Lease AgreementRESOLUTION NO. R -99-01-20-4A1
WHEREAS, RSR Sports, Inc. ("RSR") has purchased the
controlling interest in the Jackson Generals Double A Texas League
baseball team and has expressed its desire to relocate the team to
the City of Round Rock ("City"), and
WHEREAS, the City has a need for a convention center complex
to hold conventions, meetings, trade shows, exhibitions, concerts,
sporting events, and similar functions, and
WHEREAS, the City has contracted to purchase a tract of land
suitable for a convention center complex, and with the financial
assistance of RSR, is in the process of designing a convention
center complex which will meet the needs of the City, and
WHEREAS, the City desires to lease to RSR, and RSR desires
to lease from the City, the convention center complex, subject to
and upon the terms and conditions set forth in the Convention
Center Complex Lease Agreement which is attached hereto as Exhibit
"A", Now Therefore
BE IT RESOLVED BY THE COUNCIL OF THE CITY OF ROUND ROCK,
TEXAS,
That the Mayor is hereby authorized and directed to executed
on behalf of the City the Convention Center Complex Lease
Agreement, a copy of which is attached hereto as "Exhibit A", said
Lease Agreement subject to minor modifications approved by the City
Manager and the City Attorney.
The City Council hereby finds and declares that written notice
of the date, hour, place and subject of the meeting at which this
Resolution was adopted was posted and that such meeting was open to
K:\WPDOCS\RSSOLUTI\R90120A1.WPD/s1s
the public as required by law at all times during which this
Resolution and the subject matter hereof were discussed, considered
and formally acted upon, all as required by the Open Meetings Act,
Chapter 551, Texas Government Code, as amended, and the Act.
RESOLVED this 20th day of Jan nary 1999.
ATTEST:
ANNE LAND, City Secretary
CHARLES CULP'P R, Mayor
City of Round Rock, Texas
2
Pv/
ASSIGNMENT OF CONVENTION CENTER
LEASE AGREEMENT AND MASTER AGREEMENT
REGARDING CONVENTION CENTER COMPLEX DEVELOPMENT
Reference is here made to (i) that certain Convention Center Complex Lease Agreement
dated January 20, 1999 (the "Lease Agreement") between the City of Round Rock, Texas ("City"),
as lessor, and Ryan Sanders Ryan, Inc., a corporation ("Assignor"), as lessee, and (ii) that certain
Master Agreement Regarding Convention Center Complex Development ("Master Agreement")
dated February 25, 1999 and executed by and between the City and Assignor.
For and in consideration of the sum of Ten Dollars ($10.00) and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged and confessed, Assignor
hereby assigns, sets over and delivers unto Round Rock Baseball, Inc., a Texas corporation
("Assignee") all of Assignor's rights, titles, and interests in and to both the Lease Agreement and
the Master Agreement.
Assignee represents that it is an entity in which Lynn N. Ryan (a/k/a Nolan Ryan), Reid Ryan
or Don Sanders, singularly or in the aggregate, have at least a 51% ownership interest.
Assignee, by its execution hereinbelow, hereby accepts such assignment and assumes all of
the obligations, covenants, and agreements of Assignor under both the Lease Agreement and the
Master Agreement.
EXECUTED effective as of the 29th day of March, 1999.
RYAN SANDERS RYAN, INC., a corporation
By:
Reid Ryan, resident
ROUND ROCK BASEBALL, INC., a corporation
By:
eid Ryan, i ident
The City executes and delivers this instrument solely to evidence its consent to the
assignment of the Lease Agreement and the Master _ eement as aforesaid.
CITY OF R �g J T D• i TEXAS
By:
95A:332961.I
017324;0001
C: \ WPDOCS\ACITY\PRO134\LEASES \ASMNT. WPD/sls
Robe L. Be , Jr., City Manager
CONVENTION CENTER COMPLEX
LEASE AGREEMENT
by and between
CITY OF ROUND ROCK, TEXAS
as Lessor
and
RSR SPORTS, INC.
as Lessee
Dated: January 20, 1999
C:\WPDOCS\ACITY\PROJ34\LSASSS\CLN_0120. WPD/s1s
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS 1
Section 1.1. Definitions
1
ARTICLE II
REPRESENTATIONS AND WARRANTIES 4
Section 2.1. Representations and Warranties by Lessor 4
Section 2.2. Representations and Warranties by Lessee 5
ARTICLE III
LEASE OF LEASED PREMISES 6
Section 3.1. Grant 6
Section 3.2. Term 6
Section 3.3. Rent 6
Section 3.4. Option to Extend; Rentals Beyond Term 6
Section 3.5. Permitted Uses 7
Section 3.6. Compliance with Laws 7
Section 3.7. Construction of Convention Center. 8
Section 3.8. Obligations of Lessee Unconditional 8
ARTICLE IV
BEGINNING CONDITION, ALTERATIONS AND IMPROVEMENTS 8
Section 4.1 Beginning Condition 8
Section 4.2. Alterations 8
Section 4.3. Compliance with Regulatory Requirements 8
Section 4.4. Ownership of Improvements 9
Section 4.5. Lessor's Right of Inspection 9
Section 4.6. Performance and Payment Bonds 9
ARTICLE V
ADDITIONAL COVENANTS OF LESSOR AND LESSEE 9
Section 5.1. Maintenance and Operation Expenses of the Leased Premises 9
Section 5.2. Taxes and Other Charges 10
Section 5.3. Liens and Encumbrances 11
Section 5.4. Maintenance and Warranty Contracts 11
Section 5.5. Surrender of Possession 11
Section 5.6. Operation 11
Section 5.7. Right of Lessee to Revenues 11
Section 5.8. Naming and Other Rights 12
Section 5.9. Advertising Content. 12
Section 5.10. Notification of Events of Default 12
Section 5.11. Right of First Refusal. 12
Section 5.12. Capital Repair Account; Capital Improvement Program Account. 12
Section 5.13. Lessee to Provide Scoreboard. 13
Section 5.14. Lessor's Right of Entry and Inspection. 13
ii
Section 5.15. Lessor's Use of Leased Premises. 14
Section 5.16. Sales Taxes; Location of Ticket Office. 14
Section 5.17. Obligation to Provide Professional Baseball Team. 14
Section 5.18. Letter of Credit for Debt Payments Shortfall 14
Section 5.19. Concession Improvements; Access. 14
ARTICLE VI
INSURANCE AND CONDEMNATION 14
Section 6.1. Lessee's Insurance 14
Section 6.2. Workers' Compensation Insurance. 14
Section 6.3. Employers' Liability Insurance. 15
Section 6.4. Commercial General Liability: Bodily Injury/Property Damage. 15
Section 6.5. Comprehensive Automobile Liability. 15
Section 6.6. Garagekeeper's Liability. 15
Section 6.7. Umbrella Excess Liability Insurance 15
Section 6.8. Lessor's Property 15
Section 6.9. Evidence of Insurance 16
Section 6.10. Insurance Requirements for Lessee's Contractors and Subcontractors 15
Section 6.11. Release and Waiver 16
Section 6.12. Insurers and Policies 16
ARTICLE VII
INDEMNIFICATION 17
Section 7.1. Indemnification 17
Section 7.2. Indemnification Procedures. 18
Section 7.3. Survival Right to Enforce 18
ARTICLE VIII
ASSIGNMENTS; LEASEHOLD MORTGAGES; LEASEBACK 19
Section 8.1. Assignment and Subleasing 19
Section 8.2. Notice of Intent 19
Section 8.3. Conditions Upon Lessor's Consent to Assignment 19
Section 8.4. Subleases and Concession Arrangements 20
Section 8.5. Leasehold Mortgages 20
ARTICLE IX
DEFAULT
Section 9.1.
Section 9.2.
Section 9.3.
Section 9.4.
Section 9.5.
Section 9.6.
Section 9.7.
20
Events of Default 20
Remedies of the Lessor on Default 21
The Lessee To Remain Liable for Payments; Reletting 21
Remedy on Lessor's Default 21
No Remedy Exclusive 21
No Additional Waiver Implied By One Waiver; Consents to Waiver 22
Delay not a Waiver 22
ARTICLE X
DAMAGE AND CONDEMNATION 22
Section 10.1. Damage and Destruction 22
Section 10.2. Condemnation. 23
iii
ARTICLE XI
MISCELLANEOUS
Section
Section
Section
Section
Section
Section
Section
Section
Section
Section
Section
Section
Section
Section
Section
Section
Section
Section
EXHIBIT A
24
11.1 Amendments, Changes and Modification 24
11.2 Applicable Law 24
11.3 Severability 24
11.4 Notices and Demands 24
11.5 References 25
11.6 Successors and Assigns 25
11.7 Multiple Counterparts 25
11.8 Recordation 25
11.9 Attorneys' Fees 25
11.10 Time is of the Essence. 25
11.11 Landlord / Tenant Relationship. 26
11.12 Lessee's Remedial Work. 26
11.13 Lessor's Remedial Work. 26
11.14 Abatement of Rent 26
11.15 Settlement By Mutual Agreement 26
11.16 Covenants Running with the Estates in Land 27
11.17 Non -Appropriation 27
11.18 Conflicts 27
DESCRIPTION OF THE LAND
iv
CONVENTION CENTER COMPLEX LEASE AGREEMENT
This Convention Center Complex Lease Agreement ("Lease") is made and entered into as of January 20, 1999,
by and between the City of Round Rock ("Lessor"), a Texas home rule municipal corporation, and RSR Sports,
Inc. ("Lessee"), a corporation organized and existing under the laws of the State of Texas;
WITNESSETH:
WHEREAS, Lessee has purchased the controlling interest in the Jackson Generals Double A Texas League
baseball team and has expressed its desire to relocate the team to Round Rock; and
WHEREAS, Lessor has a need for a convention center complex to hold conventions, meetings, trade shows,
exhibitions, concerts, sporting events, and similar functions; and
WHEREAS, Lessor desires to lease to Lessee, and Lessee desires to lease from Lessor, the Leased Premises (as
herein defined), to be used as a convention center complex, subject to and upon the terms and conditions set forth
herein;
NOW THEREFORE, in consideration of the rents herein required to be made by Lessee, and the covenants and
agreements hereinafter contained to be kept and performed by Lessee, Lessor does by these presents demise,
lease and let unto Lessee, for the term and upon the conditions hereinafter stated, the Leased Premises; and
SUBJECT to the following terms and conditions:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. In addition to terms defined elsewhere in this Lease, the following terms, for the
purposes of this Lease, shall have the meanings set forth below:
(a) "Act of Bankruptcy" means the commencement of a bankruptcy or similar proceeding by or
against Lessee or Lessor, including, but not limited to, the following: the making of a general assignment
for the benefit of creditors, the commencing of a voluntary or involuntary case under the Federal
Bankruptcy Code or the filing of a petition thereunder, petitioning or applying to any tribunal for the
appointment of, or the appointment of, a receiver, or any trustee for a substantial part of the assets of
such person, commencing any proceeding under any bankruptcy, reorganization, dissolution or
liquidation law or statute of any jurisdiction, whether now or hereafter in effect.
(b) "Agreements" means this Lease and the Master Agreement.
(c) "Authorized Representatives" means such officers or employees of Lessee and Lessor,
respectively, authorized by such party to act on its behalf under this Lease as certified to the other in
writing.
(d) "Business Day" means any day which is not a Sunday, a Saturday, a legal holiday or a day on
which national banking institutions in the City of Round Rock, Texas, are authorized by law or executive
order to close.
(e) "City" means the City of Round Rock, Texas, a home -rule city organized and existing under the
laws of the State.
(f) "Commencement Date" means the thirtieth (30th) day following the Substantial Completion Date
(as defined in the Master Agreement) or the date on which Lessee opens the Leased Premises to the
public, whichever first occurs.
(g) "Concession Improvements" means the interior improvements and build out for concession
operations.
(h) "Convention Center" means the convention center complex, meeting space and the baseball
stadium to be constructed on the Land. It is intended that the Convention Center will be used and
managed as a "convention center complex" as defined in Chapter 351 of the Texas Tax Code.
