelter. Council recommended a $1 per year rental rate for the first 10 year term and an option to renew at $2 per year for a second 10 year term. Staff is aware of the importance of providing a facility to use as a shelter to assist the homeless and has crafted a draft lease (Exhibit 1) that provides accommodations, safety for facility staff, as well as those we seek to serve, and meets the criteria required by law for Council's consideration. Based on feedback and direction provided by Council as part of the October 20, 2015, Work Session on the proposed lease, staff made the following revisions to the draft lease to meet the intent as outlined by Council: ■ Section 35 (b) (Termination) - revised to state the City may not terminate the lease within the first five years of the agreement, unless there was just cause as determined by the City Council, Section 35 (b) (Termination) - will include wording that after the end of the fifth year, the City may terminate the agreement for any reason, but would be obligated to pay to MKOC the value of improvements agreed upon in writing at the time the improvements were made. Such values will be approved by the City Manager and could include actual direct costs to MKOC, and the value of in -kind services for the improvements. ■ Section 36 (Reimbursement to Tenant for Approved Tenant Improvements) - will be deleted. ■ Section 37 (Extension) - will have the landlord reference removed from this section so that it is solely up to MKOC if they wish to extend this agreement for another ten years at a rate of $2 per year. ■ (Naming of Facility) - MKOC will have the right to recommend to Council a facility name as outlined City of Denton Page 1 of 2 Printed on 10/26/2015 File #: ID 15 -1080, Version: 1 in resolution R2012 -007 (Naming Policy Guidelines). Because this is a City facility, the final decision for the naming of this building rests with the City Council. However, the guidelines to provide latitude to allow MKOC to accomplish the naming of the facility as desired by the Council. Staff has provided a draft copy of the revised lease to MKOC representatives and hopes to have the final terms of the agreement worked out with MKOC prior to Council's consideration of the final agreement at the October 27 Council meeting. Staff remains committed to working with MKOC representatives to provide information, access to the facility and lend support as part of the make -ready efforts. ESTIMATED SCHEDULE OF PROJECT Lease proposes a primary term of 10 years with an option for one 10 year extension. PRIOR ACTION/REVIEW (Council, Boards, Commissions) Council received a briefing on the proposed lease as part of the October 20, 2015, City Council Work Session Meeting. Council provided direction to staff to advance a lease agreement with MKOC as part of the September 1, 2015, City Council Meeting. FISCAL INFORMATION Lease contemplates $1 per year for 10 years with one 10 year option to extend at $2 per year. MKOC will be responsible for all required facility improvements as well as annual operating and maintenance costs for the term of the lease. F,XHIRITS 1. Lease 2. Resolution R2012 -007 3. Ordinance Respectfully submitted: Mark Nelson Director of Transportation City of Denton Page 2 of 2 Printed on 10/26/2015 LEASE AGREEMENT This LEASE AGREEMENT ( "Lease ") is entered into by the City of Denton, a Texas home -rule municipal corporation, ( "Landlord ") and the Monsignor King Outreach Center, a Texas non - profit corporation, ( "Tenant "). Landlord leases to Tenant, and Tenant leases from Landlord, the premises and improvements ( "Leased Premises "), known as 300 S. Woodrow Lane, Denton, Denton Landlord, Texas, or as more particularly described in the attached Exhibit A. The primary term of this Lease ( "Lease Term ") is One Hundred and Twenty (120) months, commencing on , 2015, and ending on 12025, with the following terms, conditions, and covenants: 1. Use; Limitations on Use; Non - Discrimination. a. Use. Tenant will use the Leased Premises as a homeless shelter and offices related to social services provided to the homeless individuals. b. Limitations on Use. Tenant may not use or permit any part of the Leased Premises to be used for: Any activity which is a nuisance or is offensive, noisy, or dangerous; ii. Any activity that violates any applicable law, regulation, zoning ordinance, restrictive covenant, governmental order, or this lease. iii. Any hazardous activity that would require any insurance premium on the Property or Leased Premises to increase or would void any such insurance. iv. Any activity that violates any applicable federal, state, or local law, including, but not limited to, those laws related to public safety, air quality, water quality, Hazardous Materials, wastewater, waste disposal, air emissions, or other environmental matters. V. The permanent or temporary storage of any hazardous material. For purposes of this Lease "Hazardous Material(s)" means any pollutant, toxic substance, hazardous waste, hazardous material, hazardous substance, solvent, or oil as defined by any federal, state, or local environmental law, regulation, ordinance, or rule existing as of the date this Lease or later enacted. C. Non - Discrimination. Tenant, for itself, its successors, and assigns, as a part of the consideration hereof, does hereby covenant and agree as a covenant running with the land that no person on the grounds of race, religion, color, sex, gender orientation or national origin shall be excluded from participation in, denied the benefits of, or be otherwise subjected to discrimination in the use of the Leased Premises. 2. Rent. Tenant agrees to pay Landlord at 215 E. McKinney St., Denton, Denton Landlord, Texas, or at another place Landlord designates from time to time in writing, as rent for Page 1 of 11— Lease (300 S. Woodrow Lane) the Leased Premises, one annual payment of Twelve Dollars and No /Cents ($12.00) on or before the Effective Date, and continuing each succeeding anniversary of the Effective Date thereafter until the Lease Term expires. Tenant's covenant to pay rent is independent of every other covenant in this Lease. 3. Taxes. Each year during the term of this Lease, Landlord will pay real estate taxes assessed against the Leased Premises, if assessed. Each year during the Lease Term, Tenant will pay as additional rent, on receipt of a statement from Landlord together with tax statements or other verification from the proper taxing authority, real estate taxes assessed against the Leased Premises. 4. Utilities. Tenant will pay all charges for all utility services to the Leased Premises including, but not limited to, water, sewer, solid waste, electricity, phone, and internet access. 5. Maintenance and Repair. The Tenant shall provide all ordinary maintenance and repair including routine custodial maintenance of all improvements, landscaping, fixtures, and equipment on the Leased Premises such that the Leased Premises are maintained in a clean, sanitary, good, and safe condition. The Tenant shall not commit or cause or suffer to be committed any waste on the Leased Premises. The Tenant shall be solely responsible for any repair caused by Tenant's use of the Leased Premises and for any charges resulting from police, fire, or other emergency response activities on the Leased Premises due to the Tenant's use. If, after twenty (20) days' notice from the Landlord, Tenant fails to maintain or repair and part of the Leased Premises or any improvement, landscaping, fixture or equipment thereon, Landlord may, but shall not be obligated to, enter upon the Leased Premises and perform such maintenance or repair, and Tenant agrees to pay the costs of the same to Landlord upon receipt of written demand. 6. Alterations. All alterations, additions, and improvements to the Leased Premises (except trade fixtures) installed at Tenant's expense will become the Landlords property and must remain on and be surrendered by Tenant with the Leased Premises on expiration of the Lease Term or earlier termination of this Lease. Alterations, additions, and improvements to the Leased Premises by Tenant may be made only with the written consent of the City Manager, or his designee, which must not be unreasonably withheld. If consent is granted to make alterations, additions, or improvements to the Leased Premises, the alterations, additions, or improvements must not commence until Tenant has furnished to Landlord a certificate of insurance showing coverage in an amount satisfactory to the City Manager that protects Landlord from liability for injury to any person and damage to any personal property, on or off the Leased Premises, in connection with the making of alterations, additions, or improvements. No equipment or structure of any kind will be placed on the roof or elsewhere on the Leased Premises by Tenant without the written permission of the City Manager, or his designee. If permission is granted by the City Manager, or his designee, the work or installation will be done at Tenant's expense and in a manner that does not damage the roof. If it becomes necessary to remove equipment, or structure, temporarily, so that the roof can be repaired, Tenant will promptly repair at its expense any damages resulting from the removal. At the termination of this Lease, Tenant must deliver the Leased Premises in good order and condition, except for only normal deterioration. Any damage caused by the installation or removal of trade fixtures must be repaired at Tenant's expense if requested by the City Manager, or his designee, in writing at least 30 days before the Lease Term Page 2 of 11— Lease (300 S. Woodrow Lane) expires. All alterations, additions, improvements, and repairs made by Tenant must be made in a good and workmanlike manner. 7. Condition of Premises /No Representations. Tenant has examined and accepted the Leased Premises in their present "AS IS" condition and accepts the Leased Premises regardless of reasonable deterioration between the date of this Lease and the date Tenant begins occupying the Leased Premises. Landlord has not made any representations or warranties whatsoever with respect to the condition or suitability of use of the Leased Premises or any improvements thereto and no rights, easements or licenses are acquired by the Tenant by implication unless expressly set forth herein. 8. Insurance. At all, times during the term of this Lease or any extension thereto, Tenant shall maintain in full force, and affect the following insurance policies: a. Tenant will maintain commercial general liability insurance with a minimum coverage of one million dollars ($1,000,000) payable to any one person for personal injury or death arising out of per occurrence. The general aggregate limit will apply separately to the Lease and be less than two million dollars ($2,000,000) from use of the Leased Premises or the Tenant's performance of its obligations under this Lease. The general liability policy shall name Landlord, its officers, officials, employees, and agents as additional insured with respect to liability arising out of the Tenant's use of the Leased Premises and shall not exclude any reasonably anticipated peril related to the Tenant's use of the Premises such as criminal activity, alcohol/drug use, sexual assault, or assault and battery. b. Tenant will maintain Premises, fire and extended coverage insurance in an amount equal to the replacement value of all improvements, structures, buildings, and contents located on/in the Premises. The policy shall include Landlord as an insured for its interest in the Premises. C. Insurance coverages shall not be suspended, voided cancelled, or reduced in limits until after forty -five (45) days prior notice is provided to the Landlord. All insurance coverages shall be primary to any insurance carried by the Landlord. d. All insurance required to be maintained by the Tenant under this Lease shall be placed with insurers authorized to transact business in the State of Texas and with Best's rating of no less than A. e. On the effective date of this Lease, and thereafter not less than fifteen (15) days prior to the expiration dates of the existing policies furnished pursuant to this paragraph, certificates evidencing the required insurance shall be delivered by the Tenant to the Landlord. Within fifteen (15) days after the premium on each such policy shall become due and payable, evidence shall be supplied to the Landlord of such payment. The Landlord reserves the right to require complete certified copies of all required insurance policies at any time. f. Tenant will ensure that any contractor performing renovation, construction, Page 3 of 11— Lease (300 S. Woodrow Lane) or major repair work on the Leased Premise shall comply with the insurance requirements contained in Exhibit B during the full duration of said renovation, construction or repair. 9. Compliance with Laws and Regulations. Tenant will, at its own expense, comply with all laws, orders, standards, and requirements of all governmental entities with reference to the use of the Leased Premises. Tenant and Tenant's agents, employees, and invitees will fully comply with any rules and regulations governing the use of the Leased Premises as required by Landlord. Landlord may make reasonable changes in rules and regulations from time to time as is advisable for the safety, care, and cleanliness of the Leased Premises, provided that they are in writing and do not conflict with this Lease. 10. Suns. Tenant will not post or print any signs at, on, or about the Leased Premises or paint the exterior walls of the building unless it has Landlord's written consent. Landlord has the right to remove any sign or signs in order to maintain the Leased Premises or to make any repairs or alterations. 11. Right of Entry. Landlord has the right to enter the Leased Premises during normal business hours (a) to inspect the general condition and state of repair of the Leased Premises, (b) to make repairs required or permitted under this Lease, or (c) for any other reasonable purpose. 