(i) "County" means the County of Williamson, Texas.
(j) "Force Majeure" means Acts of God, strikes, lockouts or other industrial disturbances, acts of the
public enemy, orders of any kind of the government of the United States of America, or of any state
thereof, or any civil or military authority, insurrections, riots, epidemics, landslides, lightning,
earthquakes, fires, hurricanes, tornadoes, storms, floods, washouts, droughts, arrests, restraining of
government and people, civil disturbances, explosions, nuclear accidents, wars, part or entire failure of
utilities, shortages of labor, material, supplies or transportation, or any other cause not reasonably within
the control of the party claiming inability to perform due to such cause. "Force majeure" shall not,
however, include economic hardship.
(k) "Governmental Authority" means any federal, state or local government, agency, court,
commission or other body with jurisdiction of the matter in question.
(1) "Hazardous Materials" means any substance or material, including asbestos, now or hereafter
defined or listed by any Governmental Authority as a regulated or hazardous substance, material, or
waste and shall include, without limitation, petroleum products.
(m) "Land" means the land described in Exhibit "A" hereto.
(n) "Leased Premises" means (i) the Land; (ii) the Convention Center; and (iii) any other buildings,
structures, additions, improvements, fixtures and facilities directly related to the Convention Center, and
all appurtenances to the same, which are in the future constructed on the Land, pursuant to the terms and
conditions of Section 4.2.
(o) "Lessee" means RSR Sports, Inc., a corporation duly organized and validly existing under the
laws of, and authorized to do business in the State, or any successor thereto or assignee thereof permitted
by this Lease.
(p)
"Lessor" means the City of Round Rock, a Texas home rule municipality.
(q) "Master Agreement" means that certain Master Agreement Regarding Convention Center
Complex Development to be entered into by and between Lessor and Lessee.
(r) Person" means any association, individual, corporation, governmental entity, partnership, joint
venture, business association, estate or any other organization or entity.
(s) "Rentals" shall have the meaning ascribed thereto in Section 3.3.
2
(t) "Sanctioning Association" means the Texas League, and the National Association of Professional
Baseball Leagues, Inc., their respective successors, if any, and any replacement or additional baseball
association that Lessee certifies to Lessor is a nationally recognized professional baseball association
that sanctions professional baseball.
(u) "State" means the State of Texas.
(v) "Subsidiary" means, as to any Person, any corporation, association or other business entity in
which such Person or one or more of its Subsidiaries or such Person and one or more of its Subsidiaries
owns sufficient equity or voting interests to enable it or them (as a group) ordinarily, in the absence of
contingencies, to elect a majority of the directors (or Persons performing similar functions) of such
entity, and any partnership or joint venture if more than a 50% interest in the profits or capital thereof is
owned by such Person or one or more of its Subsidiaries or such Person and one or more of its
Subsidiaries.
(w) "Targeted Tax" means any admission tax, parking tax, facility use tax and any other tax not in
effect as of the date hereof that either by its terms or effect of its application is not of general application
but is applicable to Lessee, the revenues from Lessee's conduct of its business, the activities on the
Leased Premises, or the Lessee's personnel.
(x) "Term" shall have the meaning ascribed thereto in Section 3.2.
(y) "Untenantable Condition" shall mean the existence of any one of the following conditions but
only to the extent the same is not the result of the failure of Lessee to perform it obligations as required
under the Lease:
(i) The Leased Premises are not in compliance with rules and regulations of the applicable
Sanctioning Association for any reason, the result of such non-compliance is that the Sanctioning
Association, or its rules, prohibit Lessee from conducting sanctioned games or authorizes the
Sanctioning Association to assess fines or penalties, and the Lessor fails to cause the same to be
placed into compliance within a reasonable time following Lessor's receipt of written notice of
such non-compliance (Lessor hereby agreeing to perform such work as necessary to keep the
Leased Premises in compliance);
(ii) The use or occupancy of the Leased Premises for baseball games is not permitted under
applicable governmental rule or is restricted in any material respect under applicable
governmental rule, including, but not limited to, denial of access; or
(iii) The use or occupancy of thirty percent (30%) or more of any of the public seating areas,
other public areas, or parking areas, within the Leased Premises are materially restricted or are
unusable for a period of ninety (90) consecutive days or ninety (90) days out of any consecutive
one hundred eighty (180) day period; or
(iv) The use or occupancy of fifteen percent (15%) or more of the private suites or
concession areas within the Leased Premises are materially restricted or are unusable for a period
of sixty (60) consecutive days or ninety (90) days out of any consecutive one hundred eighty
(180) day period.
3
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1. Representations and Warranties by Lessor. Lessor makes the following representations and
warranties as the basis for the undertakings on its part herein contained:
(a) Lessor is a home rule municipal corporation, existing and in good standing under the laws of the
State, and has the power to enter into the transactions contemplated by each of the Agreements to which
it is a party and to carry out its obligations thereunder. By written resolution, the City has duly approved
the execution and delivery by Lessor of each of the Agreements to which Lessor is a party.
(b) Lessor has taken all action and has complied with all provisions of law with respect to the
execution, delivery and performance of each of the Agreements to which it is a party and the due
authorization of the consummation of the transactions contemplated thereby, and each of the Agreements
to which it is a party has been duly executed and delivered by, and constitutes the valid and legally
binding obligation of, Lessor, enforceable against Lessor in accordance with their respective terms.
(c) Neither the execution and delivery of any of the Agreements to which it is a party, the
consummation of the transactions contemplated thereby, nor the fulfillment of or compliance with the
terms and conditions of the Agreements, violate any law or regulation, or any judicial order, judgment,
decree, or injunction, conflict with or results in a breach of any of the terms, conditions or provisions of
any restriction, ordinance or any agreement or instrument to which Lessor is now a party or by which it is
bound, or constitute a default under any of the foregoing, or result in the creation or imposition of any
lien, charge or encumbrance of any nature whatsoever upon any of the property or assets of Lessor under
the term of any instrument or agreement.
(d) There is no litigation now pending or, to Lessor's knowledge, threatened challenging the powers
of Lessor or in any way affecting any of the Agreements to which it is a party.
(e) The execution and delivery of any of the Agreements, the consummation of any of the
transactions contemplated thereby or compliance with the terms and provisions thereof do not and will
not (i) violate any law or regulation or any order or decree of any court or governmental instrumentality
applicable to Lessor, which violation would materially and adversely affect the ability of Lessor to
perform its obligations under any of the Agreements; (ii) conflict with or would result in the breach of, or
constitute a default under, any of the Agreements, or any other contract, lease, indenture, loan agreement,
mortgage, deed of trust or other agreement or instrument to which Lessor is a party or by which Lessor or
its property may be bound, which conflict, breach or default would materially and adversely affect the
ability of Lessor to perform its obligations under any of the Agreements; or (iii) violate the charter,
articles of incorporation or bylaws of Lessor. No consent, approval authorization or order of any
governmental or regulatory authority, agency, commission or board of arbitration was or will be required
in connection with the execution and delivery by Lessor of any of the Agreements or the consummation
of the transactions contemplated thereby or compliance with the terms and provisions thereof, except
such as have been obtained and are in full force and effect.
(f) To the best of Lessor's knowledge, no event has occurred and no condition currently exists,
which constitutes or may, with the passage of time or the giving of notice, or both, constitute an Event of
Default with respect to or on the part of Lessor under any of the Agreements or that could materially
adversely affect the ability of Lessor to perform its obligations thereunder.
4
Section 2.2. Representations and Warranties by Lessee. Lessee makes the following representations and
warranties as the basis for the undertakings on its part herein contained:
(a) Lessee is a corporation duly organized under the laws of the State and duly qualified to do
business in the State, is in good standing in the State, has power to execute and enter into each of the
Agreements to which it is a party and by proper corporate action has been duly authorized to execute and
deliver this Lease.
(b) Each of the Agreements to which it is a party have been duly executed and delivered by duly
authorized officers of the Lessee, and constitute valid and binding obligations of Lessee, enforceable
against Lessee in accordance with their respective terms.
(c) No approvals or consents, other than those that have been or will in normal course be obtained,
are necessary in order for Lessee to execute and deliver any of the Agreements to which it is a party.
(d) There is no litigation now pending or, to Lessee's knowledge, threatened, challenging the
corporate existence of the Lessee and there is no pending, or to Lessee's knowledge, threatened action or
proceeding before any court or administrative agency that individually (or in the aggregate in the case of
any group of related lawsuits) is expected to have a material adverse effect on the financial condition of
the Lessee or the ability of the Lessee to perform its obligations under any of the Agreements to which it
is a party.
(e) The execution and delivery of any of the Agreements, the consummation of any of the
transactions contemplated thereby or compliance with the terms and provisions thereof do not and will
not (i) violate any law or regulation or any order or decree of any court or governmental instrumentality
applicable to Lessee or any of its Subsidiaries, which violation would materially and adversely affect the
ability of Lessee to perform its obligations under any of the Agreements; (ii) conflict with or would result
in the breach of, or constitute a default under, any of the Agreements, or any other contract, lease,
indenture, loan agreement, mortgage, deed of trust or other agreement or instrument to which Lessee is a
party or by which Lessee or its property may be bound, which conflict, breach or default would
materially and adversely affect the ability of Lessee to perform its obligations under any of the
Agreements; or (iii) violate the charter, articles of incorporation or bylaws of Lessee. No consent,
approval authorization or order of any governmental or regulatory authority, agency, commission or
board of arbitration was or will be required in connection with the execution and delivery by Lessee of
any of the Agreements or the consummation of the transactions contemplated thereby or compliance with
the terms and provisions thereof, except such as have been obtained and are in full force and effect.
(f) Lessee has duly and validly obtained all material certificates, licenses and permits from all
public authorities, both federal and state, required to enable Lessee to carry on its business as it is now
conducted and to enter into any of the Agreements to which it is a party.
(g) To the best of Lessee's knowledge, no event has occurred and no condition currently exists,
which constitutes or may, with the passage of time or the giving of notice, or both, constitute an Event of
Default with respect to or on the part of Lessee under any of the Agreements to which it is a party or that
could materially adversely affect the ability of Lessee to perform its obligations thereunder.
5
ARTICLE III
LEASE OF LEASED PREMISES
Section 3.1. Grant.
(a) In consideration of and pursuant to the covenants, agreements, and conditions set forth herein, Lessor
does hereby lease, let, demise, and rent exclusively unto Lessee, and Lessee does hereby rent and lease from
Lessor, the Leased Premises. On the Commencement Date, Lessor will give and deliver to Lessee exclusive
possession and occupancy of the Leased Premises free of all tenancies and parties in possession of such Leased
Premises (other than those arising by, through or under Lessee) and free of all Hazardous Materials. Lessor shall
deliver the Leased Premises to Lessee on the Commencement Date in good condition and repair and in a clean
and orderly condition.
(b) Lessor covenants for the Term that Lessee, upon paying the Rentals and upon keeping, observing
and performing the terms, covenants and condition of this Lease to be kept, observed and performed by Lessee,
shall and may quietly and peaceably hold, occupy, use, and enjoy the Leased Premises without ejection or
interference by or from Lessor, subject only to the terms and provisions set forth herein.
(c) Lessor covenants that Lessee's leasehold interest in, and other rights to, the Leased Premises
arising under this Lease shall be senior and prior to any lien existing, created or arising in connection with the
acquisition, development, construction or financing of the Leased Premises or any portion thereof. The
foregoing does not extend to any liens arising by, through or under Lessee or its agents acting in such capacity.
Section 3.2. Term. The term (the "Term") of this Lease shall commence upon the Commencement Date and
shall continue through the day which is sixty (60) days after the conclusion of the last home game (regular season
or playoff, as the case may be) conducted by Lessee in the Leased Premises during the twenty-fifth (25th) full
baseball season after the Commencement Date, or until the expiration of the option period if exercised under
Section 3.4, unless earlier terminated in accordance with the terms hereof.