12. Interruption of Utilities. Landlord or Landlord's agent may interrupt or cause the interruption of utility service paid by Tenant directly to any utility company if the interruption results from bona fide repairs, construction, or an emergency. Additionally, Landlord or Landlord's agent may also interrupt or cause the interruption of utility service paid by Tenant directly to a utility owned or operated by the City of Denton for non - payment. 13. Assignment and Subleasing. Tenant cannot assign this Lease or sublease the Leased Premises or any interest in it without first obtaining the written consent of the City Manager, or his designee. An assignment or sublease without the written consent of the City Manager, or his designee, is void and can, at Landlord's option, terminate this Lease. 14. Tenant's Default and Removal of Abandoned Property. If Tenant abandons the Leased Premises or otherwise defaults in the performance of any obligations or covenants in this Lease, Landlord may enforce the performance of this Lease in any manner provided by this Lease and Texas law. This Lease may be terminated at Landlord's discretion if abandonment or default by Tenant continues for a period of thirty (30) consecutive days after Landlord notifies Tenant in writing of its abandonment or default and of Landlord's intention to declare this Lease terminated. Notice must be sent by Landlord to Tenant's last known address by certified mail. If Tenant has not completely removed or cured default within the thirty (30) day cure period, this Lease may be terminated in accordance with paragraph 35. Thereafter, Landlord or its agents will have the right, without further notice or demand, to enter the Leased Premises and remove all goods, equipment or personal property without being deemed guilty of trespass and without waiving any other remedies for breach of contract or recovery of unpaid rent. On abandonment or default by Tenant, the remaining unpaid portion of the rent from Section 4 becomes due and payable. Tenant is presumed to have abandoned the Leased Premises if goods, equipment, or other personal property, in an amount substantial enough to indicate a probable intent to abandon the Leased Premises, is being or has been removed from the Leased Premises and the removal is not within the normal Page 4 of 11— Lease (300 S. Woodrow Lane) course of Tenant's business. Landlord will have the right to store any of Tenant's personal property that remains on the abandoned Leased Premises, and in addition to Landlord's other rights, Landlord may dispose of the stored personal property if Tenant does not claim the goods, equipment or personal property within sixty (60) days after the date the goods, equipment or personal property is stored, if Landlord delivers by certified mail to Tenant at Tenant's last known address a notice stating that Landlord may dispose of Tenant's goods, equipment or personal property if Tenant does not claim the goods, equipment or personal property within sixty (60) days after the date the goods, equipment or personal property is stored. 15. Landlord's Default. If Landlord breaches any covenant, warranty, term, or obligation of this Lease, Landlord's failure to cure the breach or commence a good -faith effort to cure it within ten (10) days after Landlord's receipt of written notice from Tenant regarding Landlord's default will be considered a default and will entitle Tenant to either terminate this Lease or cure the default and make the necessary repairs, with any expense incurred by Tenant to be reimbursed by Landlord after reasonable notice of the repairs and expenses incurred. If any utility services furnished by Landlord are interrupted and continue to be interrupted despite the good - faith efforts of Landlord to remedy the interruption, Landlord will not be liable in any respect for damages to the person or Leased Premises of Tenant or Tenant's employees, agents, or guests, and the interruption will not be construed as grounds for constructive eviction or abatement of rent. Landlord will use reasonable diligence to promptly repair and remedy an interruption. 16. Tenant's Default. The following events are deemed events of default by the Tenant under this Lease: a. If the Tenant shall be in default of the performance of any covenant, warranty, term, or obligation of this Lease, and if such default is not cured within thirty (30) days after written notice thereof is given by the Landlord; or if such default should be of such a nature that it cannot be cured completely within such thirty (30) day period, if the Tenant shall not have promptly commenced within such thirty (30) day period or shall not thereafter proceed with reasonable diligence and in good faith to remedy such default. b. If the Tenant shall be adjudged a bankruptcy, make a general assignment for the benefit of creditors, or take the benefit of any insolvency act, or if a receiver or trustee in bankruptcy shall be appointed for the Tenant and such appointment is not vacated within thirty (30) days. C. If this Lease shall be assigned or Leased Premises sublet other than in accordance with the terms of this Lease and such default is not cured with thirty (30) days after written notice to the Tenant. d. If any of the above events of default are not cured within the period stated above, then the Landlord may immediately or at any time thereafter and without further notice or demand enter onto and upon the Leased Premises or any part thereof and take absolute possession of the same, fully and absolutely without such reentry working a forfeiture of the covenant or covenants to be performed by the Tenant for the full term of this Lease. Page 5 of 11— Lease (300 S. Woodrow Lane) e. The statement of specific remedies as set forth above is not exclusive, and the Landlord shall, at its option, have available any and all other remedies for default available to it under the laws of the State of Texas. 17. Tenant's Exclusion. Landlord may not intentionally prevent Tenant from entering the Leased Premises, except by judicial process, unless the exclusion results from: (a) bona fide repairs, construction, or an emergency: (b) removing the contents of the Leased Premises abandoned by Tenant: or (c) changing door locks of the Leased Premises if Tenant is delinquent in paying any part of the rent. If Landlord or Landlord's agent changes door locks of the Leased Premises because Tenant is delinquent in paying rent, Landlord or Landlord's agent must place a written notice on Tenant's front door stating the name and address or telephone number of the individual or company from which the new key may be obtained. The new key is required to be provided only during Landlord's regular business hours and only if Tenant pays the delinquent rent. 18. Lien. Landlord is granted an express contractual lien, in addition to any lien provided by law, and a security interest in all property of Tenant found on the Leased Premises to secure the compliance by Tenant with all terms of this Lease. 19. Destruction. If the Leased Premises are partially damaged or destroyed or rendered partially unfit for occupancy by fire or other casualty, Tenant must give immediate notice to Landlord of the damage or destruction. Landlord may repair the damage and restore the Leased Premises to substantially the same condition as immediately before the occurrence of the casualty. The repairs will be made at Landlord's expense. If the Leased Premises are totally destroyed or deemed by Landlord to be rendered unfit for occupancy by fire or other casualty, or if Landlord decides not to repair or rebuild, this Lease will terminate and the rent will be paid up until the time of the casualty. 20. Indemnification /Hold Harmless. The Tenant shall indemnify, defend, and hold harmless the Landlord, its employees, officials and agents against any and all claims, demands and lawsuits, and shall pay all costs and attorney's fees incurred in the defense thereof, for any injury to persons or Premises damage, including claims of the Tenant's employees, agents and invitees allegedly resulting from any act, incident, or accident arising from or relating to the Tenant's use of the Leased Premises. Landlord and its employees and agents are not liable to Tenant or Tenant's employees, patrons, visitors, invitees, or any other persons for an injury to any of those persons or for any damage to personal Premises caused by an act, omission, or neglect of Tenant or Tenant's agents or of any other tenant of the Premises of which the Leased Premises are a part. The Tenant shall not, by this provision, be required to indemnify, defend or hold harmless the Landlord for any loss or damage, or cost incurred in defense, which arises out of the sole negligence of the Landlord. The Tenant's obligation to indemnify the Landlord shall not be relieved by its obligation to provide insurance coverage set forth herein. 21. Surrender /Holding Over. Tenant shall surrender the Leased Premises at the expiration of the Lease Term, or extension, in good order, condition and repair, reasonable wear and tear excepted. Tenant's failure to surrender the Leased Premises when the Lease expires constitutes a holding over, which will be construed as a tenancy from month to month at a rental Page 6 of 11— Lease (300 S. Woodrow Lane) rate of Two Dollars and No /Cents ($2.00) per month 22. Condemnation. If any substantial part of the Leased Premises is taken for public or quasi - public use under governmental law, ordinance, or regulation or by right of eminent domain, or if the Leased Premises are sold to a condemning authority under threat of condemnation, this Lease will terminate and the rent will be abated during the unexpired portion of the Lease, effective from the date of the physical taking of the Leased Premises. 23. Non - waiver of Breach. The failure of either party to insist upon strict performance of any of the covenants and agreements of this Lease or to exercise any option herein contained in any one or more instances shall not be construed to be a waiver or relinquishment of any such, or any other, covenant or agreements; but the same shall be and remain in full force and effect. 24. Time of Essence. Time is of the essence in this Lease. 25. Binding Agreement. Subject to the provisions of this Lease pertaining to assignment of Tenant's interests, this Lease and all of its terms, provisions, and covenants will apply to, be binding on, and inure to the benefit of the parties and their respective successors and assigns. 26. Other Documents. Each party undertakes to execute such additional or other documents as may be required to fully implement the intent of this Lease. 27. Cumulative Rights and Remedies. The rights and remedies addressed by this Lease are cumulative and the use of any one right or remedy by either party does not preclude or waive its right to use any or all other remedies. All rights and remedies under this Lease are given in addition to any other rights the parties may have by law, statute, ordinance, or other source. 28. Governing Law. This Lease will be governed by and interpreted under the laws of the State of Texas, regardless of any conflict -of -law rules. Venue for any legal proceeding shall be Denton County, Texas. 29. Severability. In case any of the provisions contained in this Lease is for any reason held to be invalid, illegal, or unenforceable in any respect, the invalidity, illegality, or unenforceability will not affect any other Lease provision and this Lease will be construed as if the invalid, illegal, or unenforceable provision had never been contained in it. 30. Entire Agreement. This Lease constitutes the entire agreement between the parties. All understandings, discussions, and agreements previously made between the parties, written or oral, are superseded by this Lease, and neither party is relying on any warranty, statement, or representation not contained in this Lease. 31. Amendment. No amendment, modification, or alteration of the terms of this Lease will be binding unless it is (a) in writing, (b) dated after the date of the Lease, and (c) duly executed by the parties to the Lease. 32. Attorney's Fees. Any signatory to this Lease who is the prevailing party in any Page 7 of 11— Lease (300 S. Woodrow Lane) legal proceeding against any other signatory brought under or with relation to this Lease or this transaction will be additionally entitled to recover court costs, reasonable attorney fees, and all other out -of- pocket costs of litigation, including deposition, travel, and witness costs, from the non - prevailing party. The term "prevailing party" means the party that has succeeded on a significant issue in the litigation and achieved a benefit with respect to the claims at issue, taken as a whole, whether or not damages are actually awarded to that party. 33. Construction. Nothing contained herein shall create the relationship of principal and agent, of partnership, or of joint venture between the parties hereto. 34. Notices. Notices to either Landlord or Tenant will be sent by prepaid certified mail, return receipt requested, or by courier delivery to the address of each party as set out below its respective signature, or by other delivery to the Leased Premises. 35. Termination. a. Termination by Landlord in Event of Tenant Default. If Tenant fails to comply with this Lease within thirty (30) days after Landlord notifies Tenant in writing of Tenant's failure to comply, Tenant will be in default and Landlord may terminate this Lease by giving by giving a ninety (90) day advance written notice to Tenant. b. Termination by Landlord for Any Reason. Landlord may terminate this Lease for any reason by giving a one hundred and eighty (180) day advance written notice to Tenant and reimbursement to Tenant for the cost of approved tenant improvements. Reimbursement for Approved Tenant Improvements will be in accordance with paragraph 36. C. Termination by Tenant. In the event the Leased Premises is structurally unsound, destroyed, or damaged by fire, earthquake, act of God or other casualty to such an extent that Tenant cannot use the Leased Premises in a safe manner for its purposes, it shall be optional with Tenant to terminate this Lease by giving thirty (30) days advance written notice to the Landlord. Landlord is under no obligation to repair or replace Leased Premises damaged or destroyed by any casualty or occurrence. 