Section 3.3. Rent. Lessee agrees to pay annual rental ("Rentals") for each year during the Term in the amount of
One Dollar ($1.00), the first installment of such annual rent being due and payable on the Commencement Date
and a like installment being due and payable on each anniversary thereof during the Term.
Section 3.4. Option to Extend; Rentals Beyond Term. Lessee shall have the right and option to extend the
Term of this Lease for one additional extended period of 10 years upon receipt of the following: (i) written
notice delivered to the Lessor on or before September 30, 2023 stating the Lessee's intent to exercise the option
and (ii) an opinion of bond counsel for the Lessor that the extension pursuant to the terms of this Lease will not
adversely affect the tax exempt status of any debt issued related to the Convention Center. In the event the Lessee
exercises such option, Lessee shall pay to Lessor an annual rental during the extended period without demand, in
an amount equal to the annual fair market rental value, as of the first day of the extended period, of all buildings,
fixtures, or other improvements then located upon the Land (excluding the equipment and fixtures installed by
Lessee) as encumbered by the then existing improvements agreed upon by Lessor and Lessee. If Lessor and
Lessee have failed to agree upon the annual fair market rental value within sixty (60) days after Lessee's delivery
of such notice, the parties shall submit the dispute to mediation in accordance with the Section 11.14 below with
each party submitting to the mediator such party's determination of the annual fair market rental value of the
Land, and the mediator selecting from such submittals the annual fair market rental value. The mediator shall
select either the Lessor's submittal or the Lessee's submittal, whichever, in the opinion of the mediator, is closest
to the mediator's determination of fair market rental value. The decision of the mediator shall be final.
6
The annual rental during the extended period shall be adjusted annually, beginning on the first
anniversary of the commencement of the extended period with a subsequent adjustment each anniversary of such
date thereafter during the extended term, to an amount equal to the greater of (x) the annual rent in effect for the
immediately preceding Lease year or (y) the CPI Adjusted Rent (defined below). The "CPI Adjusted Rent"
means an amount equal to (i) the product obtained by multiplying the annual rent in effect immediately prior to
such adjustment times (ii) one plus a fraction, the numerator of which is the difference between the Consumer
Price Index (as defined below) most recently published at the time of calculation (the "Current CPI") minus the
Consumer Price Index as published at the commencement of the extended term (the "Base CPP") and the
denominator of which shall be the Base CPI (provided, however, in on event shall such fraction be less than
zero). The CPI Adjusted Rent is illustrated by the following formula:
Annual rent in effect times 1 plus [(Current CPI minus Base CPI)Base CPI] = adjusted annual rent. The
"Consumer Price Index" shall mean the Department of Labor, Bureau of Statistics, Consumer Price Index - U.S.
City Average, All Items (1982-84=100). The Consumer Price Index for any year shall be that published most
closely to the date of adjustment in the annual rent. If the manner is which the Consumer Price Index is
determined by the Bureau of Labor Statistics shall be substantially revised, including, without limitation, a
change in the base year index, an adjustment shall be made by the parties in such revised index which would
produce results equivalent, as nearly as possible, to those which would have been obtained had the Consumer
Price Index not been so revised. If the Consumer Price Index becomes unavailable to the public because
publication is discontinued or otherwise, or if equivalent data is not readily available to enable the parties to make
the calculations referred to herein, then the parties shall substitute therefor a comparable index based upon
changes in the cost of living or purchasing power of the consumer dollar published by any other governmental
authority or agency, or if no such index is available, then a comparable index published by a major, national bank
or nationally recognized financial publication.
Section 3.5. Permitted Uses. Throughout the Term, Lessee shall occupy and use the Leased Premises for the
primary purposes of operating a "convention center complex" as defined by § 351.001 of the Texas Tax Code.
The permitted uses shall include the conducting of conventions, meetings, trade shows, exhibitions, concerts,
public entertainment events, professional minor league baseball games (including radio and television
broadcasting [or other transmission] of the same), other baseball games and sporting events, and other similar
functions that will encourage tourism in the City of Round Rock and/or promote the arts; and for purposes
related and incidental thereto (including, without limitation, operation of concession facilities, sale of food and
beverages [alcoholic and non-alcoholic], conducting tours, storage, and office uses), and for no other purpose
without the prior written consent of Lessor.
Section 3.6. Compliance with Laws.
(a) Lessee shall, throughout the Term, and at no expense to Lessor, promptly comply or cause
compliance with all laws, ordinances, orders, rules, regulations and requirements of duly constituted
Governmental Authority, which may be applicable from time to time to its use of the Leased Premises
and its operation, repair and alteration thereof.
(b) Lessee shall not, however, be required to comply or cause compliance with such laws,
ordinances, orders, rules, regulations or requirements, if Lessee is, after prior written notice to Lessor,
contesting the same or the validity thereof in good faith, at Lessee's expense by appropriate proceedings;
and provided further, such noncompliance will not have a material adverse effect on the Leased Premises
or the Lessee or the performance of its obligations hereunder. Such contest may be made by Lessee in the
name of Lessor or Lessee, or both, as Lessee shall reasonably determine, and Lessor shall, at Lessee's
expense, cooperate with Lessee in any such contest to such extent as Lessee may reasonably request;
provided, however, the Lessee may not contest in the name of Lessor any law, ordinance, rule,
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regulation, order or requirement of Lessor, and the Lessor has no obligation to cooperate in any such
contest against Lessor. Lessor shall not, however, be subject to any liability for the payment of any costs
or expenses in connection with any such proceedings brought by Lessee, and Lessee covenants to pay,
and to indemnify and save Lessor harmless from, any such costs or expenses, including, but not limited
to, court costs and attorneys' fees.
Section 3.7. Construction of Convention Center. Lessee acknowledges that the Lessor has not yet constructed
the Convention Center. However, Lessor agrees to construct the Convention Center as expeditiously as possible
for use by the Lessee pursuant to this Lease. The Convention Center is to be constructed in accordance with the
Master Agreement.
Section 3.8. Obligations of Lessee Unconditional. The obligation of the Lessee to pay the Rentals, to pay the
premiums or charges necessary to maintain or cause to be maintained the insurance required by Article VI, and to
provide the indemnity required set forth herein hereof shall be absolute and unconditional and shall not be subject
to any defense (other than payment) or any right of set-off, counterclaim, abatement or otherwise except as
expressly permitted by this Lease or the Master Agreement.
ARTICLE IV
BEGINNING CONDITION, ALTERATIONS AND IMPROVEMENTS
Section 4.1 Beginning Condition. On the Commencement Date, Lessor shall deliver exclusive and vacant
possession of the Leased Premises to Lessee with all improvements having been substantially completed and in
good working order and condition.
Section 4.2. Alterations. Any subsequent alterations, additions, or construction of new improvements on or in
the Leased Premises must be consistent with the permitted uses of the Leased Premises as set forth in Section 3.5
and must be consistent with the then appearance of the Leased Premises and the uses being made thereof; and
must be approved in advance in writing by Lessor, such approval not to be unreasonably withheld; provided,
however, Lessee is not required to obtain Lessor's prior approval for (a) non-structural remodeling or installation
or removal of trade fixtures and equipment; (b) temporary improvements or alterations to accommodate
particular events; (c) alterations required to comply with any applicable law or any Sanctioning Association; (d)
alterations resulting from restorations or repairs of existing facilities; or (e) any alterations (structural or non-
structural) costing less than $100,000, with respect to any single alteration, or $500,000 in any calendar year
with respect to a series of alterations. Notwithstanding the foregoing, Lessee shall have the right to construct
additional facilities upon the Land so long as the same are consistent in exterior appearance with the architectural
theme of the Convention Center, Lessee provides Lessor reasonable evidence of Lessee's ability to pay for the
same, and so long as the same, when completed, will not have reduced the overall utility of the Leased Premises
or weakened or impaired the structural integrity of the Leased Premises. Anything to the contrary herein
notwithstanding, no such alterations, additions or improvements shall cause the facilities within the Leased
Premises to cease to qualify as a "convention center complex" under § 351.001 of the Texas Tax Code.
Section 4.3. Compliance with Regulatory Requirements. Lessee agrees that all additions and alterations on or
to the Leased Premises constructed by it shall be constructed in accordance with all applicable ordinances and
statutes of Governmental Authority as well as the codes of the Lessor. Lessee shall, at its sole cost and expense,
procure or cause to be procured all necessary building permits, other permits, licenses and other authorizations
required for the lawful and proper addition to or alteration, use, occupation, operation, and management of the
Leased Premises (Lessor agrees to cooperate with Lessee's efforts with respect thereto).
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Section 4.4. Ownership of Improvements. Provided and for so long as no Event of Default has occurred
hereunder, title to and ownership of the Leased Premises during the Term of this Lease shall be and remain in
Lessor, (except for trade fixtures, furniture, equipment, furnishings and other personal property installed in or
affixed to the Leased Premises by or on behalf of Lessee [collectively, the "Removables"] all of which shall
remain Lessee's sole property). At the expiration or other termination of the Lease, all alterations, additions, and
improvements to the Leased Premises (except for the Removables) must remain upon and be surrendered with
the Leased Premises.
Section 4.5. Lessor's Right of Inspection. Prior to Lessor giving or withholding its consent to any proposed
construction, alteration, or addition to the Leased Premises requiring such consent as set forth in Section 4.2.
Lessor may review Lessee's conceptual design drawings and construction drawings for such construction work,
the reasonable, out-of-pocket costs paid to third parties therefor to be paid by Lessee. Upon completion of any
new construction or alteration or addition to existing improvements for which Lessor's approval is needed under
the terms of this Lease, Lessee shall obtain a written certification addressed to Lessor from a licensed architect or
engineer reasonably acceptable to Lessor stating that the construction has been completed substantially in
accordance with the construction drawings and that, to the best of each professional's knowledge, the completed
improvements are in compliance with all applicable ordinances, statutes, and the requirements of all
Governmental Authority.
Section 4.6. Performance and Payment Bonds. Prior to Lessee commencing any construction project estimated
to cost greater than $500,000, Lessee shall provide a statutory form payment and performance bond for such
project.
ARTICLE V
ADDITIONAL COVENANTS OF LESSOR AND LESSEE
Section 5.1. Maintenance and Operation Expenses of the Leased Premises. Lessee shall, at its sole cost and
expense, keep, maintain, and operate the Leased Premises, including the interior and exterior, structural and non-
structural portions of the improvements, in as good repair as exists on the Commencement Date and in
compliance with all applicable laws, regulations, orders and other governmental requirements of Governmental
Authority applicable to the Leased Premises from time to time, subject to ordinary wear and tear, damage from
casualty and events of condemnation. Lessor has no maintenance and repair obligations under this lease (but
does have certain warranty obligations as described in the Master Agreement) and subject to the Lessor's
obligations as set forth below. Lessor has no obligation to pay any operating expenses of the Leased Premises
except as set forth in Section 5.15 below.
Notwithstanding the foregoing or any contrary provision hereof, Lessee shall have no responsibility or
obligation to make or perform any work necessary to repair, restore, replace, or refurbish any equipment, facility,
structure or other component of the Leased Premises (collectively, "Capital Repair Work") if such Capital Repair
Work is necessitated by (i) any defects in the construction of the improvements constructed under the Master
Agreement (ii) the deterioration of such equipment, facility, structure or other component (for reasons other than
Lessee's failure to perform routine maintenance with respect thereto) to the degree that the same is no longer
suitable for the purposes intended and cannot reasonably be returned to a useful condition through regular
maintenance, or (iii) modifications required by any Governmental Authority or any Sanctioning Association.
Capital Repair Work shall not include regular or routine maintenance nor shall it include any work needed to the
Removables or work to the Concession Improvements. Furthermore, Lessee shall have no obligation to perform
any Capital Repair Work unless there are sufficient proceeds therefor in the Capital Repair Work Account or the
Capital Improvement Program Account (defined below) and Lessor makes such proceeds available to Lessee
therefor. However, in the event the need for the Capital Repair Work is attributable solely to Lessee's failure to
perform its maintenance obligations hereunder, Lessee shall be solely responsible for performing and paying for
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such Capital Repair Work. In all events Lessor shall be obligated to bear, pay and be responsible for the
following ("Lessor's Expenses"):
(a) The costs of Capital Repair Work attributable to any casualty or failure of any part or
parts of the foundation, structure or structural support members of the Leased Premises;
(b) All expenses of repair and restoration due to events of condemnation; and
(c) All costs and expenses of Lessor's Remedial Work (defined below).
The Lessor's Expenses may be paid from the Capital Repair Work Account, but the inadequacy of funds therein
shall not release or relieve Lessor from its obligation to perform the work described in the foregoing clauses (a)
through (c) nor from its obligation to pay all of the Lessor's Expenses.
Section 5.2. Taxes and Other Charges. Lessee shall pay prior to delinquency, in addition to the payment of
Rentals, each and every lawful cost, expense and obligation of every kind and nature, foreseen or unforeseen, by
reason of Lessee's estate or interest in the Leased Premises or any portion thereof or by reason of or in any
manner connected with or arising out of Lessee's possession, operation, maintenance, alteration, repair,
rebuilding, use or occupancy of the Leased Premises, or any part thereof. Lessee shall pay and discharge, prior to
the delinquency thereof, all lawful assessments, ad valorem taxes, sales taxes, business and occupation taxes,
occupation license taxes, water charges, or sewage disposal charges, imposed on the Leased Premises and
Lessee's use and occupancy of the Leased Premises, and all other governmental taxes, impositions, and charges
of every kind and nature, ordinary or extraordinary, general or special, foreseen or unforeseen, whether similar or
dissimilar to any of the foregoing, and all applicable interest and penalties, if any, which at any time during the
Term becomes due and payable by Lessee because of its rights or obligations under this Lease and which is
lawfully levied, assessed or imposed on Lessee or the Leased Premises under or by virtue of any present or future
law, statute, ordinance, regulation or other requirement of any governmental authority, whether federal, state,
county, city, municipal, school or otherwise. Lessee, upon written notice to Lessor, may contest in good faith any
such tax, imposition, charge or assessment levied by any governmental authority (other than water charges or
sewage disposal charges), and in such event may permit such tax, imposition, charge or assessment (other than
water charges or sewage disposal charges) to remain unsatisfied during the period of such contest and any appeal,
provided, however, that prior to the commencement of such contest Lessee shall demonstrate to Lessor either (a)
that Lessee will have sufficient funds to pay such assessment if the contest is unsuccessful or (b) that Lessee has
deposited into a separate escrow account funds equal to the contested amount, together with the anticipated
interest and penalties, if any, that would be incurred in the event of an unfavorable disposition. Lessee also shall
pay or cause to be paid all lawful charges for gas, water, sewer, electricity, light, heat, power, telephone, and
other utilities and services used, rendered or supplied to, upon or in connection with the Leased Premises. Lessee
shall furnish to Lessor promptly upon request, proof of the payment or timely contest of any such tax, assessment
or other governmental or similar charge, or any utility charge which is payable by Lessee, or evidence of the
deposit of such funds into a reserve account, all as set forth above.
Notwithstanding the foregoing, in the event the Leased Premises is not exempt from property taxation
due to any failure of Lessor, then Lessor shall be solely responsible for such tax. Furthermore, in the event a
Targeted Tax is ever imposed by Lessor, then Lessee shall be entitled to a credit against all Rentals then due and
thereafter becoming due so as to enable Lessee to recapture the amount of the Targeted Tax paid by Lessee;
provided, that, in the event there are insufficient Rentals due and to become due hereunder to enable Lessee to
recapture through offset against the Rentals the amount of Targeted Tax paid by Lessee, Lessor shall directly pay
to Lessee the amount of such excess Targeted Tax within thirty (30) days following Lessee's submittal to Lessor
of an invoice therefor. The provisions of this paragraph shall expressly survive the expiration or sooner
termination of this Lease.
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Section 5.3. Liens and Encumbrances. Lessee covenants and agrees that, except for this Lease, it will not create
or suffer to be created by, through, or under Lessee any lien, encumbrance or charge upon the Leased Premises or
Lessee's interest in this Lease. Lessee shall satisfy or cause to be discharged, or will make adequate provision to
satisfy and discharge, within sixty (60) days after the same occurs, all such claims and demands for labor,
materials, supplies or other items which, if not satisfied, might by law become a lien upon the Leased Premises or
any part thereof. If any such lien is filed or asserted against Lessee or the Leased Premises by reason of work,
labor, services or materials supplied or claimed to have been supplied on or to Lessee or the Leased Premises at
the request or with the permission of Lessee or of anyone claiming under it, Lessee shall, within sixty (60) days
after it receives notice of the filing thereof or the assertion thereof against the Leased Premises, cause the same to
be discharged of record, or effectively prevent the enforcement or foreclosure thereof, by contest, payment,
deposit, bond, order of court or otherwise.
Section 5.4. Maintenance and Warranty Contracts. Lessor covenants and agrees that without the prior consent
of Lessee, which consent shall not be unreasonably withheld, conditioned or delayed, Lessor will not (i)
voluntarily, involuntarily, by operation of law or otherwise, sell, assign or transfer any of the maintenance and
warranty contracts to any person other than Lessee; (ii) terminate any of the maintenance and warranty contracts;
(iii) waive or release any of the respective obligations of any person under any of the maintenance and warranty
contracts; or (iv) in any way voluntarily modify or amend any of the maintenance and warranty contracts.
Further, Lessor agrees that Lessee is a third -party beneficiary of the maintenance and warranty contracts and
hereby conveys, transfers and assigns to Lessee the nonexclusive right to enforce any and all of the respective
obligations of any person under the maintenance and warranty contracts, including, but not limited to, any and all
representations and warranties thereunder. Lessor and Lessee shall cooperate with each other in prosecuting any
and all warranty and similar claims under any and all contracts or other agreements with third parties for the
design, construction, supply, alteration, improvement, maintenance or renewal of the Leased Premises (each a
"Warranty Claim"). All recoveries from any such Warranty Claims shall be applied, first, to the cost of
collection, second, on a proportional basis to Lessor and Lessee to (x) reimburse Lessee for the cost and expenses
incurred in order to repair, restore, renew or replace any part of the Leased Premises as to which such Warranty
Claim relates and which have not been paid out of the Capital Repair Work Account or the Capital Improvement
Program Account and (y) to reimburse Lessor for amounts paid to Lessee as Lessor's Expenses relating to such
Warranty Claim.
Section 5.5. Surrender of Possession. Upon the termination of this Lease, Lessee shall surrender the Leased
Premises (including all improvements thereon) to Lessor in a condition which would have been in compliance with
the maintenance requirements of Section 5.1 of this Lease had the Lease not terminated, reasonable wear and tear,
and, damage by casualty and condemnation, excepted.
Section 5.6. Operation. Lessee agrees to operate and maintain the Leased Premises throughout the Term in a
condition necessary to conduct the permitted uses described in Section 3.5. Except as provided below, Lessee may
not assign any rights, duties or obligations to operate and maintain the Leased Premises throughout the Term to any
party, other than its corporate affiliates, without the prior written consent of Lessor. Lessor acknowledges that the
foregoing does not prohibit Lessee from contracting with third parties to provide services such as concessions,
security, janitorial, and similar services.
Section 5.7. Right of Lessee to Revenues. Lessee shall be entitled to, and is hereby granted the exclusive right to,
contract for, collect, receive and retain all gross income and revenues and other consideration of whatever kind or
nature realized by, from or in connection with the Leased Premises, including, without limitation, all gross
revenues, royalties, license fees, concession fees and income and receipts of any nature, including, without
limitation, those arising from (a) all advertising rights, (b) all broadcast rights, (c) parking, (d) promotion of events
at the Leased Premises, (e) the sale of food, beverages, merchandise, programs and other goods and wares of any
nature whatsoever at the Leased Premises, (f) all naming rights, and (g) all telecommunications rights.
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Lessee shall have the right, without the prior consent of Lessor, to sell or grant rights to purchase future
tickets for reserved seats, club seats and luxury suites, including personal seat licenses (collectively, "Seat Rights").
All Seat Rights shall be subject and subordinate to the provisions of this Lease and shall not survive the termination
or expiration of this Lease. The Lessee shall have no responsibility or obligation to sell Seat Rights and the Lessor
shall not have any liability or responsibility to assure the sale of Seat Rights. Lessee shall be entitled to, and is
hereby granted the exclusive right to, collect, receive and retain all gross income and revenues and other
consideration of whatever kind or nature (but excluding any Targeted Taxes) realized by, from or in connection
with the sale or other distribution of Seat Rights, tickets or passes (including general admission) for any seats in the
Leased Premises.
Section 5.8. Naming and Other Rights. Lessee shall have the full right to provide a name or names for the
Convention Center during the Term of this Lease. It is provided, however, that Lessee shall display no reference to
any county or to any city other than the City in any signage, advertising, and other identification monuments or
visible media containing the name used by or identifying the Convention Center facility on the Leased Premises.
Any advertising, documents or media information prepared by or within the control of Lessee describing any event
at the Convention Center shall identify the City as the location of the Convention Center. Without limiting the
foregoing, Lessee shall have the exclusive right to contract with any person with respect to use and enjoyment of
such name for the Convention Center and the exclusive right to enter into agreements with others whereby such
others may display names, logos, trademarks, advertisements, slogans, emblems, brand names, and the like in or
about the Leased Premises. Lessee reserves the right to change the name of the Convention Center from time to
time. Lessee also retains exclusive rights of control over, and the right to grant to others, the rights to broadcasts to
and from the Leased Premises, regardless of the medium used (e.g., television, radio, internet, satellite) and all
revenues therefrom.
Section 5.9. Advertising Content. Lessee agrees that no advertising shall be allowed on the Leased Premises for
sexually oriented businesses or for political candidates or issues.
Section 5.10. Notification of Events of Default. Lessee covenants and agrees that it will promptly notify Lessor of
the occurrence of an Event of Default specifying the details of such event or Event of Default and the action that
Lessee proposes to take with respect thereto.
Section 5.11. Right of First Refusal. During and for the Term of this Lease and any extension thereof, Lessor and
Lessee agree that Lessee shall have the right of first refusal with respect to the lease, management, and/or operation
of any future facility owned by Lessor which may serve as a competing venue with the Convention Center. The
foregoing right shall only apply to facilities which are intended for conventions, outdoor concerts, and/or
professional sports teams.
Section 5.12. Capital Repair Account; Capital Improvement Program Account; Priority of Application of
Hotel and Motel Occupancy Taxes.
(a) The Lessor shall (i) establish and maintain an account for the sole purpose of serving as a
segregated source of funds to be used to pay for Capital Repair Work (the "Capital Repair Work Account"), and (ii)
establish and maintain an account for the sole purpose of serving as a segregated asset renewal and replacement
fund for upgrades of and to the components of the Leased Premises (the "Capital Improvement Program Account")
and (iii) hold and disburse the funds required to be deposited in the Capital Repair Work Account and the Capital
Improvement Program Account, all in accordance with this Section 5.12. The Capital Repair Work Account shall
be available to Lessor to pay the Lessor's Expenses, and shall be available to pay the costs of performing the
Capital Repair Work. The Capital Improvement Program Account shall be available to pay the costs of upgrading
from time to time components of the Leased Premises (the "Capital Improvement Work"). Funds deposited into
either of such accounts shall be held by Lessor for the benefit of the Convention Center.