36. Reimbursement to Tenant for Approved Tenant Improvements. If the Lease is terminated in accordance with paragraph 35.b. then Tenant is to be reimbursed for Approved Tenant Improvements as follows: a. "Approved Tenant Improvements" means any alterations, additions, or improvements made to the Leased Premises in accordance with paragraph 6 that are not removable fixtures or equipment. b. Approved Tenant Improvements completed within two years of the date the Lease was executed are to be reimbursed in accordance with the following schedule: i. Within two years or less of the date the Lease was executed: 100 percent of actual cost; Page 8 of 11— Lease (300 S. Woodrow Lane) ii. Three years from date the Lease was executed: 80 percent of actual cost. iii. Four years from date the Lease was executed: 70 percent of actual cost. iv. Five years from date the Lease was executed: 60 percent of actual cost. V. Six years from date the Lease was executed: 50 percent of actual cost. vi. Seven years from date the Lease was executed: 40 percent of actual cost. vii. Eight years from date the Lease was executed: 30 percent of actual cost. viii. Nine years from date the Lease was executed: 20 percent of actual cost. ix. Ten years from date the Lease was executed: 10 percent of actual cost. X. Actual cost must be supported by documentation dated and received at, or near, the time Actual Improvement was completed. C. Approved Tenant Improvements completed later than two years of the date the Lease was executed and any removable fixtures or equipment will not be reimbursed. 37. Extension. If the Landlord and Tenant agree, this Lease may be extended for one (1) renewal period of One Hundred and Twenty (120) months ( "Renewal Period ") by Tenant giving written notice to Landlord ( "Renewal Notice ") no earlier than twelve (12) or later than six (6) months before the Lease Term expires, provided that at the time of the notice and at the commencement of the Renewal Period, (a) Tenant remains in occupancy of the Leased Premises and (b) no uncured event of default exists under the Lease. The Rent payable during the Renewal Period will be Two Dollars and No /Cents ($2.00) per month. Except as provided in this Extension Option, all terms and conditions of the Lease will continue to apply during each Renewal Period. In addition, the rights granted under this Extension Option will terminate on the assignment of the Lease or the subleasing of all or any part of the Leased Premises. Landlord and Tenant have executed this Lease to be effective as of the date it is executed by Landlord. Page 9 of 11— Lease (300 S. Woodrow Lane) LANDLORD: CITY OF DENTON, a Texas home -rule municipal corporation George C. Campbell, City Manager Signed on Address: City of Denton 215 E. McKinney St. Denton, Texas 76201 APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY Page 10 of 11— Lease (300 S. Woodrow Lane) 12015. TENANT: MONSIGNOR KING OUTREACH CENTER, a Texas non - profit corporation Roy Metzler, President Signed on Address: 1205 Palo Verde Denton, Texas 76210 Page 11 of 11— Lease (300 S. Woodrow Lane) 12015. Exhibit A DESCRIPTION OF LEASED PREMISES The two buildings (Building 1 — approx. 1,600 sf; Building 2 — approx.. 5,779 sf) and parking facilities located at 300 S. Woodrow Lane, Denton, Denton County, Texas as shown as Lot 2 on the aerial photograph attached to this Exhibit A and identified as Attachment 1 (Lot 2 is outlined in Red). The buildings and parking facilities are more or less surrounded by a wire mesh fence topped by barbed wire. The Leased Premises includes only the area shown as Lot 2 on Attachment 1. MKOC Lease — Description of Leased Premises 300 S. Woodrow Lane Park Tract Animal Control Tract Flood Plain Zones DENTON O2RCTAN NUAL CHANCE FLOOD HAZARD Date: 10/19/2015 AREA OF MINIMAL FLOOD HAZARD 0 70 140 DENTON FLOOD— ME-, Exhibit B INSURANCE REQUIREMENTS AND WORKERS' COMPENSENTATION REQUIREMENTS STANDARD PROVISIONS: Without limiting any of the other obligations or liabilities of the Tenant, the Tenant shall provide and maintain the minimum insurance coverage as indicated hereinafter. As soon as practicable after execution of the Lease, Tenant shall file with the City of Denton satisfactory certificates of insurance including any applicable addendum or endorsements. All insurance policies proposed or obtained in satisfaction of these requirements shall comply with the following general specifications, and shall be maintained in compliance with these general specifications throughout the duration of the Lease, or longer, if so noted. • Each policy shall be issued by a company authorized to do business in the State of Texas with an A.M. Best Company rating of at least A or better. • Any deductibles or self- insured retentions shall be declared in the proposal. If requested by the City, the insurer shall reduce or eliminate such deductibles or self- insured retentions with respect to the City, its officials, agents, employees and volunteers; or, the Tenant shall procure a bond guaranteeing payment of losses and related investigations, claim administration and defense expenses. • Liability policies shall be endorsed to provide the following: ■ Name as Additional Insured the City of Denton, its Officials, Agents, Employees and volunteers. ■ That such insurance is primary to any other insurance available to the Additional Insured with respect to claims covered under the policy and that this insurance applies separately to each insured against whom claim is made or suit is brought. The inclusion of more than one insured shall not operate to increase the insurer's limit of liability. Cancellation: City requires 30 day written notice should any of the policies described on the certificate be cancelled or materially changed before the expiration date. • Should any of the required insurance be provided under a claims made form, Tenant shall maintain such coverage continuously throughout the term of this contract and, without lapse, for a period of three years beyond the contract expiration, such that occurrences arising during the contract term which give rise to claims made after expiration of the contract shall be covered. Should any of the required insurance be provided under a form of coverage that includes a general annual aggregate limit providing for claims investigation or legal defense costs to be included in the general annual aggregate limit, the Tenant shall either double the Exhibit B occurrence limits or obtain Owners and Tenants Protective Liability Insurance. • Should any required insurance lapse during the contract term, requests for payments originating after such lapse shall not be processed until the City receives satisfactory evidence of reinstated coverage as required by this contract, effective as of the lapse date. If insurance is not reinstated, City may, at its sole option, terminate this agreement effective on the date of the lapse. SPECIFIC ADDITIONAL