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(b) Both the Capital Repair Work Account and the Capital Improvements Program Account shall be
funded with proceeds of hotel and motel occupancy taxes actually collected by Lessor, after payment of certain
other obligations and the funding of certain obligations of Lessor as more fully described below. Hotel and motel
occupancy taxes actually collected by Lessor during the Term shall be utilized by Lessor in the following order of
priority and amount:
1. To establish and fund debt service requirements on the debt created under the Debt Plan;
and
2. To establish a working capital fund in the amount of $125,000. The proceeds of the
working capital fund may be used to pay costs of Capital Repair Work in the event there
are insufficient funds in the Capital Repair Work Account to pay for needed Capital
Repair Work. At such time as the working capital fund has a balance of $125,000, no
further deposits need to be made thereto unless and until proceeds are disbursed therefrom
to pay for Capital Repair Work in which case subsequent deposits shall be made to the
working capital fund to replace the amounts so used to pay for Capital Repair Work; and
3. To fund the costs of tourism related events sponsored or conducted by Lessor in the
amount of, on an annual basis, $260,000 (said $260,000 shall be adjusted upward each
year by 3% on a compounded basis); and
4. To establish and fund, on an annual basis commencing on the Commencement Date, the
Capital Repair Work Account in the amount of $250,000 (at such time as the Capital
Repair Work Account has a balance of $250,000, no further deposits need to be made
thereto unless and until proceeds are disbursed therefrom in which case subsequent
deposits shall be made so as to restore such balance to $250,000); and
5. To establish and fund, commencing on the first day of the sixth (6th) year following the
Commencement Date, the Capital Improvement Program Account with annual deposits of
$100,000, such deposits to continue until the balance in such account reaches $500,000 at
which time no further deposits thereto shall be made unless and until proceeds are
disbursed therefrom in which case subsequent deposits shall be made so as to restore such
balance to $500,000.
(c) Lessee agrees to provide Lessor, not less often than annually during the Term, a proposed schedule
for and budget of proposed Capital Improvement Work and Capital Repair Work for the upcoming year, or portion
thereof, which schedule and budget shall be subject to the approval of Lessor, such approval not to be unreasonably
withheld, conditioned or delayed. In the event Lessor has not disapproved the same in a writing to Lessee to such
effect (which writing shall set forth with specificity the reasons for such disapproval) within thirty (30) days after
Lessee's submission of the same, the proposed Capital Improvement Work and Capital Repair Work shall be
deemed approved and Lessee shall have the right to require Lessor to cause such work to be performed and the
funds in the Capital Improvement Work Account and Capital Repair Work Account, as the case may be, shall be
available to Lessor to pay the budgeted costs for such work in accordance with the contracts for such work
approved by Lessor and Lessee and executed by Lessor.
Section 5.13. Lessee to Provide Scoreboard. Lessee shall provide and install, at its cost and expense, a double-A
minor league quality scoreboard at the Convention Center. At the expiration of this Lease, the scoreboard shall
become the property of Lessor.
Section 5.14. Lessor's Right of Entry and Inspection. Upon twenty-four (24) hours notice to Lessee, Lessor
shall have the unrestricted right to enter upon the Leased Premises, for the purpose of inspecting same.
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Section 5.15. Lessor's Use of Leased Premises. Lessor shall be entitled to the use of the Leased Premises up to
twenty (20) dates per year for the conduct of City sponsored programs. Lessor shall be responsible for all costs of
operating the Convention Center for such events and for all damage caused thereby and all janitorial, security,
traffic control, and other services needed as a consequence thereof. These dates shall be determined in advance
through negotiation of Lessee and Lessor. It is agreed that home baseball games will be given priority if there is a
conflict in dates (in no event shall Lessor have the right to use the same on any day during which a baseball game is
scheduled). Additionally, Lessor shall be entitled to use the meeting facilities in the Convention Center at its sole
cost and expense on an as available basis.
Section 5.16. Sales Taxes; Location of Ticket Office. Lessor and Lessee intend for all municipal sales taxes
arising from ticket sales for taxable amusement services at the Convention Center are to be allocated to the City, as
specifically required by 34 Texas Administrative Code § § 3.298(a)(1)(C)(iv) and 3.3740; provided, however,
nothing herein shall be deemed to prohibit or restrict Lessee for effecting sales of tickets through offices or services
which are not located in the City. Should Lessee do so, Lessee shall in good faith attempt to do so in a manner
which permits the City to collect the sales taxes generated therefrom. In all events, all telephone solicitations and
sales shall be made in a manner which permits the City to collect the sales taxes generated therefrom.
Section 5.17. Obligation to Provide Professional Baseball Team. Lessee agrees that during the Term of the
Lease that it will ensure that a professional baseball team uses the Leased Premises for all of its home games. The
team will be either a double-A or triple-A team (or a reasonable equivalent thereof sanctioned by the Sanctioning
Association). All home games of the team during the Term shall be played at the Leased Premises. If Lessee shall
lose or relinquish its baseball franchise, league affiliation, or player development contract, the Lessee shall continue
to be obligated to field a team sanctioned by a Sanctioning Association at the Leased Premises. Failure to provide
said team will be considered as an event of default pursuant to Section 9.1(b).
Section 5.18. Concession Improvements; Access. Lessee shall cause the Concession Improvements to be
constructed at Lessee's sole cost and expense. Lessor agrees that Lessee and its agents, contractors, sublessees,
licensees, and concessionaires shall have the right of access, for themselves and their authorized representatives, to
the Leased Premises, without charges or fees or the commencement of rent hereunder, and at normal construction
hours during the construction period, for the purposes of determining compliance with this Master Agreement,
construction and installation of any Concession Improvements, construction and installation of any interior tenant
finish work, use of its offices for ticket sales and promotions and other normal and customary business, and
equipping locker room and related facilities for Lessee.
ARTICLE VI
INSURANCE AND CONDEMNATION
Section 6.1. Lessee's Insurance. Commencing on the Commencement Date, Lessee covenants that it shall
maintain in effect at all times during the full Term of this Lease, insurance coverages with limits not less than those
set forth below with insurers licensed to do business in the State of Texas and acceptable to Lessor and under forms
of policies satisfactory to Lessor. Lessee shall maintain such insurance coverages at its sole cost and expense.
Lessor shall be under no obligation to maintain any such insurance coverage should Lessee be found to be in
default under this Article VI. None of the requirements contained herein as to types, limits or Lessor's approval of
insurance coverage to be maintained by Lessee are intended to and none shall in any manner limit, qualify or
quantify the liabilities and obligations assumed by Lessee under this Lease or otherwise provided by law.
Section 6.2. Workers' Compensation Insurance. Commencing on the Commencement Date, Lessee shall
provide Workers' Compensation insurance in the limits required by State statute.
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Section 6.3. Employers' Liability Insurance. Commencing on the Commencement Date, Lessee shall provide
Employers' Liability insurance in minimum coverage amounts of $100,000. This policy shall include a waiver of
subrogation in favor of the Lessor.
Section 6.4. Commercial General Liability: Bodily Injury/Property Damage. Commencing on the
Commencement Date Lessee shall provide Commercial General Liability: Bodily Injury/Property Damage
insurance coverage in the amount of $1,000,000 for each occurrence or equivalent; subject to a $2,000,000
aggregate. Such commercial general liability policy shall be on an occurrence form reasonably acceptable to Lessor,
endorsed to include the Lessor as an additional insured, contain cross -liability and severability of interest
endorsements, state that this insurance is primary insurance as regards any other insurance carried by Lessor, and
shall include the following coverages:
(a) Premises/Operations;
(b) Independent Contractors;
(c) Broad Form Contractual Liability specifically in support of, but not limited to, the Indemnification
section of this Lease; and
(d) Personal Injury Liability with the employee and contractual exclusions removed.
Section 6.5. Comprehensive Automobile Liability. Commencing on the Commencement Date Lessee shall
provide Comprehensive Automobile Liability insurance for bodily injury and property damage in the amount of
$1,000,000 combined single limit of liability. This policy shall be on a standard form written to cover all owned,
hired and non -owned automobiles.
Section 6.6. Garagekeeper's Liability. Commencing on the Commencement Date Lessee shall provide
Garagekeeper's insurance for physical damage to parked vehicles in the amount of $100,000 combined single limit
for each occurrence. This policy shall be endorsed to include Lessor as an additional insured and include a waiver
of subrogation in favor of Lessor.
Section 6.7. Umbrella Excess Liability Insurance. Lessee shall provide Umbrella Excess Liability Insurance;
Bodily Injury /Property Damage (Occurrence Basis) in the amount of $5,000,000 per occurrence and aggregate.
This policy shall be written on a following form umbrella excess basis above for the coverages described in
Sections 6.2. 6.3. 6.4. 6.5 and 6.6 above and shall be endorsed to include the Lessor as additional insured.
Section 6.8. Lessor's Property. Lessor shall, at its expense, procure and keep in force, at all times during the term
of this Lease with an insurer or insurers licensed to do business in the State a hazard and casualty insurance policy
on the Leased Premises insuring it against loss and damage by fire, collapse, aircraft and all other perils which may
be insured against under multi -peril policies available on commercially reasonable terms. Such policy shall be in an
amount of not less than one hundred percent (100%) of the insurable replacement cost of the Leased Premises and
all improvements therein (excluding, however, all of Lessee's personal property).
Section 6.9. Evidence of Insurance. Evidence of the insurance coverage required under this Article VI,
represented by Certificates of Insurance issued by the insurance carrier, must be furnished to the requesting party
prior to the commencement of the Term of this Lease. Certificates of Insurance shall specify the additional insured
status required above as well as the waivers of subrogation. Such Certificates of Insurance shall state that the parties
will be notified in writing thirty (30) days prior to cancellation, material change or non -renewal of insurance. Each
party shall provide to the other a certified copy of any and all applicable insurance policies upon request.
Section 6.10. Insurance Requirements for Lessee's Contractors and Subcontractors.
(a) General Requirements. Subject to Lessor's right to waive such requirements for a contractor or
subcontractor at Lessor's sole discretion, insurance similar to that required of Lessee with limits reasonably
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acceptable to Lessor shall be provided by or on behalf of all contractors and their subcontractors to cover their
operations performed for Lessee. The Commercial General Liability policy outlined in Section 6.4 will be extended
to include Completed Operations coverage for any contractor doing construction work on the Leased Premises.
Lessee shall consult with Lessor with respect to such matters to determine if Lessor desires to waive such
requirements for a contractor or subcontractor. Lessee shall maintain Certificates of Insurance from all contractors
and their subcontractors enumerating, among other things, the waivers in favor of, and insured status of, Lessor as
required herein, and Lessee shall provide to Lessor a copy of each Certificate of Insurance from each contractor and
subcontractor if requested by Lessor.
(b) Subcontractors. The term "subcontractor(s)" for the purposes of this Lease shall include
subcontractors, consultants, or sub -operators of any tier.
Section 6.11. Release and Waiver. TO THE EXTENT PERMITTED BY LAW, AND WITHOUT
AFFECTING THE INSURANCE COVERAGE REQUIRED TO BE MAINTAINED HEREUNDER, THE
LESSOR AND LESSEE EACH WAIVE ALL RIGHTS OF RECOVERY, CLAIM, ACTION OR CAUSE
OF ACTION AGAINST THE OTHER FOR ANY (A) DAMAGES FOR INJURY OR DEATH OF
PERSONS, (B) DAMAGE TO PROPERTY, OR (c) CLAIMS ARISING BY REASON OF ANY OF THE
FOREGOING, TO THE EXTENT THAT SUCH DAMAGES AND/OR CLAIMS (i) ARE COVERED
(AND ONLY TO THE EXTENT OF SUCH COVERAGE WITHOUT REGARD TO DEDUCTIBLES) BY
INSURANCE ACTUALLY CARRIED BY THE PARTY HOLDING OR ASSERTING SUCH RIGHT OF
RECOVERY, CLAIM, ACTION OR CAUSE OF ACTION OR (II) WOULD BE INSURED AGAINST
UNDER THE TERMS OF ANY INSURANCE REQUIRED TO BE CARRIED UNDER THIS LEASE BY
THE PARTY HOLDING OR ASSERTING SUCH RIGHT OF RECOVERY, CLAIM, ACTION OR
CAUSE OF ACTION. THIS PROVISION IS INTENDED TO (i) RESTRICT EACH PARTY (IF AND TO
THE EXTENT PERMITTED BY LAW) TO RECOVERY AGAINST INSURANCE CARRIERS TO THE
EXTENT OF SUCH COVERAGE AND TO WAIVE (TO THE EXTENT OF SUCH COVERAGE), FOR
THE BENEFIT OF EACH PARTY, RIGHTS AND/OR CLAIMS WHICH MIGHT GIVE RISE TO A
RIGHT OF SUBROGATION IN ANY INSURANCE CARRIER AND (II) GIVE EACH PARTY THE
BENEFIT OF THE FOREGOING NOTWITHSTANDING ANY FAILURE BY THE OTHER PARTY TO
MAINTAIN THE INSURANCE REQUIRED UNDER THIS LEASE OR THE MASTER AGREEMENT.
THE PROVISIONS OF THIS SECTION 6.11 ARE NOT INTENDED TO LIMIT THE CLAIMS OF THE
LESSOR OR LESSEE TO THE FACE AMOUNT OR COVERAGE OF THE INSURANCE POLICIES
HEREIN PROVIDED FOR OR TO EVIDENCE THE WAIVER BY EITHER PARTY OF ANY CLAIM
FOR DAMAGES IN EXCESS OF THE FACE AMOUNT OR COVERAGE OF ANY OF SUCH
INSURANCE POLICIES. NEITHER THE ISSUANCE OF ANY INSURANCE POLICY REQUIRED
UNDER, OR THE MINIMUM LIMITS SPECIFIED IN, SECTION 6.11 WITH RESPECT TO LESSEE'S
OR LESSOR'S INSURANCE COVERAGE SHALL BE DEEMED TO LIMIT OR RESTRICT IN ANY
WAY LESSEE'S OR LESSOR'S LIABILITY ARISING UNDER OR OUT OF THIS LEASE.
Lessee shall cause each of its contractors entering upon the Leased Premises for the purpose of
conducting work thereon or therein to similarly waive its rights of recovery and subrogation against the Lessor.
Section 6.12. Insurers and Policies. Each insurance policy required by Article VI shall be issued by an insurer
(or insurers) which is financially responsible, of recognized standing and authorized to issue such policy of
insurance in the State of Texas; (b) shall be in such form and with such provisions as are reasonably acceptable to
Lessor and Lessee for the type of insurance involved; and (c) shall prohibit cancellation or substantial reduction
of coverage by the insurer without at least thirty (30) days prior written notice to the parties. Evidence of these
coverages represented by certificates of insurance issued by the insurance carrier must be furnished prior to
commencement of the Term and must be kept current throughout the Term. None of the requirements contained
herein as to types, limits or approval of insurance coverage are intended to and shall not in any manner limit,
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qualify, or quantify the liabilities and obligations assumed by the parties under this Lease or otherwise provided
by law.
ARTICLE VII
INDEMNIFICATION
Section 7.1. Indemnification.
(a) Lessee shall, except as provided in the following paragraph of this Section 7.1(a) defend, protect,
indemnify and hold Lessor and its officers, directors, employees, and agents harmless from and against any and
all liabilities, damages, suits, claims and judgments of any nature (including, without limitation, reasonable
attorneys' fees and expenses), arising from or in connection with any injury to or death of a Person or any damage
to property resulting from, arising out of or in connection with (i) the use or occupancy of the Leased Premises on
or after the Commencement Date or (ii) the negligence or willful act of Lessee or Lessee's contractors,
employees, officers, directors, agents or invitees.
Notwithstanding the provisions of the preceding paragraph, Lessee shall not be liable for any
liabilities, damages, suits, claims and judgments of any nature (including, without limitation, reasonable
attorneys' fees and expenses) arising from or in connection with:
(1) Any injury to or death of a person or any damage to property (including loss of use) to
the extent of the negligence or willful act of Lessor, its employees, officers, directors, contractors, agents
or invitees;
(2) Lessor's violation of any provisions of this Lease or any applicable Governmental
Authority or deed restriction or insurance policy, now or hereafter in effect and applicable to Lessor;
(3) The existence of any Hazardous Materials in, on or under the Leased Premises prior to
the Commencement Date; or
(4) Any environmental event caused by Lessor or any of its employees, officers, directors,
contractors, agents or invitees.
(b) To the maximum extent permitted by applicable law, Lessor shall, except as provided in the
following paragraph of this Section 7.1(b), defend, protect, indemnify and hold Lessee and its officers, directors,
employees, and agents harmless from and against any and all liabilities, damages, suits, claims and judgments of
any nature (including, without limitation, reasonable attorneys' fees and expenses), arising from or in connection
with any injury to or death of a person or any damage to property resulting from, arising out of or in connection
with (i) the use or occupancy of the Leased Premises prior to the Commencement Date or (ii) the negligence or
willful act of Lessor or Lessor's contractors, employees, officers, directors, agents or invitees.
Notwithstanding the provisions of the preceding paragraph, Lessor shall not be liable for any
liabilities, damages, suits, claims and judgments of any nature (including, without limitation, reasonable
attorneys' fees and expenses) arising from or in connection with:
(1) Any injury to or death of a person or any damage to property (including loss of use) to
the extent of the negligence or willful act of Lessee, its employees, officers, directors, contractors, agents
or invitees;
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(2) Lessee's violation of any provisions of this Lease or any applicable Governmental Rules
or deed restriction or insurance policy, now or hereafter in effect and applicable to Lessee;
(3) Any Hazardous Materials that are introduced to the Leased Premises after the
Commencement Date by Lessee, or any of its employees, officers, directors, contractors, or agents; or
(4) Any environmental event caused by Lessee or any of its employees, officers, directors,
contractors, or agents.
The provisions of this Section 7.1 are solely for the benefit of Lessor and Lessee and are not
intended to create or grant any rights, contractual or otherwise, to any other person.
Section 7.2. Indemnification Procedures. In case any claim shall be brought or, to the knowledge of any
indemnitee, threatened against any indemnitee in respect of which indemnity may be sought, such indemnitee
shall promptly notify the other in writing; provided, however, that any failure so to notify shall not relieve the
indemnitor of its obligations under Section 7.1 unless (i) such failure so to notify precludes investigation and
defense of such claims as a matter of law, and (ii) the indemnitor does not otherwise have knowledge, either
actual or constructive, of such claim. The indemnitor shall have the right (and obligation, subject to the terms
below) to assume the investigation and defense of all claims, including the employment of counsel and the
payment of all expenses. Each indemnitee shall have the right to employ separate counsel in any such action and
participate in the investigation and defense thereof, but the fees and expenses of such counsel shall be paid by
such indemnitee unless (i) the employment of such counsel has been specifically authorized by indemnitor, in
writing, (ii) indemnitor has failed after receipt of notice of such claim to assume the defense and to employ
counsel, or (iii) the named parties to any such action (including any impleaded parties) include both parties, and
the indemnitee, after consultation with its counsel, reasonably believes that there may be one or more legal
defenses available to it which are different from or additional to those available to the indemnitor (in which case,
if such indemnitee notifies the indemnitor in writing that it elects to employ separate counsel at indemnitee's
expense, indemnitor shall not have the right to assume the defense of the action on behalf of such indemnitee;
provide, however, that indemnitor shall not, in connection with any one action or separate but substantially
similar or related actions in the same jurisdiction arising out of the same general allegation or circumstances, be
liable for the reasonable fees and expenses of more than one separate firm of attorneys for the indemnitee, which
firm shall be designated in writing by the indemnitees). Each indemnitee shall cooperate with the indemnitor in
the defense of any action or claim. The indemnitor shall not be liable for any settlement of any action or claim
without its consent, but if any such action or claim is settled with the consent of the indemnitor or there be final
judgment or agreement for the plaintiff in any such action or with respect to any such claim, the indemnitor shall
indemnify and hold harmless the indemnitees from and against any damages by reason of such settlement or
judgment.
Section 7.3. Survival Right to Enforce. The provisions of this Article VII shall survive the termination of this
Lease. In the event of failure by an indemnitor to observe the covenants, conditions and agreements contained in
this Article VII, any indemnitee may take any action at law or in equity to collect amounts then due and thereafter
to become due, or to enforce performance and observance of any obligation, agreement or covenant of the
indemnitor under this Article VII. Except as otherwise provided in Article VIII below, the obligations of the
parties under this Article VII shall not be affected by any assignment or other transfer of its rights, titles or
interests under this Lease and will continue to inure to the benefit of the indemnitees after any such transfer.
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ARTICLE VIII
ASSIGNMENTS; LEASEHOLD MORTGAGES; LEASEBACK
Section 8.1. Assignment and Subleasing.
(a) Except as provided below, Lessee shall not assign or sublet its interest in this Lease or any of its
rights or obligations hereunder without the prior written consent of Lessor, which consent may be granted
or withheld if in Lessor's sole judgment such assignment or subletting might materially and adversely
affect the financial condition or operations of the Convention Center. Notwithstanding the foregoing (but
subject to the provisions of Section 8.1(b) below) Lessee shall have the right upon thirty (30) days prior
written notice to Lessor to assign its interest in this Lease to (i) any entity in which Nolan Ryan, Reid
Ryan, or Don Sanders, singularly or in the aggregate and whether directly or indirectly, have at least a
51% ownership interest, (ii) in connection with a merger or consolidation of Lessee with another so long
as, following such transaction, the successor entity's financial creditworthiness is equal to or greater than
that of Lessee as of the Commencement Date, or (iii) in connection with a sale by Lessee of all or
substantially all of its assets, in a single transaction or a series of transactions, and where such
purchaser's net worth (determined in accordance with generally accepted accounting principles) is,
following such purchase, equal to or greater than $7,500,000.
(b) Prior to December 31, 2007, Nolan Ryan shall not assign, sell, transfer, or convey any of his
interest in the Lessee without the prior written consent of Lessor, which consent may be granted or
withheld in Lessor's sole judgment; provided however that the consent of the City shall not be required
for Nolan Ryan to assign, sell, transfer, or convey any of his interest to Don Sanders, Reid Ryan, or any
trust created by Nolan Ryan for his benefit or the benefit of any of his family members.
Section 8.2. Notice of Intent. If Lessee shall, at any time during the Term, desire to assign this Lease or sublet
all or part of the Leased Premises to a party other than as permitted under Section 8.1, Lessee shall give notice
thereof to Lessor, which notice shall be accompanied by: (a) a conformed or photostatic copy of the proposed
assignment or sublease; (b) a statement setting forth, in reasonable detail, the identity of the proposed assignee or
sublessee and the nature of its business; (c) current financial information with respect to the proposed assignee or
sublessee, including its most recent financial statement (which may taken into account the effects of the transfer);
and (d) banking and business references of the proposed assignee or sublessee.
Section 8.3. Conditions Upon Lessor's Consent to Assignment. In the event that Lessee complies with all of
the provisions of Section 8.2 and provided no Event of Default then exists, Lessor's consent to a proposed
assignment shall not be withheld or delayed, provided and upon condition that:
(a) The proposed assignee or sublessee is a reputable person or entity of good standing in the
business community and with financial worth (after giving effect to the transfer) not less than that of
Lessee as of the date hereof, and Lessor has been furnished with reasonable proof thereof;
(b) The proposed assignment shall be in a form reasonably satisfactory to Lessor and shall comply
with the provisions of this Lease; and
(c) Lessee shall reimburse Lessor on demand for any costs and overhead that may be incurred and
substantiated by Lessor in connection with said assignment or sublease, including the costs of making
investigations as to the acceptability of the proposed transferee and reasonable legal costs incurred in
connection with the granting or withholding of any requested consent.
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If the foregoing conditions to an assignment are satisfied and the assignment is made, then upon such
assignment the named Lessee herein shall be released herefrom with respect to obligations, covenants, and
agreements to be observed and performed by the Lessee under this Lease after such date.
Section 8.4. Subleases and Concession Arrangements. Notwithstanding the foregoing, Lessee shall have the
right to enter into such subleases of portions of the Leased Premises and concession arrangements as Lessee may
desire, all without consent from Lessor so long as each such sublease or concession arrangement provides that it
is expressly subject and subordinate to this Lease and the matters to which this Lease is or shall be subordinate.