INSURANCE REQUIREMENTS: All insurance policies proposed or obtained in satisfaction of this Lease shall additionally comply with the following marked specifications, and shall be maintained in compliance with these additional specifications throughout the duration of the Lease, or longer, if so noted. A. General Liability Insurance: General Liability insurance with combined single limits of not less than $1,000,000.00 shall be provided and maintained by the Tenant. The policy shall be written on an occurrence basis either in a single policy or in a combination of underlying and umbrella or excess policies. If the Commercial General Liability form (ISO Form CG 0001 current edition) is used: • Coverage A shall include premises, operations, products, and completed operations, independent Tenants, contractual liability covering this contract and broad form property damage coverage. • Coverage B shall include personal injury. • Coverage C, medical payments, is not required. If the Comprehensive General Liability form (ISO Form GL 0002 Current Edition and ISO Form GL 0404) is used, it shall include at least: • Bodily injury and Property Damage Liability for premises, operations, products and completed operations, independent contractors and property damage resulting from explosion, collapse or underground (XCU) exposures. • Broad form contractual liability (preferably by endorsement) covering this contract, personal injury liability and broad form property damage liability. B. Automobile Liability Insurance: Tenant shall provide Commercial Automobile Liability insurance with Combined Single Limits (CSL) of not less than $500,000 either in a single policy or in a combination of basic and umbrella or excess policies. The policy will include bodily injury and property damage liability arising out of the operation, maintenance and use of all automobiles and mobile equipment used in conjunction with this contract. Exhibit B Satisfaction of the above requirement shall be in the form of a policy endorsement for: • any auto, or • all owned hired and non -owned autos. [The below provisions may come into play depending upon what services are being provided. Workers' Compensation Insurance Tenant shall purchase and maintain Workers' Compensation insurance which, in addition to meeting the minimum statutory requirements for issuance of such insurance, has Employer's Liability limits of at least $100,000 for each accident, $100,000 per each employee, and a $500,000 policy limit for occupational disease. The City need not be named as an "Additional Insured" but the insurer shall agree to waive all rights of subrogation against the City, its officials, agents, employees and volunteers for any work performed for the City by the Named Insured. Professional Liability Insurance Professional liability insurance with limits not less than $1,000,000.00 per claim with respect to negligent acts, errors or omissions in connection with professional services is required under this Agreement.] Exhibit B ATTACHMENT 1 [X] Workers' Compensation Coverage for Building or Construction Projects for Governmental Entities A. Definitions: Certificate of coverage ( "certificate ") -A copy of a certificate of insurance, a certificate of authority to self - insure issued by the commission, or a coverage agreement (TWCC- 81, TWCC -82, TWCC -83, or TWCC -84), showing statutory workers' compensation insurance coverage for the person's or entity's employees providing services on a project, for the duration of the project. Duration of the project - includes the time from the beginning of the work on the project until the Tenant's /person's work on the project has been completed and accepted by the governmental entity. Persons providing services on the project ( "subTenant" in §406.096) - includes all persons or entities performing all or part of the services the Tenant has undertaken to perform on the project, regardless of whether that person contracted directly with the Tenant and regardless of whether that person has employees. This includes, without limitation, independent Tenants, subTenants, leasing companies, motor carriers, owner - operators, employees of any such entity, or employees of any entity which furnishes persons to provide services on the project. "Services" include, without limitation, providing, hauling, or delivering equipment or materials, or providing labor, transportation, or other service related to a project. "Services" does not include activities unrelated to the project, such as food /beverage vendors, office supply deliveries, and delivery of portable toilets. B. The Tenant shall provide coverage, based on proper reporting of classification codes and payroll amounts and filing of any overage agreements, which meets the statutory requirements of Texas Labor Code, Section 401.011(44) for all employees of the Tenant providing services on the project, for the duration of the project. C. The Tenant must provide a certificate of coverage to the governmental entity prior to being awarded the contract. D. If the coverage period shown on the Tenant's current certificate of coverage ends during the duration of the project, the Tenant must, prior to the end of the coverage period, file a new certificate of coverage with the governmental entity showing that coverage has been extended. E. The Tenant shall obtain from each person providing services on a project, and provide to the governmental entity: 1. a certificate of coverage, prior to that person beginning work on the project, so the governmental entity will have on file certificates of coverage showing Exhibit B coverage for all persons providing services on the project; and 2. no later than seven days after receipt by the Tenant, a new certificate of coverage showing extension of coverage, if the coverage period shown on the current certificate of coverage ends during the duration of the project. F. The Tenant shall retain all required certificates of coverage for the duration of the project and for one year thereafter. G. The Tenant shall notify the governmental entity in writing by certified mail or personal delivery, within 10 days after the Tenant knew or should have known, of any change that materially affects the provision of coverage of any person providing services on the project. H. The Tenant shall post on each project site a notice, in the text, form and manner prescribed by the Texas Workers' Compensation Commission, informing all persons providing services on the project that they are required to be covered, and stating how a person may verify coverage and report lack of coverage. L The Tenant shall contractually require each person with whom it contracts to provide services on aproject, to: 1. provide coverage, based on proper reporting of classification codes and payroll amounts and filing of any coverage agreements, which meets the statutory requirements of Texas Labor Code, Section 401.011(44) for all of its employees providing services on the project, for the duration of the project; 2. provide to the Tenant, prior to that person beginning work on the