Section 8.5. Leasehold Mortgages. Lessee shall have no right to encumber by mortgage, deed of trust, security
agreement or other instrument in the nature thereof (collectively, a "Mortgage") or otherwise to encumber or
affect in any way the titles, interests, or estates of Lessor in or to the Land or the Leased Premises or, unless
consented to by Lessor, Lessee's right to use and occupy the Leased Premises, the leasehold estate created hereby,
or any right, title and interest in and to any and all improvements constructed on the Leased Premises; provided,
that, in all cases Lessee shall have the right to assign, mortgage, pledge, hypothecate or assign Lessee's
receivables, accounts, or revenue streams from, and equipment and fixtures in, the Leased Premises, all without
the need for obtaining Lessor's consent.
ARTICLE IX
DEFAULT
Section 9.1. Events of Default. The occurrence of any of the following shall constitute an "Event of Default" by
Lessee hereunder:
(a) The failure of Lessee to pay when due any installment of Rentals pursuant to Section 3.2 hereof,
provided such failure continues for more than five business days after Lessee receives written notice
from Lessor that such installment is due.
(b) The breach by Lessee of any other covenant, condition, or agreement required to be performed or
observed hereunder or under any of the Agreements, if such breach has not been cured within thirty (30)
days of delivery of notice of such breach to Lessee by Lessor, unless such breach, by its nature, cannot be
cured within such thirty (30) day period, in which case so long as Lessee is diligently proceeding to cure
such breach and is making reasonable progress in effectuating a cure, it shall not be deemed to be an
Event of Default.
(c) The occurrence of an Act of Bankruptcy, provided that with respect to the filing of an
involuntary petition in bankruptcy or other commencement of a bankruptcy or similar proceeding against
Lessee, such petition or proceeding shall remain undismissed for ninety (90) days.
The occurrence of any of the following shall constitute a "Lessor Event of Default":
(a) The failure of Lessor to pay when due any money owed to Lessee by Lessor hereunder
provided such failure continues for more than five (5) business days after Lessor receives written notice
thereof; or
(b) The breach by Lessor of any other covenant, condition, or agreement required to be
performed or observed hereunder or under any of the Agreements, if such breach has not been cured
within thirty (30) days of delivery of notice of such breach to Lessor by Lessee, unless such breach, by its
nature, cannot be cured within such thirty (30) day period, in which case so long as Lessor is diligently
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proceeding to cure such breach and is making reasonable progress in effectuating a cure, it shall not be
deemed to be an Event of Default.
Section 9.2. Remedies of the Lessor on Default.
(a) If any Event of Default shall have occurred and be continuing, Lessor may, in its own name and
for its own account, without impairing the ability of Lessor to pursue any other remedy provided for in
this Lease or now or hereafter existing at law or in equity or by statute, institute such action against
Lessee as may appear necessary or desirable to collect such rentals and any other amounts then due under
this Lease, or to enforce performance and observance of such covenant, condition or obligation of Lessee
hereunder, or to recover damages for Lessee's non-payment, non-performance or non -observance of the
same.
(b) Upon the occurrence of any Event of Default and during the continuance thereof, Lessor may (i)
by giving Lessee written notice upon the occurrence of any Event of Default described in Section 9.1(0
or (bi and without giving Lessee notice upon the occurrence of an Event of Default described in Section
9.1(c), declare this Lease to be terminated, (ii) exclude Lessee from possession of the Leased Premises
and reenter the same; and (iii) take whatever action at law or in equity as may appear necessary or
desirable to collect the Rentals and any other amounts then due, to enforce performance and observance
of any covenant, condition or obligation of Lessee hereunder, or to recover damages for Lessee's non-
payment, non-performance or non -observance of the same; provided that Lessor shall be required to
mitigate its damages to the extent required by law and Section 9.3(b) hereof.
(c) Lessee shall pay all of Lessor's reasonable fees and expenses, including reasonable attorneys'
fees, in enforcing any covenant to be observed by Lessee or pursuing any remedy upon an Event of
Default.
Section 9.3. The Lessee To Remain Liable for Payments; Reletting.
(a) Notwithstanding the exercise by Lessor of its remedies pursuant to Section 9,2 hereof, Lessee
shall continue to be liable for the payment of all Rentals payable under Section 3.3 hereof and other
amounts, if any, payable under this Lease and Lessee shall make such payments at the same times and in
the same manner as provided in this Lease.
(b) In the event Lessor elects to exclude Lessee from possession of the Leased Premises and re-enter
same, then Lessor shall use reasonable efforts to relet the Leased Premises for the maximum rental it may
reasonably obtain, provided, however, that Lessor shall have no obligation to relet the Leased Premises to
any person who will not use the Leased Premises for the purposes set forth in Section 3.5 hereof. Any
such rentals received prior to the stated termination date of this Lease shall be applied first to the
payment of expenses incurred by Lessor in connection with such reletting and second, to the Rentals due
hereunder.
Section 9.4. Remedy on Lessor's Default. Upon the occurrence of a Lessor Event of Default, Lessee may elect
to (i) terminate this Lease and (ii) exercise any and all other remedies available at law or in equity.
Section 9.5. No Remedy Exclusive. No remedy herein conferred upon either party is intended to be exclusive of
any other available remedy or remedies, and each such remedy shall be cumulative and shall be in addition to
every other remedy given under this Lease or now or hereafter existing at law or in equity or by statute. No delay
or omission to exercise any right or power accruing upon any default granted under this Lease shall impair any
right or power or shall be construed to be a waiver thereof, and any such right or power may be exercised from
21
time to time and as often as may be deemed expedient, and the exercise of any one right or remedy shall not
impair the right to any or all other remedies under this Lease. NOTWITHSTANDING ANY CONTRARY
PROVISIONS HEREOF IN NO EVENT SHALL LESSOR OR LESSEE BE LIABLE UNDER ANY
PROVISION OF THIS LEASE FOR LOST PROFITS, INCLUDING LOST OR PROSPECTIVE
PROFITS, OR FOR ANY OTHER SPECIAL, INDIRECT, INCIDENTAL, CONSEQUENTIAL,
EXEMPLARY OR PUNITIVE DAMAGES, IN CONTRACT, TORT OR OTHERWISE, WHETHER OR
NOT CAUSED BY OR RESULTING FROM THE SOLE OR CONCURRENT NEGLIGENCE OF
LESSOR OR LESSEE OR ANY OF THEIR AFFILIATES OR RELATED PARTIES. WITHOUT
LIMITING THE FOREGOING, THIS LIMITATION OF LIABILITY SHALL APPLY TO CLAIMS OF
LESSOR OR LESSEE ARISING OUT OF THIRD PARTY CLAIMS AGAINST LESSOR OR LESSEE
FOR ANY OF THE FOREGOING.
Section 9.6. No Additional Waiver Implied By One Waiver; Consents to Waiver. The waiver of either party
of any breach by the other party of any covenant, condition or obligation under this Lease shall not operate as a
waiver of any subsequent breach of the same or a waiver of any breach of any other covenant, condition or
obligation under this Lease, nor shall any forbearance by the non -defaulting party not breaching to seek a remedy
for any breach by the other party be a waiver by such non -defaulting party not breaching any of its rights and
remedies with respect to such breach or any subsequent breach of the same or with respect to any other breach.
Section 9.7. Delay not a Waiver. No delay or omission in the exercise of any right or power accruing upon any
default shall impair any such right or power or shall be construed to be a waiver of any such default or any
acquiescence therein, and every power or remedy given by this Lease may be exercised from time to time and as
often as may be deemed expedient. Either party may waive any default which in its opinion has been remedied
before the entry of final judgment or decree in any suit, action or proceeding instituted by it under the provisions
of this Lease or before the completion of the enforcement of any other remedies under this Lease. No such waiver
shall extend to or affect any other existing or subsequent default or impair any rights or remedies consequent
thereon.
ARTICLE X
DAMAGE AND CONDEMNATION
Section 10.1. Damage and Destruction.
(a) If the Leased Premises are destroyed (in whole or in part) or are damaged by fire or other
casualty, Lessee shall promptly give written notice thereof to Lessor. All applicable insurance proceeds
shall be applied by Lessor to repair, rebuild or restore the property damaged. Any remaining balance after
payment for such repair, rebuilding or restoration shall be retained by Lessor. Lessee agrees to look
solely to its insurance for the replacement and repair of the Removables and shall have all rights to all
insurance with respect to, and shall be responsible for repair of, the concession areas to the extent, but no
further, the same were equipped by Lessee or concessionaires contracting with Lessee.
(b) Lessor will proceed promptly to repair, rebuild or restore the property damaged or destroyed to
substantially the same condition as it existed prior to the event causing such damage or destruction, with
such changes, alterations and modifications (including the substitution and addition of other property) as
may be desired by Lessee and Lessor and which will not impair productive capacity or the character of
the Leased Premises. If such damage results in an Untenantable Condition, all Rental shall abate during
the period of repair and restoration. Notwithstanding the foregoing, in the event that (a) substantially all
of the improvements shall be damaged or destroyed by casualty at any time during the final three (3)
years of the Term or (b) any portion of the Leased Premises shall be damaged or destroyed by casualty at
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any time during the Lease Term and the governmental rules then applicable to the Leased Premises do
not permit the restoration of the Leased Premises so as to eliminate an Untenantable Condition, then
Lessee may, at its option (exercised with reasonable promptness in the circumstances, but in all events
within ninety (90) days after such damage or destruction), terminate this Lease by serving upon Lessor
notice within such period setting forth Lessee's election to terminate this Lease as a result of such
damage or destruction as of the end of the calendar month in which such notice is delivered to Lessor.
Upon the service of such notice and the making of such payments within the foregoing time period,
Lessor shall pay to Lessee the amount of the Unamortized Portion of the Lessee's Contribution
(measured as of the date of termination) this Lease shall cease and terminate on the date specified in such
notice with the same force and effect as of such date were the date originally fixed as the lease expiration
date and Lessee shall have no further obligation hereunder. The term "Unamortized Portion of the
Lessee's Contribution" means an amount equal to, as of the date of its determination, the product of "X"
times the total number of days remaining in the scheduled 25 -year Term with "X" being determined as
follows: "X" equals the sum obtained by subtracting from $5,825,000 the Applicable Amount. The term
"Applicable Amount" shall be, as of the date of determination, the sum of the dollar amounts reflected in
Column A for each period set forth opposite in Column B below which have expired prior to the date of
determination plus a pro rated amount of the amount in Column A for the period in Column B below in
which the date of determination falls:
Column A Column B
$500,000 1st year of the Term
$400,000 2nd year of the Term
$300,000 3rd year of the Term
$200,000 4th year of the Term
$100,000 5th year of the Term
$ 15,000 For each year of the Term thereafter
through and including the 20th year of the Term
$ 5,000 For each of the 21st through the 25th year of the
Term
(As an example of the foregoing, if the date of determination is on the first day of the seventh month of
the 3rd year of the Term, the Applicable Amount would be $1,050,000 [i.e., $500,000 plus $400,000 plus Y2 of
$300,000).
Section 10.2. Condemnation.
(a) In the event that title to the Leased Premises or the leasehold estate of Lessee in the Leased
Premises created by this Lease or any part of either thereof shall be taken under the exercise of the power
of eminent domain by any governmental body or by any person, firm or corporation acting under
Governmental Authority, or shall be conveyed in lieu thereof, this Lease shall terminate and Lessor shall
pay to Lessee the Unamortized Portion of the Lessee's Contribution. Any condemnation award
attributable to the temporary use or temporary condemnation of the Leased Premises or the leasehold
estate shall be paid to Lessee. If only a part of the Leased Premises or leasehold estate is taken Lessor
will cause any proceeds received by it from any award made in such eminent domain proceedings with
respect to the Leased Premises, to be paid to the Lessee, to be applied in one or more of the following
ways:
(i) The restoration of the Leased Premises to substantially the same condition as existed prior to
the exercise of the said power of eminent domain.
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(ii) The acquisition, by construction or otherwise, by Lessee of other improvements suitable for
Lessee's operations (which improvements shall be deemed a part of the Leased Premises and
available for use and occupancy by Lessee without the payment of any rent other than the
Rentals to the same extent as if such other improvements were specifically described herein and
demised hereby).
(iii) To Lessee if the condemned property is not essential to the normal operation of the Leased
Premises.
(b) Lessee shall notify the Lessor in writing as to which of the ways specified in this section Lessee
intends to have the condemnation award applied.
(c) Lessor shall cooperate fully with Lessee in the handling and conduct of any prospective or
pending condemnation proceedings with respect to the Leased Premises or any part thereof and will, to
the extent it may lawfully do so, permit Lessee to litigate in any such proceedings in the name and behalf
of Lessor and for the purpose of seeking and obtaining a separate award for damage to the Removables,
the value of Lessee's leasehold estate, and damage to Lessee's business. In no event will Lessor
voluntarily settle, or consent to the settlement of, any prospective or pending condemnation proceeding
with respect to the Leased Premises or any part thereof without the written consent of Lessee.
Notwithstanding the foregoing, if as a result of any condemnation, an Untenantable Condition exists or if
the damage caused thereby occurs during the last three (3) years of the Term, Lessee shall have the right and
option to terminate this Lease by providing written notice to Lessor to such effect whereupon this Lease shall
terminate as of the date set forth in such notice and Lessor shall pay to Lessee the Unamortized Portion of the
Lessee's Contribution.
The provisions of this Article X shall survive the termination of this Lease.
ARTICLE XI
MISCELLANEOUS
Section 11.1. Amendments, Changes and Modification. No amendment, change, addition to or waiver of any
of the provisions of this Lease shall be binding upon the parties hereto unless in writing signed by an Authorized
Lessee Representative and the Mayor of Lessor.
Section 11.2. Applicable Law. The Lease shall be governed exclusively by the provisions hereof and by the
applicable laws of the State. Venue for any proceeding to enforce this Lease shall be in Williamson County,
Texas.
Section 11.3. Severability. If any provision of this Lease is held to be illegal, invalid, or unenforceable under
present or future laws effective during the Term such provision shall be fully severable and this Lease shall be
construed and enforced as if such illegal, invalid, or unenforceable provision had never comprised a part hereof,
and the remaining provisions hereof shall remain in full force and effect and shall not be affected by the illegal,
invalid, or unenforceable provision or by its severance from this Lease. Furthermore, in lieu of such illegal,
invalid or unenforceable provision, there shall be added automatically as a part of this Lease a provision as
similar in terms to such illegal, invalid, or unenforceable provision as may be possible and still be legal, valid, or
enforceable.
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Section 11.4. Notices and Demands. Any notices or other communications required or desired to be given to the
other party hereto shall be given in writing and delivered by courier, overnight delivery service, facsimile
transaction or through the U.S. postal service, postage prepaid and by certified mail, return receipt requested, at
the following addresses:
To Lessor:
City of Round Rock
221 E. Main St.
Round Rock, Texas 78664
Attention: City Manager
Fax: (512) 218-7097
With copy to: City of Round Rock
221 E. Main St.
Round Rock, Texas 78664
Attention: City Attorney
Fax: (512) 255-8986
To Lessee:
RSR Sports, Inc.
P.O. Box 5309
Round Rock, Texas 78683
Attention: Reid Ryan
Fax: (512) 255-1558
With copy to: Nolan Ryan
2900 South Gordon
Alvin, Texas 77512
Fax: (281) 585-2238
Section 11.5. References. All references in this Lease to particular Articles or sections are references to Articles
or sections of this Lease, unless otherwise indicated. Article and section headings are furnished for convenience
only and do not constitute a part of this Lease. References in the singular number in this Lease shall be
considered to include the plural, if and when appropriate, and vice versa. Any times referred to herein shall be
deemed references to Round Rock, Texas, time. Any capitalized terms not specifically defined herein shall have
the meanings ascribed to them in the Master Agreement.
Section 11.6. Successors and Assigns. The terms and provisions of this Lease shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and permitted assigns.
Section 11.7. Multiple Counterparts. This Lease may be executed in multiple counterparts, each of which shall
be an original but all of which together shall constitute but one and the same instrument.
Section 11.8. Recordation. Lessor and Lessee shall not record this Lease, but both parties agree, on request of
the other, to execute a memorandum of lease in recordable form and complying with applicable laws of the State
of Texas, which memorandum of lease may be recorded by the requesting party.
Section 11.9. Attorneys' Fees. The prevailing party in any litigation related to this Lease shall be entitled to
recover from the non -prevailing party or parties the reasonable attorneys' fees and costs incurred by such
prevailing party in connection with such litigation.
Section 11.10. Time is of the Essence. Time is expressly declared to be of the essence in this Lease.
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Section 11.11. Landlord / Tenant Relationship. This Lease establishes a landlord/tenant relationship between
the parties. It does not create any other type of relationship between the, such as one of agency, partnership, or
joint venture.
Section 11.12 Lessee's Remedial Work. Lessee shall be responsible for performing or causing to be performed,
and for paying the cost of performing, any and all corrective or remedial actions required by applicable
Governmental Authority to be performed with respect to any environmental event caused by Lessee's, or any of its
agents, contractors, or subcontractors at any time ("Lessee's Remedial Work"). Lessee shall promptly inform
Lessor and all applicable Governmental Authorities of any environmental event or Hazardous Materials discovered
by Lessee (or any agent, contractor or subcontractor of Lessee) in, on or under the Leased Premises and promptly
shall furnish to Lessor any and all reports and other information available to Lessee concerning the matter. Lessee
shall thereafter promptly consult with Lessor as to the steps to be taken to investigate and, if necessary, remedy
such matter. Lessee shall select an independent environmental consultant to evaluate the condition of the Leased
Premises and materials thereon and therein, at Lessee's cost and expense. If it is determined pursuant to such
evaluation that remediation of the same is required by this Section 11.12, then Lessee shall perform Lessee's
Remedial Work at its own cost and expense and with due diligence.
Section 11.13 Lessor's Remedial Work. Lessor shall be responsible for performing or causing to be performed,
and for paying the cost of performing, any and all corrective or remedial actions required by applicable
Governmental Authority to be performed with respect to (i) any environmental event caused by Lessor or any of its
agents, contractors or subcontractors or (ii) any Hazardous Materials that were introduced to the Leased Premises
on or before the Commencement Date (but excluding Hazardous Materials introduced by Lessee or its agents,
contractors or subcontractors at any time) ("Lessor's Remedial Work"). Lessor shall promptly inform Lessee and
all applicable Governmental Authorities of any such environmental event or any Hazardous Materials discovered
by Lessor (or any agent, contractor or subcontractor of Lessor) in, on or under the Leased Premises and promptly
shall furnish to Lessee any and all reports and other information available to Lessor concerning the matter. Lessor
shall thereafter promptly consult with Lessee as to the steps to be taken to investigate and, if necessary, remedy
such matter. Lessor shall select an independent environmental consultant to evaluate the condition of the Leased
Premises and materials thereon and therein, at Lessor's cost and expense. If it is determined pursuant to such
evaluation that remediation of the same is required by this Section 11.13, then Lessor shall perform, or cause to be
performed, Lessor's Remedial Work at its own cost and expense and with due diligence.
Section 11.14 Settlement By Mutual Agreement. In the event any dispute, controversy or claim between or
among the parties arises under this Lease or is connected with or related in any way to this Lease or any right, duty
or obligation arising herefrom or the relationship of the parties hereunder (a "Dispute or Controversy"), including,
but not limited to, a Dispute or Controversy relating to the effectiveness, validity, interpretation, implementation,
termination, cancellation or enforcement of this Lease, the parties shall first attempt in good faith to settle and
resolve such Dispute or Controversy by mutual agreement in accordance with the terms of this Section 11.14. In
the event a Dispute or Controversy arises, either Party shall have the right to notify the other that it has elected to
implement the procedures set forth in this Section 11.14. Within fifteen (15) days after delivery of any such notice
by one party to the other regarding a Dispute or Controversy, the Authorized Representative of the parties shall
meet at a mutually agreed time and place to attempt, with diligence and good faith, to resolve and settle such
Dispute or Controversy. Should a mutual resolution and settlement not be obtained at the meeting of the
Authorized Representatives for such purpose or should no such meeting take place within such fifteen (15) day
period, then either party may by notice to the other Party submit the Dispute or Controversy to mediation.
Section 11.15 Covenants Running with the Estates in Land. The parties hereto covenant and agree that all of
the conditions, covenants, agreements, rights, privileges, obligations, duties, specifications, and recitals contained
in this Lease, except as otherwise expressly stated herein, shall be construed as covenants running with title to the
Leased Premises, and the leasehold estate hereunder, respectively, which shall extend to, inure to the benefit of and
bind, Lessor and Lessee, and their permitted successors and assigns, to the same extent as if such successors and
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assigns were named as original parties to this Lease, such that this Lease shall always bind the owner and holder of
any fee or leasehold interest in or to the Leased Premises, or any portion thereof, and shall bind predecessors
thereof except as otherwise expressly provided herein.
Section 11.16 Non -Appropriation.
(a) Current Expenses. Except for the funds to be provided pursuant to Section 5.12, the obligations
of the Lessor for payment and other monetary obligations under this Lease are each subject to an
appropriation and, accordingly, (a) shall constitute a current expense of the Lessor in the fiscal year to
which an obligation applies and (b) shall not constitute an indebtedness of the Lessor within the meaning
of any applicable governmental rule. Nothing herein shall constitute a pledge by the Lessor of any funds,
other than funds designated pursuant to lawful appropriations from time to time to pay any money or satisfy
any other monetary obligation under any provision of this Lease.
(b) Result of Non -Appropriation. If a non -appropriation occurs in response to a request for a
proposed Appropriation, the Lessor shall provide Lessee with written notice of such non -appropriation on
or before the twentieth (20th) day after the non -appropriation. Any non -appropriation shall constitute a
default hereunder by Lessor.
Section 11.17. Conditions Precedent. Notwithstanding anything to the contrary contained herein, the following
are conditions precedent to the effectiveness of this Lease and Lessor's and Lessee's obligations hereunder:
(a) that the Lessee executes and delivers to Lessor that one certain Master Agreement
Regarding Convention Center Complex Development in the form and substance acceptable to
Lessor and Lessee; and
(b) that the Debt Plan as defined in the Master Agreement be approved by Lessor and Lessee.
Section 11.18. Conflicts. It is the intention of the parties that the Agreements comply with the provisions of
Chapter 351 of the Tax Code, as amended, and in the event of a conflict between the applicable provisions of the
Tax Code and the Agreements, Chapter 351 of the Tax Code shall govern. Additionally if any conflict exists
between the Agreements and the Bond Documents, the Bond Documents shall govern. As used herein, the term
"Bond Documents" means the Bond Ordinance, Trust Indenture and other documents and certificates approved
by the Lessor in connection with the issuance of debt for the Convention Center.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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Executed this 20th day of January, 1999.
LESSOR:
CITY OF ROUND ROCK, TEXAS
By:
Charles Culpepper, s a or
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LESSEE:
RSR SPORTS, INC.
By:
EXHIBIT "A"
The Land will be approximately forty (40) acres out of that one certain 88.411 acre tract of land
situated in the P.A. Holder Survey, Abstract Number 297 in Williamson County, Texas, being all
of tracts Two, Three and Four conveyed to Arnold Telander by instrument recorded in Volume
2129, Page 744 of the Official Records of Williamson County, Texas. The boundaries of said
forty (40) acre tract to be agreed upon by Lessee and Lessor and surveyed by a registered
surveyor. Upon completion of said survey, a metes and bounds description of the forty (40) acre
tract will be attached to the original copies of this Lease Agreement and substituted for this
Exhibit "A".
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