project, a certificate of coverage showing that coverage is being provided for all employees of the person providing services on the project, for the duration of the project; 3. provide the Tenant, prior to the end of the coverage period, a new certificate of coverage showing extension of coverage, if the coverage period shown on the current certificate of coverage ends during the duration of the project; 4. obtain from each other person with whom it contracts, and provide to the Tenant: a. a certificate of coverage, prior to the other person beginning work on the project; and b. a new certificate of coverage showing extension of coverage, prior to the end of the coverage period, if the coverage period shown on the current certificate of coverage ends during the duration of the project; 5. retain all required certificates of coverage on file for the duration of the project and for one year thereafter; Exhibit B 6. notify the governmental entity in writing by certified mail or personal delivery, within 10 days after the person knew or should have known, of any change that materially affects the provision of coverage of any person providing services on the project; and 7. Contractually require each person with whom it contracts, to perform as required by paragraphs (1) - (7), with the certificates of coverage to be provided to the person for whom they are providing services. By signing this contract or providing or causing to be provided a certificate of coverage, the Tenant is representing to the governmental entity that all employees of the Tenant who will provide services on the project will be covered by workers' compensation coverage for the duration of the project, that the coverage will be based on proper reporting of classification codes and payroll amounts, and that all coverage agreements will be filed with the appropriate insurance carrier or, in the case of a self - insured, with the commission's Division of Self - Insurance Regulation. Providing false or misleading information may subject the Tenant to administrative penalties, criminal penalties, civil penalties, or other civil actions. K. The Tenant's failure to comply with any of these provisions is a breach of contract by the Tenant which entitles the governmental entity to declare the contract void if the Tenant does not remedy the breach within ten days after receipt of notice of breach from the governmental entity. s: \legal \our documents \resolutions \12\naming policy guidelines for city buildings, facilities, land or any portion thereofdoc RESOLUTION NO. R2012-007 A RESOLUTION ESTABLISHING NAMING POLICY GUIDELINES FOR CITY BUILDINGS, FACILITIES, LAND OR ANY PORTION THEREOF; REPEALING RESOLUTION NO. R2007 -035; AND DECLARING AN EFFECTIVE DATE. WHEREAS, the City of Denton desires to amend the policy guidelines for naming City buildings, facilities, land, or any portion thereof, and WHEREAS, the City Council deems it in the public interest to adopt the revised policy; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY RESOLVES: SECTION 1. The revised City of Denton Naming Policy Guidelines for City Buildings, Facilities, Land or any Portion Thereof; which is attached hereto and made a part hereof for all purposes, is hereby approved and adopted. SECTION 2. All policies inconsistent herewith are hereby repealed, including without limitation, Resolution R2007-035. SECTION 3. This Resolution shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: ,M1� I Q Q fOJ AJ APPRWED M TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY CITY OF DENTON NAMING POLICY GUIDELINES FOR CITY BUILDINGS, FACILITIES, LAND, OR ANY PORTION THEREOF I. GENERAL These policy guidelines are intended to address naming opportunities when a citizen, group, or organization submits a nomination to name a City building, facility, land, or any portion thereof. The City Council may initiate the naming of any building, facility, land, or any portion thereof at its discretion and may apply the following guidelines in Council initiated naming. The Council may choose to waive any part of this guideline by three fourth's vote of the entire City Council. These policy guidelines do not address the naming of streets, fire or police stations, or naming based on advertising. II. DEFINITIONS City Buildings. City owned facilities which are open to the public and used to conduct City business. Buildings may include, but are not limited to, City Halls, civic /community centers, conference /convention centers, public libraries, and public utility buildings /structures. City Facilities. City owned structures, amenities, or features, which are open to the public and used for City business, or public attractions of any kind, including, but not limited to, athletic fields, bridges, fountains, gymnasiums, library collections and /or department's interior and exterior spaces, meeting rooms, picnic shelters, playground equipment, recreation facilities, swimming pools, tennis courts and basketball courts. City Land. Real estate owned and/or managed by the City, including park property or other open space areas. Funded Project. Any project that the City has fully funded prior to the start of construction. Non - Funded Project. Any project that the City wishes to construct, but for which it lacks designated funding. III. NAMING OF A CITY BUILDING, FACILITY, LAND, OR ANY PORTION THEREOF AFTER AN INDIVIDUAL It is intended that all the criteria in this section be satisfied when considering naming a City facility, building, land, or any portion thereof after an individual. A. Naming After an Individual 1. The individual must be deceased at least five (5) years; and 2. The individual must have been a resident of the City of Denton; and 3. The individual must be of good moral character and must not have been convicted of a felony, or Class A or B misdemeanor; and 4. The individual should have made exceptional contributions to the City of Denton, the State of Texas, or the United States of America; and the individual's achievements should represent a lasting legacy to the mission of the City building, facility, land, or any portion thereof. B. Naming After an Individual Who Performed Outstanding or Heroic Service Buildings, facilities, land, or any portion thereof may also be named in memory of individuals who died in the line of duty serving the City of Denton, the State of Texas, or the United States of America; or died performing a heroic act, such as saving the life of another person; or a deceased individual who has made a significant and lasting contribution to humanitarian causes on a world or national level. In these instances as appropriate, the City may elect to obtain or attempt to make contact for approval from living family members of the individual recommended for having a City building, facility, land, or any portion thereof named in their honor. C. Naming After a Foundation, Business, or Organization 1. If consideration is given to naming a City building, facility, land, or any portion thereof after a foundation, business, or organization, the foundation, business, or organization considered should have made exceptional local, state, national, or world contributions; and their achievements should represent a lasting legacy to the mission of the City building, facility, land, or any portion thereof. 2. In selected instances, a City building, facility, land, or any portion thereof may be named after a foundation, business, or organization that makes a unique and extraordinary contribution to the development and or usage of the City building, facility, land, or any portion thereof being named. The merits and value of each such naming shall be evaluated on a case -by -case basis. IV. NAMING A CITY BUILDING, FACILITY, LAND, OR ANY PORTION THEREOF THROUGH FUND RAISING OR BY PURCHASING NAMING RIGHTS 1. Any individual for which a City building, facility, land, or any portion thereof may be named, must be of good moral character and must not have been convicted of a felony, or Class A or B misdemeanor. Any foundation, business, or organization must be compliant with all applicable laws, rules and regulations. 2. A City building, facility, land, or any portion thereof may be named as part of a public fundraising campaign, donation, or by purchasing naming rights. The City Council may approve other non - monetary donations for naming rights. 2 V VI. 3. Naming rights for a funded project can be accepted at any point during construction. 4. A funding agreement for the naming rights of a non - funded project must be in place prior to start of construction. 5. The required donation to acquire the naming rights of a City building, facility, land, or any portion thereof shall be substantial as determined by the City Council on a case -by -case basis. 6. All funds contributed to naming a City building, facility, land, or any portion thereof will be nonrefundable. 7. In the event a donor fails to meet the total required commitment, the City Council may reconsider the naming of the City building, facility, land, or any portion thereof. 8. It should not be assumed that a financial contribution guarantees that a City building, facility, land, or any portion thereof will be named after an individual or a business, foundation, or organization. PLAQUES, MARKERS AND MEMORIALS A. Plaques, markers, and memorials that are requested to be located on a City building, facility, land, or any portion thereof, must be reviewed and approved by the City as to design and maintenance requirements. B. Total costs for purchasing plaques, markers, and memorials involved in the naming of a new City building, facility, land, or any portion thereof, as well as up to five (5) years of maintenance costs, shall be paid by the nominating individual or organization, unless City Council waives such funding. This provision has no application in those instances where the costs of plaques, markers, or memorials are included in the design and construction costs of a project. RENAMING OF A CITY BUILDING, FACILITY, LAND, OR ANY PORTION THEREOF A. In order to honor the decisions of previous City Councils and descendants of individuals after whom a City building, facility, land, or any portion thereof are named, renaming shall typically not occur. B. If it is determined that circumstances have changed such that the criteria set forth in III.A.3 or IV. l is no longer met, the City Council may elect to remove the name from the City building, facility, land, or any portion thereof. Further, a City building, facility, land, or any portion thereof named after a foundation, business, or organization, which dissolves, is convicted of criminal acts, or for other good and valid reasons, may be renamed. 3 VII. PROCEDURES FOR NAMING CITY BUILDINGS, FACILITIES, LAND, OR ANY PORTION THEREOF A. Groups or individuals may submit nominations for naming a City building, facility, land, or any portion thereof, by submitting a nomination to the City Manager on the City of Denton Name Application Form For City Buildings, Facilities, Land, or any portion thereof. B. The City Manager, upon the receipt of the City of Denton Name Application Form For City Buildings, Facilities, Land, or any portion thereof shall refer such naming request to the City Council. C. The City Council may appoint a seven- member ad hoc Naming Committee to review the naming request submitted by a citizen or organization. Such committee shall be nominated by individual Council members. In the event of a City Council initiated naming, the Council may, if it desires, appoint an ad hoc committee as outlined herein to investigate and recommend one or more names for Council consideration. D. At least two additional members of the ad hoc Naming Committee shall be selected from any impacted advisory or governing board. E. The name or names submitted will be considered by the members of the ad hoc Naming Committee. The committee shall be guided by the provisions of this policy and shall provide a recommendation to the City Council for consideration. F. The final decision for naming a City building, facility, land, or any portion thereof shall rest with the City Council. 4 CITY OF DENTON NAME APPLICATION FORM FOR CITY BUILDINGS, FACILITIES, LAND, OR ANY OTHER PORTION THEREOF Please type or print clearly in ink and return to the City Manager's Office: Date of Submittal: 2. Individual or Organization Submitting Nomination: 3. Signature of Nominator or Organization Representative: Point of Contact: Address: City, State, Zip: Telephone: _ Email: 4. Nominee (Check One): Individual ❑ Organization 5. Recommended Name of City Building, Facility, Land, or Any Portion Thereof: 9. Location of City Building, Facility, Land, or Any Portion Thereof: 10. Explanation of why this name should be considered. Please include the individual's biographical information and vitae or resume. Use additional sheets, if necessary: S:ALegal \Our Documents \Ordinances \15 \Shelter Lease Ordinance.doc ORDINANCE NO. AN ORDINANCE OF THE CITY OF DENTON AUTHORIZING THE CITY MANAGER, OR HIS DESIGNEE, TO EXECUTE ON BEHALF OF THE CITY OF DENTON A LEASE OF PROPERTY BETWEEN THE CITY OF DENTON AND MONSIGNOR KING OUTREACH CENTER, ATTACHED HERETO AND INCORPORATED HEREIN BY REFERENCE, FOR THE OPERATION OF A HOMELESS SHELTER AT 300 WOODROW LANE; AND PROVIDING FOR AN EFFECTIVE DATE. WHEREAS, the City Council of the City of Denton hereby finds that the Lease Agreement between the City and Monsignor King Outreach Center, attached hereto and made a part hereof by reference (the "Lease "), serve a municipal and public purpose and is in the public interest; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The findings set forth in the preamble of this Ordinance are incorporated by reference into the body of this Ordinance as if fully set forth herein. SECTION 2. The City Manager, or his designee, is hereby authorized to execute the Lease and to exercise all rights and duties of the City under the Lease, including authorizing and ratifying the expenditure of funds. SECTION 3. This Ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the day of , 2015. CHRIS WATTS, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY BY: V✓1 s